September 21, 2014

Home Prices to Fall 15% in the Next 3 Years

Filed under: Real Estate

House prices are 12% overvalued today. They have already started to decline. Today’s misevaluation matches the excess of 2006-2007, just before the Great Recession. Since World War II home prices have been tightly correlated to income and mortgage rates (R2 = 96%). Investors/cash purchasers, which make up 50% of home sales, have driven real estate volatility to unrivaled levels in trackable history. As public policy makers debate seminal decisions on “forward guidance” and unconventional monetary stimulus we note that each 1% increase in rates drops home valuations by another 4%; at a 2% fed funds rate, where fed officials and investors expect to be by the end of 2016, the overvaluation equals 20%. Respectfully, the United States can not afford another housing driven recession. The facts and correlations – the tenets of probabilities – suggest it is more likely than not that home prices fall 15% in the next three years.

Joshua Pollard
“A Financial Imbalance”
Sept 17, 2014

April 13, 2012

Two Florida Mortgages, Ten Headaches, One Answer, One Realtor

I have a home in Clearwater, FL under contract for a short sale since 12/5/2011. Second lender ($80,000 heloc) wants $6,000 from first lender to release the lien plus 50% promissory note and will not bend. First lender has approved us for HAFA, which will require full release from second who will not do so. How can this be reconciled- if at all? If closing occurs outside HAFA, we don’t have confirmation that the first will waive their deficiency. We’ve talked about bankruptcy but would like to avoid it if possible. Any suggestions?

Mike (more…)

March 5, 2012

St Petersburg Florida Process Server

As a Florida licensed real estate agent working short sales in Pinellas, Hillsborough, and Manatee counties, I check the lis pendens filings in each of those counties each day shortly after they are filed.  A couple of weeks ago I saw a foreclosure filing for a property in the subdivision of my own residence in St Petersburg, FL.  Looking a little closer I discovered that it was for the home directly next door to my own.

I do mailouts to folks in St Petersburg, Clearwater, Seminole, Tampa, Bradenton, Sarasota, Palm Harbor, Largo, Pinellas Park, Safety Harbor and basically all areas in and around the Tampa Bay area for those who have recently been named defendant in a foreclosure action.  I get a good response I think partly because my services are free to them and partly because my mailers are chock full of information that can help them get out of this foreclosure mess, containing the harm to their credit report, and getting them a check for $3,000 for relocation – again all of that is free.  You see licensed real estate agents in Florida represent sellers in short sale transactions in a fiduciary relationship yet shorting lenders pay their fee upon closing the transaction.  Banks need Florida real estate agents to get short sales closed and if you are a Florida short seller then you need a real estate agent too.  The idea that there is a short sale expert who can guide them through the process is appealing and perhaps even more so if it is someone that they don’t already know.  My friendly mailer is timely.  But I’m getting sidetracked here, back to my neighbor.

I’m not sure he speaks English.  I waive to him every now and then when I see him in the front yard.  He smiles and waives back.  I’ve tossed a few volleyballs back over the fence that landed in my backyard when the kids were playing – I hear a child say thank you as the ball bounces back into their yard.  The kids speak English but I don’t think the father does.  Anyways, I saw the foreclosure filing and decided not to send my mailer to him.

Why you ask?  I’m not sure but something felt strange about it because I never know how someone might react.  When I send the mailer offering Florida short sale help to strangers in the Tampa Bay area I learn that almost all of them know, are related to, or are friends with another Florida real estate agent yet they choose to work with me, and perhaps the fact that I don’t already know them is what is appealing.  People need to come to grips with the fact that homes are upside down, incomes have been reduced, living expenses have increased, etc. and it is easier to talk with a realtor-stranger who you know is an expert than it is to bear your soul to the local realtor-agent-friend whose kid plays on the same little league team as your own.

A few minutes before writing this article I stepped outside.  It was around 9 pm Monday night.  A creepy pick up truck was parked in front of my neighbor’s house.  I hadn’t seen it before and it was parked in an odd way blocking the driveway.  A few more steps outside and the pick up truck starts its engine and drives away.  The first thought that came to my mind was that my neighbor has just been served his foreclosure complaint by the driver of the creepy pick up truck.  After that I started thinking about how many people are going through this exact situation right now – just served with a Florida foreclosure complaint by a process server.  And finally, I wrote this article.

February 19, 2012

Foreclosure Filed: Should I Hire An Attorney?

