We are doing various seminars during Money Smart Week.

If you missed the Short Sale Webinar, you can view it here:

No Negotiation of Preforeclosure Sales Commission

Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers

Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a reduction of the total commission to be paid to real estate agents to a level below what was negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales price of the property in the aggregate. Servicers are reminded that they must continue to obtain any approvals that may be required by interested third parties in connection with preforeclosure sales.

Common Sense Isn’t So Common

I wrote an article back on September 24th for InvestWithPassion.com, before the $700 billion Plan (TARP) was approved - which essentially layed out the reason why we needed it and what the potential consequences were without it. (very informative article, you should read it). Shortly thereafter, the plan was approved and it seemed we were heading in the right direction. I don’t think anyone believed that the plan would immediately fix all the problems with the economy, however it was intended to be a start.

According to Neel Kashkari, Assistant Secretary of Treasury, the funds were to be used in the following areas:

Mortgage-backed securities purchase program: Identify which troubled assets to purchase, from whom to buy them and which purchase mechanism will best meet the policy objectives.

Whole loan purchase program: Identify which types of whole residential mortgage loans to purchase first, how to value them, and which purchase mechanism will best meet the policy objectives.

Insurance program: Establish a program to insure troubled assets (mortgage-backed securities and whole loans).

Equity purchase program: Design a standardized program to purchase equity in a broad array of financial institutions.

Homeownership preservation: When mortgages and mortgage-backed securities are purchased, every possible opportunity to help homeowners will be explored, including working with borrowers, counselors and servicers to keep people in their homes.

Executive compensation: The law sets out important requirements regarding executive compensation for firms that participate in the TARP - therefore define the requirements for financial institutions to participate in three possible scenarios: One, an auction purchase of troubled assets; two, a broad equity or direct purchase program; and three, a case of an intervention to prevent the impending failure of a systemically significant institution.

Compliance: The law establishes important oversight and compliance structures, including establishing an Oversight Board, on-site participation of the General Accounting Office and the creation of a Special Inspector General, with thorough reporting requirements.

Sounds like an overall solid plan with potential, right? Well, have you ever heard the term “bait and switch”? It is a term used frequently in the mortgage industry and it usually unfolds at the closing table. Clients (borrowers) are given acceptable fees/closing costs at the initial time of application, however when they get to the closing table (approximately 30 days later) those costs have increased considerably. Usually, because of the emotions involved in closing on the house, this change is overlooked (somtimes intentionally and other times unintentionally). This is an unethical way of doing business and many of my counterparts don’t see the problem operating as such. This is exactly what I believe Treasury Secretary Henry Paulson and the Kashkari team has done here. If you remember, Congress denied the bill several times partially because it did not include any relief for homeowners and it did not establish any restictions on “golden parachutes” for executives. And it was not moving at all until these issues were addressed - hence the final proposal laid out above.

Now in a recent press conference, Paulson states:

“As credit markets froze in mid-September, the Administration asked Congress for broad tools and flexibility to rescue the financial system. We asked for $700 billion to purchase troubled assets from financial institutions. At the time, we believed that would be the most effective means of getting credit flowing again. During the two weeks that Congress considered the legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets - our initial focus - would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.”

In other words, we changed our mind and absolutely none ($0) of the $700 billion will be going toward helping homeowners as originally agreed upon. Now it seems to me that he never had any intention of deviating from his orginal plan which did not include assisting homeowners. Instead, once he realized that the original plan was not going through, he decided on the old “bait and switch” technique. I don’t understand, well yes I do understand, why Paulson and his team feel they can start to repair the problems with the economy without addressing the foreclosures - one of the underlying reasons we are in this perdicament.

I remember, a couple of months ago my brother borrowed my vehicle and I ended up driving his for a couple of days. While his vehicle was in my possession, the battery died on me. I had the vehicle towed to a service station and was told the battery had been drained due a faulty alternator. Now I had no clue what he was talking about and asked “so can I just purchase a new battery and be on my way.” The mechanic advised that I could obtain a new battery and the car will probably run for a short period of time, however if the problem with alternator is not addressed - the new battery will eventually be drained also. Eventhough I know very little about cars what he told me made sense, common sense. So I had the alternator and the battery replaced and the car was and still is running fine…

So if we apply that analogy to the current economic situation, essentially Paulson and his boys are trying the replace the battery without addressing the problems with the alternator. Doesn’t it just make sense, as opposed to giving the banks money (”strengthen bank balance sheets”) that they help the homeowners in foreclosure that are causing the bank’s financial problems? Can’t they see that if they start with the homeowners - that this will eliminate the bad debt that the banks are holding and therefore addressing the root cause of their financial problems - common sense. I can remember years ago, my grandmother telling me - “common sense isn’t so common.” As I’ve grown older, I see this more and more in everyday life. Could it be that people sometimes allow greed and power to control their actions? Or maybe it is as Jim Cramer (whom I love) stated a couple of months ago - “THEY KNOW NOTHING!”

