Wednesday, November 18, 2009

SHORT SALE - Nolensville TN Single on Acreage

SHORT SALE - Nolensville TN Single on Acreage




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37135-Nolensville ()

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Jim McCormack
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Address: 3008 McCanless Rd Type: Residential Style: Single Story Bedrooms: 3 Bathrooms: 2.5 Suite: No Living Area: 2,308 square feet Year Built: 1993
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SHORT SALE - NEEDS 2 LENDER APPROVALS. Could be a great Federal Colonial home on a scenic 7.40 acre lot. Home needs lots of work. Foundation issue resulting in cracked bricks. Moisture problem in garage/basement area. Call for details.
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If you are a home buyer or real estate investor in Middle Tennessee who is interested in purchasing a Fannie Mae foreclosure, a Freddie Mac foreclosure, bank foreclosure or REO, a short sale, or other distressed real estate in order to get a great home or investment property at an attractive price without dealing with the difficult REO/foreclosure listing agents and you want aggressive and professional buyer representation, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN. I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

SHORT SALE - La Vergne TN Townhome Condo

SHORT SALE - La Vergne TN Townhome Condo




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37086-LaVergne ()

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Jim McCormack
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6031 Cullen Drive La Vergne TN - Exterior Front




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Address: 6031 Cullen Dr Type: Condominium Style: Single Story Bedrooms: 2 Bathrooms: 3 Suite: No Living Area: 1,150 square feet Year Built: 2007
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SHORT SALE SUBJECT TO BANK APPROVAL. NON-BINDING OFFER ALREADY SUBMITTED TO LENDER. Nice townhouse that needs some TLC. Square footage based on tax records - buyer to verify. Make your best offer.
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Brokered and Advertised by Exit Realty Network LID 1000641220
Information is deemed to be correct but not guaranteed.

If you are a home buyer or real estate investor in Middle Tennessee who is interested in purchasing a Fannie Mae foreclosure, a Freddie Mac foreclosure, bank foreclosure or REO, a short sale, or other distressed real estate in order to get a great home or investment property at an attractive price without dealing with the difficult REO/foreclosure listing agents and you want aggressive and professional buyer representation, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN. I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

Real Estate Fiction

Real Estate Fiction

According to this Realtor.org (NAR) article, Headed in the Right Direction, things are looking up for real estate. The article quotes, Lawrence Yun, chief economist of the NATIONAL ASSOCIATION OF REALTORS (NAR), as saying "With home sales heading up and inventories shrinking, prices are stabilizing. These are the key conditions needed for housing to lead the economy into growth mode. Once that happens, jobs will follow." I have never heard such fiction in my life. Housing prices need to stabilize so that the economy will grow and jobs will return! What!? IT IS THE OTHER WAY AROUND LAWRENCE! The economy needs to start growing so that jobs will return so that housing can then recover. The only way housing can recover without job growth is if people borrow more to make up for the fact that they are making less money. The problem is that this is want caused the financial mess in the first place. A backwards real estate market recovery will just lead to more short sales and foreclosures in the future. Please stop producing real estate fiction! We need a sustainable real estate market recovery and that can only happen AFTER jobs return.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

