If you are like me, that statement is scary, and you grow weary hearing about this subject.  Yet it is something we as a nation have not dealt with.  And until we do… we will have more articles saying the same thing.  Case in point, per a recent article by RUTH SIMON and JAMES R. HAGERTY of the Wall Street Journal, “the proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery… according to First American CoreLogic.” 

“These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market.  Economists from J.P. Morgan Chase & Co. said Monday…”. 

“Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value… More than 520,000 of these borrowers have received a notice of default…”

“Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau”.  You read that right, no mortgage!

So, here is the QUESTION?  Can you complete the following adage:  ____ low, ____ high!  This is the defining separation between the speculator, investor, and wannabes.  Speculators think it is all about the ‘flip’.  Wannabes wait until the investors have made huge profits and then slide in while the media is still hyping the market so they can pretend to be investors.  But the investor, they know that greatest wealth comes from sustained planned ownership. 

Here is the one secret that have made my clients fortunes.  So, save your dollars, no shipping and no more late night TV telling you how to be rich with real estate.  Ready?

$165,000 x 10% down = $16500.00 invested.  Market increase of 10% means subject should sell for $182,000 in a year.  Meaning, your $16500 invested returned $16500, or 100% return on investment.  Not counting tax shelters.  Not counting rental income.  Can you get 10% in today’s market?  MLS statistics for YTY June 2009/2010 show the average increase in the market values were 10.3%.  Is that too good to be true?  What about 5%, for a 50% return on money invested?

While there is more to this, it really is this simple.   With minimal risk you can get rates of return today of 40-100% on your money invested.  Anyone want a cup of coffee and to chit chat?  Until then,

SUCCESS!

Darrell

I love being a father; even months before December 1, 1974 I could tell that I would love it.  And it is an understatement to say that July 1, 1978 life ratcheted up massively with birth of our 2^nd child, and I loved it.  Did I mention I love being a father?

To watch my son and daughter grow, to play a part in their development and now to stand back and bask in pride as I see who they have become, stand in awe at the decisions they make, and to top it off, to see them move into young parenthood!  Life is Good!  God is Good!

So when my friends Zenet and Carri sent me the following, I knew I had to get their permission to share with you all.  If we want a future for our children, and now our grandchildren, we might want to read, re-read and then take responsibility for making better decisions.  Oops!  Hope I didn’t go too far!  But don’t you agree that when we see 54% of our income going to taxes and interest, that, yeah, it means we must make better decisions?

_________________________________________________________

__________________________________________________________ 

But there was something that happened today that made me want to shake it up a little.  You may remember that I am always loved being a resource to you, but have I done enough for my clients to provide access to me and information that might help them turn a decision into a good decision?

One of my bank clients sent me an order to confirm occupancy on a home that just had completed the foreclosure process and was now becoming REO.  The address sounded very familiar, and I verified with my past client file to find that sure enough I had sold this home to a wonderful couple at the beginning of the new millennium.  I have kept in touch with mailings, and whenever possible we would communicate by phone or in person on a Pop By.  Now they lost their home, and I never was aware of the difficulty they were in.

The reasons do not matter, whether they were caught up in the Refi for better rates, using the home for an ATM machine, or needing their equity for real emergencies, something had gone wrong and they couldn’t keep on going.  With this being so visible and close to home for me, I couldn’t just let this go without offering some insight and possibly some hope.

What caused this to end this way was embarrassment.  It was too embarrassing to this couple to let anyone know until it was too late.  Now added to that is guilt, what if, why, and a variety of other soul robbing questions.   Let me help.

1^st, if this is where you find yourself, or your family and friends, STOP, call, let’s meet and consider your options.

2^nd, if you are in the rat race of refi, refi refi,.. STOP!  The only one who wins is the lender, not you.

However, having said all that, this is not the end of the world.  Someday, if someone is interested, I will tell Donna’s and my story of what we went through in the 1980’s that nearly cost us our home, business and credit but at the end changed our lives.  Suffice it to say, ‘been there, done that, bought the whole T-shirt collection’.  In other words I know exactly what I am speaking of.

So to this couple and to any others you may know, get up, get in, and let’s get a plan to rebuild.  It took time to lose it, it will take time to regain it, but we will regain if we create a plan that works specifically for you.