Watch Cramer - THEY KNOW NOTHING!!!

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About the Author
AC Clinton, the Mortgage Closer, is the licensed loan originator, investor, author and entrepreneur. She believe’s that ownership of Real Estate, Stocks/Bonds, Business is the key to obtaining financial independence - Ownsomethingtoday.com.

I remember the day that Orlando and Aminah were married. I have always admired them because they are young, hardworking, educated, and they don’t care what the Joneses do because they are focused on their plan. Buying a home and creating sweat equity for themselves was also a part of the plan.

We have been in a contract on three different properties in Bronzeville and we went to the closing table once. Every property came with its own set of issues not to mention city liens that the City of Chicago wasn’t willing to subordinate first lien position on which is why we didn’t close.

No matter what the obstacle my clients never gave up on their vision. Ironically with every property there came huge price reductions. The first property they were willing to spend $255k, the second property $202k, and finally the one they bought was $162k and the sellers paid 6% towards their closing cost. That is a major savings.  My clients will have to wait several months before they can move in due to the renovations but they will make it through that hurdle as well.

The current market will make the next set of millionaires. You don’t want to kick yourself in the butt because you set on the fence.

I just came off the road from what I profess to be the best road trip I’ve taken. My road trip had been scheduled for months now and I was charged to be able to go to Cedar Rapids, Iowa. The hotel was directly of the expressway and for the first time in a long time I was able to fill up on less than sixty dollars.

Cedar Rapids has set an example for what a true Realtor® should strive for: Education. I was shocked that 100 of their 705 members took the time out of their schedule to come and learn about Short Sales and Foreclosures. That is over 14% percent of their members. Absolutely phenomenal.

While preparing myself to instruct my course “Short Sales: The Result of Foreclosure” I soon learned that Iowa isn’t plagued like the rest of the country with foreclosures problems. They are ranked 38^th in the country for foreclosure filings.

I always learn from my students and I was shocked to find out that they are currently selling 60% of their listing inventory in a little over six months. Realtors® are still making money in Iowa. Not to mention that when a short presents itself they now how the skill set to service that client.

I will be going back to Iowa because they have already told me that the class was excellent. Take a look at some of the comments:

It was wonderful to be educated by a bright and talented individual who knows her stuff!!  My team of four were present and we all enjoyed your presentation. Thanks so much. Now comes the tough work which is us following the instructions. We will succeed!  NV

I really enjoyed your Short Sale presentation in Cedar Rapids last week — you kept the material interesting and I’d highly recommend that anyone attend. LF

Your presentation was perhaps the most professional real estate training that I have experienced.  It was content rich, and well organized and presented. GW

To learn more about foreclosures and short sales please visit us at www.shortsaleresultsnow.com and if you’re looking to buy or sale real estate please visit us at www.markilemons.com.

Coffee or Not, the Bronzeville Coffee house has become my favorite spot to meet with clients and discuss the abundance of REO properties in the area which if managed properly can turn into gold mines. Why? The Bronzeville Coffee House you ask. Well it’s located in the heart of some of the most sought after Single Family Homes, Multi Unit Buildings, and Condo’s. I’ve never had a problem with parking, and the muffins and smoothies are delicious.

I don’t really go for the coffee but, I do buy something because I use their storefront as a regular meeting spot to discuss and show (Free Wi-Fi) what’s HOT-Foreclosures. I love the facts that with a little sweat equity my buyers are making out like bandits. They say it’s a depreciating market but my buyers are amassing a 100k (+) in equity once they complete the renovations on the numerous properties they are acquiring.

Next week we will close on yet another 203(k) loan where my first-time home buyers will have a 135k in equity after they convert a foreclosed three unit brownstone into their single family dream home. Talk about happy clients.

Looking to Buy or Sell in the Bronzeville, North Kenwood, Oakland, Grand Boulevard, Woodlawn, or Hyde Park area my team is here waiting to serve you. Now is an excellent time to buy.

Stop complaining and get up off your butt and create a real estate legacy. For the past two days I’ve attended NAR EAH (Employer Assisted Housing) program. I’ve identified yet another niche in real estate that can lead to an endless supply of buyer leads. What a great idea to work with employers in the communities that you service to help them retain and aide their employees with home buyer incentive programs. There is generally more money available for under served communities which are plagued by foreclosures.

Last week I had the pleasure of closing a new construction condo with a fresh out of college single parent. My client is resourceful and wanted every first time homebuyer incentive available. I negotiate numerous upgrades that the developer provided at no additional cost. But the greatest benefit was the $23,000 in forgivable subsidies that my client received. First Chicago Public Schools gave $3,000 that will be forgiven in five years and the City of Chicago gave $20,000 that will be forgiven over four years. After attending NAR event I now know that some buyers are receiving up to $75,000 in buyer incentives. Instead of reading headlines on how bad the real estate market is, I plan on researching how much money is out there for my buyers seeing that you’re too busy complaining about the market. For those who practice real estate in Illinois our incentives are underutilized.