I live, breathe, eat, drink and occasionally sleep in what is considered by experts to be the heart of our Nation’s foreclosure crisis.  I am a Florida licensed real estate agent whose practice consists solely of representing sellers in Florida on short sale transactions.  Frequently, I am asked the following question by Florida homeowners: “A foreclosure has been filed against me, should I hire an attorney?”  My answer is always: “You can, that’s up to you.”

I deal with Florida foreclosure defense lawyers every day.  They represent the Florida homeowner in defending the foreclosure action through the courts and then refer their clients to me to handle the short sale.  I deal with the bank on behalf of the homeowner, get the approval of the shorting lender typically as a full release of liability with $3,000 paid to the seller by the bank for relocation costs and we close the file.  As a result of the successful HAFA short sale of the property, the lis pendens is discharged, the foreclosure case is dismissed, and the seller/borrower is forever free of this monstrous mortgage debt.  The Florida attorney in that scenario filed a notice of appearance and an answer to the foreclosure complaint and that’s it – case closed – full settlement.

I received a call after 8 PM on Friday night from a Florida foreclosure defense lawyer working late.  I didn’t get the message until Saturday morning.  It looked like he was playing catch up on his files and was asking about a specific file that we were working on together – he was handling the foreclosure defense for a client in Clearwater, Florida and I was handling the short sale for the same clients.  He wanted to know the status of the short sale.  Below is the email that I sent to his paralegal in reply:

Hey *paralegal name and attorney name redacted*,

*attorney name redacted* left a message for me at 8:17 pm last night asking for the status of *seller name redacted*.  *seller name redcated* was a HAFA short sale that closed on 12-30-2011 in your office.  The HUD1 is attached and there was a $900 attorney fee included for *attorney name redacted* on line # 1304.


Bear in mind that he was asking about the status of this file on 2-17-2012 and he was unaware that the file closed on 12-30-2011.  Some law offices are able to handle real estate closings so I sent the title work back to the law office and also had the shorting lender pick up an extra $900 tab for attorney fees for him.  I had sent him the HAFA short sale approval earlier that month and we had the closing in his office so it was a surprise that he was unaware that the closing took place.

But I’m getting a little sidetracked away from my point.  My point is that there has to be an end game for Florida homeowners in all of this.  Florida homes mortgaged prior to 2009 are in large part underwater and many that I deal with are severely underwater by $50,000 to $100,000 or more.  What is the goal in all of this?  To lengthen the amount of time that the foreclosure will take to complete?  And then what?  Be left with a Florida deficiency judgment and/or continued collection on the mortgage deficiency for up to 20 more years?  Is the goal to modify the loan?  When lenders modify mortgage loans they typically make them temporary and do not modify the principal.  This means that the lender can recall the loan and send you a past due bill at any time whether months or years later.  I have repeatedly encountered Florida homeowners who have been told –by no fault of their own – that the lender decided that they did not qualify for the loan mod over a year after having being given the mod and now the lender demanded all of the past due amounts at once.

The fact is that we are in the throes of a housing crisis and it is going to be a slow crawl out of all of this mess.  The foreclosure programs such as HAFA (the Home Affordable Foreclosure Alternatives) which allow a home to be short sold and require the bank to provide a full release of liability and give $3,000 to the home seller at closing are set to expire at the end of this year.  Also, there are some dire tax consequences written in the IRS code for those who wait until after 2012 to complete a short sale.  This means the time to settle the debt and get out of it without having to repay the deficiency or taxes on the debt forgiveness to the IRS is now, this year.  Those who wait it out may find that these programs no longer exist come 2013.

This article is not to say that hiring an attorney won’t help the homeowner.  Other than the cost, it certainly won’t hurt.  And I don’t know your situation – maybe you have equity?  Maybe you made all of your payments on time and were never late?  Or maybe you came home one night and there was a creepy process server sitting in your driveway who handed you a Florida foreclosure complaint and the first thing that came to mind was: I should hire an attorney.  So, I get asked that question a lot – a foreclosure has been filed against you and you want to know if you should hire an attorney?  My answer: You can, that’s up to you.  I will help you with the short sale.

Do you like what you read, then contact me for help with your Florida Short Sale

July 31, 2011

Pinellas County Florida Short Sales Getting Affordable

Filed under: Real Estate,Short Sale

Clearwater Florida * 3 Bed, 3 Bath * Short Sale Only $109k

July 14, 2011

St Petersburg Florida Foreclosure Defense Lawyer

Matthew Weidner, a Florida foreclosure defense lawyer, as quoted today by the St Petersburg Times:

“This is a catastrophe being laid upon a crisis,” he said. “America is foreclosing upon ourselves. The federal government is foreclosing on taxpayers to pay rich bankers. This is madness.”

