The Realty Butler Blog

What’s Up with the Arizona Real Estate Market?

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Mon, 23 May 2011 20:57:00 +0000

“How is the nation’s ‘foreclosure problem’ coming along?” “What is the Arizona real estate market doing right now?”
“What is it likely to do in the near future?”

These are the questions that everyone wants to know. Real estate values are of key importance for many in

America

, even those who don’t own homes. Politicians in Washington have full responsibility for inflating the real estate bubble that led to the housing crash that brought down the American economy, and many are now wondering: How are their efforts going to clean up the mess?” So how is the market? How are the problem-solving legislative measures playing out? Let us just look and see!

The

foreclosure problem is still in full swing, and shows little signs of abating. There are still millions of Americans who are 90 days or more late on their mortgages, whose lenders have not “foreclosing” on them. There are still many millions more properties that banks HAVE foreclosed on, but have not released to the market for sale as REO properties. The “foreclosure situation” is not at all different from 2007, 2008, 2009, 2010, and so far in 2011. When one understands the legislation that was designed to “fix” the housing crisis, everything becomes much clearer.

When one examines the actual legislation designed to combat the foreclosure crisis, and looks at the now 3 year results of these programs, the conclusion is inescapable: the legislation, wrangling, law suites, hearings, and administrative orders were NOT designed to STOP the foreclosure crisis, just SLOW IT WAAAAAYYYYY DOWN.

Everyone knows the bottom line beneath the hype: if you don’t pay your mortgage, you will, eventually, be forced out. There is no “saving your home”. There is only leaving it gracefully, or leaving it under duress. The only other question is, “How long can I stay before they kick me out?” It has indeed come to this.

The stark reality is this: the real estate market will NOT return to “normal” until MOST of all underwater mortgages are “liquidated.” Gone. The market cannot be anywhere near normal, when more than have of all homeowners are underwater on their mortgages.

Right now, we are dealing with a “command & control” housing market. The free market is NOT working at all. The laws of “supply and demand” have disappeared, to be replaced by panels of Washington housing experts, who have command and control over the nations largest lenders (easy, since the government already owns most mortgages anyway) to dictate how many people to foreclose on per month, how many of those homes will be placed on the market each month, etc. The plan is to have a steady, but not rising, stream of foreclosures. Most analysts predict that with the current number of homes in the “foreclosure pipeline,” and the “speed” at which they are being released, our mortgage crisis should be over by about 2021. Not kidding.

The only other option is to actually “speed up” the foreclosure process, which would result in massive amounts of people being “dislocated,” so to speak. Although some, myself included, have advocated this more direct approach to getting rid of the problem much more quickly, the pain would be intense, and the economy and people’s lives would be severely disrupted. This would probably be a period of intense misery, lasting about 2 – 4 years.

What does this mean for the housing markets across the nation and Arizona’s in particular? The evidence suggests that we are probably at, or near, the bottom of the market, and have been for a few years. The problem is, we’re likely to be here for quite some time, as the powers that be very slowly foreclose on people and release their homes onto the market, in just sufficient quantities to keep prices from falling any more. This has already been happening for the last 3 years. It looks as though it will keep happening for many years to come.

Have Questions? Answers are Always Free.

By Phone: (602) 499-4798

Or by Email: therealtybutler@gmail.com

*Disclaimer: I am NOT an attorney, and neither do I play one on TV or the Internet. None of my opinions should be construed as specific legal advice. If you need specific legal advice regarding your personal situation, please ask.

IMPORTANT NOTICE: West USA Realty, Inc. is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. ***If you stop paying your mortgage, you could lose your home and damage your credit rating. ***

Arizona Short Sales: HAFA Part I

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Tue, 19 Oct 2010 22:29:00 +0000

It's been a little while since I've done a comprehensive overview of the short sale process, and certain federal legislation and lending policies have changed the landscape some. With that in mind, I'll fully review the newest short sale strategy, HAFA. By now, I'm sure you know that HAFA stands for "Home Affordable Foreclosure Alternatives". HAFA is Part II of the government's failed HAMP loan modification program. I'm sure you've read all over the media that the individual homeowner has about a 17% chance of actually getting a loan modification. Also remember that included in that 17% figure are quite a few homeowners whose loans were indeed successfully modified, but to a HIGHER PAYMENT. How's that "success" working for ya?

What happens (or will happen once the bungled foreclosure legal process is ironed out) to the other 83% whose loan modifications are denied? If they don't know their options, and they don't contact their lenders to find out their options, they'll be foreclosed upon and evicted. Happens hundreds of times a day. Unfortunately, my company evicts people also. It's not a pleasant task.

If (when) your loan modification fails, you need to know your options. Approximately 87% of all financial institutions are "signatories" to the Treasury Department's foreclosure mitigation programs. As such, they are legally required to follow the guidelines that Treasury publishes for these programs. You simply need to know that they exist, and demand access. Here a link to all Making Home Affordable participating loan servicers.

One trick that loan servicers will use is to put homeowners in "a" loan mod program, but not "the" federal government's program. This way, they can play by their own rules. In the same way, many homeowners will ask their lender for a HAFA short sale, and will be offered something else instead. Whether you're asking for a HAMP loan mod, or a HAFA Short Sale, you'll need to use the correct form for application. Here is the correct HAMP application for a loan modification, if your lender is a participating servicer. And here is the correct HAFA application for a short sale. Use these resources to make sure you get into the right program, that offers the most incentives and homeowner protections.

Stay tuned for our next installment: Qualifying for, and staying within, HAFA and HAMP guidelines.

Allen D. Butler, GRI, CDPE, MSSC, A-REO

As always, we love to take your calls and emails with questions about foreclosure, cash for keys, short sales, loan modifications, and deeds in lieu of foreclosure. Consultations and default services are offered at no cost to our homeowner clients. Seriously.

Call: (602) 499-4798

Email: therealtybutler@gmail

Cash for Keys: Yes, you must actually live there.

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Fri, 01 Oct 2010 21:35:00 +0000

Hello Again, Folks!

I'm back with more cash for keys information, as I've gotten a lot of questions about this one aspect: "what if I move out before the foreclosure occurs? Can I still get cash for keys?" The answer is an unequivocal NO. Let me explain.

If you move out of the home, it is then vacant. Lenders simply will not pay you cash for keys if you're already gone and your stuff is already gone. Why would they? They have what they want. A vacant home that just needs cleaned up and gotten ready for market. So, let me be clear (as Obama says), IF YOU MOVE OUT BEFORE THE FORECLOSURE DATE YOU WILL NOT GET CASH FOR KEYS. Now hang in with me here for a sec, as this can get a little complicated.

See, those last, combative conversations you had with your lender before the foreclosure occurred? You know, the one you had shortly after some local attorneys posted a foreclosure sale notice on your door? In that conversation, you probably heard something like this:

"Yes sir. I'm sorry, but your loan modification has been denied, and the foreclosure auction can no longer be postponed. The is coming straight from the investor. You'll need to pack up all your personal belongings and be out of the home before the foreclosure, because the sheriff WILL come to your home and change your locks. "

"No, sir. We do not offer cash for keys to help you move. I'm truly sorry."

The problem with this is that it is simply not true. Let me repeat that: You have been misled. Can the sheriff come to your home and change your locks and remove your stuff? Absolutely, but only after a month of litigation and a judge's court order is issued. You cannot, under any circumstances, be forced out of your home in 5 days. It is simply not gonna happen. Lender representatives will mislead you all day long to the contrary, but do not be fooled!

Let us discuss the spirit of the law. It is true that once the foreclosure auction occurs, you no longer own the home, and are now an "illegal occupant". That does not mean you have to leave right away, it simply means that you should. If you are determined to get cash for keys, or you truly need cash for keys in order to move, you'll need to stay put! In other words, you'll have to violate the spirit of the law, in order to reap the benefits of having done so . . .kinda strange, huh? Kinda like the old line from you lender: "We can't offer you help until you stop making your payments."