The Unsustainable US Economy

The Unsustainable US Economy

The US economy is not sustainable. It is like a house built on an unstable foundation. I will make this a short bullet point post.
  • Nearly the entire US economy was and still is based on consumer spending (think credit cards, car loans, etc.) and real estate, which was fueled largely by debt.
  • The reason so much of the economy was based on consumer spending and real estate is that we do not make anything in the US any more. Real estate, in particular, is still something that has to be "made" in the US.
  • Too much money (really debt) flowed into real estate and prices reached levels that could not be supported by personal incomes (the real historic driver of real estate prices - at least if you want a sustainable market).
  • Now, our government want to artificially prop the price of real estate back up with more debt via the tax credit, expanded FHA (and other low/no down payment government loan programs), increased loan purchases by Fannie Mae, Freddie Mac and Ginnie Mae and bank bailouts (i.e. TARP). In addition to these taxpayer subsidies (more debt), the government instituted new FASB accounting rules which allow financial institutions (banks) to value their loans at debt value (i.e. the amount they are owed) despite the fact that many of their assets (think 2nd and 3rd mortgage loans, HELOC's etc) are worth 0-10% of that amount due to property value declines.
  • The whole premise of this government plan is that if we give money to financial institutions (banks) and allow them to "cook their books", they will start lending to consumers and on real estate again.
  • The government's desired result is that real estate will start increasing in value again which will in turn make the financial institutions (banks) healthy again (by virtue of eliminating the need to "pretend" their assets are worth something close to their actual debt values), bring back the construction industry and jump start other industries that feed off of real estate.
Below are my major issues with the plan above:
  • Who will make these debt payments that are artificially high due to inflated real estate prices and increased consumer debt particularly in a time when unemployment is over 10%?
  • The problems that started this entire mess in the first place were too much debt and inflated real estate prices (i.e. beyond what personal incomes could support).  These two causes operated hand in hand. Now, the government wants to start it all over again. This is insanity.
  • The result of these government actions will be that the US economy will go up and crash again (due to another debt bubble, asset bubble and real estate bubble) and/or the US economy will be stuck in a low/no growth state for an extended period of time (think Japan).  Either result will cause more short sales, foreclosures and bankruptcies.
  • The US economy will not enjoy sustainable growth until the real problems are addressed - jobs and debt (public and private).  In order to do this, we need to correct the economic and regulatory issues causing jobs to leave the US and we need to reduce public sector debt and encourage people to reduce their individual debt.
If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Tuesday, November 17, 2009

Record Mortgage Delinquencies in 2009 Q3

Record Mortgage Delinquencies in 2009 Q3

According to this TransUnion press release, TransUnion.com: Mortgage Loan Delinquency Rates on Course to Hit Record in 2009 - Deceleration in Rate Climb Continues for Third Consecutive Quarter, in the 3rd quarter of 2009 the rate of mortgage loan delinquencies (the ratio of borrowers 60 or more days past due - a precursor to future foreclosures) increased 58% over the 3rd quarter of 2008 to reach an all time record of 6.25% (up from 3.96%). The rate of mortgage loan delinquencies has now increased for the 11th consecutive quarter. Below are the quarterly rates of increase in the rate of mortgage loan delinquencies in 2009:
  • 2009 Q3: approximate 7.57% increase from 2009 Q2.
  • 2009 Q2: approximate 11.3% increase from 2009 Q1.
  • 2009 Q1: approximate 14% increase from 2008 Q4.
The release goes on to quote FJ Guarrera, vice president of TransUnion's financial services division, as saying "The third quarter provided a mixed bag of economic indicators. Many companies' third quarter results are coming in above analysts' expectations. The unemployment rate like the mortgage delinquency rate is still climbing, but has decelerated in the number of monthly job losses during the quarter. While housing starts improved during the first four months of the year, a drop was seen during this quarter and consumer spending still remains anemic or cautious at best. The economic peaks and valleys that we experienced during the quarter will most likely continue into the first half of 2010. While it continues to be a positive sign that the increase in mortgage borrower delinquency rates has slowed for three consecutive quarters, we have to keep things in perspective. Delinquency rates are rising and expected to peak at record levels. Until the housing market can consistently demonstrate several months of home value appreciation and the unemployment rate improves, mortgage delinquency will likely continue to rise. Many of these delinquencies in places like Nevada, California and Florida will result in foreclosures, potentially keeping home values depressed in these areas."

Personally, I think that Mr. Guarrera is being overly optimistic. I see no reason why mortgage loan delinquencies, foreclosures and short sales will be lower in the near future. Job losses, even at a slightly slower pace, are still job losses and people who do not have jobs tend to have a difficult time paying their mortgages. Beyond that, the housing market still has too much new construction and too many "shadow foreclosures" (homes that should be foreclosed due to mortgage non-payment, but are not) that will come onto the market within the next year.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Nashville TN Banks Hurting

