Lender-Abandoned, Non-REO Foreclosures

No big deal; if these properties have become abandoned (no property taxes are being paid) the City/County can take possession. (Imminent Domain) Great opportunity for refurbished low income housing, or better yet bulldoze and create a park, green space, community garden, etc. People migrate to jobs. If jobs leave, people leave. If no people left, return the land to the agriculture, forest, grass lands, that were there before the cheap, ugly subdivision inconveniently located miles and miles away from employment centers.

…throw in lenders who foreclose and are stuck with exorbitant monthly taxes insurance and other expenses …no or few buyers who can qualify …in South Florida alone there maybe $100 billion in real… not book value losses…as liquidity dries up things here anyway are only in the 3rd inning by my eye…what happens when lenders don’t want triple AAA properties back..can’t happen ? ..I was in Houston in the late 80’s buying gorgeous brand new Triple AAA empty office buildings for 10 to 20 cents on hard construction cost dollar for a company I worked for…Miami and parts of the South coast remind of this.. by the way Barry great blog ..

Seems like a non issue to me. Home prices in the vast majority of places are not going below the cost to maintain the property. Also, home prices don’t have to go up for them to recoup their value. They can simply rent them out.

Very interesting. I suppose you’d have to follow the money: is there an obligation to pay the property tax that, by local law, falls on anybody but the owner who abandoned the place?
Some areas might end up back in 1950’s style ‘urban renewal’ if cities end up owning the stuff. That is their only way out. Fix-up is not worth the investment and no developer will come in unless you can clear out all the old stuff and turn over a ‘clean’ site.

There’s an REO speedwagon / Mortgage collapse joke in here somewhere, but I can’t find it.

Royce raises an excellent point; why foreclose if you don’t want the place, and the hassle/cost that comes with it? Once everyone stops trying to screw each-other, I say the mortgage holders make a downward adjustment to the principal, write off the amount adjusted, and continue with business as usual; trying to con some other poor sucker in to buying garbage he can’t afford with money that doesn’t exist.

Does anyone see the irony here? Lender’s have spent the last 6 months talking about the “immorality” of jingle mail. Apparently they have no problem turning the keys over either(to anyone but them).

Questions

QUESTIONS….Q: What happens if a buyer who can’t make his loan payments decides to just walk away from the house? A: The bank takes title and tries to sell the house, either now or later, when the market improves. Q:…

There are other industry impacts to this situation and others like it. Based on anecdotal evidence, utility companies are taking larger write-offs because people walk away from their houses without notification and stop paying the utility bills. By law in many states, utilities cannot turn off power or gas to homes from ~Nov to ~April so they are stuck. Even when they know foreclosure has happened, they are having a much harder time than in the past getting banks to pay the utility bills.

This is anecdotal based on conversations with folks in utilities serving states from the midwest to TX and the Mountain west. I would be fascinated to see a rigorous analysis.

OT…Sort of: Builders First! Uh, what was the question? Oh Yeah, crumbs for the strapped homeowners…

Btw A ‘win-win’ for creative truthtelling with reinstatement of losses! Time to reprice executive options, eh?

Housing Accord Puts Builders First (Washington Post)
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/02/AR2008040202293_pf.html

Senate Democratic and Republican leaders rushing to address the nation’s housing crisis reached agreement yesterday on a package that would provide billions of dollars in tax rebates to the slumping home-building industry while offering little to homeowners threatened with foreclosure.

After working through Tuesday night to flesh out a bipartisan agreement, lawmakers unveiled a bill that rejects the most ambitious plans for aiding distressed homeowners, including a Democratic proposal to permit bankruptcy judges to modify the mortgage on a person’s primary residence.

Instead, lawmakers settled on a sharply scaled-back array of measures that would provide $4 billion in grants for cities to buy foreclosed properties, temporary tax breaks worth up to $7,000 for home buyers who purchase foreclosed properties, and new tax deductions for almost every American who owns a home. The package, which would cost about $15 billion over the next 10 years, also would jump-start stalled legislation to streamline the Federal Housing Administration, one of the top priorities of the Bush administration.

Families who cannot afford to repay their home loans – the group at the heart of the mortgage meltdown – would benefit mainly from $100 million to expand foreclosure counseling services and greater latitude for local housing authorities to use tax-exempt bonds in refinancing subprime loans.

Home builders and other businesses suffering losses in the flagging economy, meanwhile, would get the lion’s share of federal spending in the bill: $6 billion in tax rebates.

snip

MS, agree completely. Rubin and Paulson with fellow former GS individuals are running the whole damn thing. I believe it goes to the heart of who is really running everything, and it sure as Hell isn’t our elected officials who look the other way at every occasion. Sickening really!

In 1995 they changed the Reserve Requirements, in 1999 the did away with Glass Steagall and in 2005 we had the Bankruptcy laws changed to protect the playas after they had allowed everyone to borrow up to their eyeballs. If I didn’t know better, I would call it conspiracy but that can’t happen in America right?

And no Paulson at the committee??

“Trip to china planned months ago”

He’s been responsible for all of this bullshit bailout(s) and he can’t even answer a few questions??

The hubris on display here is truly staggering.

Ripping us off and smiling the whole time.

MS

Places like Stockton Calif. are facing some of these issues already from a city planners perspective.

The entire city is having to deal with slum like issues because the large number of abandoned homes are spread out over the entire city. So, even though it may be only 2 homes per block the effect on the neighborhood is close to what it would be if it was most of the homes on the block.

