Save My Real Estate Deal

It's all over the press and other media sources and talk at the water cooler and the unemployment line or the job fair....loan modifications.

It's time for some simple truths about modifications.

1. They are not new to the industry. Loan Mods have been done before when real estate values and credit markets have dropped in conjuction with an economic crisis. The difference this time, it is on a national level, whereas before, it was localized to specific markets. (Texas in the early 1980's and California in the early 1990's)
2. Free Services:  Let's get real. You get what you pay for. The vast majority of the 'Free' services are horrible in service and actual results. Since the HOPE program was announced in late 2008, By February 2009 over 65% of those assisted by this "Free" service are back in default, as recently noted in the LA Times. The lenders are paying the 'FREE' Service providers--so ask yourself this: If the lender is paying for the service, who do the negotiators and counselors represent? Me? or the Bank?
3. FEE Services: What makes FEE any better? Well, Fee services have had a bad reputation because of the Wild West attitude and lack of oversight or regulations. HOWEVER, a higher percentage of homeowners who have paid for services are in a better position than their counterparts that went for the FREE. As with any FEE service, you are paying for professionals who will become your advocate against the heartless banks and servicers. You pay for representation!
4. When does it make sense? Most Fee services are going to be charging in the $1900-$4000 range depending upon the complexity of your needs. If you have a mortgage where the payments are $1500 month or less, doing a loan modification may not be the best use of your money. You may be better off paying your mortgage and any late payments. Since there are thousands of scenarios with thousands of variables, it is best to have a professional look at your situation, then get a second opinion.
5. You need to be delinquent to get a loan mod. NO WAY-one of the biggest lies told by the lenders and servicers. You do need a hardship--but you do not need to be delinquent.
6. You need to have a job to qualify. Well Yes and No. Most of the programs require evidence of INCOME--not necessarily a job. Some programs will work with you when you are unemployed.
7. You need to have no money saved in the bank. Again a Yes and No answer. Most programs will like to see that you do not have a lot of money in your savings or checking accounts. I have seen Loan Modifications approved when the homeowner had $40,000+ in the bank.
8. Retirement funds are counted. Nope, not counted. You will be told to stop contributing to the retirement accounts, but you will not have to liquidate these accounts.
9. Always believe a guaranteed result. Another NO WAY....a specific result can not be guaranteed. Sometimes the result is not what you want, but it is a result nonetheless. You should consider all results carefully.
10. Money Back Guarantees are always provided. Another NO WAY...I've read the fine print and guess what? The chance of a a money back guarantee is full of conditions, that it is a come on to pay big bucks and not get your file worked on.
11. Broker Model V. Attorney Model. In most cases an attorney model is going to work far better than a broker model. However, the key in both models is the expertise of the negotiators and their contacts with the lenders.
12. Do It Yourself v. Services: Okay, so do have 40 hours a week to sit on the phone and fax for up to 45-60 days to work it out with the bank? I bet not. And when you call, you get to talk to the Collection Department--wrong group of wolves to talk to. Services know the inside track and the unpublished phone numbers inside the lenders to get the work done. Next time you thing you can do it yourself, go to U-Tube and type in Maxine Waters--look at the video of a sitting US Congresswoman trying to help her constituants help themselves.

I have found one group that does what it says and has the track record to get modifications done. The National Loan Resolution Law Center has state-of-the-art systems and 24/7/365 electronic notification services when any action takes place on a file. NLRLC does not work directly with homeowners, but accepts packages from brokers, like myself. I complete the paperwork on-line and submit directly to the law center. The homeowner pays the law center. I do earn a small processing fee and the satisifaction that a homeowner is on his/her way to finding some piece of mind.

Gregg Cochran  714-731-5282  gregg.cochran@att.net

Ok so the news hasn't been great. For a majority of Californians its been down right shocking. With the siezure of IndyMac Bank on 7/11/08 that followed a week of the mortgage giants FNMA and FHLMC getting hammered by investors, it almost seems the world as we know it has gone down the drain. 