Nashville TN Banks Hurting

According to the information contained in these articles (Nashville Public Radio: Pinnacle Backtracks, Saves TARP Funds for Rainier Day and Associated Press: Synovus downgraded on capital, regulation worries.), two Nashville Tennessee area banks are in financial trouble: Pinnacle Financial and the Bank of Nashville (a Synovus company).  According to the ProPublica Financial Institution Bailout Recipient List, both banks/financial institutions received TARP (government bailout) monies with Pinnacle Financial receiving $95M and Synovus receiving almost $968M.  Ongoing credit deterioration was cited as the main reason for the financial trouble.  In short, these lenders made loans that are now going bad.  According to the Nashville Public Radio article, Pinnacle Financial intended on paying back their TARP money, but changed plans after economists told Pinnacle CEO Terry Turner that conditions will get worse before they get better. As a result Pinnacle now needs the TARP capital to prepare for the worsening economy. The article quotes Turner as saying "We’re not in a position where we’re going to see a steady climb out of the economy but instead may see further deterioration, maybe even worse than what we’ve seen thus far." According to the article, "Dragging down Pinnacle’s balance sheet is a growing number of bad loans. For the third quarter, Pinnacle had nearly four times the number of bad loans compared to the same period last year." The Associated Press article stated that shares of Synovus Financial Corp. (parent company of the Bank of Nashville) are now trading at near 17 year lows. While this news is definitely not good, it should be expected. Almost all banks are in poor financial condition with most being insolvent. Only government bailouts and FASB accounting rule changes are allowing many banks to survive (think "zombie banks"). There will definitely be more foreclosures and short sales at these banks (and at all banks) in the near future.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Commercial Real Estate Problems

Commercial Real Estate Problems

According to this Philly.com article, Commercial real estate facing worse days, the worst for commercial real estate is yet to come. The article cites the contracting economy and worsening financing markets as the main causes of the commercial real estate decline. My opinion is that the real problem is that all real estate prices (residential and commercial) just reached a point where they made no sense whatsoever. According to the article, "It's just a hint of the harrowing state of affairs in commercial real estate, where vacancies are on the rise across virtually all sectors, rents and property values are dropping, building owners are low on funds, and financing options are drying up. And bad as things are, they're expected to get worse - the next slide in the snowballing economic crisis that began with the collapse of the housing market and continues to claim casualties." The article quotes Sid Smith, managing partner of the regional office of Newmark Knight Frank Smith Mack, a global real estate services firm, as saying "There's a tremendous amount of pain coming." I definitely agree. I predict that we will see more and more commercial real estate foreclosures, bankruptcies and short sales.

If you are a Middle TN real estate investor, home builder or real estate developer who cannot pay the property/project mortgage payments (due to the poor economy, adverse financing conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), have already defaulted on the mortgage, or are already in foreclosure, or owe more than the property/project is worth, please contact me to discuss your options including a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/project). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Nashville Developer Faces Foreclosure

Nashville Developer Faces Foreclosure

According to this Nashville Business Journal article, Bank forecloses on property for Crosland's Griffin Plaza, Crosland, Inc.'s Griffin Plaza property (a 280,000 square-foot mixed-use development) in Downtown Nashville TN (in the Gulch area) is being foreclosed on by Carolina First Bank. The trustee auction sale is scheduled to take place on 11/30/2009 at 11:00 AM in front of the main entrance to the Sommet Center. This news comes only about a week after I posted my article, Terrazzo in Nashville Gulch to Auction Condo Units Due to Slow Sales, in which I predicted that the developer of the Terrazzo (also Crosland) would face foreclosure on that project. Now, I am almost certain that foreclosure will occur. It is clear that many other Nashville Tennessee and Middle Tennessee developers will go bankrupt and/or face foreclosure. The worst is yet to come.

If you are a Middle TN real estate investor, home builder or real estate developer who cannot pay the property/project mortgage payments (due to the poor economy, adverse financing conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), have already defaulted on the mortgage, or are already in foreclosure, or owe more than the property/project is worth, please contact me to discuss your options including a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/project). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Monday, November 16, 2009

Foreclosure Problem Spreading

Foreclosure Problem Spreading

According to this SmartMoney article, Beyond California: New Foreclosure Hot Spots, and this The Christian Science Monitor article, Foreclosure surprise: 10 fastest-growing problem cities are newcomers, the foreclosure problem is spreading to previously stable (and largely untouched) cities and towns.  Both articles cite rising unemployment as the main cause of the spreading foreclosure crisis. The result of this spreading crisis will be more short sales and foreclosures in these areas.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

FDIC Hurting Distressed Homeowners

FDIC Hurting Distressed Homeowners

As set forth in this FDIC publication, IndyMac Shared-Loss Agreement, the FDIC is making so called "Shared-Loss Agreements" (SLAs) with investors who are willing to purchase the assets of insolvent financial institutions.  Without going into all the details, these SLAs basically offer these investors guarantees on huge percentages of any net losses that they may suffer as a result of their investment in the failed financial institution.  In this particular case, the FDIC is paying for 80%+ of the net losses of the investor (OneWest Bank) who purchased the assets of IndyMac. Basically, the Net Loss is calculated by taking the current outstanding balance of the mortgage note (at the time of the loan purchase) less the net proceeds of the short sale or foreclosure offer price.