But what could we have done differently had someone let me into their private financial affairs? 

One thing I believe every one of the more than 5000 clients I have personally served would attest I gave them my best:  advice, support, knowledge, and fought for them.  I would not have allowed this to happen without an all out assault to provide alternatives.  And there are some.  And in 75%+ of times, they work and stop the foreclosure losses!

We have all heard the terms Loss Mitigation.  This was always available for the seller to attempt to work with the lender to resolve the debt in some other fashion, i.e., rewrite the terms, recast the loan, put off the payments and add to the end of the loan, and other techniques.  While not wildly successful, it is a first step to other alternatives. 

Then there is the granddaddy of all solutions, the Short Sale.  While industry averages of success are around 47%, with our system, our team was able to maintain over 90% success rate in 2009.  As you will remember, I LOVE SYSTEMS THAT WORK, in fact, my whole 35 year career has been based on creating and improving systems that create success for my clients. 

Short Sales, in brief, allow for negotiation with the Lender(s) to accept as Payment in Full the current market price for your home.  There may be more detailed explanations out there, but the best summary is the bank takes what the home can now bring, as payment in full.  And the cost to the seller for commissions, etc., ZERO.  They are included in the loan payoff so there is no out of pocket expense for the fees.

What does this do for you? 

Allows you:

1-       To leave the home with dignity once it is sold, you fully participate in the selling process just as you would if you were a seller with equity in their home. 

2-      There is no strange signage to create embarrassment, no markings on the home targeting you as a troubled owner.

3-      Reduces the negative credit rating received if the home goes thru foreclosure

4-      Returns you to the market as a buyer in much less time (80% faster!)

5-      Did I mention dignity?

Had this young couple been able to face the embarrassment of speaking with me about their issues, I believe we would have had a 90%+ chance of granting them a gracious dignified exit while placing them on the road to ownership in short order.  Ownership that I know would have been handled differently.  Isn’t there an old saying that goes “wisdom is knowledge gained by experience”?  Their ‘case’ was poster perfect of what a lender looks for to see if someone qualifies for such a strong solution.  One similar transaction we just closed on had the 1^st and 2^nd trust deeds in excess of $394,000 with our final sales price ending up at $157,000 and the banks accepted that as payment in full.

So why am I writing to you?  1 in 8 families in America are behind in their mortgage payments.  In Stockton the numbers are nearer 1-6.  That means you may know someone who could benefit from a no obligation counseling meeting. 

How can you help?  Here are a few suggestions:

1-      Have them visit www.209-411.com as a starter

2-      They can then visit my blog on www.darrellisaacs.com and get to know me a bit.

3-      Let them know my CORE values of work, to serve the client, answer the questions and educate without obligation so as to build trust and how it helped you through the decision process that you went through.

4-      Encourage them to visit with me for 30-60min to ask me any question about the process.  Again, no obligation.

5-      Request some printed materials I can forward to you or your friends/family to start the conversation.

I really believe we are at a crisis in real estate and that there are few who can lead families out of this mess.  I am committed to aggressively doing everything within my power, using the knowledge and life experiences of 35 years in business and more than 5000 home sales, to ensure your family and friends have the best chance. 

Oh yeah, the young couple.  We are currently looking for an investor who will purchase in today’s market, enter into a qualified Lease Option that will benefit both parties fairly.  Total Win-Win.  Interested? J

If I can be of service, please do not hesitate to call or email.

SUCCESS!

In his November 2009 Update, Dr. Yun shares the following:  Rising home values will prevent home prices from overcorrecting even further. Home prices have, indeed, been overcorrecting and have led to sizable destruction in middle-class housing-related wealth. By contrast, stock market and financial wealth have experienced spectacular gains in the past nine months. Despite those gains, however, consumer confidence still continues to tread near historic lows.

But stirring a pot of voodoo finances has produced a brew that is showing some strong medicinal benefit.  Per Dr Yun: Earlier this month, the U.S. Congress overwhelmingly passed and the President signed into law new measures to maintain the momentum for a housing market recovery. The home buyer tax credit, originally scheduled to expire at the end of November will now be available through the middle of next year and more potential buyers will be able to take advantage of it. The income limit was also increased and many move-up buyers - not just first-timer purchasers - also will qualify. Furthermore, loan limits will not shrink as was planned for next year; in high-cost areas, the loan limit will remain at near $730,000 in 2010, thereby permitting more consumers to tap into the historically low mortgage rates.

