Real Estate Investing

Although short sales have become fairly commonplace in the last year, lenders have parameters that must be met to qualify to sell a home “short” of the payoff amount.  Parameters that *most* banks require, that is.  Some still don’t pay attention.  In a very illuminating post by Pacita Dimacali, an East Bay, North CA real estate agent in Alameda, one specific lender gets a pretty powerful dressing down.  She also writes on ActiveRain what conditions are defined as “hardship”:

HARDSHIP conditions include, but are not limited to:

Unemployment
Reduced income
Divorce
Separation
Medical bills
Too much debt
Death of spouse
Mortgage payment increases
Business failure
Job relocation
Illness
Damage to property
Military service
Incarceration

A friend of mine qualifies at least four of the 14 items listed here, but also deals with this bank that’s mentioned as being one of the worst for short-sales.  I think she’s bound for foreclosure before they ever get the paperwork done for a short-sale.  I hate that she’ll go through this, but she is not alone - there are a lot of people who sympathize with her position. In fact one commenter wrote (regarding the bank),

I know many say had our all-wise government just let the banks go ahead and fail it would have caused world-wide disaster. Well, I wish they had stayed out of it and let the chips fall where they may. No one comes to my aid or yours if we make bad decisions. As for the world-wide disaster, I think the banks are causing it themselves right now.

They do not care. That’s all. The top brass got their bonuses and that’s all that really mattered.

Read the entire article along with the comments.  Very very enlightening and I’m all about informing the consumer!

Remember the old Monty Python and the Holy Grail movie where the “collector” walked the streets with his cart shouting, “Bring out yer dead!”  The man brings out a body for the cart to collect the ninepence, but the body says, “I’m not dead yet.” This is what property preservation companies remind me of!

Several months ago, a property clean-up crew member came to the office and told us about the grueling work they do.  They’ve seen and cleaned up just about everything … and I imagine they dread opening the next door to see what’s in store for them.  In an article published on MSNBC.com, the reporter followed one property preservation company,

Ever open a utensil drawer in a kitchen and have rats leap out?

Hazel has.

Ever crawl around a pitch-black attic, feel a buzzing tremor, and flash a light on a hornet’s nest big as a 55-gallon drum?

Hazel has.

Ever enter the backyard of a mansion, stroll over to an Olympic-sized pool and notice somebody floating, face down?

Hazel hasn’t yet — though he expects to.

“You hear horror stories from people who do this kind of work,” he says. “I’ve never walked in on any floaters. But this job is pretty much a grab bag; you never know what you’ll be walking into in the morning.”

For people looking for work, this could be a possible niche to get into, but jump now while the work is good.  With the second great world-wide depression diverted, according to Economist Paul Krugman, things may be getting better.  However, I anticipate there will be plenty of foreclosures to clean in the next year because there’s such a back-log of homes to sell, so this is a great time to be in the clean-up business. If you have the stamina - and the stomach - for it!

Every time I turn on the television, I hear about how angry people are that the federal government is spending TRILLIONS of dollars to boost the economy and how awful it is to be sending money to the banks who caused the problems in the first place.  Without going all political on you here - though I most definitely have my own opinions on the subject - I did read one interesting and viable solution to the problems with the foreclosures in the housing market.

John Watch of AccuriZ The Science of Valuation said Franklin Roosevelt called it a Lend Lease program, but here’s how it works (in John’s words):

• Mr. and Mrs. ZZZZZ have a mortgage payment of $1,170 ($200,000 loan with 30 year payout at 5.75% interest).
• The ZZZZ’s lose their job and can only pay $470, so the government pays the difference of $700
• So the ZZZZ’s remain homeowners and work through their problem. It takes the ZZZZ’s 10 months to get back on their feet, the government paid out $7,000 and now the ZZZZ’s owe the government.
• But the government says okay, you can start paying us back in seven years and the payment will be over 10 years at an interest rate of 3%.

He added,

This program is not perfect, but it can assist a lot of people who want to own homes. Most importantly, it is channeled directly to the property owner, not a large corporation that has other motives besides keeping the property owner solvent.

I can see how this will help homeowners today.  I think of my friend and her family who’ve been unemployed for a year now and know they could easily come up with a house payment of $500 instead of the $900 they are paying now.  If they had two years of help (capped at $50,000 as suggested in the post), they’d be that far ahead still on their own home and could start paying back when they get back on their feet - the seven year delay to start paying back is genius.

Read his entire post because there are further benefits of this suggestion (job creation!).

Photo by leedsyorkshires via Flickr Creative Commons.