Okay now, everyone who thinks that the bottom is in on the housing stocks, I have some Bear Stearns stock priced at the low low price of $60/share just for you. :)

Detroit homeowners have figured this one out.

Once the abandoned home is occupied (by the homeless, or worse), call the police to roust them out, then go back in the middle of the night and torch the now vacant house.

Eventualy the city will clean up the debris and you’ll have a nice “side lot” instead of a crack den next door.

Sign of things to come:

http://www.examiner.com/a-1318196~Corona_games_called_by_darkness__copper_wiring_for_lights_stolen.html

but remember it’s all contained…..

Ciao
MS

“They want to give Judges the power to change mortgage agreements which is unconstitutional.”

Says who?

Changing mortgage agreements are standard practice in business matters when it comes to court for potential foreclosure. Pray tell why what is good for the goose isn’t so for the gander?

Barry,

I wish Tanta from Calculated Risk could shed some light on this whole thing.

(just a suggestion…)

From what I understand, mortgage lenders have the right to approach borrowers with crappy houses at any point and demand they fix them up. I mean, the banks are the true owners (or co-owners) anyway. So, I’d be happy to see the industry being more proactive and preventing non-fully-owned owmes from becoming crappy in the first place! If that happened, the view out my front window might be a little nicer…

Bill,

Painful as it may be to recognize reality, that “Detroit” solution is probably the best. These things are absolutely not worth the fix-up price and left in place they are a hazard. Get rid of them so that maybe someday there can be a fresh start.

“…It does call for a capable and functioning local government…”

Oh well, so much for that idea.

Holman Jenkins of WSJ says we should just start bulldozing houses–how about starting w/ REO’s in say, Detroit.

Even in my hometown you can find whole lists of REO’s offered for less than $50,000, and our economy is otherwise doing okay, for now.

By the way, you can’t just modify mortgage contracts in foreclosure proceedings. Bankrupty, yes, foreclosure proceedings (which are governed by state law), no.

The constitutional point is as almost as old as the principle of judicial review.

By the way, for anyone who wants to see where each CONgressperson gets their graft, I mean campaign contibutions, go to opensecrets.org.

Rebecca, the bank is the mortgagor not the owner or co-owner. Yes, they can try to get the owner to keep the property in good condition as well as insured with the taxes paid. These aren’t properties were the owner much cares about complying with any of the terms of the mortgage.
Congress, if they fix anything, is going to want to fix the IRS provisions regarding debt forgiveness. if the bank reduces he loan principal by say $50.000, then the homeowner has that amount of income on which tax is due.
That Catch-22, that’s some catch.

As a broker in the Inland Empire, CA. I can see the problem being created by the large scale abandonment of homes. Increasingly, I am approached by homeowners who have lost all of their equity, and are upside down in the property by hundreds of thousands of dollars. These are individuals with good jobs, and income, unlike the first wave. They are simply packing up, moving out and leaving the property fallow. The lenders are foreclosing more and more slowly, and more and more selectivly.

Lenders are cherry picking the properties they put on their books and dragging heels on the ‘trashed’ properties (estimated to be about 50% of the REO’s). I know of homes that have been in default for nearly 2 years that are in limbo, no one can purchase them, the bank is not completing foreclosure so the properties become increasingly decrepit. Many of these homes should be bulldozed to decrease the size of the market as increasingly the homes are stripped of fixtures, plumbing and wiring. Without a large scale government intervention, I feel that we are in for a dose of signifcant social upheaval not seen in our lifetimes. People are terrified, ashamed and lost in this abyss. We must stop the talk and have action now, lest we leave a legacy to our children of little hope.

Not one person has asked how the FED did this in the first place.

Posted by: SPECTRE of Deflation | Apr 3, 2008 12:23:38 PM

That’s because the media hasn’t told people to ask that question yet.

Oh, and alarmingly, to me as a Democrat, Barney Frank is in this with him all the way. Damn we are hosed.

Todays Finance Concept: jingle property taxes.

Good piece in The Atlantic on this topic:

http://www.theatlantic.com/doc/200803/subprime

At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son’s bedroom and into her own, Laurie Talbot, who’d moved to Windy Ridge from New York in 2005, told The Charlotte Observer, “I thought I’d bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen.”

Ah, with all this End is Nigh talk, without any leavening optimism at all, that surely means to contrarians that the bottom is near.

Of course, the End really could be Nigh….

Torching houses to acquire a lot – reminds me of the late 70s in NYC on the Lower East Side (and the Bronx and Brooklyn, too). I lived on a block east of Avenue A in which two tenement buildings were torched and razed. Many more were torched and boarded up throughout the neighborhood. THe boarded up buildings became mega-heroin markets, with lines of buyers out the door. The cops stayed away. In all, like a bad movie; when Brazil came out later it seemed they’d used my neighborhood for stage set ideas.

Razing a building was an improvement – guerilla gardeners or local Puerto Rican social clubs would move in and green up the site, creating little parks in the middle of the chaos. They grew food, too.

Now thirty years later the area is so expensive only trust fund babies and Wall Street players can afford to buy there.

Don’t know if this is in the cards for Detroit. But it seems ripe for young adventurous urban permaculture hippie/rasta homesteaders. Just start farming the lots.

Absolutely agree with those who say raze the buildings and create more greenspace. Brilliant.

