Real Estate Investing

I watched part of the NBC News Special this weekend that Brian Williams hosted - a look inside President Obama’s White House.  I regret that I only watched the first half, but one thing definitely caught my attention.  It was how the President replied to how he’d respond to a woman’s letter stating her disappointment in how the banks with federal bailout money aren’t doing anything to help people save their homes.  He said he would answer that he’s also very concerned with how the money is being handled.

Lately I’ve had an abundance of experiences with both my friends and clients where lenders are quite UNWILLING to help sellers.  I might have talked about it before, but one friend was having a difficult time making her high-interest rate mortgage payment, so she called her lender to ask about refinancing.  The lender explained they could do nothing unless she missed a payment.  In response, she skipped her December payment and bought her kids a Wii for Christmas.  In January, she called back and they nearly fell over themselves to do a refinance… her payment went from a ridiculous $1200 p/month payment (for a $120,000 house) to about $850.

Another case study: a buyer has written an offer for a house - a GOOD offer.  The institution holding the mortgage has indicated they’d rather see it go to foreclosure than allow a short-sale.  Now I don’t know what gives with that - it seems like it would make better sense to forgive $10,000 than go to the expense of losing more than $50,000 if they foreclose, but I believe this is indicative of why we have a mortgage mess in the first place.  Are there any sound business guidelines to be found under the roof of this lender?

I don’t believe I’m the only one scratching her head wondering at the insanity.  In addition to the White House receiving letters, phone calls, and emails from people seeking help, they’ve also begun to contact their members of Congress.  And they’re getting results. According to MSNBC.com,

Rep. Maxine Waters, who represents Los Angeles, has called mortgage lenders directly to seek lower payments for her constituents.

Waters said it’s frustrating. She’s spent more than an hour on hold before, listening to music and getting transferred to different departments.

She said the process can be worse for homeowners who are only slightly behind in their mortgage payments. A grossly delinquent homeowner might get a specialist on the line who can modify the loan, Waters said. But other cases are handled by someone who merely threatens homeowners to pay up.

When members of Congress also get a run-around, you know something is wrong with the system.  I advocate that lenders take a long hard look at how their decisions are made, be more responsive to responsible homewoners, and stop trying to be punitive when homeowners are trying to find ways to make it work.