So, if you want the cash for keys, your only option is to stay in the home until a lender representative contacts you. Only then will you be offered cash for keys. Referring back to a previous article I wrote, remember to make it really easy for the lender's rep to contact you. Best practice is to post your own notice on the front door that says something like this:

Dear Lender Representative,

My name is YOUR NAME HERE. I am currently residing in this property, whose address is 12345 N 12th Court Patch, CA. If you have any questions about this home and its occupancy status, please contact me directly by one of the methods identified below:

Phone: 555-555-5555
Fax: 555-556-6666
Email: me@mymail.com

Thank you,

MY NAME

MY SIGNATURE

I've provided links below to my other Cash For Keys articles, and have included a fillable, printable, pdf copy of the above notice. Just fill it out, print it, and tape it on your door with clear tape. Good luck out there!

Allen

Get A Copy of the POSTED NOTICE

Cash for Keys Part I
Cash for Keys Part II
Cash for Keys Part III

Lenders just say "NO" to Foreclosure & Short Sale Extensions

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Fri, 01 Oct 2010 05:51:00 +0000

The media has been reporting lately that many lenders are drawing deeper, more delible lines in the sand in regards to foreclosure postponements and short sale extensions, and are ramping up their foreclosure sales. This is true, kinda.

Over the last 6 months, many of the newly assigned foreclosure homes we visited were occupied by homeowners who were "waiting to hear back" from their lenders about their loan modifications. Unfortunately, not everyone reads my blog, so they don't know that waiting for your lender to call you is like waiting to get struck by lightning: you could even place yourself in the right place, at the right time (sitting by the phone?), and still have little chance of getting struck. . .er. . .called. Banks do not call people unless they want money. Period. If you are waiting on your lender to call you with an update on your loan modification, stop it. Call them, repeatedly. It is indeed a fact that if you don't stay on top of them and call at least once or twice a week to keep them on track, they will ultimately foreclose on you.

We are indeed witnessing many loan modification failures, and the "failures" do indeed seem to be conspicuously timed. There are also rumors that the GSEs have begun pushing their loan servicers to clear out the pipelines of back-logged foreclosure processing. It is also likely that many lenders may be foreclosing in an effort to clear up their books as their fiscal year end approaches. Whatever the reasons, foreclosures are stepping up, so don't be surprised if you get a knock on your door. . .
In regards to short sales, and lenders not granting extensions, we haven't seen this problem. Perhaps because we plan and execute our short sales flawlessly, we haven't needed to ask for extensions? I'll need to check with my staff and get back to you with the consensus.

In the meanwhile, call your lender!

Allen

As always, we love to take your calls and emails with questions about foreclosure, cash for keys, short sales, loan modifications, and deeds in lieu of foreclosure. Consultations and default services are offered at no cost to our homeowner clients. Seriously.

Call: (602) 499-4798

Email: therealtybutler@gmail

Cash For Keys: Even More Info

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Wed, 15 Sep 2010 20:53:00 +0000

Ok. This is apparently a hot, hot, topic. I've only written one article and posted one podcast on this subject, and I have gotten so many calls, I don't know what to do with them. Don't get me wrong, I'm delighted to help anyone who calls me or emails me. It's the sheer volume that scares me! Also, being a person with a teaching degree, I figure that if I'm getting lots of calls for more information, I probably didn't do my job very well. Therefore, after having answered lots of varied questions in lots of different scenarios, I can offer some more insight. As more people contact me and run through more experiences, I'll keep you all updated periodically about the latest developments in "Cash for Keys" or "Relocation Assistance" (if you want to sound smart).

Let's review just a bit, some of the highlights of the Cash for Keys Programs:

1.) Cash for Keys offers are available to both former owners and tenants.
2.) Cash for Keys offers are initiated by lenders usually within 5-15 days after a foreclosure auction sale.
3.) Cash for Keys offers are usually initiated by real estate agents who are hired by the lender.
4.) Cash for Keys offers are usually not offered for more than a 30 day move-out.
5.) Cash for Keys offer amounts may reflect the value of the home.
6.) Cash for Keys offers are usually between $1000 and $3000 for a 15 day move-out.

Some interesting questions have been asked about occupancy and how it relates to Cash for Keys. For example, many people have asked, "What if I move out before a lender representative offers the Cash for Keys?"

In this situation, there are several things that can happen. First, we must realize that the lender wants possession of the home. They intend to sell it, and can't if you live in it. So, if you move out before the lender makes a Cash for Keys offer, you may be rejected. If I, as a lender representative, roll up to your home and ascertain that it is vacant, why would I offer you Cash for Keys? In fact, I wouldn't really have any way to contact you, and no motivation to do so. I have what I want: a vacant house that I can put on the market and sell.

Let us say, for the sake of discussion, that I roll up to your home and see the yard well kept, the blinds or shades drawn, and I can't clearly ascertain whether someone is living there or not. I'm going to post a notice on the home advising the occupant to contact me as soon as possible. Now, here's where it gets interesting, so pay attention:

A suggestion was made that a certain homeowner might move out, make the place appear to be occupied, and post a notice right on the door that says something to this effect,

"Dear Lender Representative,

My name is Franklin DeMint. I am the occupant of this home. Please contact me with any questions: 555-555-5555."

Theoretically, this might indeed work. You could move out, the lender rep would contact you, you would make an agreement, sign the docs electronically or fax them, then meet at the home on the agreed upon move out date and collect the money. The agent did not inspect the property up front, so he or she has no idea the property was vacant all along. Neat trick, right?

Well, it could be, depending upon the agent or lender rep. In the case of my company, and the services we provide to our lenders? Not gonna happen. See, I'm all for helping people out, and I love to be able to work out a good Cash for Keys deal with a family who needs it. The problem is, I have to protect my clients. In this case, it is indeed the lender. I feel it is my duty to inspect the property up front, at the time of the agreement, so I can report to the lender the condition of their asset (the home) both at the time of initial contact and at the time of vacancy. A LOT can and HAS happened between these time frames, none of it pretty.

I also feel it is my duty to work with the former homeowner or tenant to protect them against further damages by my lender clients. If a homeowner does not work with me, and under my guidance, they may inadvertantly remove items or fixtures that legally don't belong to them. I would hate for them to be prosecuted for property damage after the fact. It can and does happen.

On a final note for now, I'll identify the general guidelines for what a person can and can't take from the home when they leave:

1.) You MAY take your washer, dryer, and refrigerator.
2.) You MUST take all personal property and trash or debris from the home.
3.) You MAY NOT take anything that is "fixed" to the home by nail, bolt, or screw.

Examples of items you MAY NOT take from the home include:
Ceiling Fans                    Light Fixtures                    Cabinets
Range/Ovens                  Built-In Microwaves          Blinds
AC Units                        Water Heaters                   Dishwashers
Disposal Units                 Pool Equipment                 Flooring
Built-In Speakers            Built-In BBQs                    Plumbing Fixtures

Hope that was helpful!

Allen Butler

HUD: "Hair of the Dog" Nepotism as Foreclosure Blight Mitigation

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Thu, 02 Sep 2010 16:10:00 +0000

I was literally stunned today when I learned that HUD and many of the largest sevicing lenders have partnered to expand the government's "First Look" program through the Neighborhood Stabilization Programs (NSPs) in place around the country. These programs are exactly the wrong prescription at precisely the wrong time. The First Look program and NSPs are certainly not new, they further erode housing stability, and prescribe a shot of tequila after a night of binge drinking.