Has the financial markets hit the ice berg and is going down the deep like the Titanic? That is one possible scenario that is being floated.

One thing to remember--the financial markets will always need to be adjusted. Some of the adjustments are minor while others are major. We are in a major adjustment and it will take time to get all of the adjustments ironed out.

As our credit markets go through a remodeling, as with any remodel, you need to tear down to rebuild. And a tear down will always reveal other faults that were unseen until the remodeling is under way. This is where we are today--in the middle of the remodel and we have now been informed that the work load is increasing because of unseen damage has come to light.

Well it's that time of year when one gets caught up in the hussle and bustle of the season...heck, I have been, since it's been 14 days since my last entry!

Anyways--give yourself a gift this year. Instead of trying to make your home loan work, take a look at buying a commercial property. 

Commercial lenders have more money that residential lenders. Commercial loan programs are still offering up to 97% financing to $1,000,000 for owner occupied builidings/business and up to 90% for investors.

Commerical loans can be amortized as fixed rates over 30yrs.

When you lease your building, over 60% of all leases require the tenants to not only pay the rent, but whole or in part of the owners taxes, insurance and maintenance costs (called triple net).

Commerical lenders look at the property first as the qualifyer for the loan and the borrower second.

So, if you are not sure on the residential market--then getting into commercial real estate may be a better choice--call me now.

I have never really been an auto show fan, so I really never had been to an auto show, outside the Texas State Fair and what I would see on TV about any of the big auto shows like, LA, Detroit, New York, etc. All the glitz, glamor, staging, lights and displays. I never gave it much thought into how it all worked before and after, until recently.

My brother-in-law works for a company that sets up the auto show booths for Mercedes, Mazerati and Farrari as the shows travel throughout the US and Canada. This year he asked if I had the time to work on a show with him--since this time of year the mortgage business is a little slow, I told him I'd be glad to help.

The LA Auto Show opened on Thursday Nov. 14 with Press Day and the public opening was the following day. The Show closed at 5pm on Sunday November 25th. Good Morning America broadcasted from the LA Auto show on Wednesday November 13th at 3:00 am.

That is what the upfront exposure that all of use see. Now how did it get there?

Work began on Monday November 5th with the marking of the booth spaces and the off loading of semi loads with show crates (the display stuff). Electrical and carpet laying began on Nov 6th. Nov 7th the forklift drivers begin bring in the fregit to the assigned booths and setup begins. I worked on the Mercedes Benz booth starting on Nov 8 through Nov 11 with an average of 12 hrs/day un packing, assembling and setting up stages, turntables, towers, light walls, arches, VIP and reception booths, tile flooring, display cases and so on. Work days started at 7am and I usually didn't get home until 9:30 in the evening. I was back at the Auto show on Thursday Nov. 15th for a cleanup/polish up detail, prior to opening of press day from 5am until 9am.

After the closing of the show the tear down commences at 8pm on the last day of the show (Nov 25th) and continued until everything was disassembled, recrated and all of the carpet and flooring removed. This process was completed by 7pm Nov 27th.

Here are some figures that just might astonish you about the auto show.

1. No cars are sold at the show.
2. Mercedes-Benz's space was 61,000 sq. feet with 2 turn tables, 3 performance stages, 17 plasma screen TV's and an impressive movie screen 20'x80' suspended 15 feet in the air over the new BlueTech Series.
3. Mercedes-Benz's displayed 23 models.
4. Over 1100 man hours were clocked setting up the booth (excluding: electricians, riggers, forklift drivers,  carpet layers and 24-hour security).
5. Over 350 man hours were clocked tearing down the booth at close.
6. $180 the average per man hour charge paid. (over $260,000 in labor costs from only one contractor).
7. $5,000,000 Est. Value of MBZ models displayed
8. $2,000,000 est. cost MBZ paid to participate in this show.

I now have a greater appreciation for all of those who toil to make the glitz and glamor of any show come off so marvelously.

The first thing to remember is that the media dwells on bad news because it gets your blood pressure up and rings your fear alarm bells.

