The Conspiracy to Keep You Poor and Stupid, which should be in your feed-reader — especially right now:
What is “crisis-itis?” It is my own diagnosis. It is a form of dementia where the inflicted believes his or her own self worth rises as the situation he monitors worsens. In all cases, the inflicted greatly exaggerates his or her control over events, as well as the size, duration, and impact of those events. In extreme cases, the inflicted seeks to worsen the crisis to inflate his or her self esteem.
Technorati Tags: real estate, real estate marketing
Jefferson Otwell says:
So, does that mean that crisis-itis is a social form of Munchhausen’s Syndrome? And that financial crisis-itis is a political form of it?
August 13, 2007 — 5:47 pm
burress says:
“If Congress must do something, then it should pass a law requiring all crises to occur during congressional recesses.”
I’d vote in favor to pass that one! Who is providing legislative oversite for all these lenders? What did the lenders do wrong? I haven’t been following this mess but I know the lenders have incentives somewhere to offer subprime loans to those who cannot avoid it. It’s the basis of fighting proverty. Then you have all the borrowers going out refinancing and buying SUVs with money they claimed they needed to fix up the house, etc…
sorry if i make no sense… lost a lot of blood today in my little chainsaw accident.
August 13, 2007 — 7:40 pm
Robert Kerr says:
Make no mistake, federal legislative action is going to happen. Heck, it’s already happening at the state level.
The industry has brought this upon itself through excess and abuse – and subsequent wholesale denial of any culpability – and Congress is going to wield the only stick it has.
August 13, 2007 — 10:33 pm
Brian Holden says:
Anyone facing foreclosure should be aware that there is one very important alternative to avoid the foreclosure and that is the Short Sale. A Short Sale is a proven way for a homeowner who owes more than the house is worth to avoid a foreclosure and the subsequent credit hit.
I would advise anyone facing foreclosure to discuss their situation with an experienced Realtor. Short Sales are not a part of real estate basic training but there are a number of educational seminars a Realtor can take to get up to speed. Lenders will pay a reasonable selling commission so Realtors have an incentive to get involved in Short Sale situations.
The basic requirements for a Short Sale are a Listing Agreement with a Realtor and a Sales Contract from a Buyer which are submitted to the Lender along with a Hardship Letter from the Seller explaining why they cannot continue to pay the mortgage and supporting documents such as tax returns, bank statements, information and photos of the home and the Comps, or comparative home prices supporting the offer. The way mortgages are sold, the lender can be anywhere in the country and certainly not aware of local real estate conditions.
If the package is complete, the Lender will order a BPO, or Broker’s Price Opinion, from an independent Realtor. Ths BPO is the key to the whole process. If it is too high, the Lender will not accept a low offer. Your Realtor can meet with the Agent doing the BPO and offer information supporting the offer, such as the average time on market of comparable homes, recent selling prices and point out any defects in the home. Most Lenders will accept an offer lower than the BPO, but usually not much more than 10% lower, though that will vary depending on the company.
The sales contract should specifically state that the offer is contingent on the Lender accepting the purchase price in full and forgiving the Seller the deficiency on the mortgage. There can be tax consequences but if the Seller is truly in a difficult financial situation they can be avoided – an accountant should certainly be involved in that question. This does all take time and Lenders are swamped, expect at least 2-3 months before a sale can be finalized, even if the Lender accepts the first offer. If they do not, the price can be negotiated.
I am a Realtor, a Broker Associate and I am involved in Short Sales. It is a detailed but fairly straightforward process that can work to benefit Buyer, Seller and even the Lender. The Buyer gets a good price on a home, the Seller gets to avoid the disruption and credit hit of a foreclosure and the Lender avoids the delay and expense of foreclosing on a property they don’t want to own and that would negatively impact their ability to make more loans.
All this information is available on the web site
http://www.free-foreclosure-information.com
August 13, 2007 — 11:44 pm
jimi says:
A short sale may benefit the consumer by avoiding foreclosure. However, when the lender “forgives” the un-recovered debt, the consumer gets a 1099 for the “debt relief”. In a high cost area where values are plunging, a borrower “forgiven” say $150k, will get a huge tax bill!(approx. $50k for 28% tax bracket). How bout them apples!
August 14, 2007 — 6:48 am
Brian Holden says:
Jimi – Don’t scare people TOO much.
What you say is true about the 1099 IF the mortgage company gets around to sending one, but there are provisions in the tax code for this “phantome income” to be offset if the Seller’s liabilities exceed their assets, which is usually the case if a Lender has allowed a Short Sale. After all, no money was actually received.
It’s a complex tax issue best discussed with an accountant, but no-one I know who went through a Short Sale had to pay the IRS anything. Congress is also looking at the Mortgage Cancellation Tax Relief Act of 2007 which would eliminate the 1099 requirement, however that will take a while.
The reason I started my Blogging to these sites is that there is just way too much mis-information being passed around on Foreclosures and Short Sales.
I know everyone means well, but it would really help if people checked their facts before they posted.
August 14, 2007 — 7:25 am