July 9, 2010

Biggest Defaulters on Mortgages Are the Rich

Filed under: Foreclosure,Real Estate

NYTimes – No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”

The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.

In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.

The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.

The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”

Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.

“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”

The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.

“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.

In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.

The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.

The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.

But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.

His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.

“I’m going to be downsizing,” he said.

The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”

March 24, 2010

Short Sale Prior To Default?

Hello Paul, I just approved for mortgage modification. However, it is not the Obama plan. I am paying about 48% of my income toward mortgage. It is not realistic number. My new trial period starts April 2010. I have gave a lot of thought. I thinking about just leaving the property by using short sale. Can I request a short sale whiling I am in new trial modification? Or do I need to default again and request Short Sale? Any advice would be help.

Jonah (more…)

January 12, 2010

Shadow Inventory

Filed under: Foreclosure,Real Estate – Although the Obama administration has worked to suppress foreclosures, it appears these efforts may not be enough, according to Bank Foreclosures Sale, a foreclosure listing service.

High unemployment continues to plague the real estate market, and according to a recent article in the New York Times, an estimated 2.4 million foreclosed homes will be added to the list of 2010 foreclosures. As a result, Bank Foreclosures Sale predicts prices will decrease another 10 percent.

Simon Campbell, a real estate analyst for the company, said it appears the real estate market may see a surge of shadow inventory properties appear on the market. These are properties that have not been calculated into official inventory numbers and include homes repossessed by lenders through foreclosures and similar actions and homes where owners are 90 days or more delinquent on payments.

Unemployment remains at a record high, and congressional leaders continue to look for ways that millions of people who have lost their jobs will be able to stay in their homes. While current statistics show lenders may finally be closer to finding a solution for the home mortgage crisis, Campbell said the question now is about how fast these lenders can work to stem potential foreclosures.

“Until we see a reduction in the number of foreclosures, we cannot get too hopeful about restoring housing industry stability,” Campbell said.

January 2, 2010

Years of Illusion: A Look Back at the Naughts

LasVegasSun – As Las Vegas limps into a new decade, let us return to the now-hazy origins of our current sickness: 2005.

It would seem the entire Las Vegas Valley had been slipped a drink laced with a financial hallucinogen — a powerful narcotic that combined Ecstasy’s feelings of well-being with methamphetamine’s urge to be busy.

Even the city’s most accomplished business and political elites could not resist its influence. They were spaced out, convinced that the laws of the economic universe had been suspended, that housing prices could expand into space, that borrowing money was as holy as prayer.

“We thought we had a recession-proof economy, we thought we would grow forever,” says Elliott Parker, a UNR economist.

Parker describes an “illusion, that we could create wealth from nothing, that we could keep consuming beyond our income, that housing prices would keep rising, that investments could yield high returns without risk, since we were all so clever …”

If they weren’t addicted to the drug themselves, Las Vegas denizens acted as street corner touts — marketing the magical drug for a living — and were always shouting its wonders.

We were, in Parker’s words, “selling high roller fantasies to gamblers and expensive houses to people who sold their homes elsewhere for even more insane amounts of money. We thought it would continue forever, and we made no contingency plans for the alternative.”

Illusion. Fantasy.

When skeptics pointed out that perhaps a dangerous real estate bubble was forming, the crowd responded with mockery:

“The only bubble you’ll see in this market is in a Champagne glass,” a well-known real estate player said in our now fated year of 2005.

But in fact, here’s what was happening in the Las Vegas real estate market: After years of slow and steady growth, a mania took hold. Home values had increased more than 35 percent in 2004 alone.

It was a classic bubble by 2005, right up there with phony Silicon Valley technology companies 10 years ago, and phony Amsterdam tulip futures 375 years ago.

For a while, Americans could borrow unlimited sums of money against their rising home values to come to Las Vegas to spend money. So we built new resorts.

We needed construction workers to build those resorts. We needed other construction workers to build homes for the first construction workers.

Simple logic

This wouldn’t — couldn’t — go on forever. At some point, Americans would hit their limits and the growth of tourism would slow, and we wouldn’t need so many construction workers to build resorts, and then we wouldn’t need so many construction workers to build those houses for the first construction workers.

Once we didn’t need those construction workers, they would be laid off and stop making mortgage payments on their homes. And the sell-off would begin. Throw in all the subprime loans that borrowers couldn’t pay to begin with and you’d get a fire sale. Welcome to 2007.