The First look program came into being around the beginning of 2010, and was a result of home buyers not being able to compete with investors in the open market. Back in the spring, there were very few homes on the market for sale in Arizona, and the Home Buyer Tax Credit was pumping along, building buyer demand. The problem was, every time a home came onto the market, a cash investor would offer over the asking price, and financed home purchasers simply could not compete. Because of appraisal restrictions, financed buyers cannot pay more for a home than it will appraise for. Cash buyers can pay whatever they want. This worked great for lenders and investors. The lenders got more than the property was even worth, and investors got rental properties to put back on the market. (It is worth noting here that many families are experiencing foreclosure, and cannot find a rental home on their markets. The market needs more rentals.)

Housing advocacy groups denounced this investor glut as a travesty of social justice that needed to be stopped, so that more homeowners could buy homes (with borrowed money and more "sub-prime," low down payment loans, by the way. Sound familiar?). Government responded with the First Look program. The program was deceptively simple: only owner-occupied purchasers would be allowed to make offers on properties within the first 15 days of being on the open market. This would presumably ensure that homeowners got "first dibs" on properties for sale. In reality, the program had limited effect, as it was shortly thereafter that banks glutted the market with more homes, making the point kinda moot.

NSPs came into being to help foreclosure blight. An NSP is simply a local, county, or state community housing authority that has been given millions of dollars in tax-payer money from the Feds to buy foreclosed homes. What will they do with these homes? They can fix them up and resell them, or they can turn them into section 8 housing. You don't really need to use your imagination to figure out which will actually happen. Even before this introduction of a strong and prominent role for NSPs, the "unintended?" consequences have already ensued.

The combination of the First Look program with the NSPs has produced the glaring problem of government nepotism. See, now when a property comes to market, the NSPs are automatically notified of the property, and are given the right to purchase the property before anyone else. Please note that when I say "before anyone else," I am NOT talking about other investors. I'm actually talking about homeowners. The reality of the program is this: if an NSP wants the property, it gets the property, no questions asked.

Allow me to provide an example: A property comes onto the market. It is a nice home at a great price, and people want it. So, let's say that 5 potential buyers (these are owner-occupants) arrive with offers on the property. The lender begins to negotiate the price as high as they can get, and let us suggest that a particular buyer is willing to pay $120,000 for this home. Done deal, right? Not so fast. An NSP has also noticed the home, and would like to purchase it for their rental program. So the NSP puts in an offer of $90,000. What happens next is simply stunning: all potential private purchasers are kicked to the curb, and the home is sold to the NSP at the reduced price. In fact, NSPs are mandated to be able to purchase these homes for 1% less than market value.
The combination of these two programs is deadly stuff to the housing maket. The anti-competition that these programs engender, along with the sizeable expansion of Section 8 housing is NOT was this market needs.

Allen

After Foreclosure: Cash for Keys Dos and Don'ts

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Wed, 01 Sep 2010 00:06:00 +0000

Hello Again, Folks!

There must not be very much information out on the internet about the subject of cash for keys or relocation assistance, because after I wrote that last article, I got calls from around the country, and even from business owners who were being offered cash for keys on commercial properties. So, I thought that you all would appreciate some more information on the subject of cash for keys in Arizona, or cash for keys in general, as most banks have similar policies.

On a special note, I was able to wrestle Johnson Smith, a noted cash for keys expert, into talking with us about cash for keys, and how he handles these situations for banks from around the country.

Let's hear what he has to say:

A Further Discussion on Cash for Keys

Short Sale Negotiations: After the Offer

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Mon, 16 Aug 2010 20:52:00 +0000

I've written many articles over the years about short sales and how they work. We've spent a considerable amount of time detailing how a short sale is packaged, who is qualified, and what the benefits and risks are to both the homeowner and the lender. This time we will detail the process of the short sale from the time an offer is accepted on the home, until time it closes.

The first thing that we need to realize is that once all of the borrower's financials are collected and packaged, nothing can be done with them until an offer is received and executed on the home. Many homeowners are anxious to get their package in to their lenders, in order to get processing started. However, what most homeowners don't realize is that the lender can not process any paperwork until a fully executed offer is received on the home. There are, fact, very few lenders who will even respond to communications without an offer on the table. So, the first thing we need to realize is that short sale processing does not begin until an offer is fully executed on the home.

Once a completed short sale package is sent to the borrower's lender(s), there are a series of steps that must be completed, and involve no less than six individual entities or departments.

The first step that the lender will take is to review the package carefully for any missing or incomplete documents. This is called the document preparation stage. The stage usually takes from 10 to 15 days to complete, and contact will be made with the listing agent regarding any missing or incomplete documents. This is also the stage at which an order will be placed by the servicing lender to determine fair market value of the home with an independent opinion of value, performed by either a licensed appraiser, or a licensed real estate agent. Once this valuation and document review is complete, the file will move to a "negotiator" or "underwriter".

Once the file has been cleared for completion, it is sent to an underwriter or negotiator for review. This person's job is to review the package carefully to determine several key details:

a.) Is all documentation complete and up to date?

b.) Does the financial package demonstrate a valid hardship of some kind?

c.) Is the amount of the offer sufficient for market value?

d.) Is the amount of the offer of within the lenders purview to accept?

e.) Is there a mortgage insurer on the file, and will they sign off on the package?

f.) Who is the "investor" of the actual note, and will they need to sign off on the package?

g.) What are the laws governing foreclosure in the borrower's state.

h.) Is there a 2nd Lien Holder, and how much money do they want to clear their lien?

i.) Who is the buyer? Are they qualified? Are they asking for concessions? Which concessions are permissable per the lender's internal policies?

j.) What are the taxes due, and how much will we assume?

k.) Is there an HOA? Are they owed any back payments?

These are just some of the details that must be examined carefully to assess if the deal is plausable for the lender to perform. This "negotiation" process usually takes 2-3 weeks, and contact between the borrower's lender and their real estate agent should be frequent, accurately tracked, and reported. Remember, if there is also a 2nd lien holder, they also will need to complete this entire process, and the amount of parties involved doubles instantly.

The negotiation process will end with either an approval that all parties agree to, or the short sale is denied, and other options may be examined, or the home may go to foreclosure. In the event that the short sale is approved, a new series of processes will start. This is generally known as the escrow phase.

During the escrow phase is where tradition real estate transaction rules begin. It is during this time that the buyer will conduct their home inspections, process their loan file, if any, and attempt to close the deal within the time allowed by the contract or short sale authorization. The first step here is inspections.

During the inspection phase of escrow, the buyer will hire an independant property inspection company to give an opinion on the overall condition of the home and its various mechanical systems. These inspections are important for a buyer, as they can affect the buyer's loan processing, and reveal problems that may affect their purchase decision. For example, if the home inspections reveal that the roof is leaking and needs repairs, it is also likely that the buyer's lender will discover this problem when they do an appraisal of the property. If the buyer is an FHA buyer, they may not be able to complete the purchase without the repairs being completed, as FHA will not insure a home with this problem. Or, perhaps it is revealed that the home's foundation is cracked, and the repairs will be "astronomically" expensive. The buyer may decide they don't want the home at all. And they are perfectly in their right to do so, provided they indicate this in writing to the seller before their allotted inspection period expires. However, with a short sale transaction, this process can become complicated. . .

In a short sale transaction, it should be generally understood that the homeowner is in "financial straits," or would not be short selling in the first place. This could mean that if the buyer does discover defects in the home that will necessitate repairs being made, the seller of the home will probably not be able to financially cover the costs of repair. Therefore, a buyer of a short sale should be prepared to truly buy a home "as is." If it is discovered that there is something wrong with the home, the buyer will have to either pay for the repairs themselves, or perhaps, they can ask the seller's lender to pay for the repairs. This would however, require some pre-planning on the part of the seller and their real estate agent.

