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Stop Foreclosures? Whom Will That Help?

Thu, 04 Dec 2008 15:42:00 CST

Everyday we hear more and more that the government may "stop foreclosures" - and when I mean government, I don't mean Bill White and I don't mean Paul Bettencourt or the County Recorder.

I mean Fat Sam.

So, now, I own a piece of bad debt - maybe. Maybe the borrower will pay, work it out, can come to the table with something.

Then, Fat Sam steps in and says - no, we may help the homeowner get out of the mess.

So, Joe Homeowner does what?

Nothing.

Makes your debt his lowest priority, the longer he waits the more he can expect from his generous Uncle.

And maybe, it will work out well for the note holder.

And maybe, it won't.

As a homeowner, I have made my last mortgage payment. My rich uncle has added me to his bailout.

Too bad, suckers.

Our Election Pick...

Fri, 31 Oct 2008 08:43:00 CST

I know most of you waited with baited breath to learn whom we would select as our candidate for President.

The answer, John McCain. Not that it matters here in Texas, where we believe Sen. McCain will win easily.

In big picture terms, the choice was easy. We are clearly in a crisis. Sen. McCain is probably the only guy in Washington with whom we would be willing to sit through a crisis.

He has done it before.

His opponent speaks marvelously and makes us feel comfortable. But as the sheen wears off, we realize, he just has not done very much.

We put aside any notions of policy for housing, keeping interest rates low and spurring economic growth.

We ignore the characters around whom either of them pal.

We just trust Sen. McCain based on what he has done in his life. Anything else is a gamble not worth taking.

How to Save the Real Estate Market...

Thu, 28 Aug 2008 22:20:00 CST

...in two paragraphs or fewer.

And I will make them short ones.

Cut property taxes and assessments right now.

Free up capital by not only allowing but encouraging individuals to lend directly in the real estate market.

I will address the "individual lending" model in a further post.

But, on to my "cut cut cut" for property taxes.

We have already seen that the tax cuts of the last several years have helped Houston avoid the worst of the real estate bloodbath. We avoided any downturn at all far longer than other markets - including ones that had similar moderate price increases in the first half of the decade.

So, we know cutting taxes helps make real estate affordable on the margins and is capitalized in value, so why not just take this "great advice" and just do it?

It would certainly cause a few other issues such as "how can we afford all the government services if we lower taxes?" But this intriguing question was not one I promised to tackle in two paragraphs.

Maybe a rephrasing of the question should be: "Are we as citizens so happy with each and every expenditures of our local governments, and particularly our schools, that we should allow our largest asset to continually depreciate?"

Hmmm. Guessing not a lot of "aye"'s on that one.

The Nay's have it.

If I may add a third suggestion, cut government spending.

Fannie and Freddie: From Our Friends to Our Masters

Fri, 25 Jul 2008 10:10:00 CST

As Houston realtors, lenders and real estate investors, readers of HoustonRealNews believe we perform some pretty important functions in generating wealth for Houston homeowners.

With the bailout of Fannie and Freddie, President Bush and Congress are telling is we just don't matter that much.

Fannie and Freddie started as a service to the financial markets to help real estate transact - providing liquid MONEY for new homeowners trying to purchase and existing homeowners (and builders) trying to sell.

Today, we learn they are "too big to fail". See, if they fail, the real estate market will lose the money that helps it transact so efficiently.

We understand the argument.

But we know more. We know the hard-working men and women in the real estate industry can do better. We know that if unshackled by competition from government sponsored entities, our constituents, our readers would find a way to help real estate transact. We know the market better than Fannie and Freddie ever could.

We see the houses, we meet the people involved in the transactions. We know our neighborhoods, we know their problems and we know their gems.

Fannie and Freddie did a fantastic job of consolidating risk to the American taxpayer - also us by the way - and handing the taxpayer guarantees to Japanese insurers, Arab Oil Sheikhs, Wall Street and hedge funds to purchase mortgages.

Haven't we learned the lesson that Sumitomo Bank's Mortgage Backed Securities department has no real knowledge of Fondren, or houses in it?

That an appraiser's "best estimate" of value may no longer effectively collaterize debt?

That you, our readers, know more than an algorithm could ever tell a bank when it comes to evaluating the condition of a house and a borrower? [Full disclosure - our Publisher writes and publishes those algorithms and results.]

So, we now learn that our experience will now be subsidizing an organization that is "too big to fail" - instead of allowing us to build our own system based on our value, our expertise.

