Archive for the 'Just "My" Opinion' Category
Is the Glass “HAFA” full or “HAFA” empty?
February 26th, 2010 categories: Just "My" Opinion, Short Sales
Will Hafa be a success or failure?
The National Association of Realtors has new numbers on existing home sales for the month of January and they are not good.
The First Time Home Buyer program is due to expire April 30, 2010. How many more months will it last. If home sales are down with the stimulus what will happen when the stimulus is no longer available to new home buyers.
FHA guidelines are changing and many people looking to buy are not going to qualify for FHA loans.
Unemployment continues to be the number 1 problem. If people do not find jobs more mortgage defaults are learching around the corner
Pre-foreclosure (Short Sales) and Bank owned (REO’s) represent 34-39% of all home sales. Yet buyers, agents that I talk to are all frustrated because pending sales are taking too long.
Short Sales can take anywhere from 6 months to a year to close.
On April 5, 2010 HAFA will go into effect. The question is “How many lenders will participate in the program?” Will it streamline the process of Short Sales and Deed in Lieu or just be another beurocracy created by government.
We will have to wait and see if the glass is “HAFA” full or “HAFA” empty.
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HAFA Program Explained …
January 19th, 2010 categories: Ask the "Specialist", Just "My" Opinion, Short Sales
The HAFA program is a logical addition to the HAMP program.
My friend Jafer Hasnain of Lifeline Assets has written an article on the HAFA program and I am glad to share his article here on my website.
Thank you Jafer…
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It May Look Like Steak but Taste Like Beef Jerky.. The ‘Deed For Lease Program”
November 9th, 2009 categories: Just "My" Opinion
Fannie Mae announced a new program on Thursday that may look like steak to some but taste like beef jerky. The program is called ‘The Deed for Lease Program.
‘The Deed for Lease Program”is a temporary solution to the foreclosure problem. The program is for homeowners who DO NOT qualify for a loan modification program but DO NOT want to move from their home.
In this program the borrower voluntarily transfers the deed back to the lender and the lender rents back the home to the borrower at Fair Market Value or no more than 31% of the borrowers gross monthly income.
Doe this sound familiar. It should because the 31% is also used as the criteria for the Home Affordable Modification program (HAMP) program. If Borrowers did not qualify for a home modification program why would anyone think the lender would now rent the same home to some who has defaulted on their mortgage and would not be considered a good candidate for a new loan.
There seems to be a flaw in logic to this plan. It may look like steak, smell like steak, but it taste like beef jerky…
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Is The Glass Half Empty or Half Full?
September 30th, 2009 categories: Just "My" Opinion
When it comes to predicting the state of the economy and the real estate market its like looking at a glass of water.
Is it half full or half empty?
Neither.
We are no where near a recovery nor are we at the bottom.
STOCK MARKET:
In the short run the stock market will get better before housing .
People who have lost a lot of personal wealth are anxious to make up some of that loss.
With low interest rates on CD’s, Treasuries, The Stock market appears to be half full.
REAL ESTATE
Real Estate is another story. Real estate in general lags behind other markets and with unemployment data at 10% nationally I think the Real Estate Market glass is half empty.
I predict we will see more foreclosures as more people are going to be unable to modify their loans or pay their mortgage while unemployed.
I think home prices will continue to decline because of the increase in foreclosures.
I think there will be fewer home buyers due to tighter credit, or if the First time Home buyer credit is not renewed or if FHA runs out of money.
According to the Home Builders Association there will be fewer new homes being built due to lack of credit and financing.
I would love to hear your comments….
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If I Had X-Ray Vision Like Superman “What Would I See?”
July 22nd, 2009 categories: Just "My" Opinion
If I had X-Ray Vision Like Superman “What would I see behind closed Doors?”
Loss Mitigators playing with Paper Airplanes?
How many times have you had re-fax a file because the Loss Mitigator says they never received it?
Bankers trying to manipulate figures on the final HUD-1 Statement?
Or Investors just playing a game of Risk ? 
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Unemployment in IL is the Number 1 Problem …
July 8th, 2009 categories: Just "My" Opinion, Local Markets
Every day I get asked the following question ” How is the Real Estate Market?” and then the follow up question is “When do you think it is going to get better?”
These are the two most difficult questions to answer because I do not have a crystal ball and I am not able to predict when the market will get better.
All I can say is the number 1 problem we face in Illinois appears to be the rise in unemployment through out our State.
According to the most recent May figures, the unemployment rate is now 10.1 percent. According to the Department of Employment Security there are now 671,400 unemployed people in Illiniois.
The State of Illinois has lost more jobs that it is creating. In fact 290,800 more people have lost their jobs since the beginning of the recession.
According to a recent Chicago Crains article dated April 9, 2009, Illinois companies plan to cut 2, 486 jobs.
Android Industries, LLC, an engine manufacturer, plans to cut 273 jobs.