Go to Buffalo, you will see endless streets of empty houses. It is not easy for a city or neighborhood to stabilize when the houses are empty.

As someone who has worked in the mortgage industry, I believe that it is patently unfair to say that lenders should be held responsible for foreclosures. Government programs made it possible for large amounts of people previously afford it to buy homes. The government did everything in their power to encourage this type of lending. As a result, many people who were deserving were suddenly able to buy a home. An unfortunate side affect of this is that many other undeserving people took advantage of the generous terms of the government’s offer. I can testify from personal experience that it is impossible to tell if a person will pay or not. You can look at their credit scores or listen to what they say, but in the end all you have is a very fleeting impression of how that person behaves when they are over their head and terrified.I have no doubt that this is not the reason every one of these homes has been foreclosed on. There are many unscrupulous lenders. However there are at least as many legitimate lenders who try their best to make good loans. Holding these peoples defaults against them only reduces the responsibility of the many many people who took advantage of the system. Also most mortgage companies levy penalties on lenders for every mortgage they make that defaults.

I would be shocked if simply not taking title, after going through the foreclosure proceedings, would releive them of liability for what happens on that land. Fine, they don’t pay taxes, etc. but let’s just see when someone gets hurt on the land, or it becomes dangerous or a blight to the community. I wouldn’t be surprised if this comes back to bite a few people in the rear!

Here’s a related con also perpetrated by Wall Street. The money center banks, in cahoots with local financial advisors to school districts, concocted this scheme to exploit those districts that have cash flow problems. The banks provide cash to the districts (thru HIGHLY complex derivative instruments), and in return the banks get huge fees, along with the advisors who are supposed to be giving un-biased advice to the local school boards—a clear conflict of interest. To top it off, the instruments are structured, thru the banks’ sophisticated software, so that the banks seem to win either way while the low level bureaucrats buying these things don’t have much of a clue. http://tinyurl.com/2gfkes

Ya gotta love that they specifically targeted rural districts, with (presumably) less sophisticated bureaucrats to fleece.

I don’t get it. Why are the properties vacant? The defaulting borrowers still have title, and therefore still have the right to quiet enjoyment. Why did they move out?

Paul in NYC, LOL!, hosed we are me thinks as well! We are dealing with corruption at every frigging level from both groups. If 5 hours of testimony today didn’t prove they are clueless, liars or both, nothing ever will. The Joint Committee yesterday was as bad if not worse. Hell, even Ron Paul babbled. This was his chance to nail their asses on Constitutional grounds, and I’m still trying to figure out what the heck he was trying to ask. Did I mention we are hosed? LOL!

It is the maintenance of the house and neighborhood that matters. An empty house may be vandalized or occupied by squatters. In the absence of complaints to the police there is no crime reported.

Ownership depends upon local law. In some places the lender owns the house until the loan is paid. In others the borrower owns the house but it is security for the loan.

When default occurs the lender may decide to ignore the situation. The home will be sold for taxes after a few years and all prior claims vanish at that point.

The real difficulty is the period before the tax sale.

Someone is liable if there is an injury on the property, even to a trespasser. And run down properties decrease the value of homes nearby. So civil suits can be filed against the borrower and the lender and the homeowners association (if any). These civil judgements won’t depend on who owns what, the jury merely has to say who is responsible.

I favor putting more responsibility upon the lenders. How else will they ever be restrained from making reckless loans?

The gist of the matter: Bankers can’t legally buy lottery tickets with depositors money, but they are well paid for lending almost any amount on any real estate scheme.

>> I believe that it is patently unfair to say that lenders should be held responsible for foreclosures.

Pfhthfthfth! (Hold on while I wipe the water from my screen.) Help me, Jeebus!

Sorry, Joel, but here are my questions:
– Did the government FORCE lenders to offer no-doc loans?
– Did the government FORCE lenders to eliminate down payments?
– Did the government FORCE lenders to continue lending in bubble areas where affordability was clearly stretched by early 2005?

Corporations have far better resources than individuals. And so they should perform even better. Barry and other bloggers pointed out the risks by 2005 (when I started reading) or even earlier. Corporate lenders *must* take “personal” responsibility for their actions!

Unfair??!?

I agree government IS a big part of the problem. But, they didn’t force ANYONE’s hand.

Since you work in the mortgage industry, the people you should blame work in the cubes around you — and especially the slicksters in the corner offices. Whatever their bonuses were for the past 4 years, that’s unearned income.

Sorry to be harsh. But, that’s the facts as I see them.

First a couple million Mexicans aren’t allowed to show up as planned. Then the fuel cost of commuting into the rich areas to work for the rich people quadruples. Now you have Mexicans doing what I’d do, ripping copper out of abandoned homes to survive. This is like the dark ages when they burned the Roman statues to make lime for the fields.

“Here’s your answer, and google is your friend. Judges currently don’t have the powers that some in CONgress want to give them:

Banks contend the Durbin provision would raise the cost of mortgages because investors would be unsure whether they would be able to generate revenues on loans that they financed. It is likely to be voted on as a standalone amendment.

Posted by: SPECTRE of Deflation | Apr 3, 2008 12:54:13 PM”

SPECTRE, do you really believe the industry’s media talking points on this? They don’t mention that Durbin had already re-written the bill so it only allowed bankruptcy for loans that have already been made (not future loans), and only for loans are otherwise going to fail.