The reason this is a problem for financially distressed homeowners is that due to the loss guarantees provided by the FDIC, the investors mentioned above have very little financial risk in the deal.  Therefore, they have incentives to take what would normally be a big risk (but isn't due to their sweet loss guarantees courtesy of the FDIC) such as foreclosing on homeowners to try and squeeze out more profit even when there are feasible alternatives to foreclosure such as short sales and loan modifications.  As a result, these investors are making it difficult and even impossible to get loan modifications and short sales approved.

In her blog post, Is the FDIC Killing Short Sales, Alexis McGee of Foreclosures.com states that "IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire)." She goes on to describe the terms of the SLA.  The highlights are below:
  • The investors purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts).
  • They purchased all current HELOCS at 58% of Par Value.
  • The FDIC stepped in and guaranteed that for any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the current outstanding balance of the mortgage note (at the time of the loan purchase), not the amount that OneWest paid for the loan.
  • For foreclosures, the FDIC picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO’s, upkeep, utilities/maintenance, legal fees, etc.)
Here is an example which shows why this creates a problem for financially distressed homeowners who would like to do a short sale, or obtain a loan modification.  Let's say one of the loans that OneWest purchases has a Current Loan Amount of $500,000.  Based on the 70% purchase deal described above, OneWest would have paid $350,000 for this loan.  Also, let's assume that an all cash investor wants to purchase the property via a short sale for net offer price to OneWest of $200,000.  Below is the analysis of this situation:

  • The Net Loss, according to the FDIC calculations, is $500,000 (i.e. the current outstanding balance of the mortgage note at the time of loan purchase) less $200,000 (i.e. the net proceeds of the short sale offer) = $300,000.
  • Based on this $300,000 Net Loss, the FDIC pays OneWest $240,000 (i.e. 80% of the Net Loss).
  • One West would then be able to sell the property in question for the short sale Net Offer Price of $200,000 and end up with total revenue of $440,000 ($240,000 + $200,000) for a loan that they paid $350,000 for.  Therefore, OneWest will have made a profit of $90,000. 

The reason that this situation creates a problem for a financially distressed homeowner seeking a short sale is that since the FDIC (per the information above) pays 80% of the losses of foreclosure there is no incentive for OneWest to mess around with a short sale unless they can make much more money.  That is why they are demanding absurd short sale settlements and promissory notes from the homeowner.  Of course, there is absolutely no incentive to offer a loan modification so that request would be dead on arrival.

According to Alexis McGee, "The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC. Some of them include: Bank of America (go figure), CitiMortgage, Wells Fargo, etc."  I have to agree.  That is truly scary.  I can already see the pain and anguish of hundreds of thousands, if not millions, of financially distressed homeowners as they are unnecessarily dragged through the foreclosure process.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Saturday, November 7, 2009