In the Stockton market we have seen the benefit of this ‘brew’ first hand.  As the accompanying graphs are showing, the overall inventory has diminished greatly since the Tax Credit hit the scene.  In recent years a graph showing a decline of inventory would have been due to Sellers “giving up” and deciding to ride out the storm; not sell for a loss.  Who knew the tsunami that would be known as 2006!  But this decline of assets is real, representing Sold inventory leaving the market at near historic levels. 

Another interesting side note has been the rise of Short Sales, which continue to clog the market.  The effect is a market that is clearly made up of 3 parts.  1- Sellers with equity; 2- REO (foreclosures); 3- Short Sale assets.  As the graphs show, the moratoriums have delayed the REO assets from hitting the marketplace.  More on that subject later.  Short Sales are on the rise and slated to increase even more for the next 3-5 years per Alex Charfin, president of Certified Distressed Properties Experts (CDPE   www.cdpe.com).  Due to their increase as a market presence, they are impacting Days on Market (DOM) averages and more important there appears to be a growing sum of evidence showing they are selling

-10% less than REO or Retail.  The reasons are many, but 2 quick observations are: First, the primary buyer has been 1^st timers who qualified for the $8k Tax Credit.  These buyers did not want to take the chance and lose these funds by going to escrow with a home that may never close.  2ndly, as the DOM are long, the end result unknown, in a market that is still declining on average of 1.4% P/M (Metrolist) the buyers want to ensure they are not overpaying for the home once it finally closes. 

The end result has been buyers have turned their attention first to the Retail and REO seller.  We experienced a window of opportunity where pricing was able to be ‘pushed’.  Multiple offers were the norm throughout 3^rd quarter and into 4^th quarter leading to final values in excess of original list pricing.  Internally, we saw Sellers with borderline equity rush to the market to escape their losses, and eliminate the threat of foreclosure or the stress of short sale. While the extension of the tax credit has acted like a pressure relief valve, it is clearly going to play a part in 2010 as the Phantom Inventory makes itself visible.

As is evident, a safe conclusion of the above ‘facts’ is that we are in the MIDDLE of this market.  We have seen hints of what can happen if the market has sufficient Salable Inventory coupled with Tax Credits and historic low interest rates.  The data clearly show the Buyers are “there” if the market is.  However, we also see the effect of not having a clear Short Sale program equal in clarity to the REO system.  If someone can finally persuade the lenders to create some rules the housing market and real estate agents can interpret and depend on, we will see the END of this market.

Ever the ‘eternal optimist’ I believe we are seeing this.  Several lenders I serve are aggressively pushing the ‘Pre-Approved’ Short Sale.  Various reports show that the Lender will lose 70% of value through foreclosure while the losses are 15% in Short Sale.  Sounds like a simple decision then, right?  Not so.

The financial market is not the simple structure of years past, but more closely associated with “it’s not your father’s Oldsmobile” thinking.  With STORING loans being rare, selling the loan off the norm, selling fractured interest common and commonsense rationale being absent altogether, the task of persuasion becomes formidable.  Yet, any movement towards standardization will have a multilayered effect: cleansing the market, stabilizing pricing, and even driving prices to the point that borderline Short Sale candidates will not need to go down that path but instead sell and re-buy without a stigma attached to their credit.

And after all, it will be Housing that leads the way…

SUCCESS!

Darrell

Last Thursday while attending an early morning meeting, I had the opportunity to hear my friend Zenet Negron, from First Priority Financial speak about how changes in appraisal policies and a declining market have impacted those ‘borderline’ borrower’s ability to refinance into a superior loan product.  So I asked Zenet if we could chat about this in today’s blog

DRI: Zenet, thank you for the time to chat and inform the public by means of my blog.  There are recent changes in appraisal law that were designed to give the public more protection through the loan process.  Have you already seen impact due to these changes?

Zenet: The appraisal process is pivotal to closing your loan.  As of Feb. 15, 2010, FHA loans are required to use an Appraisal Management Company (AMC) when ordering appraisals. Conventional loans adopted this practice in the latter part of 2009.