One of our new strategies at The Realty Butler has been to work with home sellers to get an inspection on the home before it even goes up for sale. This way, any major malfunctions will be able to be addressed and priced for repair. If this is done in advance, the homeowner and agent, working together, can put together repair estimates and photographic evidence of problems that may possibly inhibit the sale. This data is then presented with the buyer's offer, indicating that as the homeowner has no money, and the buyer also has no "spare money," for the repairs, the lender will have to authorize the repairs, and pay for them, if they want to short sale the home. If they eventually foreclose on the home, they'll have to do the repairs anyway in order to sell it then.

These are the major hurdles for both parties to the short sale transaction. It IS very complicated, and can be botched beyond recognition, if all parties are not on the same page. Once these milestones have been passed, the only items left are the buyer's loan processing, and that is outside the scope of this missive.

Perhaps we'll cover that next time. . .

Allen

Have Questions? Answers are Always Free.

By Phone: (602) 499-4798

Or by Email: therealtybutler@gmail.com

*Disclaimer: We DO provide loan counseling services and process short sales for our clients, but we DO NOT charge fees. Please also remember: I am NOT an attorney, and neither do I play one on TV or the Internet. None of my opinions should be construed as specific legal advice. If you need specific legal advice regarding your personal situation, please ask.

Loan Mod Failing? Time for a Spanking!

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Mon, 16 Aug 2010 20:06:00 +0000

Let us say for the sake of discussion that you have a 4 year old child. This child's room is filthy, and he or she needs to clean it. You instruct the child that they cannot come out of the room until it is clean. Now, if your 4 year old is anything like mine, I can walk into that room a few hours later, and it will be the same, or worse than it was before, and I will be greeted by a blank stare when asking, "What happened to the cleaning?"

See, we should all certainly know by now, that if you want a child to clean a room, you must stand over them with a stick, keeping them on track, and moving them efficiently to the next cleaning area. They have short attention spans, and they are not particularly interested in cleaning.

Unfortunately, this analogy also works for getting a loan modification. You call your bank (or they call you) to say that you're financially in trouble, help is offered. There's only one simple thing to do: send in all your paperwork, and everything will be fine. And like the child cleaning the room, if you peek back in a little while, you'll find that absolutely nothing has happened, and the file has probably been lost. . .

I know that comparing a servicing lender to an uninformed and helpless child is not exactly fair, but the similarities are uncanny. For example, when you call a few weeks after sending in your docs (if you had bothered calling in to confirm), you will find that nobody knows who you are, they can't find your file, and the docs you sent in are lost. True story. Over 50% of the time. . .

So, if you really want a loan modification, you must treat your lender like a child. Let me show you how this works.

1.) When you send in documents, you must repeatedly call and confirm that the documents were received, are clear, and complete. You must do this a few times until at least 3 people confirm your docs are in the system. Why three times? Because these people will lie to you, repeatedly, and unashamedly. If you can get three separate individuals to confirm receipt of your documents, you're probably safe.

2.) After your docs are received, they will need to be reviewed for completion and compliance, then passed along to an "underwriter" or "negotiator". This is about a 2 week process. The person who's reviewing your file? Yep, also a child. So, you'll need to call at least twice a week, and push to have this completed, always writing down everything they say, and when they say this process will be complete. You must keep them on track. Remember, in dealing with loan servicers the squeaky wheel gets the grease. If you do not raise all holy hell to get your loan mod completed, it simply won't be, and you'll get an entirely unexpected "Get Out of Our House" letter posted on your garage.

3.) So, once you've sufficiently beat the negotiator about the head & shoulders to get them to process your paperwork, you have a 50/50 shot that you'll be "accepted" into the loan mod program. Chances are, if your loan mod is rejected, someone made a mistake. Demand to be notified in writing, EXACTLY WHY your loan mod was rejected. You'll probably find that they screwed something up, and rejected you on accident. Time to raise hell again, and bring out the stick. This is where you demand that you be re-instated into the program with no penalties, or you're going to turn the files over to the Dept of Treasury and your local attorney general, along with a forensic audit. That'll get their attention.

4.) So, let's say you get accepted into the program. You'll be placed into a "trial mod," where you'll have to make the new payments for 3 months, and turn over any additionally requested paperwork in order to make the mod permanent. In this phase, it is vitally important that you contact your lender after you have made your monthly payment, to make sure it was applied, and applied properly. Also, you'll want to always ask if all paperwork is complete, and if they can see ANYTHING that is missing from your file.

5.) Now, let us suppose that you have made your 3 months of trial payments, and according to your call records, the lender has all your paperwork. It is now time to demand the permanent modification. If you have made all trial payments, and your paperwork is complete, you are entitled to a permanent mod. Demand it. Make more threats, escalate the file to a supervisor, call the president of the bank; whatever you have to do.

If you follow these simple guidelines, you will have a much better chance of loan modification success. You know all those scammers and "legitimate" business that offer these services for between $1500 and $5000? They do exactly what I have indicated in order to complete their deals. You can do it yourself and save the money. Unless you have more money than time. . .

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More Details on Arizona Cash For Keys

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Mon, 19 Jul 2010 20:48:00 +0000

I just discovered this video that was actually published online by a public television crew in San Diego discussing banks' cash for keys programs and how they work. It's definitely great information for people who are looking at a cash for keys or location assistance situation. Enjoy:

Relocation Assistance (Cash For Keys) Informational Video

And this one is from Chris Berg in San Diego. It's just hilarious, and good fun:

How To Buy A Bank Owned Home

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Arizona Home Buyer's Market Report--5/28/10

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Fri, 28 May 2010 20:45:00 +0000

A discussion between Allen D. Butler, GRI, MSSC, CDPS, AHWD, A-REO, and Ronald a Mauck, MSSC:

The discussion focus on the current home buyer's market in Arizona, sheds some light on the impact of an increase in home inventory levels, and lays the ground work for further "Wise Buyer Strategies". As more homes come to market, the market is shifting yet again. We discuss where it's headed, and what this means for Arizona home buyers. Free media streaming below. . .

MP3 STREAMING HERE

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Arizona Home Prices to Fall Again?

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Tue, 25 May 2010 21:02:00 +0000

In late 2008, it became readily apparent that, due to federal and state government intervention in the mortgage markets, traditional foreclosure processes ground to a halt; by mid-2009 it had become all but illegal to foreclose on a borrower in default. Unfortunately, we have all come to realize that all the intervention in the world will only postpone the deflation of the housing bubble. This "postponement" is approaching four years now, and it seems that it may be reaching its inevitable end.

There is not much consensus among experts as to why, exactly, we were seeing huge amounts of foreclosures initiated, but no actual foreclosures. Some believe that the banks secretly foreclosed on the homes and just held them, hoping to manipulate prices upward. Others have cited the federal government's "prevention" efforts as clogging the works so badly that foreclosures couldn't be completed. There are convincing arguments from both camps, but the reason is kinda moot at this point.

The fact is that more homes are coming to market: people whose loan mods weren't gonna fly are now being funneled into short sales and deeds in lieu of foreclosure. My own foreclosure inventory has grown by more than 46% in these first few months of 2010, and doesn't seem to be slowing down. Our short sale inventory is also growing.

Just a few short months ago, buyers were clubbing each other with over-priced offers on over-priced homes, struggling to find anything to buy. We couldn't keep a house on the market for more than a week without multiple offers. For all of 2009, my colleagues were lamenting the lean inventory, knowing that if someone would just let loose the homes, we could sell them all, in no time, and fix the problem. Buyers were everywhere, and they were rabid.

Unfortunately, now that the government's "free money" for home buying has run out, so have the home buyers. It was reported in late April that new loan applications were down to something like a 17 year low, and we now realize that most of our buyers rushed to buy homes in early spring; they were shooting for the free money deadline, and our usual summer sales uptick has evaporated.

So, our market understanding has changed yet again. Case-Shiller predicted Tuesday that home prices are on shaky footing. More homes are coming to market, but the buyers are not. That's a perfect recipe for falling home prices. Indeed, it has already begun. My own listings' "days on market" have increased, and price reductions after a 30 no-offer period have also increased.