Our Phony Real Estate Market

Our Phony Real Estate Market

The "real estate recovery" (or market bottom called), which has been trumpeted by the "drive by media" (translation - they are too lazy to do any real research) for almost a year now, is a fraud, a sham. All we are seeing is the result of artificial government market propping. I cover this in my blog posts: Real Estate Recovery or More Problems (Short Sales and Foreclosures)?, US Government Provides Funding For 95% Of Mortgages, New Subprime Lender: The US Government and Sad Loan Modification Story. If you do not want to read them the key points are below:
  • 59% of all home sales in 2009 are to buyers with FHA, VA, USDA and other government guaranteed/insured/subsidized loans.
  • The US government is now purchasing about 95% of all mortgage loans via Fannie Mae, Freddie Mac and Ginnie Mae. "Lenders" are really nothing more than loan brokers.
  • Government promoted "foreclosure resolution" and "loan modification" programs are nothing more than subprime schemes. Homeowners are given temporary rate and payment reductions, but the real problem (negative equity) is not addressed. The result will be more foreclosures and short sale in the future as these modified loans re-default (most do), or expire. The negative equity will remain and until it is addressed, no real solution will be offered to this financial and real estate mess.
  • The $8,000 first time home buyer tax credit caused an additional 350,000+/- home sales to occur, but about 1,900,000 people will receive the credit according to NAR (these numbers will be much higher due to the recent extension). The result is that each one of those additional 350,000+/- home sales cost approximately $43,000 (1,900,000 x $8,000 / 350,000) in taxpayer money. Based on the typical 1st time buyer home purchase price of $200,000, the cost of each additional sale created was over 20% of the sale price. Clearly, this program is absurdly costly and has no merit. All the tax credit is doing is temporarily propping up housing prices so they stay high relative to historical norms. The home buyers who pay retail prices for homes due to the tax credit will end up the next generation of underwater homeowners, stuck in the homes (prisons) for many, many years due to the negative equity unless they want to short sell their homes.
The real question is what to do if you are a current owner of a home who may want to sell, or a buyer who may want to buy. Here is what you should do:
  • Sellers - If you think you might want to sell soon do not wait. Sell now before the market gets worse. This winter and the spring of 2010 will be your window before the government market propping starts to fail.
  • Buyers - If you cannot wait a few years to buy a home or other property when the market hits bottom I recommend that you buy only short sales, foreclosures, bank owned properties and other distressed properties in order to price in the coming market decline.
Update (9/8/2010): This article was written before the extension of the 2009 housing tax credit to April 30, 2010 (closing before September 30, 2010), so the "Seller's Window" advice above was off by a few months, but did in fact turn out to be accurate. Housing prices are declining again and will continue to do so for the foreseeable future.

Short Sale and Foreclosure Help and Assistance for Homeowners and Property Owners in Nashville TN and Middle TN. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR, Expert and Real Estate Investor. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR, Real Estate Expert and Real Estate Investor.

If you are a home buyer or real estate investor in Middle Tennessee who is interested in purchasing a Fannie Mae foreclosure, a Freddie Mac foreclosure, bank foreclosure or REO, a short sale, or other distressed real estate in order to get a great home or investment property at an attractive price without dealing with the difficult REO/foreclosure listing agents and you want aggressive and professional buyer representation, please contact me, or visit my website Search the Middle Tennessee MLS - Find Middle TN Short Sales, Pre-foreclosures, Foreclosures & REO's so that you can find foreclosures, short sales and other distressed real estate and homes in Middle TN. I help home buyers in Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN.

Friday, November 6, 2009

Sad Loan Modification Story

Sad Loan Modification Story

In this Mish's Global Economic Trend Analysis article, "Wells Fargo Madness" a Reader Reply to Fear and Shame Tactics, a reader replied to an article on that website (Government and Lender Policies of Fear and Shame Help Keep Homeowners Debt Slaves which I referenced in my blog post Why Lenders Push Homeowners Around) and told a very sad, but sobering story regarding his attempt to obtain a loan modification from Wells Fargo.  Rather than trying to paraphrase the reply/comment, I have posted almost the complete reply/comment below:

"I bought a house back in 2004, having moved halfway across the country for a new job. It was a house I could comfortably afford - I made a little over $70,000 as a senior manager for a newspaper, and my mortgage was a little under $900 a month (including taxes and insurance), fixed at 5.25% for 30 years with Wells Fargo. In spite of the pressure put on me by a broker when I was buying, I avoided the no money down variable option because I wanted to do what I thought was the responsible thing to lock in my payments at a decent rate I knew I could afford and avoid the reset lotto. In April of 2008, I was notified that the job I had moved across the country for was set to be eliminated, along with the entire staff of my department. The company I worked for was highly levered in an environment where revenues were shrinking, and 'consolidations' were being made across the company. The day I found out that I was going to be out of work, I called Wells Fargo to see if it would be possible to make some alternate payment arrangements until I found work, and was told precisely what the article you reference noted - that they couldn't even discuss the matter with me until I was 30 days in arrears. I was mortified, knowing that being 30 days in arrears would leave me with the dreaded 'mortgage late' on what had been a pristine 800 credit score. I had been prudent and saved a fair sum of money, so I decided to try and keep the plates spinning while I looked for work. I applied myself to the job hunt, but with nearly 50 positions eliminate from my company and a few hundred at other domestic newspapers who shared my area of specialty, it was a tough task finding work. Then in August, Gannett, the biggest newspaper company in the world, announced that they would be laying off 1000 workers, and my sources inside Gannett told me that they were going the 'consolidation' route, meaning that in the course of 3 months nearly a third of the total positions in my field had gone *poof*. My prospects for finding work in the industry where I had experience had just gone from tough to Quixotic. I again called Wells Fargo to see if there was anything they could help me with that didn't involve damaging my credit - I still had a sizable amount of savings to negotiate with - but the answer was the same: 30 days late or no discussion. I decided I'd have to take them up on the offer. When 30 days had elapsed, I contacted them once again, only to now be told that they couldn't work out any arrangements until I had found work. I was angry, as one might imagine. I decided that they had received the last payment they were going to receive from me. Fourteen months later, I have kept the vow. I'm not proud of walking away from my 'responsibility', but in light of the situation - nearly 18 months without finding work - it seems that it was the best thing that could have happened. If I had kept paying all along, I'd have depleted a good deal of my savings, and I'd still be facing losing the unemployment benefits that are keeping the other bills paid. As it stands, I've still got that nest egg to see my family through the rough days that lie ahead. I've been to the housing counselors the state has set up, and the best they were able to do for me was that I could pay off the back payments, penalties and interest, and resume making payments. My house is set to be sold at auction next week, and due to the rules in the state, the minimum price will be well in excess of what I suppose the market price would be. I expect that the bank will be the buyer by default. If my experience is representative, walking away might be the best option. From Wells Fargo's perspective, this was an avoidable situation. I called them when I found out about my joblessness, and I did everything I could to avoid a default. All I wanted was some recognition that I was willing to work with them if they would work with me - maybe only paying interest until I was able to find something. However, once I felt double-crossed, having been told to let it go into arrears so that they could work with me, and then to be told they still couldn't work with me, I did what I thought was prudent. I decided to see how long I could live rent free. As of today, it's been almost 14 months. Assuming that the house sells next week and I get an order to vacate the next, I'll be here through the end of January (it takes a minimum of 60 days to affect an eviction here). More likely, I won't get the order to vacate until the bank sells my house as part of a package foreclosure deal for about 20 cents on the dollar. I might get to live here rent-free for a good spell longer. I could have, and probably would have, paid them nearly 50% of the house's value as a cash settlement 14 months ago if they'd been willing to have a conversation. I've come to the realization that I'm not going to find work in the field to which I'm accustomed and I'm back in school to get another degree. I started in August after the Gannett news came out, as much to avoid a long gap in my resume without an explanation as anything else. I've been doing programming and database work since I minored in computer sciences 15 years ago, but I figured I'd legitimize my skills with a degree - since I have the down time. I've got 8 classes to go and a 4.0 GPA. The big question is: will I find work when I get done this spring?"

Wow, that comment is fantastic, and sad all in one. What really angers me is that the government bank bailouts (TARP) combined with the FASB accounting changes that allow banks to count virtually worthless assets such as 2nd mortgage loans collateralized by homes that are no longer worth enough to even cover the 1st mortgage loans let alone the 2nd mortgage loans have allowed mortgage lenders to take this callous approach toward homeowners and reject the lone cure to this financial mess - voluntary mortgage loan principal reductions. In short, the US taxpayer is helping banks artificially have more leverage in their dealings with distressed homeowners and allowing the banks avoid doing what is necessary to solve this financial crisis. Of course, taxpayers will pay again when these lenders ultimately fail after billions and billions more are wasted. The end result will be more and more foreclosures and short sales.