The process is now taking longer, which can cost the consumer more to complete a loan.  We have seen appraisals “come in” both under and over the current market values. In most cases out of area appraisers are being assigned by the AMC; hence, they are not entirely familiar with certain areas.

With every appraisal, the underwriter will review the appraisal report and establish a recommendation of value. It is not unusual for them to request a second appraisal. This long process is prohibiting some transactions from a timely closing.

DRI: Have you had someone actually impacted by this new policy?

Zenet: This past week, my refi-client had three comparable properties close escrow as their appraisal was being done. They were the ‘freshest’ and the rules require newer rather than older data be used.  Each comparable property had lower values which effectively reduced their home’s value and they were unable to refinance. So, the delay in process allowed closings occurring in a declining market to drive the new value out of range

DRI: This does not seem likely to be a ‘one time’ event.  What are you telling your clients?

Zenet: Timing is essential. If you're considering refinancing your home, it may be best to not postpone your decision and move forward. If you're purchasing, make sure to contact a reputable real estate professional that can properly negotiate your purchase price and that they are capable to renegotiate the purchase price in case the appraised value is lowered.

DRI: I know we have tossed out a significant coveration and lightly touched it.  I hope you will feel like taking this a bit deeper in a future blog.  Any interest?

Zenet: Absolutely.  I know we both work from a core value that our clients should be the most educated and well prepared in the marketplace to ensure their chance of success.  I would be glad to help.

DRI: Zenet, again, thanks for taking the time.  We all look forward to that day.

SUCCESS!

Darrell

This is quite an honor, one I privately wished for but just didn’t see it in the cards.  However, Howard Brinton made that all change by selecting me for this honor just prior to his turning the reigns over to Alex. 

I have had a blast attending more than 12 STAR POWER conventions where I was free to grab, borrow and tweak ideas, from thousands presented, that allowed me to drive our business to record levels.  Those and other strategic ideas, clarified by our commitment to the Team motto:  Integrity… Knowledge… Success, coupled with applied energy and focus to succeed for our clients, has allowed our sales to soar to figures that at times are hard to conceive.  A statement backed by the NAR.

Per the National Association of Realtors data the average agent sold 3.98 homes in the year 2008.  We were blessed to assist 576 families in getting into their new home during that same time period.  In fact, since 2006 we have successfully closed over 1600 home sales.  Something I could never do without the support of a great Team, and that I have!

So, allow me this brief moment to sit in the sunshine, and I will be back to work on Monday morning.  After all, it will be a new day.  And if you’re an agent looking to take your business to the next level, you cannot do better than joining the STAR POWER team.

SUCCESS!

Darrell

The first of these appears to be the agreement that the recession is losing steam and in the words of one source: “the pluses outweigh their minuses”.  To quote The Kiplinger Letter: The economic pluses outweigh the minuses.  Consumers are now showing a willingness to spend, despite their high debt levels and rising foreclosure rates.  Their long-term history suggest they‘ll keep it up.  Confidence, rebounding smartly, will keep improving.”

And, there is agreement in another area, that being 90% of the economists predicted the recession to be over by year end 2009, with 74% of the forecasters declaring the end by 3^rd quarter, and 19% estimating the turning point to be in 4^th quarter.  (Per NABE).  NABE further stated the economy will have grown at a 0.7% pace in 3^rd quarter followed by a 1.8% pace in the 4^th quarter.  “While that growth may appear to be minute, compare that to shrinkage at a 6.1% annualized pace in the 1^st three months of 2009.”

But housing may be stating a different opinion.  Housing has a long history of leading the economy into and out of recessionary times.  Why be any different this time?  So, is there good news?  Per Lawrence Yun, Chief Economist, NAR Research: “Happier days are ahead.”  But with it’s heals digging into the sand. (watch for Pt 2)

http://tribute.jimrohn.com/

Jim closed his programs with the following: “I go with you in all the experience that we’ve had. But I promise you this as we leave here: I will not leave you behind. I’ll take you with me in my thoughts and in my heart.” And you are in mine.

D.

I have just been forwarded a link to Ladies Home Journal’s website with an excellent article on what to do when you just can’t store it anymore. 

