I'm Not Making This Stuff Up! March's Resource Post

Ok, my Rebellious Readers, it's time for another resource post for you folks out there who get tired of listening to my voice...no, really, it's ok to admit, for a few minutes every month you'd like to see a couple of other places to click...spend some time apart...give each other some space...

So I thought I'd point you in the direction of some of the information out there that I base my business model on, and more importantly, fuel my Rants from time to time. Honestly, I couldn't make this stuff up (I'm good, but not even I could imagine some of the shennanigans that banks think up to snarl the short sale process...)

Here are some directions to the original research that I use to fuel my inner fire...click away...I know you'll come back to me...you always do!

• Just what exactly is a "Short Sale"? This article is a great summary. It's a little dated, but was updated last year and is still a good starting place to understand the who/what/why of the process http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/UseAShortSaleToEscapeForeclosure.aspx
• Do the banks really deliver somewhat less-than-stellar customer service in the short sale environment? Don't believe me? Check out http://articles.sfgate.com/2007-08-12/business/17255730_1_short-sales-lender-approval-buyers
• Lastly, several readers asked about my recent rant about the promissory notes that lenders are asking owners to sign to approve a short sale. Read more about them at http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2009/07/13/story15.html

So, whaddya think of me now? It's ok, I know you had to spread your wings and soar...and I know I'll see you next week, ya Rebel!!

Stay rebellious!!

-Larry

March Rant-Where There's a Will...There's a Won't...

In the words of the immortal Sam Kinison, comic, commentator and Rebel, "OH...OH...OOOOOHHHHHHHH!!!"

That's what I said when I came across the latest tactic that some lenders are engaging in when it comes to messing up the short sale process. We've talked about the stalling, the poor customer service, the incorrect (to put it kindly) information, the ridiculous no-resale requirments, etc etc that are experienced by anybody trying to navigate the short sale environment. I'm not going to bore you with any of that again (but, I reserve the right, not to bore you, but to, um... GET YOU FIRED UP AGAIN about it a later date...), so let's move on to the latest bit of chicanery afoot in California and particularly in San Francsico Bay Area short sales.

Let's turn our attention to the folks in the #2 position...the SECOND mortgage holder...

For those of you who are NOT real estate investors but who bought homes in the past 5 years in the Bay Area, you know that having a second mortgage was practically de riguer in order to get into anything. So, of course, as a homeowner falls farther and farther behind on payments, it's not just the primary mortgage but the second that is growing more and more past due. Nothing new there...

So, a short sales expert comes along, and negotiates a deal-the homeowner gets out from under the house, the primary mortgage holder gets some cash (more than they would get at auction, and the place is off their books)...again, nothing new here. Now, the SECOND mortgage holder is often given a token sum depending on the primary lender; I generally see about $3k being approved and given to this #2 spot.

BUT NOW...

Many second mortgage holders are refusing to OK the short sale unless the soon-to-be former owner of the house signs a personal promissory note for the amount of the second mortgage, or for some huge lump-sum amount "today" in lieu of a larger amount spread out over time.

So what? Why shouldn't they hold out for more?

BECAUSE IF THE PLACE GOES TO AUCTION THEY GET NOTHING!!!!

That's why.

The whole point of a short sale (from a bank's perspective) is to avoid the low return and hassle of a repo. The banks work with investors like me and my team BECAUSE they will make more money that way (it ain't because they appreciate my or Sam's humour, I can tell you THAT fer nuthin!).

So, the lender in the #2 position refuses to OK a short sale and turns up their nose at the $1K-$3K that I commonly see going their way, unless the owner signs a new note for the $35k or $75K or whatever they owe...a note that is now UNSECURED, with interest that is now non-tax deductible, and rates that are often variable.

So the owner, who couldn't make the payments in the first place but at least has a roof over their heads that they are willing to give up if they can get out of debt, understandably says NO WAY! This means the property will probably go to auction and the lenders will make much, much less, the owner's credit is destroyed, nobody wins.

Get that?? It's worth repeating...

NOBODY WINS when a bank puts up roadblocks to a decent short sale offer.

Ok, I think that'll do for now. It's so simple, even a BANKER should be able to understand it!

Stay Rebellious!!
--Larry

March Buyer's Tip-Think Local, Think Credit Unions

I've spent a lot of time critiquing the banks and mortgage brokers for their one-size-fits-all solutions, poor customer support, and general not-with-it-ness (hey, why be a rebel if you can't make up a word from time to time...?). And next week, I'll be getting back to that topic.

But today I thought I'd share a solution to the big-bank re-financing trap that a lot of people are in. Or, even if you're a new buyer looking for financing.

Take a look in your own backyard. If you're looking for innovative and still local decision making, try out your local credit union. Even if you don't already have an account, a small deposit ($50-$100 in most cases) will open one and give you access to their services.

According to the American Credit Union Mortgage Association, (www.acum.org) Credit Unions are well positioned to take advantage of the current lending crisis. Because they are generally local and association based (credit union membership is usually predicated on some kind trade, academic, or residency affiliation. See, I can use big words too...), reaching out to those members who are not being well served by the bigger banks represents a unique opportunity to grow a Credit Union's membership and asset base. This means that they are actively looking to restart their mortgage lending. Huzzah!

So what are you waiting for?? If you're having a tough time getting a response from your bank, check out http://www.creditunion.coop/ to find a Credit Union that fits you.

Good luck, and go gettem!!
-Larry

March Seller's Tip-for Real Estate Agents

Recently we've spent some time talking about how we like to work with Brokers/Agents (B/As...and again...NO SNICKERING!) who really understand the short sale process. Especially San Francisco Bay Area foreclosures remaining high.

Sadly, as we mentioned, in many cases, we've found that many B/As are under some very false assumptions about the short sale process, even being confused about whether or not the process is legal. I'm not going to address THAT particular issue again (IT'S ABSOLUTELY LEGAL!), but recently my team and I thought that we'd be doing the world (and, frankly, ourselves) a favor if we worked hard at educating this group so they can work with the hundreds of sellers out there facing a short sale.

So I'm pleased to announce the launch of www.realtor.bea-corp.com, a sub-site of our investor focused site designed to help Real Agents work with us in the short sale market.

Using this site, B/As can get find a great resource to help them

• Handle a short sale by bringing our team into the transaction
• Spend more time on finding a buyer for a property at a competitive market rate
• Spend less time talking to the lender negotiating all the short-sale issues (MUCH, MUCH less time-none at all, in fact)
• Earn their full commission on a property
• Do what they love-sell houses!

So if you are a B/A (or if you know one, pass this along) facing walking away from commission checks because short-sale properties are too much work and, frankly, outside of your expertise, www.realtor.bea-corp.com presents an excellent opportunity to become a Real Estate Rebel in your own Right (oooh, how awesome alliteration accelerates acceptance!) and start making money in a part of the market that you've previously stayed away from.

Keep Spreading the Rebellion!

-Larry