Future mortgages are going to cost more no matter what, because years of stupid lending have led to massive losses and a credit crunch. In the midst of this mess that it created, it’s totally dishonest for the industry to argue that a law requiring the salvaging of existing, failing loans will drive up the cost of loans in the future.

As Tanta once suggested, maybe lenders wouldn’t have to worry about bankruptcy losses if they were more sensible with their lending standards in the first place.

Calm down folks. Step away from the bomb bunker. Are people really advocating the destruction of perfectly good housing? Simply doze the houses and then rebuild them, thus wasting twice the amount of resources? With talk like this, we really could be in for a crazy couple of years.

Banks, given the right nasty market fundamentals, will sit on properties before taking them back, but if they fail to pay taxes the houses eventually get sold at tax sale. If no one shows up to sale, the city/county/whatever takes the house. Local taxing authority has priority over all other liens, kids. Basic tax-sale theory. Pretty simple really. Don’t know why a bank would let that happen if they could salvage a few dollars by a hard fire-sale, but there you have it.

“Here’s your answer, and google is your friend. Judges currently don’t have the powers that some in CONgress want to give them:

Banks contend the Durbin provision would raise the cost of mortgages because investors would be unsure whether they would be able to generate revenues on loans that they financed. It is likely to be voted on as a standalone amendment.

Posted by: SPECTRE of Deflation | Apr 3, 2008 12:54:13 PM”

SPECTRE, do you really believe the industry’s media talking points on this? They don’t mention that Durbin had already re-written the bill so it only allowed bankruptcy for loans that have already been made (not future loans), and only for loans are otherwise going to fail.

Future mortgages are going to cost more no matter what, because years of stupid lending have led to massive losses and a credit crunch. In the midst of this mess that it created, it’s totally dishonest for the industry to argue that a law requiring the salvaging of existing, failing loans will drive up the cost of loans in the future.

As Tanta once suggested, maybe lenders wouldn’t have to worry about bankruptcy losses if they were more sensible with their lending standards in the first place.

Posted by: Apt604 | Apr 4, 2008 1:39:44 AM

Link please! By the way, the senate killed new bankruptcy provisions in the Housing Bill. Bankruptcy judges cannot write down mortgages. Period and end of story unless congress authorizes it.

“Reluctant Banks” Let Defaulted Borrowers Stay in Homes

Yesterday, we discussed Lender-Abandoned, Non-REO Foreclosures. That started a robust discussion, leading to a follow up piece by Bob Ivry of Bloomberg: Lenders Buried By Foreclosures Let Late Borrowers Stay in Homes. According to Ivry:Banks are so ove…

Pardon if I missed it in the postings, but when would be debt have to be written off in the described foreclosure situation? If the interval resulting in tax taking is prolonged (e.g. years), can the lender carry the assets on the books until a more convenient time. Presumably, the lender is not paying the taxes, so no negative cash flow.

“If BSC assets were “performing”-as the clueless Fed Head said- then why were they not liquidated??”

Um, because no one wanted to buy them. Bear, and the rest of the system, froze up because the system faced a LIQUIDITY CRISIS. When no one can properly assess the value of an asset (which began in the subprime mortgage market and then spread), that’s what happens. The Fed (which has far more of a clue than you) stepped in to inject some much-needed liquidity.

Cities should seize these properties for non payment of taxs and sell them to people cheap on the condition that they will actually live in them. People still don’t get it, the problem is not too much housing, its lacking of housing that people can afford. Why let these places rot when your teachers, fire, police, and trash collectors are forced to rent?

“Link please! By the way, the senate killed new bankruptcy provisions in the Housing Bill. Bankruptcy judges cannot write down mortgages. Period and end of story unless congress authorizes it.

Posted by: SPECTRE of Deflation | Apr 4, 2008 10:17:32 AM”

Here’s what Tanta had to say:
http://calculatedrisk.blogspot.com/2007/10/just-say-yes-to-cram-downs.html

Yeah, I know bankruptcy judges currently can’t write down mortgages. That’s the whole point of the legislation.

It’s a shame the industry killed it in the Senate. Perhaps it prefers foreclosures and “jingle mail” to cramdowns? In a lot of cases, those are gonna be the only alternatives.

I’ve read that banks are not allowed to own real estate unless it is in the commission of doing bank business. ie bank branches etc… Therefore they have to get it (foreclosures) off their books. This may explain why they are leaving some foreclosures in limbo. It functions as another tool to help them manage how much property is on their books when the regulators come. I am sympathetic to people losing their houses. I think lenders should be allowed to rewrite terms of loans to let homeowners keep thier homes. I dont want my tax dollars to bail out everyone. Let the lenders figure it out. Also lenders banked on properties going up in value and screwing over a few people to make even more money. As soon as someone misses a payment they are charging 500.00 fees for drive bys to insure occupancy instant fees of 2000.00 dollars for attorneys costs. I’ve read several stories of families off of work and missing two payments and their back payment is thousands more than what they are in arears for.

Rose Spoltore
“The wealth of this country lies in the homes of its people” Abraham Lincoln
OUR NATION IS CRISIS—a clear and present danger!
The Middle Class is Quickly Being Pulled into Poverty Level

The Dollar is devalued and worth 60 cents.

Americans are being terrorized by our own leaders in every level of government. Let’s not burn the flag…..but the traitors must be brought to justice. Who are these traitors? Read on….There should be blood on the street….there should be protests…..and yet the people continue to take it…….

