HAMP Loan Modifications – Preventing Foreclosures, Or Causing Them?

As I once heard brilliant financial guru Steve Forbes say (paraphrase) “. . . we had a chance to fix the mortgage crisis back in ’07;  if we had just let it crash, it would have been painful, but we would have recovered in 6 months.”  A free economy tends to correct itself, but it’s just not the nature of government(s) to leave things alone.  That’s why we have to endure this mess for years instead of months, and why we have new government programs every time another one fails.  Whatever it takes to prevent economy from it’s natural course: stretch the band, kick the can down the road, etc.

Since 2008, when foreclosures finally got the nation’s attention, congress and the administration has been trying everything they can think of to keep the economy off its inevitable course.  So every few months we get another program:  TARP, Cash-For-Clunkers, HAFA, etc.  Not only are none of these programs working, they seem to be making the problem worse, and like all government programs are easy targets for fraud.

It gets even more frightening when you can’t tell if the fraud is intentional.  Case in point is HAMP, the Home Affordable Modification Program.  The evidence is pretty clear that one way or another, most loan mods fail.  So along comes the government (again) with another program trying to revive a dead animal.  Is it intended to assist borrowers, or abuse them?

“What people entering the HAMP modification process don’t understand, until they are out on the street, is that it wasn’t designed to limit foreclosures; it was intended to expedite them”  (Geroge W. Mantor, RISMedia 8/17/2010).

Sound incredible?  Check out these two links:

(1)  More And Better Predatory Loan Servicing Fraud.

(2)  Are Loan Modifications Causing Foreclosures?

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Are Foreclosures On The Decline In California?

We were recently asked this question while being interviewed by the local ABC TV news station.  What prompted the interview was an article and statistical survey published by RealtyTrac: “Forelcosure Sales Account for 31 Percent Of All Residential Sales In First Quarter.”

According to RealtyTrac, “California posted the second highest percentage, with foreclosure sales accounting for 51 percent of all sales there in the first quarter — up slightly from 50 percent in the previous quarter but down from 70 percent of all sales in the first quarter of 2009.”  Wow!  Over half of all sales were foreclosures, and that’s an improvement from the previous year.  The highest percentages were in the San Joaquin Valley, San Bernardino and Riverside areas.  Santa Clara County was relatively low by comparison.

So, are foreclosures on the decline in California? Hardly.  According to the LA Timesbanks foreclosed on almost 200,000 homes in California last year, and this year’s toll is expected to be even higher”.

Sometimes the news is confusing, which is to be expected because the media seems to be generally confused.  It’s easy to misunderstand the facts.  On one hand, foreclosure activity was down in May, but bank repossessions hit a record high (CNBC, June 10).  What . . . foreclosures down, repossessions up?  Aren’t foreclosures and repos the same thing?  It depends on how the terms are used.

Foreclosure activity” generally refers to the beginning of the process, and “bank repossessions” refers to homes that have already been foreclosed, or REO (see our earlier post).

Why did the percentage of foreclosure sales decline since a year ago?  It’s not because there were fewer foreclosed properties, it’s because fewer of them were for sale.  Doesn’t make sense, does it?   If there are more bank-owned properties, there should more of them for sale.  But according to Rick Sharga, senior VP of RealtyTrac:  “they’re managing inventory to prevent a free fall in home prices.”  See our earlier post: The Shadow Inventory.

We still have a long way to go.

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Beware The Craigslist Rent Scam

Regretfully, all is not what it seems on CraigslistOn a recent REO listing we received numerous calls inquiring whether the property was for rent or for sale.   Shortly after we posted the home on the multiple listing service someone posted a Craigslist ad offering the property for rent at a ridiculously low price.  The ad actually copied our MLS headline and verbiage word-for-word.  This was an upscale property in remarkably good condition for an REO.  We expected a lot of inquiries, but not from renters.

Some of the callers had driven by the property, noticed our lawn sign, figured the spoof and called to tip us off.  One of the parties answered the ad and received a response from an “absentee owner” with elaborate instructions regarding deposit, credit check, keys, etc.

This isn’t the first time someone rent-spoofed one of our REO listings. The last time we got tipped off, one of my staff posed as a prospective renter and carried on a clever reverse spoof with the scammer by email. She filled out a long application under a celebrity name, answered by a request for a photo.  She sent a photo of another celebrity, answered by a request for a money order for the deposit.   The scammer explained how they really wanted someone who would take good care of their home while they were overseas, how they would take time out of their busy schedule to fly home and deliver the keys once the deposit had cleared.

Game on. The scammer fell for the spoof, apparently not picking up on the celebrity name or photo.  This is where it got interesting.  My assistant crafted a passable, but obviously mocked-up money order and sent it.  After a couple of days, the scammer responded furiously, all upset that the money order was a fake, going on and on about how someone would take advantage of him that way. Finally I weighed in and emailed the fellow explaining the spoof, how much fun we had, and the implications of the fraud he was attempting.  He wrote me back telling me to “go and die.”

Although we’ve been tipped off to only a couple of instances over the last three years, it’s probable that this goes on all the time. The sad part is, like all internet scams, they must work sometimes.  If people didn’t fall for them, they would stop.  Beware the Craigslist rent scam, and warn everybody you know:  don’t pay for anything you can’t verify! If you are even slightly suspicious, consult a professional.

Craigslist
Image via Wikipedia

 

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Whatever Happened To Common Courtesy?

What is it with real estate agents who don’t return phone calls, reply to email, or respond to inquiries?  It’s like an epidemic, especially with REO or short sale agents.  Look, we all know you’re busy, but how about a little common courtesy? You’re giving us all a bad rap.

If I leave you a voice mail, have someone call me back, for crying out loud. How difficult is that?  If you’re so busy that you can’t handle the volume of calls, you can afford to hire a staff to do it for you.  If not, you should change your outgoing message from: “Your call is very important to us,” to: “Sorry you called.  We’re too busy to acknowledge you, so don’t leave a message because we won’t call you back.”

I’d guess you don’t ignore your REO clients, asset managers or short sale negotiators.  You wouldn’t leave them in voice jail; you probably respond immediately.  Why should buyer agents be treated any differently?

Buyers and their agents have a right to expect a timely response to inquiries, and especially to offers.  Maybe it’s just a simple question about the availability or status of a listing, whether it’s worth the time and effort to draw up an offer.  Maybe I just want to know if you actually received my offer.  I don’t know how many offers I’ve submitted which were never even acknowledged, even after numerous calls and email.  Eventually I discover the pending sale on the MLS.  That’s more than discourteous; it’s a professional slap-in-the-face.

We have more communication devices than ever before. It should be easier than ever to respond to each other.  We’re so connected that it’s nearly impossible to disengage.  So, why can’t you call me back? Or send a text?  Or something?  Isn’t that what your blackberry or iPhone is for?

Imagine if your doctor suspected you had a brain tumor, but after a series of tests he didn’t return your calls.  Would that cause you some anxiety?

Buyers are in a battle zone right now, getting beat up by multiple offers, and buyer agents are getting worn out.  Give ‘em a break and show a little courtesy. Call them back.  That’s the least you can do.

Being an REO broker, I know how busy the phones and email can get.  Still, I believe that we have a professional obligation to be as responsive and timely as possible.  If you call my office during regular business hours you should get a response within 60 minutes; if after hours, by the next business day.  If not, please email me directly.