The federal bailout of Fannie and Freddie shows us who the government thinks really matters in real estate. And I can assure you, its not us - the people who do the work.

Let them fail. Let us succeed and make it better.

Not Real-ty Trac?

Fri, 27 Jun 2008 13:30:00 CST

[Full Disclosure: HRN owns the domain HotHoustonHouses.com where foreclosures, preforeclosure, motivated seller and wholesale house leads are sold.]

Once in a while, a reporter almost gets it right.

Earlier this month, Realty Trac statistics were questioned by the CNBC reporter for the segment "RealtyCheck ."

The reporter critiques the methodology as double-counting (although it may really be quadruple counting in some cases). She does a pretty good job of summarizing the impetus for the review:

Are these numbers from Irvine, California-based RealtyTrac to be believed? Are they in fact hyping the numbers because part of their services include listing houses for sale, and buyers looking to get a deal on properties in distress--pay $49.95 a month to subscribe to RealtyTrac?But what is wrong with that? So, as long as readers know that RealtyTrac is selling the info, why shouldn't they take it with a grain of salt?

RealtyTrac's Rick Shraga, seemingly always accessible to the media, went so far as to nearly affirm the critique, suggesting that pending improvements would allow them to remove the double-counting criticism.

A job well done by the reporter?

This line left us perplexed:

"Were there 176,137 foreclosures in May? Nope. A house can go through several permutations: first the default, then the bank repossession, then the auction..."

Are we really to believe that banks first repossess and then have an auction?

I think I will stay away from that bank next time I get a loan.

Uh Oh. Here Comes the Government

Tue, 27 May 2008 09:04:00 CST

The housing bill is coming. The housing bill is coming.

What does it mean to us? Well, if you are in over your head, then the government "might" help you by asking your lender to take a hit and insuring the resulting loan.

Our bet is that few lenders agree to this - sometimes because its "bad business."

Congress has also issued warnings that compulsory conversion will be a next step if voluntary participation by mortgage servicers isn't deemed adequate by the seers in Washington.

But "bad business" would be the smallest of obstacles when it exists. When it doesn't exist, then giving junk loans over to the government to insure is by definition "good business" - which is probably bad for us taxpayers.

[This scenario is often referred to as Moral Hazard. Or, for policy-minded folks, "unintended consequences" of giving away money - somebody takes it.]

So, once past the good business-bad business issue, we come into the real question. Mortgage servicers represent multiple interests. Asking for a "settlement" on a loan is a negotiation amongst multiple lenders.

Getting multiple lenders to agree, when each has a different claim to the underlying asset is not an easy task.

However, if the loan is BAD ENOUGH (see above under "good business"), we think the parties can agree to hand it over to the feds.

Or, in reality, the taxpayers.

Short Sales Galore...

Mon, 21 Apr 2008 22:53:00 CST

The WSJ noted the vast increase in the number of short sales occurring - even through traditional realtors.

According to a story published Friday, short sales now account for 18% of home sales.

Having worked the short sale market extensively, we know this number to be high.

However, there is no question that the ability to close short sales is essential for any real estate operator right now.

[Full Disclosure: HoustonRealNews receives a LOT of short sale leads from realtors who do not know how to handle them and from homeowners themselves. We have a short sale leads service coming online shortly.]

Lifestyles Event on Saturday Morning

Thu, 03 Apr 2008 13:05:00 CST

We had a misprint on our featured event for this Saturday with Lifestyles.

Its not on Saturday evening, but Saturday from 9 to 11 AM. Please spend your first Saturday of this month with Lifestyles Unlimited!!!

Finally, Some Good News...

Thu, 27 Mar 2008 16:54:00 CST

The rest of the bad news aside, let's take a moment to read some good news:

None of this, however, adequately explains Houston's ascendancy. Other cities enjoy better locations for shipping, richer agricultural resources, or similar proximity to oil fields. The answer, I have come to understand as I have worked in Houston as a reporter and consultant, echoes something that the late Soichiro Honda once told me: "More important than gold and diamonds are people." This critical resource, more than anything, accounts for Houston's headlong drive toward becoming not only the leading city of Texas and the South, but also a player on the global scene: it is emerging as one of the world's great cities. That's right - a great read about Houston and pause for thought to all of us wondering when we will rebound.

Calendar Policy Changing

Thu, 27 Mar 2008 16:52:00 CST

Current customers of HRN's Calendar can ignore this message. Past customers please note, the new rate for the calendar has increased by 33% for events posted April 2008 and forward.

Thank you for your support and stay tuned here for more real estate news.