February 2009 Archives

Hopefully, a cycle that actually began in November will be coming to an end on or about March 6.  I am referring to the decisions by almost all mortgage servicers to not foreclose on homeowners who are actually living in their defaulted home.  Without trying to sound self-serving, I have found myself many times over the last couple of months explaining the other side of this argument.  The one that is not so politically popular, but like many things, is the reality of the matter.

Step one to providing value in a moratorium is to create a modification program with enough teeth to make it very attractive for the defaulting homeowner.  We finally have a national program just announced last week.  Frankly, it is pretty narrow in focus, and controversial in who it rewards.  With the announcement of the program, it has become clear that the five months of foreclosure moratoriums will likely be coming to an end.  Properties where the occupant is the owner, may still live for another day.  The interesting thing to note in our practice is that this might be 5% of all properties in default.

Why is this?  Most often the sad truth is when a person decides things are so bad they do not make their house payment, no matter what the possible restrucutre might offer, it is too late.  They want out.  Many of these cases involve personal tragedies that simply providing $100 a month in savings are not going to fix.

This whole subject involves a lot of psychology.  The defaulting homeowner may be given some element of hope knowing there is the potential of their mortgage being modified, the servicers are able to take some of the heat off of themselves (rightly or wrongly) as they are today's villan in this mess.  Most of them are not the "greedy bankers" portrayed by the politicians as making these loans. Then we have the politicians.  I blog enough on today's politicians..you know how I feel.  Lets just leave it to say that sticking their nose in the private sector and cramming rules that sound politically correct (no matter what the consequences) is the normal fare of the day.

Recent statistics show that modified mortgages over the last two years actually return to default at a rate of 60% within six months.  This statistic amplifies the costs involved in a process that has a low history of success.  Liberals I know point out that this is a fantastic outcome..40% of homeowners are still NOT in default after six months when their loans are modified.  Unfortunately, another 15% find their way into default within the following three months.  In the meantime, neighborhoods deteriorate and home values continue to fall..hurting the people who continue to be able to afford their homes.

The forgotten fact as we spend billions trying to help a few is that the  defaulting homeowner usually has no money for maintenance and repairs.  If they successfully modifiy their mortgage, not only faced with continuing financial pressure, the home does not end the cycle of deterioration began months earlier.  This has significant ramifications on the entire community.  Believe me, in our business we see the effects of this neglect.  All involved in these modification plans are spending a lot of time, money, and effort on a process that helps a very few, and does not have a history of success. 

Again, this is not a self-serving position for me.  I am just sharing from my unique experience the concerns I have that instead of saving communities, the government, and the servicers pressured by the government, are possibly making the social issues associated with foreclosure even worse.  As most things are today, I can only hope for the sake of our country that I am wrong.

Today, my lovely, and usually brilliant bride, informed me that we will be going to dinner on Valentines Day (that is Sat in case you did not know) with two other close couple friends to "the Japanese Steakhouse."  Maybe because I spend half my time somewhere but home, or maybe becasue I am oblivious as I drive, I had no idea that we had a "Japanese Steakhouse" in our community.  So, as is usually my practice, I say that sounds like a splendid idea and go along with my day..relieved that the pressue is off for me to come up with some great idea for the evening!

Tonight, I sit down to open the mail and there it is..the familiar blue package.  I bet you get one too.  The Valpak coupon mailer.  Here we all spend hours a day on line, looking for ways to spread the word of our business in the world of social media and websites..and there is still this company that sends out coupons regularly.  More interesting, even though I might find one or two that I think I might use..at a cost of 10 minutes of my time, I will still thumb through these Valpaks religiously.

So, I took a look at the Valpak website and learn an amazing, but believable fact.  90% of adults receiving Valpak usually open and look through the coupons!  So, I am not a nut after all.  I am normal.  Isn't it fascinating that in this day and age, something so 1980's (or even earlier) can achieve such results.  I wish 90% of the people who visited our website spent 10 minutes there.  I bet you do too.

The lesson?  We are all bargain hunters.  It is a primal need to find a deal.  Secondly, we like to find new places to shop, eat, and have our car serviced.  It is interesting.  Coupons provide a variety of ideas that provide us our fix.