Increased unemployment—reported statistics are wrong—when someone stops collecting unemployment, the government considers them employed even if they do not have a job and what about employee buy-outs or people receiving entitlements, or welfare, etc. So, distorted information then becomes Public Perception then becomes reality!! Gasoline has gone up to almost $4.00 per gallon and fuel oil is at $3.86 per gallon. If nothing is done—it will take another 10 years for the Real Estate market to begin to stabilize—it always does!! THE SOLUTION IS SIMPLE AND WILL COST LITTLE OR NO MONEY!!

Good morning…My name is Rose Spoltore. I live in North Attleboro, MA. I have been a Realtor for more than 33 years. I have seen several recessions….this is by far the worst….than 1989 and even 1981 when the interest rates were 19% fixed.

A SPECIAL MESSAGE TO NAR (National Association of Realtors) We are 1.3 million Realtors across the Country who is facing declining property values – AND WE ARE IN A STRONG POSITION TO HELP. NAR does nothing. Our dues pays their comfortable salaries—their salaries are not based on commission. We have begun a “grass roots’ movement from the local levels to The National Association of Realtors and Washington to make these necessary changes. Yes, I am angry……very angry…..

The Government creates the Boom and the Government creates the Bust. 1981-1984—recession—some people may debate the dates, the interest rates in 4/04 was 12 ¼%/30 yr fixed. 1985-1989 recovery and peak. 1989-1996—recession and recovery. Boom and peak 1997-2004. 2005-2008 recession and tough times are getting tougher.

The year, 2008…..Today’s Crisis—I won’t get into the story of how we got here this time….or the sub-prime lenders and the names of the legislators in Congress that Approved These Irresponsible Programs.

Property values continue to decline due mostly to foreclosures and short sales. I feel that getting the property listed and sold as quickly as possible at current market value, while the property is still occupied….

Market value is changing day by day…”the reason”….THE INCOMPETENT MANNER AND POLICIES THAT LENDERS HAVE IN PLACE TO ATTEMPT TO DISPOSE OF THESE PROPERTIES and their abusive tactics to homeowners. Loan sharking has been made legal!! What is happening on Main Street across this Country is “a crying shame”— We Have a Nationwide Serious Problem Here. All the economists that I’ve listened to, I’m sure are highly intelligent people, but they are driven by statistics, and when statistics are skewed… then the policies have no substance…and what is wrong and untruthful, it then becomes “what the market will bear” and “supply/demand” economy. I believe in Capitalism and their many opportunities for so many. The Real Estate market and its many derivatives, as well as the stock market and the entire financial industry is at the mercy of a very few. Insider trading in the Real Estate and financial industry—of course!

This is My story—every Realtor has one…

I have been attempting to do a short sale locally with Countrywide Mortgage from Simi Valley, California. The people owe $329,000.. On August 26, 2007, I listed the property for $248,900. After doing a Market Analysis, and looking at all the options, we decided to do a short sale…“subject to the sellers’ lender approving the short sale and forgiveness of debt”. I immediately contacted Countrywide Mortgage. The automated phone system keeps you in a web of circles for hours, “we are attempting to collect a debt” and after many calls, I am directed to the “home retention department”. Why is it called a “home retention department when it is “anything but”. Anyway, I gathered all the sellers’ monthly income and expenses, hardship letter, and copy of the listing, bank statements, and an Authorization Letter for the lender to release information to me.

And on September 4, 2007, I faxed them everything I had. THEY SAID THAT THEY COULD NOT DO ANYTHING UNTIL WE HAD AN OFFER. After two months of various methods of weekly advertising and many showings, I had no offers. We then decided to reduce it to $227,900. Again, many, many appointments….I received three written offers within a month…..the first one….no money down—this property is a two family—the buyer would qualify if it was a single family—but not a two family—“gee”, I said to myself….three years ago I had a buyer who closed on two properties; a three family and a four family with no money down…. the same week, and he had bought another, six months earlier with no money down!

The second offer….the people got tired of waiting for Countrywide to make their decision after about three weeks…and the third offer was a cash sale…. the buyers waited and waited. Countrywide told me that they ordered the appraisal…Ok, we should know in a few days…I received a call from two separate Realtors…to look at the property….I thought they were going to do the BPO, Broker Price Opinion…..oh…no…their job was simply to take interior and exterior photos and then they would e-mail them to McCaffrey Properties, LLC from Cicero, New York. All this for $20.00 TWENTY DOLLARS. They then would do an “Internal BPO”…OK, how can they do an “internal BPO”….that’s like a Doctor doing “an internal” on one patient and diagnosing another patient with that information. What do they know about Attleboro? In fact, they do not have a telephone number or an address on their web-site. The only way I was able to reach them is by fax, saying that I am interested in doing work for them. They e-mailed me back with their phone number. Are these people real estate appraisers….lawyers, investors, organized crime or what?….and even a Real Estate appraiser cannot do a proper job without being familiar with the neighborhood…and “the local market place”.

After 5 months, the “negotiator”, came back with a counter offer of $307,500.00. “These people must be on something very strong and illegal”! “This property will end up in foreclosure, abandoned and in eight months, it will be worth $100,000. or even less….in the early ‘90’s, bank owned properties similar to this were selling for $25,000.-$40,000.” I heard that it generally costs the lender $65,000. to go through a foreclosure auction.