The big question now: where are the buyers? Why are they not buying? It's a little too early to speculate, in my opinion, but we should have a better idea of where this is heading in the coming few months. I'll keep you up to date. . .

Allen

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After Foreclosure: Cash For Keys in Arizona

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Mon, 17 May 2010 00:34:00 +0000

The subject of “Relocation Assistance,” (more commonly referred to as “cash for keys”) has been something I’ve wanted to write about for some time, but felt that the law and the various lender and government guidelines in place on this issue were not properly defined or implemented yet. With the passage of the HAFA portion of the Government’s HAMP program, and the GSE’s common usage, the practice of cash for keys has been . . . codified, shall we say. So, armed as I am with my usual sweaty-palmed grip on the law, and a few years experience under my belt doing cash for keys, I’ve come up with some guidelines that I think will serve families facing a cash for keys situation.

Homeowners in Arizona who have recently been foreclosed on will likely get a knock on the door and a posted notice of some kind, indicating that the home is now under new ownership, and the new owner intends to take possession shortly. Depending upon the new owner, this will usually occur within 10 days. For lenders and processors whose operations are well defined and implemented, the knock and the posted notice can come within 48 hours of the auction sale. If the new owner is a servicing lender or a GSE, it is likely that the person who knocks on your door and posts notices on the home will be a real estate agent. If your home is sold at auction to a direct buyer or investor, anyone could show up at your door: the county sheriff, an eviction attorney (or one of their “runners”), a real estate agent, or possibly the new owner him or her self.

Regardless of who shows up at your door or posts notices on your home, it is imperative that you understand your legal rights. You cannot, under any circumstances, be forced to move out of your home immediately. Arizona law dictates that if you are the owner of a home, and you want the people who are in the home to move out, you must first post a “5 day notice,” which is usually a standard form that indicates that if you do not move out within 5 calendar days, “eviction proceedings,” “forcible detainer actions,” or some-such thing will occur. What that means is that if you don’t move out within 5 days, a petition will be made in court to force you to move out of the home.

Going to eviction court . . .

When the petition to evict you is filed, a court date will be set. This date is usually 14-30 days after the petition is filed. This court date is set in order to determine occupancy rights. The new owner will bring their new deed of trust showing that they own the home. If you appear at the appointed court session, you will be given the ability to state your case for staying in the home.

If you are a tenant who was renting from the former owner and you have a valid rental contract and evidence you’ve been paying the lease every month, you may be able to build an effective case for retaining your rights to occupancy of the property. Legal help is advised in this case.

If you are the former owner, it is doubtful that you will be able to prevail in court, even with legal help. Unfortunately, my research and experience shows that homeowners who attend eviction court proceedings in an attempt to re-establish ownership of the property or maintain occupancy rights have not yet made any significant inroads on this front. They usually end up spending a few thousand dollars for an attorney and end up being forced out later, rather than sooner.

If either the former owner or the current occupants do not attend the appointed court hearing, the judge will automatically rule in the owner’s favor, and will grant a forcible detainer action to the owner. This will allow the sheriff to go out to the property, change the locks, and remove any personal property left there. Not good. Also, you now not only have however many months of missed payments and a foreclosure on your record, you now have a forcible eviction on your record. Ouch.

How does “cash for keys” work?

When the new owner or their representative appear on your doorstep and post a notice on the home, they always leave clear directions to contact the representative. It is strongly recommended that you or your representative contact this person immediately. Avoiding contact with the new owner is not going to win you any favors. Contact them, and see what they’re offering. Chances are, your home was purchased at auction by the foreclosing lender or is now owned by one of the GSEs. If this is the case, there will usually be a “cash for keys” offer made. . .

Cash for keys offers made by lenders and GSEs on foreclosed properties generally follow a few simple guidelines:

1.) Money will be offered to vacate the property.
2.) The vacate date must be within 30 days of the original date of the posted notice.
3.) All personal property and/or debris must be removed inside and outside the home.
4.) Money will be delivered on the vacate date only, and only if Item #3 is complete.

How much money are we talking about?

The amount of money offered on a cash for keys deal varies greatly among servicers and GSEs. First, there is usually a formula used to determine an initial cash for keys offer based on the estimated value of the home. Another consideration is the mount of time you are given to vacate. In most cases, the faster you move out, the more money you get. As an example, an initial offer is usually about $2,000, if you move out within 14 days. If you request the full 30 days, your cash for keys amount drops to approximately $1,300. These are averages for homes that are worth between $100,000 and $200,000 at fair market value.

Take the money and run?

Unless you are a tenant who has a binding rental agreement that is up to date on payments, your chances of retaining possession of a foreclosed home are slim. For people facing eviction, and know they can’t fight it, a cash for keys deal can be a life-saver. If you have cash for keys questions, let us know.

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New Arizona Foreclosure Law Sparks Discussion

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Thu, 13 May 2010 19:59:00 +0000

Arizona Governor Jan Brewer signed a new foreclosure law in Arizona that deals with Banks and Delinquent Borrowers. This sparks a discussion with our foreclosure specialists.

TRBPodcast--5-13-10--New Arizona Foreclosure Law Sparks Discussion

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More Banks Seeking Deficiency Judgments Against Homeowners

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Wed, 12 May 2010 21:14:00 +0000

More and more, major lenders are taking a firm stance against homeowners in regards to deficiency jugements. Listen as Allen D. Butler, MSSC, CDPE, GRI, A-REO and Ronald A. Mauck, MSSC discuss these issues, and how they affect Arizona families.

TRBPodcast-5-12-2010--Ron and Allen discuss anti-deficiency statutes.mp3

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US Census Workers and Arizona Foreclosure Homes

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Sun, 02 May 2010 19:28:00 +0000

I was a little puzzled last week when a US Census worker called about one of my many vacant foreclosure homes. He wanted to know the names of the people who used to live there, how many people lived there, and their ages. Being the exemplary citizen that I am, I dutifully complied, digging into my records and legal papers to find out who the owner was, and what kind of information I could provide the census-taker. He seemed pleased at my helpfulness. Great. Then came many more calls, about vacant houses all around Arizona where my sign is in the yard. . .

This got me to wondering: what is the purpose of the census? Purportedly, it is to track the number of people in the US for various and sundry political and economic purposes. So if census workers are reporting data on people who used to live in these vacant homes, they are sure to be counted. We don’t want to miss anybody, right?

A potential problem I see is that census workers seem to be operating under some mystical assumption that these families have “disappeared from the face of the Earth.”

“Where did they go? We need to find out who they WERE, so we can count them.”

The problem is, they STILL EXIST, and the chances are pretty good (uh. . .100% certain) that they are simply located somewhere else now.

Every residence in the US gets a census for to fill out. If these families have re-located, they’ll presumably report their new location on their census forms. Therefore, it is likely that there will be plenty of double-counting. In fact, due to the size and scope of Arizona’s foreclosure problem, I suppose I shouldn’t be terribly surprised when the census report indicates that Arizona’s population has doubled, mysteriously. . .

Normally, we could just chalk this up to more government incompetence. However, with the way the government’s been acting lately, the implications seem kind of sinister. . . One never knows what the government is REALLY up to these days.