It’s simple logic, really. Any college freshman who got suckered into a pyramid scheme could explain the illogical underpinnings of it all. It was an economic house built without a foundation on a sandy desert hillside. And there it goes, into the wash.

Sure, we had the resorts, and the wealth they created was real, but the Strip was living on borrowed time, larded with debt, a bad recession away from near collapse and in some cases, bankruptcy.

“A growth-addicted economy produced phony prosperity,” says Hugh Jackson, proprietor of the Las Vegas Gleaner blog and a policy consultant to the Progressive Leadership Alliance of Nevada, a liberal advocacy group.

Phony. Like the happiness of a drug.

This isn’t to say that the decade didn’t begin with hopeful signals — low unemployment and rising wages, and the tax revenue needed to improve schools, health care and social services. The Strip kept attracting more customers and building more hotel rooms to house them.

But the 9/11 terrorist attacks should have provided a clear warning that a dip in tourism could pummel the city. When tourism quickly resumed, however, that warning went unheeded.

Plus, debt was accumulating, in households here and among potential customers around the world, and on corporate balance sheets.

It should have been a portentous time, a ripe time for Cassandras.

“The decade began with a facade,” Jackson says of those go-go years.

A facade. Soon it was a Potemkin village of steel and stucco, massage parlors and pawn shops.

So wrong

In the reality-based world, many people knew the intensifying speculative bubble in real estate wasn’t sustainable and tried to warn others. Bill Robinson, a UNLV economist, sold his house in 2005, patiently explaining to neighbors the laws of economic reality and the coming crash.

“Everybody who was independent of all this saw it coming,” Robinson says. Meaning everybody sophisticated enough to understand economic data and not a paid representative of the resort or development industries.

(And, in fairness, some people from those industries tried to pull the fire alarm early on.)

What is striking about our real estate player, the one who sneered about there being no bubbles except those in Champagne, isn’t that he turned out to be so wrong. After all, people are wrong all the time. The sun revolved around the Earth for centuries after Ptolemy, and many smart and well-meaning people, even the high priest of laissez faire capitalism Alan Greenspan, were wrong about the housing bubble.

No, what’s striking is the tone of triumph and arrogance, like he’s pulled one over on the stupid herd.

It turns out, our addiction’s true power was so much like that of other drugs: It gave the user great powers to deceive.

We were good at deceiving others.

“Hardly anything we did this decade was upfront,” Robinson says.

Illusion has always been part of Las Vegas’ appeal — that we would not succumb to mathematical certainty at a card table; that we could come here and remake ourselves into glamour gods; that buildings that look like the New York City skyline can approximate the feeling one would get from actually being in New York City.

Illusion is one thing.

Deception, done with malice and for the most selfish ends, is something else.

Deception in Las Vegas took many different forms this decade.

Easy to con

On the Clark County Commission, four members would eventually be convicted of what amounted to dishonest service for taking bribes. Erin Kenny told us she was acting on the community’s behalf when she pushed approval of a CVS drugstore at Desert Inn Road and Buffalo Drive. Really, it was for a $200,000 bribe.

From the sensational to the prosaic: The real estate loan officers who extended money to people knowing they couldn’t repay, demanding no documentation, employing no safeguards or due diligence.

So, waddya make last year?

Oh, that’s good enough.

“Stated income,” we called these loans, employing our bottomless ability for euphemism.

Or, our lenders weren’t straight with borrowers — many who didn’t speak English — about what would happen to their monthly payment in a year or two after a “reset.”

On the other side of the ledger, there were speculators and plenty of average people who took out loans they had no intention of repaying.

“The easiest con for a con artist is another con artist,” says Mike Green, the Nevada historian. “If you want to believe you’ll always be living on the Big Rock Candy Mountain, then it’s easy for someone to sell you another piece of worthless land.”

Once things started to collapse, a whole new set of scam artists — “loan modification specialists” — preyed on vulnerable homeowners, promising to keep them in their homes but running off with cash instead.

For so many — and at great expense to the rest of us — the decade was a giant con, a bamboozlement, a flimflam.

“We have a history of benefiting from all that flimflamming,” Robinson notes.

“It’s kind of our culture. So at some point it was inevitable that if there was an easy-money climate, we would fall prey to it,” he says.

Which brings us back to another kind of deception, perhaps most damaging of all — self-deception.

“It’s easy to delude yourself into believing something you want to be true. And here we are,” says Mike Sloan, a gaming consultant and former state senator.

We were deceived, we were narcotized, because we wanted to be deceived.

Next Page »

Back to Broken Credit Blog