The people who were in charge in the late 80’s and early 90’s— did a great job—at least you could talk to the people who could make the decisions—now “they keep spinning you around”! There is no direct line, no direct fax, and no direct e-mail with the negotiator. The person that finally answers the phone—I’ve spoken to at least 12 of them…will then e-mail the negotiator and then you have to wait for him/her to call you back. WHY ALL THIS SHIELD OF PROTECTION and alienation….and “the beat goes on”. And this is called the “Home Retention Department.”

After heavy discussions with Countrywide, they agreed to send a third person to the property. This time they sent a local Realtor to do a BPO. Another two weeks went by…..I get a second counter offer of $268,500 and they gave me a list of documents that they still wanted… 90% of them, I had already given them on September 4th, such as the hardship letter and Authorization letter, but they could not find it….

A little angry with Countrywide, I called the seller…she came in the following morning at 10:00AM. to help put together the rest of the documents that was required, 32 documents (numbered 1-32kl) with a cover sheet indexing and explaining each page. I began to fax to Countrywide from 12:30PM-2:30PM – could not get through. I then called Countrywide and was told that they had one fax line…..I said, “what!… you’ve got one fax machine when you are servicing thousands of properties each day.” Oh, we have lots of fax machines, but only one dedicated line!” “It’s the same thing,” I said…..I’m reminded of the Comcast digital phone commercial…..”Sir, your leg is going to fall off unless you change the dressing or something to that effect.”

I decided to go to the Post Office and Overnight the package, $16.25, with all the documents on 1/10/08. A few days later, I went on-line to track it. They received it the next day at 1:28PM and signed by S. Edwards. About a week later, I called them: They didn’t know where the package was…I told them that S. Edwards signed for it…they did not know who S. Edwards was. “There are a lot of people who work here!”, I was told “Yeah, but do they do anything?”, I said.

On 1/28/08, they still did not have the documents. I called the Realtor who did the BPO, “by the way…what value did you come up with that property that you did the BPO on”? “I don’t have the file in front of me….but I believe it was around $225,000”, was the response. Mind you, at this time, I DID NOT TELL THEM THAT THE FIRST TWO OFFERS WERE DEAD, otherwise the process would have stopped right then and there….and as of now…the cash buyer can no longer wait….

In all seriousness…..IT IS VERY SAD WHAT IS HAPPENING IN THIS COUNTRY….If these properties are not disposed of in a timely manner…inventories continue to build…and regular sellers cannot sell-–property values continue to decline, and decline.

Short Sale

When people are upside down on their mortgage, they cannot refinance or sell it. Any new loan is driven by credit scores, appraisal, and verifiable income. It is interesting that in the last few years, with such a boom, people refinanced, pulled money out….and now with no more money to pull out, people aren’t spending as much….as is now being reported. But more important—many of these sellers have borrowed from family members to try to keep up the payments…high cost of goods and services and less monthly income…it then spirals out of control….there is no way out. One client has borrowed money from her 90 year old parents to help with the mortgage.

Foreclosure

When the lenders have taken possession of the property, the property is now abandoned and in disrepair. This requires a CASH BUYER. A three family that originally sold for $289,000., now vacant and condemned by the City, is listed at $135,000. My buyer offers $50,000. The bank refused the offer. The buyer in checking with his lender was told that if the property was condemned, they could not do the loan. When I told the buyer that it had to be a CASH sale, he said, “Offer them $10,000.00”!!!!!! On a Bank Owned property, we have one buyer who is ready to close and has been waiting 2 months for a Purchase and Sales Agreement to be signed by the bank! He has credit scores above 800…Why is this happening?

A fellow Realtor I am working with…she has four transactions that she has been working on for months and ready to close since November…has now been told by Wells Fargo that they will not close until February because they do not enough help to close these sales. This information was told to me the end of January, 2008. We have lots of buyers and we can’t close because the lenders who hold the loans are holding everything up. Multiply this issue with the 1.3 million Realtors across this country—YOU DO THE MATH…

Another property that is listed for short sale—needs a new septic system—the bank won’t do it….eventually a builder/buyer will pay $80,000. at auction. When it was originally appraised and sold for $360,000., most likely, the bank will buy it back; keep on the market for two years and when it doesn’t sell because now there are frozen pipes, water damage and MOLD IN THE PROPERTY. Mold is “that green stuff that’s a big issue now- a-days” Was it safe 10-15-30 years ago?

I believe…above all else, jobs and then the Real Estate Industry drives the economy. You can’t inject consumer confidence with false information.

Forgive my simplistic view of the issues. I am a very simple person. I am not the Harvard Graduate, who came up with “different computer models” called sub-prime..and this created wealth for certain greedy investors on Wall Street, and from China to Norway. The high level of intelligence of the President and Congress, they created a monster with the infusion of sub-prime lending—“these mortgage backed securities on Wall Street were selling like “hotcakes”…Many countries (185 countries, members of the World Bank) invest and buy this bundled securities and hedge funds for huge profits. The incentive is lend as much money as possible on the street. People were making more and spending more money. “Abondanza” as we say in Italian. I am sure Mr. Mozillo knows what “abondanza” means. He’s got lots of it.

The 7 step solution– A Presidential Initiative to Stabilize the Housing Market
THIS MARKET COULD BE REVERSED IN LESS THAN A YEAR—WITH IMMEDIATE ACTION.