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Chase Plays Hardball With AZ Homeowners

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Thu, 29 Apr 2010 19:54:00 +0000

Today, we bring you a policy discussion regarding Chase Home Finance and the pursuit of deficiency judgements against homeowners in Arizona. Your hosts are:
Allen D. Butler III, MSSC, GRI, CDPE, A-REO, AWHD
Ronald A. Mauck, MSSC

TRBPostcasts:JPMChase Gets Aggressive on Deficiency Judgments

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Exercising The Housing Demons

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Fri, 09 Apr 2010 01:16:00 +0000

The Arizona real estate market hasn't changed much in the last year and a quarter. My essay concerning government intervention in the housing market explains why this is likely so, but it doesn't explore the path forward. In fact, "where are we headed?" is the biggest unknown occupying the minds of Americans everywhere, and Arizonans especially.
We all know that the government's strategies for combating the foreclosure crisis are not working at all, and are delaying the inevitable. There are fundamental powers and laws in the universe that will ultimately prevail over our leader's attempts to corral them. Millions of people have been, are going to continue, shedding billions of dollars in shaky mortgage debt for years to come. As of now, everyone involved is losing big:

1.) homeowners will lose their homes, and either find a way to buy a new one or rent one close by
2.) servicing lenders will lose big on principle and interest advances to investors
3.) mortgage investors will lose big when the home is eventually liquidated for half its value
4.) all taxpayers will lose big as the bailout fire-hoses douse (fan?) the flames of the real estate Hindenburg

Now that we've had a couple of years of strong arm attempts to manipulate the housing-bubble-monster, we've come to understand (at least some of us have) that the monster must be deflated. The government is frantically plugging the holes of the monster with bubble-gum in an effort to keep it from popping.

The question really becomes, how long do we want this to take? Apparently, our brightest minds cannot tackle the uber-problem, and the pain is coming.

I think we're all thinking the same thing at this time:

Gee, this is a lot like sitting in my room as a kid, waiting for dad to come in and deliver the hyper-anticipated ass kicking I so rightly deserved. Only this time, he has been standing outside my bedroom door for the last three years jingling his belt menacingly and whispering threats through the key-hole.

Can I just take my licks now, and be done with it? Good thing dad never did that, I guess. . .or who knows what kind of man I'd be.

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Perhaps I Spoke Too Soon?

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Fri, 26 Mar 2010 22:36:00 +0000

In a fit of prescience, yesterday I indicated that the outlook for government housing programs was less than rosy, and that the foreclosure crisis would roll on, albeit much more slowly. I also, at the end of my article, engaged in a bit of frolicking fun at the government's expense, prognosticating soviet style housing for all in the near future.

Well, I thought it was funny at the time. A look at this morning's newspapers however, resulted in coffee through the nasal passages, for what did I see? This headline:

President Obama urges banks to reduce mortgages in bid to tackle foreclosures

You can read about it later. I'll provide links in a moment. Basically, what the president is urging is two key provisions (that we know of at this time) of his new plan:

1.) Banks are URGED to reduce principle from underwater mortgages in an effort to make them more affordable.
2.) Banks will temporarily (for 90 days) modify a mortgage so people with no job, who are living on government assistance, can qualify for a modification based on said assistance income.

How banks be urged to comply with Obama's request is something I wouldn't care to speculate on. Knowing this president, and his brand of Chicago-style political hardball, I'm sure he'll find a way to make it happen.

The problem is, how far will this go, and who can get this "help"? This is precisely the Pandora's Box that everyone has been afraid to open: Free Mortgages For Every Family. You already know what's gonna happen with this one. It'll be the biggest fraud perpetrated in history. In fact, I myself may get into the action.

For Pete's sake, if I can "lose my job just long enough. . .," or cook my family finances to produce a hardship, and ultimately divest myself of over $150,000 in mortgage debt AND keep my house, you can absolutely count me in. In fact, I am trailblazingly confident that there are at least 1 million families in Arizona alone that could use this help.

Ouch!

Allen

Here are the Headlines. This one is with a rosy glow, and this one is with whiff of horror.

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Death of the Loan Modification

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Thu, 25 Mar 2010 17:56:00 +0000

There is just about full concensus now that mortgage modifications as a cure-all for the US foreclosure crisis are, shall we say, "less than adaquate" to the situation. Like most government efforts to make people's lives better, it's a day late, a dollar short, and has had a slew of unintended consequences. If the government's plan was to fix the mortgage crisis, they have failed miserably. However, if the plan was actually to delay the inevitable, it has succeeded brilliantly.

The foreclosure crisis is still very much in full swing, and is still growing. The fact that the government has introduced so many road-blocks, moratoriums, and applied just the right amount of legislative "sludge" to bring the foreclosure legal process to a grinding halt does NOT mean it is "fixing" the problem. There are still millions of families who WILL lose their homes. It will just take longer.

It is now very common for homeowners to live mortgage free for up to 2 years before losing their homes to foreclosure. Remember those "unintended consequences" I spoke of? The "unintended?" consequence is that banks and investors (and tax-payers) are now on the hook, instead of the homeowners living in the homes.

The government has been very explicit to the people who loan money to homeowners: eat it, you've got the money. Well, as it turns out. . .they DON'T have the money. The entire loan industry has been placed on its head, and is in danger of imminent collapse.

Let us suppose for a moment that the US Government, in an effort to stave off economic disaster, informs The People's Republic of China that it will only repay 40 cents on every dollar of the $800 billion-plus owed. Good luck with that one. Fortunately, banks don't have standing armies or nuclear war heads (yet), so they have to rely on the legal system to collect on debts from borrowers in default.

Now, that legal system has been tampered with, giving a decided advantage to the borrower. The lender can no longer excersise their legal rights against a borrower to collect on the debt, or collect the collateral for the debt (the home, in this case). The government has effectively said to the housing industry, "A person's home is much too important a right in this country for us to allow you to take it away from a borrower."

If this is now true, I suppose that the next step is for government to make houses themselves, and "assign" them to people based on need. When you die, you relinquish the home to the next family on the list. Of course, equality dictates that each house be similar in style and amenities. If the government is in charge of housing, it cannot be unfair, and give bigger houses to "bigger" or "more important" citizens. I suppose in that day, bigger homes will have to go to people with bigger families, on a needs basis.

Bottom line: you ARE going to lose your home. Millions of people are going to. It's just a matter of when. Call me when you get there.

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Who's Processing My Short Sale?

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Mon, 15 Feb 2010 22:13:00 +0000

Because short sales are difficult, time-consuming, and process intensive, real estate agents who don't have the time, knowledge, or inclination to do them have begun to offload or "out-source" the work to others. There are now many different kinds of short sale negotiators, from attorneys, title companies, and financial advisers, to unlicensed individuals and stay at home moms. Can any of these people complete a short sale? Sure they can. The key questions are: a.) could homeowners be affected by the out-sourcing of their loss mitigation efforts, and b.) who exactly should be conducting these short sales?

In California right now, the Department of Real Estate is issuing cease and desist orders to as many individuals as it can find who are offering “loan modification or short sale services,” and who are NOT licensed as real estate agents or attorneys. Apparently, the State of California has decided that only real estate agents and attorneys can perform these activities.

Here in Arizona, I personally have received at least 5 solicitations from title companies indicating they will “handle my short sale negotiations for free” if I just bring them short sale files from my clients. Now indeed, anyone can call a lender and ask if they’ve received a certain piece of documentation or something, as long as they are “authorized by the client” to speak to the servicer. If a short sale involved nothing more than passing information back and forth between agents and lenders, then I would have no problem with this. The problem is this: who’s looking out for the client, and negotiating on their behalf? What if the lender stipulates something in the agreement that is damaging to the client? How can the title company suddenly take on my client’s interests, if by definition, they are “an objective third-party” to the transaction? There are all kinds of worms in that box.

If, as happens frequently in short sale negotiations, the loan servicer, investor, or insurance company agrees to the short sale, but wants more money than the home is worth on the open market, who’s going to address the issue, and with what data? When that battle is launched, a real estate agent will have to provide the data to combat the opposition’s ignorance or greed. There’s simply no way around it, as Realtors have a monopoly on almost all real estate sales data.

One of the most frequent homeowner complaints about out-sourced short sales is that they have no idea what is going on with their transaction, and getting a hold of someone for answers is very difficult. Whenever an process or service is out-sourced, or a middle man is introduced between the customer and service provider, there will be delays, lost communications, and confusion. Just take a look at our current health care fiasco to see this concept in action.