If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Why Lenders Push Homeowners Around

Why Lenders Push Homeowners Around

According to this Mish's Global Economic Trend Analysis article, Government and Lender Policies of Fear and Shame Help Keep Homeowners Debt Slaves, lenders offer loan modifications to financially distressed homeowners only if doing so financially benefits the lender (i.e. it as a business decision), while homeowners view walking away from their homes as a moral decision. The article concludes that the result of these differing view points is that homeowners are at a distinct disadvantage compared to mortgage lenders when trying to make sound financial decisions regarding their homes. Without going into all the details described in the article (if you would like all the details, I highly recommend that you read it), I would like to mention the following points made in the article.
  • Homeowners heavily factor in personal responsibility and morality into their decision to keep paying their mortgages even though they are financially struggling and/or may owe more than their homes are worth (although this view is changing somewhat - see my blog post Underwater Homeowners Walking Away From Their Homes).
  • Lenders are more responsible than homeowners for the real estate boom and bust due to lenders' superior real estate market knowledge including appraisals to determine property/collateral values, complex default models, deciding to require lower down payments even though the lenders knew that higher loan to value mortgage loans had higher default rates, etc.
  • Due to lenders being more than 50% responsible for the housing bust, lenders should be willing to voluntarily write off some of the debt in order to reduce the amount that homeowners are underwater (i.e. negative equity), but they are not doing this since when lenders are trying to decide on how to best handle struggling homeowners, they do not factor in "responsibility" for the housing market crash.  Instead, lenders strictly desire an outcome that will maximize profits or minimize losses.
  • Due to the difference in the way that homeowners and lenders view mortgage loan default (personal responsibility/morality versus business decision), mortgage lenders are able to manipulate homeowners to do things that are to the financial benefit of mortgage lenders, but to the financial detriment of homeowners.
The article states "First, lenders know that borrowers with high credit scores are unlikely to default even at high levels of negative equity. To modify loans for these homeowners would be to throw money away – and to encourage more homeowners to ask for modifications. Second, a significant number of homeowners who temporarily default on their mortgages "self-cure" without any help from their lender – though self cure rates have dropped precipitously in the last two years. Again, to modify the loans of individuals who would otherwise self cure would be to throw away money. Third, homeowners with poor credit, or who end up in arrears because of “triggering events” such as unemployment, divorce, or other financially devastating circumstances are likely to default on the modified loan as well. To modify loans for these individuals is to waste time and risk housing prices falling further before the lender eventually has to foreclosure and sell the property anyway. Given these economic incentives for the lender, a seriously underwater homeowner with good credit and solid mortgage payment history who responsibly calls his lender to work out a loan modification is likely to be told by his lender that it will not discuss a loan modification until the homeowner is 30 days or more delinquent on his mortgage payment. The lender is making a bet (and a good one) that the homeowner values his credit score too much to miss a payment and will just give up the idea of a loan modification. However, if the homeowner does what the lender suggests, misses a payment, and calls back to discuss a loan modification in 30 days, the homeowner is likely to be told to call back when he is 90 days delinquent. In the meantime, the lender will send the borrower a series of strongly-worded notices reminding him of his moral obligation to pay and threatening legal action, including foreclosure and a deficiency judgment, if the homeowner does not bring his mortgage payments current. The lender is again making a bet (and again a good one) that the homeowner will be shamed or frightened into paying their mortgage. If the homeowner calls the lender’s bluff and calls back when he is 90 days delinquent, there is a good possibility that he will be told that his credit score is now so low that he does not qualify for a loan modification. Most lenders will, in other words, take full advantage of the asymmetry of norms between lender and homeowner and will use the threat of damaging the borrower’s credit score to bring the homeowner into compliance. Additionally, many lenders will only bargain when the threat of damaging the homeowner’s credit has lost its force and it becomes clear to the lender that foreclosure is imminent absent some accommodation. On a fundamental level, the asymmetry of moral norms for borrowers and market norms for lenders gives lenders an unfair advantage in negotiations related to the enforcement of contractual rights and obligations."

The information above is why:
  • Lenders take as long as they want to respond to homeowner loan modification requests.
  • Lenders frequently reject loan modification requests.
  • Financially struggling homeowners can frequently stay in their homes for many months despite not paying their mortgage loans (the lenders are frequently deciding to do nothing until foreclosure is absolutely imminent).
  • Homeowners do sometimes walk away despite the personal responsibility - they get completely frustrated with the games lenders play.
  • Walking away needs to be a viable option (albeit not the best one) for homeowners.
  • Short sales and foreclosures will continue to increase.
If you are a Middle TN homeowner, property owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in and around Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN and Belle Meade TN).  If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.