1. A Coalition of Government, Lenders, HUD, FNMA, 1.3 million Realtors, MLS systems, Appraisers
a. A Fair and Uniform Standard to process Short Sales and Bank Owned properties (FUS) thereby quickly selling these properties, preventing the continuing” free-fall of prices.”
• Prevents the existing incompetent and lengthy process—no buyer will not wait 5-6 months for a decision from a lender—he has a signed purchase and sales agreement—during this time the value of that property has continued to drop.
• This is especially important while the home is still occupied

2. HUD—Laws should be reviewed and changed to allow a better market place for consumers.
a. Allowing for seller 2nd mortgages, negotiated between parties a 6%- 8% without fear of fraud. Yet private investors could charge a 1st at 8.99% and the 2nd at 11.99% not long ago, with stated income.
b. Investment Banking and Hedge Funds regulations must always be under careful watch….this is where the real fraud against all of us exists—at the highest levels.
c. A 12 month “interim loan” for properties that are in disrepair—made available for owner occupied and non owner occupied. Rhode Island Housing and MASS housing programs and 203K have so many fees and restrictions that it either disqualifies or discourages so many buyers. CASH BUYERS brings the price lower.

3. Realtors—A vital instrument — 1.3 million Realtors in this Country who are in a strong position to help— using his/her skills to work and coordinate with buyers, sellers and lenders.
4. Upon listing the property and at first contact with “the lender”, the lender must then immediately order two BPO’s or Certified Appraisal of the property by local Realtors and Appraisers who have applied. They are most familiar with the local market and when an offer is presented, if there is more than a 90 day lapse—a time adjustment can quickly be made by the appraiser or the person who did the BPO.
d. The Realtor immediately begins to prepare the package to send to the lender consisting of the listing contract, the authorization letter, bank statements, w-2’s, pay stubs, hardship letter, list of their monthly expenses and debts, etc.
e. If the Realtor is directly involved with the listing, the BPO must be assigned to another Realtor.
f. The lender negotiator must be properly trained and, if possible, have a Real Estate background. The Realtor, listing broker, must have direct communication with the Negotiator.
g. The Negotiator MUST HAVE THE AUTHORITY TO MAKE IMMEDIATE DECISIONS and sign off, just “like an underwriter” for new loans,,, and sign documents….the investor must be made aware of the situation….and all the facts.
h. Direct access to the negotiator by phone, fax, and e-mail is crucial
i. 7 day DECISION turn-around for short sale and foreclosure decisions from when a qualified offer is presented—BY NOW ALL THE WORK HAS BEEN DONE

We have buyers; they will not wait 6 months.

4. MLS systems—BO (bank owned) SS (short sale) on the listing.—many may feel that it promotes BO/SS properties…on the contrary…it identifies these properties, they get sold quickly. When the positive results are reported in MLS, National Association of Realtors and the media, the buyers will gain confidence, continue to buy…. thereby stabilizing property values…. Many buyers have asked me for a list of foreclosed properties…..it is difficult so sort through 1265 listings in my surrounding communities.

5. Lenders
a. One satellite office in each state—servicing all lenders expediting processing the huge volume of Short Sales and Foreclosures—sub-letting space at existing bank location.
b. Lenders to have two departments—When people call, they are immediately directed to the proper departments
i. Home Retention—Should mean home retention
One client, a single parent, has been negotiating with Countrywide for 9 months, has not been able to make mortgage payments on a loan of over $400,000.00. At the end of this 9 month process, they give her this option: $15,000. now, and continue your mortgage payment or we will go to foreclosure. She then called me for help. When she originally bought this house, the down payment came from the sale of her previous home and her mothers home.

-Preventative foreclosure.

• Six months of relief for homeowners who, due to circumstances, cannot make payments, cannot sell, and cannot refinance–yet they have equity in their home from past sales….if we do not do this….everyone is going to be on welfare… This gives homeowners six months to get their house sold. The payments can be added to the principal with no loan modification, no extra fees; IT’S EITHER THIS OR THE PROPERTY GOES TO SHORT SALE OR FORECLOSURE—THE LENDER LOSES MORE—THIS IS A WIN-WIN SITUATION FOR ALL. Homeowners provides list of income and monthly expenses to qualify—there must be a change of income to show hardship.
1. One client’s home was foreclosed yesterday, April 29, 2008 at 9:30AM—last year they were forced to choose: either pay the mortgage or pay for their “Cobra” health insurance—it took 9 months for Social Security to approve their disability. (they both had many medical problems) and could no longer work…when they did work…they were factory workers….
ii. Short sale/ Foreclosure
• Upon listing property, Realtor contacts Lenders immediately and a complete list of required documents be sent to Realtor—and returned to Lender within 10 days, as mentioned earlier. A negotiator is assigned to work with Realtor.
i. Realtor must have direct access to Negotiator w/phone, fax, e-mail instead of automated phone systems making communication impossible.
a. Now you have a qualified buyer—Market value has now been determined—Negotiator must have the authority to sign Purchase and Sales agreement..
b. 7 day DECISION turn-around for short sale and foreclosure decisions from when a qualified offer is presented—BY NOW ALL THE WORK HAS BEEN DONE. 30-45 days total time to close.

6. Mortgage Originators—A little preventative medicine—they should be LICENSED AND PROPERLY trained in taking complete applications, having a full and complete knowledge of their mortgage products and have an overview of mortgage processing, underwriting and closing process.

6. LENDERS for new construction LOANS–PROCEED WITH CAUTION when lending on new housing projects—determine value, salability and current inventory as well.