While there are lots of people jumping on the band wagon of short sale processing for an easy buck, they will undoubtedly be launched from their comfortable perches either by government bureaucrats who discover these are people over whom they have no control, or by consumers who have bad experiences and vote with their feet.

A good real estate agent worth his or her salt will always be able to provide the service and help that homeowners need to close short sales and get foreclosure help. They are the most experienced in short sale processing, cannot by law be paid for short sale processing, their fees are codified so that lenders actually bear all the costs, and homeowners will not have to pay them.

Now, if you could just find a realtor who’s not a schmuck, does what they say they’ll do, and answers the phone once in awhile, you’d be set! Here’s hoping you never need a short sale. . .

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Is a Short Sale the Answer to Our Problems?

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Tue, 09 Feb 2010 23:51:00 +0000

Short sales have become the next best step for families who either don't want to modify their mortgages, or who have had an offer of modification that is not financially viable. In fact, many of our clients are reporting that when they contact their loan servicers for the first time to report a hardship, their servicers are directing them to contact an agent to do a short sale. They're not even mentioning a modification.

It looks as though short sales are the new answer to the foreclosure problems we all are facing. With the help of some bailout money, servicers and investors will get a little more financial help, and families will even get a chunk of change to move out of the house when the sale is completed.

Now, moving millions of families out of their homes in a short sale situation is NOT the answer that anyone wanted to hear, but we all knew was coming. Short of just paying everyone’s mortgage off in full (which might have actually been a cheaper fix, by the way), there is simply no way to do it. As I’ve indicated before, this is going to be painful for lots of people, and it’s shameful that the system was manipulated in such a way as to allow this to happen.

However, we must move forward and get through this crisis, and the short sale or deed in lieu of foreclosure is really the only way to do it as of now. The short sale in particular will be a big favorite with loan servicers, because they may be able to minimize the costs associated with the foreclosure itself, holding and maintaining the property, and handling the sale of the property. If for no other reason, this makes sense to banks. Also remember that there won’t be as many vacant and visibly distressed properties in neighborhoods, and the properties will be maintained by homeowners themselves.

So what’s in it for the homeowners? Well, for one, if the new short sale guidelines are followed by loan servicers and are efficiently carried out, we could see families be able to remove themselves from their troubled loans in as little as 60 to 90 days. A few of our most recent deals with JP Morgan Chase have resulted in short sale approval in less than 3 weeks. That’s absolutely phenomenal for everyone involved.

Consider this: if a homeowner is smart, and moves into action immediately upon discovering an inevitable hardship, the entire short sale process could be completed in less than 90 days. There will likely be no deficiencies owed, no taxes on losses, minimized credit damage, and no foreclosure on their record. These families could very well be on their way to homeownership again in a short time, at much more sustainable home prices, with low interest rates, and much more security.

I wish there were another way to solve this problem. I really do. For now though, this is the best that we can do in a society where the pursuit of "life, liberty, and happiness (ie, property) still means something. Here’s to hoping you never need a short sale expert.

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Between A Rock and a Hard Place: American Anxiety

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Sat, 30 Jan 2010 19:17:00 +0000

I've not been one to wax political in public (though I am a rabid idealogue in private) as politics doesn't always relate to the business of real estate. And in a sense, my comments here will not be so much politcal as they are societal, and a connection absolutely can be made in this case to real estate and such, and I will do so.

I believe that a case can be made that Americans are feeling a great deal of anxiety right now over both their own circumstances, those of their neighbors and friends, and those of the entire country (and economy) at large. I think that Americans are caught beween a rock and a hard place. Or perhaps a better metaphor would be that Americans are at a "fork in the road," and both roads seem to lead to hell. Let me explain:

When gasoline was $4 per/gallon it really hit Americans where it hurt: in the pocket. There was a national uproar. Now consider the problem in the housing market. It's been bad for 4 years already, and it only seems to be getting worse. And unlike an expensive tank of gasoline, the foreclosure of a family's home is much more personal, emotional, and powerfully troubling. And here is where we come to the fork in the road.

The first road is the public road. This road is run and maintained by the federal government. The road is wide, and branches off in seemingly endless directions. There are tolls to pay at every fork in this road, and taking any given fork will theoretically take you to your destination. The problem with this road is that like all government roads it is semi-maintained, the signs are confusing, and once you do get to your destination, you've paid dearly for the trip, and you have the nagging sensation that your destination looks a lot like your starting-point.

The American people have lost faith in the ability of government to actually solve problems. They have come to understand that government will simply take their money, throw it at some aspect of the problem, and report success with charts, graphs, and cryptograms that show the problem has been solved, or will be solved "shortly."

When President Obama came to office in 2009, the people seemed persuaded to give the government one more chance to fix things. It seemed that Obama maybe could make positive changes to the way things were done in Washington. He called for transparency, openness, coming together to solve problems, and offering real solutions. Instead, what we got was less transparency, more seeming corruption, and a whole lot of the people's money spend on stimulous that didn't seem to stimulate anything or anybody except the bureaucrats in Washington and their corporate lobbyists on Wall Street.

Once again, government has failed to fix anything. Just like we secretly knew in our hearts that it would. But what is our alternative? What is the "other road," or the "hard place"? The private sector.

The people's only other choice is to get the government out of the way, and allow the private sector to fix its own economic problems. Capitalist free markets are harsh in the glare of reality. If the people allow the market to correct itself, the pain could be intense. Many people do not trust capitalism because they have been lead to believe that capitalism equals greed and corrution. They believe that if capitalism is given free reign, the rich will simply take all the money, and everybody who's poor and disenfrachised will become moreso.

I believe this stems from a misconception people have about the road of capitalism. The capitalist road is almost always straight. It has to be, because the goal is always to get from point "A" to point "B" as quickly, efficiently, and cheaply as possible. On the capitalist road, if the people decide that a particular branch of the road is no longer useful or desireable, they will abandon it, or use it for something else.

In regard to the housing crisis, I woud like to make the following proposition: "The Government's Meddling in the Private Sector caused the housing crisis." You see, the road in the private sector that represents housing was a large road, and many people were on it. It was a well maintained road, the speed limits were set correctly to provide safety to the people on the road, and there were very few "accidents" on this road.

But then, along comes mister government. He has an observation to make, and just like any government observation, it always comes with consequences. The government suddenly mandated that the road be widened, the speed limit be increased to a reckless 150 miles per hour, those who couldn't pay the toll for this road were subsidized. Union government contractors took over road maintenance, and the rules of the road were expanded, duplicated, and codified into a 12,000 page document that normal Americans couldn't even understand.

And just like government always does when its bungling causes misery for the poeple who used to enjoy the road, it blames the former owners of the road. The government's good intentions are never to be questioned. The outcomes of the government's bungling always goes bad, and it's almost always the private sector's fault when things crumble. It is a strange and wonderful thing that our government feels the need to confound, confuse, and destroy the very system that props it up and gives it its power.

Thus, there are indeed only two roads we can take, and both are scary, but for different reasons. The laws of nature are manipulated and not allowed to function correctly on the private road. The government is determined to make the private road look and feel and function like other government roads. But allow me to ask this:

"Which road will you travel on?"

Unfortunately, the government road is freshly paved, and decorated beautifully. In spite of its confusion, corruption, cost, and unknown destination, people may choose to use this road rather than the people's road. The people's road has a 3 million car pile-up, the roads are in disrepair, the signs and speed limits need to be redone, and it is certainly not safe. But can we realize that we need to take the road back from the bumbling bureaucrats and fix it ourselves, so it goes where we need it to, and the rules make sense?

Until we determine to fix our own road, and get the government OUT OF THE HOUSING BUSINESS, our choices will look pretty bleak. I for one will be shouting loudly and clearly on the side of the private road:

"Give me my damn road back!"