I have heard of companies that offer a similar idea as Valpak on line.  I have always  felt a lack of enthusiasm for this concept.  On line coupons..what.. I have to use my own ink to print one to save a buck?  It just does not work in my world.

So, what do coupons have to do with my Valentines Day?  You probably already have this figured out.  The second coupon in the familiar blue pak is for the Valentines Day special at the Japanese Steakhouse I previously did not know existed.  In fact, I will save $5 on one entree and get a free Valentines Day desert with one entree!  Being my cheap self, this is one of the highlights of my day.  And just another reason that I will keep tearing into the Valpak and other coupon packages when they arrive.

Sometimes, realizing that some old fashion advertising still has value is a nice thing to discover.   Are there other old traditional methods of advertising that equally are worth their dirt?  Comment and let us know. 

I guess I can now only hope that the final tally, many years from now, of the Generational Theft Act of 2009, will prove to have been the shock our economy needs.  I seriously doubt it and I have history, and the Congressional Budget Office to back me up.

But..it does not matter.  The Democrats led by our iconic leader, know the American people wanted change.  Or at least enough to vote them in.  The rest of us preferred to not just leverage the heck out of our country's future and maybe even continue to be considered the model of prosperity.  Go back and look at 1980-81 if you want some recent history of a really bad economy.  We are not even close.  How would you like some 20% interest rates and 11% unemployment?  And somehow we fixed that economic mess without spending a trillion dollars.

Lets face this for what it is.  If you voted for the Democrats, you won and you basic allowed the mess we are headed into to occur.  Pork?  Change?  I guess the change we can believe in is the government now is not even in the lending business..no they are in the grant business.

Enjoy the following list.  When the final House-Senate compromise is approved and our leader signs this all into law..well you might just really be longing for the day when we questioned if a couple of mavericks really were change enough. 

I must say I never thought the day would come when I would be so proud of my alma mater's basketball program for the hard work and development they have shown for just missing establishing a new school record for consecutive losees.  After losing 11 games in a row, dating back to Dec. 10..that is almost 2 months..last night this very young group of players showed the resolve to not set a dubious record and  A few of us believers really felt they would not go 0-not in the Big Ten Conference and last nights victory over Iowa just shows how the program is improving every day despite the decimation of last year and that our new Coach, Tom Crean, is a heck of a Coach.

I sure hope these other teams enjoy kicking us while we are down.  I do not expect that will last for long.

Ah..life in America in 2009.  We have a cultural icon for President, we have learned that if you live in Washington it is apparently OK to fudge on your taxes, and if you belong to any kind of group at all you are entitled to government protection!  Now, in what I believe is a ridiculous, but revealing, request...a national group is insisting that Congress force the stimulus package to include a provision that allows all Realtors an equal opportunity to service the defaulted REO assets that servicers (who have received TARP funds) are managing.  This would include Fannie, Freddie, WAMU, Wells Fargo, Citi, Chase and the whole group that are either now controlled by the government or are in receipt of these funds.

Since we now worry so much about fairness, it seems to me that since many mortgages were insured with the help of a government guarantee, direct or indirect, we also should direct any seller of real estate, with a government-backed mortgage, to be forced to use the approved "fairness" pool of all Realtors in America.  We can actually set up a Federal program, run by HUD, to manage the enrollment of all Realtors who would like to be approved for this pool.  Then the government can inform all homeowners in America with a guaranteed mortgage or one serviced by companies with TARP funding, that they must select their Realtor through this pool.  A random selection process will be created using some of those new $100 million of federal computers being purchased with the stimulus funds.  The program will not take into account skills, neighborhood knowledge, or specializations that a Realtor may have.  Also, all NAR alphabet soup designations are irrelevant in our "Fairness to Realtors" program.  If you need to sell your home, you just enter some info on line at the great Big Brother web site and the next thing you know Sally Realtor will call and she will be your Realtor.

Sounds fair..right?  And that is what we are about now in America..playing fair!  Capitalism is really not fair so lets not use that word again..OK?

I am not making this up.  I will hope we are not this advanced in our entitlement mentality yet.  The word in that statement that concerns me is YET.  When people actually start investing time in creating petitions like this, I am afraid the paradigm has changed.  Oh wait..that is what we wanted..isn't it?

Read what has me up in arms, or laughing (I am not sure which).