AHS Food Company, a soybean processing company, plans to cut 246 jobs.
HSBC Finance Corporation, plans to cut 214 Illinois jobs
Northfield Laboratories announced 69 jobs are being cut.
RR Donnelly, announced 118 jobs are being cut
Motorolla announced 74 jobs are being cut in Libertyville.
As more people loose their jobs there will be a a rippling affect in the Illinois housing market.
People who loose their jobs will be unable to pay their mortgage on their homes and will not be able to refinance their mortgage or modify their loans with their lender.
I predict more home foreclosures and a longer recovery to the Housing Market in Illinois.
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Does Anybody Want a Free Glass of Lemonade?
June 18th, 2009 categories: Just "My" Opinion
As I reviewed the Home Affordable Modification Program (HAMP) in more detail I thought of another analogy to help people understand the concept “Mortgage Forebearance”.
As a child my first business enterprise was a “Lemonade Stand” in front of my house.
I stood outside selling lemonade to people as they parked their cars and went to the beach near my house.
My stand look something very similar to the picture you see in this blog.
If you look real close to the picture you will see children standing in line with money and the very last boy in line is standing there without anything.
He appears to be looking for something. Maybe he thinks money will fall from the sky. I don’t know about you but I think he plans on asking for a free drink in the form of I.O.U.
Well a ” Mortgage Forebearance is also a form of an I.O. U. 
instead of Lemondade it’s your home.
Well back to my analogy. If I were the operator of this lemonade stand and I gave this boy a free glass of lemonade in the form of an I.O.U. what are the chances that I would collect my money after the glass is empty? Not very good. As a entrepreneur I expect those losses.
Now back to the homeowner who has to agree to a “Mortgage Forebearance” Let’s say this homeowner agrees to sign this I.O.U. with the bank and wants to sell his home in 5 years and the value of the home is less than the amount he has agreed to pay back to the bank in the form of the I.O.U. what is the banks chance of collecting on this I.O.U.
I think it is pretty much like the boy in the lemonade stand.
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Banks Should Stay Out of The Real Estate Business…
June 16th, 2009 categories: Just "My" Opinion
I have been a realtor for over 10 years it is my opinion that Banks Should Stay out of the Real Estate Business and do what they do best LEND MONEY.
I recently had an experience doing a short sale where I had 7 offers and I could not get the bank to accept the highest and best offer we had which was over list price.
If you have been in this business long enough you know “Your first offer is usually your best offer” so why does the bank think their property is worth more.
I know for a fact that as soon as they put the property back on the market there will be a price reduction and they will get less for the property.
So again I say to them “Do you want to be in the Real Estate Business or Lending Business?”
Remember another cliche” Time is of the Essence” or in the Finance business ” Time Value of Money”. Money received today is worth more than money received in the future…
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Banks Need A Clean Load of Laundry
May 20th, 2009 categories: Just "My" Opinion
When I thought about writing an article that would try to describe how we got ourselves into this financial mess I thought about the analogy of going off to college with a clean load of laundry.
Imagine the real estate market 30 years ago.
Back then, if you wanted to buy a home you would go to the community bank or savings and loan and ask them to give you a loan. You would give them all of your personal financial information. They would qualify you for a loan based on the value of the home, the purchase price, how much you have in savings, how much you earn on your job.
Giving you a loan was pretty clean and neat. The bank would hold on the mortgage and receive monthly payments from you until the loan was paid off.
Our banks grow up and go off to college and look what happens. The once neat pile of laundry turns into room full of dirty laundry.
Banks started to realize that they could not do more loans if they did not hold onto your mortgage for the full 30 years. So based on your credit, the value of the asset, they bundled the loan with other loans like your to investors.
This is called repackaging cash flow producing financial assets into Securities.
The banks soon found out there were many people interested in buying mortgage backed securities than there were loans. So here is what they did. They started to mix the loans together AAA rated loans with Subprime loans. The pile of mortgages kind of looks like our dirty laundry pile above and here is the problem we have today.
We need to sort out all of the laundry. We need to put whites with whites, color with colors, those that need to be washed as seperates and so forth. The rest we take to the dry cleaner.
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You can Put Lipstick on a Pig but…
March 29th, 2009 categories: Just "My" Opinion
You can put “Lipstick on a Pig” but it will still be a “Pig”. This is what the government is doing with the toxic assets. They have now changed the name from “Toxic Assets” to the term “Legacy Assets”.
What is a Legacy Asset? Well according to Wiki, “Legacy Assets are those assets which are less productive (outdated) and in some cases least productive overtime, they are just on the brink of being a liability overtime.”
What does Toxic Mean? Well according to Wiki, “Toxic means capable of serious injury and even death from poison.”
It really doesn’t matter which word you use when describing these bad loans. The way I see it is they will continue to be a liability to our economic and financial recovery and may even cause serious injury or death to the current way we function as a society.
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