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Or by Email: therealtybutler@gmail.com

Arizona Short Sale "Experts" Abound in 2010

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Fri, 08 Jan 2010 22:52:00 +0000

Homeowners searching for help with a short sale might be unnerved to find that almost all of the real estate agents advertising in their city are promoting themselves as “Short Sale Specialists” or “Short Sale Experts,” or some other exemplifying adjectives. With so many experts out there, how can a homeowner be sure they actually have an “expert” to help them? Let’s start out by stating unequivocally, there simply is not any licensing or certification from any governing body anywhere that places restrictions on who can process a short sale, nor are there universal standards on how they can or should be done. Finding a good short sale agent to help you involves the search for knowledge and experience. They’re gonna need both.

     It might be helpful to define the word “expert” itself. I suppose common sense dictates that anyone claiming to be an expert at anything would have to exhibit the following qualities:

1.) A deep and current knowledge of the subject

2.) Plenty of current experience with the subject

     How much knowledge is enough? Consider this: if you had to hire an attorney, a CPA, a doctor, or a mechanic, how much would you expect them to be “up-to-date” on current trends, law, or practice in their subject? My guess is, most folks would like it if their representative was as current and cutting edge as possible. Until 2009, there was virtually no formal educational training for agents in short sale negotiations. Now, there are many training/coaching/certifying entities. Some agents have been certified by the Distressed Property Institute (CDPEs) to handle short sales, others get trained and certified as “Master Short Sale Consultants,” while other agents may have no certifications because they don’t really need any; these might be agents who are either research hounds, or are very experienced and engaged in the practice.

     In regards to the subject of experience, consider the same example. How many cases like yours would you like for the attorney you hire to have tried? How comfortable would you be if your mechanic reassured you that he had dealt with exactly this same problem on numerous occasions? Experience also has a shelf life. If I was a short sale expert back in the late 80s, I might have a foundational knowledge of the subject, but might be well behind in the current methods being used to perform short sales. So, how is the homeowner to select a true expert? By getting the answers to just a few questions, when interviewing short sale experts:

1.) Ask them to tell you about the latest laws and programs that are in place to help you in your situation.

*Here, you’ll want to carefully gauge to the agent’s overall knowledge on the subject. Does he or she speak with authority and confidence on the subject, or can you hear lots of paper shuffling in the background? How much detail is he or she able to go into? When there’s an expert on the other end of the line, you can definitely tell.

2.) Ask them for records of actual success.

*Here, you’ll want actual records of success. Not stories, not letters of reference from beaming clients, actual records. The specific document you want is called a “Closed MLS Plano.” Ask them to show you at least a few recently closed short sale transactions. On an Arizona Regional MLS Plano, you’ll see the following data strip (click image for larger view) near the bottom of the page:

The highlighted portions show that it was a short sale (Short Sale Apprvl Req), it took 144 days to complete, and it closed escrow on 12/14/09. Ask for the agent to show you at least 3 of these that are fairly current.
If you can get a good feel for the knowledge level of the agent, and be assured that they actually have experience, you’ll be well on your way to selecting a good representative. That’s not to say the experience is guaranteed to be good, but at least you can be confident that the person is really at least experienced. Beyond this, it all comes down to customer service. At the bare minimum, I think decent service dictates that your representative be able to educate you, answer your questions, communicate with you on progress, and guide you along the way.

Here’s to hoping you never need a short sale expert!

Free Loan Counsel Available Now!

By Phone: (602) 499-4798

or by Email: therealtybutler@gmail.com

*Disclaimer: We DO provide loan counseling services and process short sales for our clients. Please also remember: I am NOT an attorney, and neither do I play one on TV or the Internet. None of these pontifications should be construed as specific legal advice. If you need specific legal advice regarding your personal situation, give us a call. We can help you ourselves, or provide a list of housing counselors that are free!

Why Loan Modifications Fail

therealtybutler@gmail.com (Allen D. Butler, CDPE, MSSC, GRI) — Wed, 06 Jan 2010 20:52:00 +0000

According to the latest report by the Dept of Treasury, loan modifications are failing at an alarming rate. Consider: of the 728,000+ attempted loan modifications done so far through the government’s HAMP program, only slightly over 31,000 have been successful. Stated differently, if you attempt a loan modification, you have a 23% chance of success. Why can’t people get loan modifications completed? Let’s take a look.

According to reports from banks, homeowners are to blame because they don’t turn in the paperwork required, nor do they make trial payments. Homeowners, on the other hand, say mods are failing because lenders are losing paperwork, foreclosing on “accident,” changing terms mid-stream, simply ignoring them, or denying them loan mods based on some mysterious formula.

There are in fact many homeowners who can qualify for a modification who have decided they don’t want one. These people who “failed to complete the process,” probably came to the conclusion (after months of emotional hell) that it’s best to ditch the home and start over. Once these families have been through 6 months of fighting with their lenders about a modification, they start to realize a few things:

a.) their credit is already ruined
b.) the “fix” is somewhat iffy, and temporary
c.) there is a real chance they’ll be going through this again in 5 years

These facts add up fast, and signing on the dotted line to temporarily modify an already shaky loan is the last thing these people want.

Homeowner accusations of lost paperwork, accidental foreclosures, and unfair dealing are all absolutely true, when viewed in a certain light. The reasons that banks appear to be unfair in their dealings is probably for a different reason than many think, though. What many fail to realize is that getting three huge bureaucracies to agree, in writing, to give away free money, and coordinate this free money give away on a specified date is no small feat. It can actually feel a lot like trying to trick a gang of bullies into poking each other in the eye while you make a quiet escape. That’s not to say it can’t be done, just that it’s . . . tricky. It really helps to understand the bureaucracy part of the equation to understand why you can’t get help from your bank.

The servicing lender you send your bill to every month? They don’t actually own the mortgage to your house. They’re just “servicing” that mortgage for an investor. So already, you’ve got one road-block. Your servicer can’t actually make a decision regarding modifying or short selling your loan. Oh, and that lovely and gracious representative on the other end of the line you call for help? She’s about 20 people down the chain of command in this organization that can’t make a decision anyway. Not only that, she’s likely a low paid “temp” with little incentive to be helpful or friendly. And to make matters worse, she knows absolutely nothing about the process, your file, your problem, or the bank she works for! She’s just reading from a screen that contains very little information. She couldn’t help you even if she did have the best customer service skills in the world. I could actually write an entire book on the process, and the steps that have to be followed, and the executives who need to sign off, and this book would leave a lot of questions unanswered. Imagine, if you will, that you would like the federal government to send you a detailed report of every dollar you’ve paid them in taxes and what they spent it on. Yeah. It’s kind of like that.

The housing crisis is an absolute mess. The processes in place for helping troubled homeowners are very confusing, very time intensive, and anything but guaranteed. Lenders will continue to blame homeowners, and homeowners will blame lenders for lack of progress on the issue. There is one certain fact that everyone knows, but we’re hiding from and delaying at all costs: there will be millions of families moving out of their homes and renting in the coming years. The millions of the homes sold between 2000 and 2008 are the crumbling, decaying, “foundation” of all of our household wealth. It is and has been crumbling. Those who abandon ship now will suffer for a time, then thrive and grow again. Those who continue to “re-arrange the deck chairs” on this sinking ship will be floating on a life-raft for quite some time.
Next time, I’ll detail for you the governments new program to “streamline” this process. . .

Free Loan Counsel Available Now!

By Phone: (602) 499-4798

or by Email: therealtybutler@gmail.com

*Disclaimer: We DO provide loan counseling services to our clients, but we NEVER charge the homeowner money. Please also remember: I am NOT an attorney, and neither do I play one on TV or the Internet. None of these pontifications should be construed as specific legal advice. If you need specific legal advice regarding your personal situation, give us a call. We can help you ourselves, or provide a list of housing counselors that are free!