“Don't Dump It, Donate It!  Give your old stuff new life by contributing it to worthy organizations”

“…Confession time: How much of the stuff that's crammed into your closets, attic, and basement do you actually need or use? We're talking about the bridesmaid dress the bride swore you'd wear again, the books your kid never read, and the inline skates you bought on a whim. But before you haul your random clutter to the dump, find out if there's a greener way to get rid of it. These organizations will take all that junk off your hands and recycle it or give it to those in need…”

Have linens that are ready for the rag bin?  “Animal shelters are often desperate for donations of soft blankets, thick towels, and linens to use in the animal cages, visit pets911.com”.

“Contribute your used furniture, such as beds, couches, and dining room tables, to your local chapter of the National Furniture Bank Association (nationalfurniturebank.org). The organization provides furniture to victims of hurricanes, floods, and earthquakes. It also helps families living below the poverty level and women and children who are starting over after fleeing violent homes”.

A whole host of suggestions for everything you rediscover that just needs a new home.  And, a tax deduction might be in order too.  I have always strived to create ‘win-win-win’ results in every opportunity I could.  This is a terrific example of how we all can create that ‘perfect’ solution.   A worthy organization gets goods to meet the needs of those in need;  you finally get some space in your home; and you might get a tax deduction to boot!  What can be better than that?  Oh…Santa IS on his way!

Take a moment and see if you might benefit with this information.  And, Merry Christmas!

SUCCESS!

Darrell

http://www.lhj.com/volunteering/dont-dump-it-donate-it/

The following is an exerpt from SRCAR...

"It's amazing the difference it makes when you have somebody in a position of authority who actually knows what they’re doing as opposed to putting a bunch of bureaucrats and political hacks in charge. Commissioner and Under-Secretary of Housing Dave Stevens is one of us. Just like in the state of California we finally got Jeff Davi in place to help straighten out the Dept. of Real Estate.

After hearing the apologists and sycophants discuss HVCC yesterday, it was gratifying to have a discussion with somebody who listens and who, as Pres. McMillan said, ‘Gets It.’ According to Charlie Mac, the FHA & Stevens has been a ’solid partner’. "

Speaking before a packed house...

"He credited discussion with Charles McMillan with swaying FHA policy regarding HVCC implementation saying they realize the importance of the independent appraiser and are concerned about the proliferation of AMC’s, especially those owned by major lenders. He said they intend to apply the principles of HVCC as it was intended, not as it has actually been implemented. Along those lines he also announced that effective Monday there will be NO MORE 2nd appraisal requirements for FHA."

Welcome news, indeed!

President Obama today signed legislation to extend and expand the $8,000 first-time homebuyer tax credit that had been set to expire at the end of the month. These tax credit changes are included in the Worker, Homeownership and Business Assistance Act of 2009, which also extends unemployment benefits to people who have been jobless for more than one year.

The new legislation extends the deadline for the first-time homebuyer tax credit to include home purchase contracts entered into by April 30, 2010 and closed by June 30, 2010. The tax credit was also expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new principal residence — if they have lived in their current residence for at least five consecutive years of the past eight years.

Homebuyers looking to take advantage of either tax credit are subject to income eligibility limits of $125,000 for individuals and $225,000 for married couples, up from the limits of $75,000 and $150,000 included in the previous law. The home purchased must cost less than $800,000 to qualify the homebuyer for the tax credit. And to help guard against fraud, buyers are required to attach documentation of the home purchase to their tax return.

NAR economists estimate that the current tax credit has contributed approximately $22 billion to the general economy, and that approximately 2 million people will take advantage of the tax credit this year.

“The substantial rise in home sales we’ve seen over the past few months proves that the tax credit is working and is being used by buyers who were waiting for the right opportunity to get into the market,” says NAR President Charles McMillan. “This important incentive is helping to stabilize the housing market, stimulate the economy and create new jobs in communities all across our great nation. Extending and expanding the home buyer tax credit will enable even more families to take advantage of current low interest rates and affordable prices to invest in their future through homeownership.”

Tax Credit Resources from NAR:

Details on Homebuyer Tax Credit Changes

Frequently Asked Questions on the Expanded Homebuyer Tax Credit
Fri, Nov 6, 2009

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.