For more information copy and paste the link below:

http://www.realtor.org/government_affairs/housing_opportunity/programs/home_from_work/take_a_home_from_work_class

Marki D. Lemons

National Trainer, Certified Residential Broker

CRB, CRS, CNE, QSC, SRES, ABR, ABRM, CRMS, MBA

Rubloff Residential Properties

773-454-0274 Cell

888-205-4615 Voice and Fax

www.markilemons.com

www.shortsaleresultsnow.com

The 700 billion dollar question is will the bailout benefit Americans more than hinder them, and what are the true cost of the bailout? Only time will tell. Will the bailout effect short sales and our lenders holding out on doing short sales in order to see will they be able to capture more money through the bailout than from doing a short sale or reducing prices on REO properties.

As consumers we would never know if the banks are stalling. Banks are taking up to 3 months to approve a short and 3-4 weeks to execute a contract that was written according to their terms. The bottom line is if you shut off credit you stop economic growth. Time is of the essence. We need a plan and we need it quick in order to stop the bleeding. Banks need to respond quicker to short sales instead of racking up addition unnecessary debt. Asset Manager need to execute contracts sooner in order to reduce their holding cost. The government needs to bail us out but insure that those at the top don’t benefit first. No matter what action it needs to be taken today.

Marki D. Lemons

National Trainer, Certified Residential Broker

CRB, CRS, CNE, QSC, SRES, ABR, ABRM, CRMS, MBA

Rubloff Residential Properties

773-454-0274 Cell

888-205-4615 Voice and Fax

www.markilemons.com

www.shortsaleresultsnow.com

Everyday, I receive phone calls and emails from REALTORS® inquiring about the delays in the contracts they’ve presented on properties in foreclosure or an REO. REALTORS® are grounded in the belief that “Time is of the Essence.” This philosophy simply means that REALTORS® and their clients will perform within a time limit specified by a contract or within a reasonable time if there isn’t a specific date for the performance outlined in the contract. I wish that this concept was followed by a world now inundated by loss mitigation specialists and asset managers. I do ask REALTORS® to use empathy and not judgment when dealing with lender employees because they are overwhelmed by the abundance of new foreclosure filings and the fact that some employees are already handling up to 1,200 files.

Real estate is a fast-paced world full of contracts, negotiations, and going to the closing table. Finally, REALTORS® can take a long lunch and a walk in the park because you might have to wait months just to get an executed contract.

To paint a realistic picture, I have a short sale listing that was submitted to the lender via fax and overnight mail on March 7. Three weeks had passed before the lender acknowledged receipt of the short sale package. The lender ordered two Broker’s Price Opinions and informed my client on April 22 that they wouldn’t pay for a survey, termite, zoning certification, water certification, or any outstanding water bills. My client, the attorney, and I have had weekly communications with the lender. On May 1, we received a counter-offer to the contract and the lender wanted a response on or before May 5 and they wanted the purchaser to close by May 31.

Representing the buyer doesn’t make for an easier transaction.  I love working with buyers, and I use the skills acquired through the ABR designation courses to attract buyers looking to purchase short sale and REO properties. Distressed properties often have deferred maintenance or have been vandalized. To ensure that clients can close according to the terms of the contract, it’s important to have them preapproved by a purchase-rehab lender.

Taking extra steps won’t guarantee you a smooth deal. One of my clients has been pre-approved and has saved her money to purchase a home where she wants to create sweat equity. We have submitted six contracts over the past two months. On March 22, we submitted a contract for a property in Englewood. I faxed the listing agent twice, emailed her four times, and called a half of dozen times. Six days after submitting the offer, we finally received word that there were other offers (cash) and that the listing agent was waiting on a response from the lender. Much to my dismay on April 21, I received a phone call from the listing agent who stated that the other deal didn’t work out and that she would send me the lender addendums. My client was livid because when we did receive the addendums on April 22, they stated that she needed to sign everything and submit with a cashiers check in 24 hours. She decided not to submit a new offer with the addendums because she felt like she was second choice and she and the lender were on an uneven playing field.

C.O.S.N.O.P (Concentrate on Solutions Not on Problems), now is the time to revisit an old skill set (initial buyer and seller consultation) in order to have a successful transaction. First and foremost, set a realistic time frame for the buyer and the seller before entering into an executed contract. Commissions are negotiable and should be discussed with all parties. Listing agents need to discuss commission with all buyer agents prior to the exception of a contract because commission will be determined by the lender and not the homeowner with whom the REALTOR® has the listing agreement. Buyer agents should draft sales contracts that allow their buyers to cancel the contract if they haven’t received a response by a certain date or they have the right to rescind the offer. Remember, listing agents are waiting just like you. Short sales and REO aren’t for everyone but, patience will be the best skill set to develop if you plan on doing business in this new niche.
Marki Lemons, CRB, CRS, ABR, ABRM, CRMS, MBA, is a member of the C.A.R. Board of Directors and an instructor at the REALTORS® Real Estate School. She is a Certified Residential Broker with Rubloff.