I believe that, neither Congress, the President, or the new candidates have a clue as to how to resolve this…….and they can not relate so they do not care. I also believe that the CEO’s of all the lenders are making huge mistakes. “Get out of the office for a minute and listen to the people who are dying in the street”. Not just people who bought the 0 down, 80-20, no income verification, but people who have worked for 30-40 years and have lost all their equity….

AND EVEN IF YOU JUST THINK ABOUT THE MONEY—AND NUMBERS, REPORTS, AND CHARTS…..THEN BE SMART ENOUGH TO HAVE A SYSTEM IN PLACE THAT WORKS–EXPEDITE THE SHORT SALES….AND FORECLOSURES…I challenge you….to work with me and others to make this happen.

In closing, let me quote one our greatest Presidents

Abraham Lincoln said “The wealth of a nation lies in the homes of its people.” Then, the reverse is also true….”then the weakness of a nation lies in the lack of homes for its people. We have lots of homes, and we have created such an enormous nightmare “when so many are losing their homes”. Yet, the CEO of Countrywide reported in one writing earned $57 million year. 10 million dollars in stock options, and other unknown income and benefits.

Government and Industry, including lenders must fulfill the needs of the people in a way that it does not make us dependent on government, but independent and secure. By the way, this is also true…in many developing nations….they need food, clothing, and shelter….not weapons…..We pay $80. per hour to laborers from this country to be a laborer in Iraq, when there are millions of able bodied men who would work for $10. per hour in their home towns who would take pride in re-building their own country.

In past elections, everyone promises that they will make a change that benefits all Americans….yet there is no change and the “status quo” remains. The upcoming elections—everyone says “they are the candidate for change and experience”. If we do the same thing over and over again…can we expect different results?

What if the polls were open…and no one showed up to vote? What if the malls opened and no one goes shopping…for a day, for a week? What if April 15th came and no one filed their returns unless they were getting a refund.

What if there was a silent revolution in this country…of the people for the people and by the people? Would things change then….

We ask every Realtor to sign a petition for some relief from “our government “ to help this distressed economy….we are constantly attempting to fix other countries’ problems, when we can’t fix and wont fix our own….for sale signs, for rent signs and abandoned homes on almost every corner. It is easy for government to print more money as they need it…but what do we do?

We ask for immediate laws for lenders to quickly negotiate with homeowners and Realtors. Relief from lenders and “our government “ to help this distressed economy…reduced interest rates, tax cuts, $300.00, without a Fair and Uniform Standard of Procedure does nothing to handle short sales and bank owned property….. does nothing to resolve the real issues.
Just a note: It means nothing for me to get $300. from the stimulus package, because it will cost me $1100. to do my returns.

Update on my story as of February 7, 2008

I received a call from the negotiator yesterday….they finally received the package that I sent on January 10th. They are closing the file until I have another offer—after loosing three buyers; I still do not know what they will accept…

Update as of April 30, 2008. We found another buyer at $206,000. minus $6,000. for buyer closing costs…..he’s been waiting 3 months and now…. has now requested his deposit back.

The house is back on the market at $199,000. I am told by the sellers of 40 Horton St. Attleboro, MA….yesterday that both heating systems need replacement…..which will again reduce the price to I don’t know what…..the next buyer will offer. I showed the house yesterday, many of the windows were open, as I could smell fuel oil….The last prospect asked about the fire escape from the second floor—is it legal? I then faxed a note to the City of Attleboro Building Inspector, Doug Semple. He said that State Building Code requires (current window to be cut a made into a door to a 3X3’ platform and a staircase 3’ wide to another platform and then to grade.

AS A RESULT OF MY INTERVIEW WITH THE BOSTON GLOBE ON THIS ISSUE:

April 28, I received a call from Sasha Rainey, the administrative assistant to the Vice President of Countrywide….she asked for the phone number for 40 Horton St. (The Barbozas) The seller then called me and this is what they offered her after 8 months.

1. A new mortgage of $311,000. plus attorney fees, late fees and interest for the last eight months. (which ads approximately an additional $20,000.)
2. A rate of 5.5%/fixed for 30 years/paying interest only for the first 5 years
3. The payments would be about $2200. a month

The seller has moved out of the property. It will need 2 heating systems before next winter and a lot of interior repair and now that the fire escape issue has come to my attention…..I MUST DISCLOSE THAT A LEGAL FIRE ESCAPE MUST BE INSTALLED PRIOR TO CLOSING, OR MONEY HELD IN ESCROW… Current value of the property? We’ll see what the next offer brings.

These people at Countrywide are insane…..they must be on drugs….they should be in jail.

Now, I have to go and show 40 Horton St. again in 15 minutes.

Thank you….this is everyone’s battle…..
I have sent this letter to at least 150 people and organizations; the President, Federal Rserve, NAR, Congressmen and Senators, Fox News, CNN, radio stations, The Boston Globe, and other newspapers, etc.—
I have also started a petition of local Realtors
Someone has to listen—I would love to have a hearing before Congress and ask Mr. Mozillo a few questions.
A petition to our leaders–We are the voice of 1.3 million Realtors

Rose Spoltore 16 E. Washington St. North Attleboro, MA. 508-643-1144 BB904758
Concetta I Golant 16 Washington St. North Attleboro, MA. 508-643-1144 BB902376
Stacey Susi 16 East Washing