I am not in denial about the nature of the business, real estate, values and the effects it has on a personal and wide scale levels. However, all of the information must be questioned and throughly analysized to determine the value of the data.

In addition to that, all the data affects one based upon the position they are in at the time of the events unfold. Example: If your neighbor is out of work it is a recession. If you are out of work it is a depression.

Since the last downturn (1991-1996) we have added over 8 million housing units to the national matrix. According to those that track these figures claim about a 4% increase in housing units over 10+ years. Assuming we have 180,000,000 housing units at the end of 2006 and the average annual foreclosure rate anticipated is in the 3-4.5% range during a normal healthy economy, translates out to we can sustain around 8,000,000 in distressed properties.

Here's the where the screamers go off the handle.  In the past years (2001-2005) we were seeing a national foreclosure (distressed properties) rate running in the 1% range. Now we appear to be closing in on the 2% per annum range.  Yes a big increase. No--not the end of the world. You would need over 650,000 housing units per month going into distress to really mean big problems. However we are running about 81,000 units per month.

I see this at this point as a correction to the market and not a need for panic.

I also see that the equity markets have enough money to continue lending at increased levels since the credit crunch that was much ballyhooed is apparently not as deeply entrenched as once thought. The investors will eventually agree upon a industry standardization of credit criteria so consumers can once again obtian mortgage loans. The actions will occur sooner than later because by not lending, the investors will loose far too much in income/profits than they will ever loose by servicing non-performing assets (bad loans). Beside, with preasure from governmental agencies to reform credit guidelines in the works to make them into law, the industry will adapt faster as to avert regulatory mandated changes.

BTW have a happy and safe Thanksgiving.

1. Tax Assessor: This appraiser will appraise the value of property at it’s highest, nearly unrealistic value for the sole purpose of creating a tax base for the local governmental agency. (High Values)

2. Bank Appraiser: This appraiser is employed by the bank (lender). The appraiser in this case assesses values at a very conservative level. Since this appraiser is paid by the bank, it is in the appraiser’s best interest to lower values---especially when they are used as a review appraiser. (Low Values). Both Tax Assessor and Bank Appraisers have a difficult time earning a living as an Independent Fee Appraiser—ergo, they work for those who like to sabotage your values.

3. Independent Fee Appraiser: This appraiser is employed by a variety of scores, most commonly the Broker. This individual uses market conditions to determine the most likely value a property will bring at time of sale after consideration of all circumstances and conditions. (Closest to Actual Values a property will sell for in a fair market).

 I hope this information you will find useful. Next Issue ( Part II): Appraisals and Appraisers: Licensing.

Last year this time, my wife and I were on vacation in Mexico. Now there is a celebration to be a part of. . . Day of the Dead (Dia de los Mortes). It is a really cool way to celebrate. The locals take plates of food & beverages and the favorite things in life their deceased relatives enjoyed to the gravesites. It is a celebration of their lives on earth, a rememberance of the time spent with the departed and a way of tribute and honor.

If you ever have a choice for a vacation next year, go to Mexico during our Halloween week and celebrate the Day of the Dead. You won't be disappointed.

Well FEMA did a real neat Smoke and Mirrors job on a 'press conference' last week (10/23/07)...by having employees pose as reporters because the announced press conference only gave the local media 15 minutes to assemble.

Really dumb move on the Press Office (it is an extension of the Directors Office on the 8th Floor at HQ in Washington DC).

You'd think that upper management would have learned by now--apparently not.

But let's not bash the Rank and File employees of FEMA--they are really great people who believe in the programs, missions and aims of the Agency. The knuckleheads inside the beltway are so immersed in the bureaucratic existence that they really know how to sabotage those who do the good work.

To the management--I say it is time to earn a real living--go work at a disaster for 2 or more months.

To the Rank and File--I say keep up the good work!

Ok history buffs:

On this date in 1962-the trial to convict Nelson Mandela in Cape Town, South Africa begins--charged with Treason.