GRANDMA MUST HAVE SPOKEN TO FANNIE MAE!

It's been a few weeks, but in my last blog I told you my Grandmother would have rolled over in her grave while 60 Minutes was doing their piece on strategic defaults.

You remember, that was the little piece of journalism telling the world how financially solvent couples were simply deciding not to pay their mortgages because the new neighbors got the same houses for much less. The "Why Should I Have to...." cry was echoing off my vaulted ceiling out of the television speakers.

Well, apparently Fannie Mae, one of the larger loan insurers, doesn't much like the idea of strategic defaults either.

Fannie Mae announced policy changes on Wednesday that will have a dramatic effect on the ability of borrowers who have defaulted on their loans to receive future Fannie Mae insured loans - and they insure a bunch.

Under the changes, a defaulting borrower who has the ability to pay, OR who did not complete a work-out alternative in good faith (read Loan Modification, Short Sale or Deed in Lieu of Foreclosure) will be ineligible for a new Fannie Mae backed mortgage for a period of SEVEN (yes, I said seven) YEARS!

That's a long time. Hmmm, lets see; seven years ago I had children at home, who were still a ways away from High School graduation (now they're both gone and one is married!). Seven years ago was a different decade. Seven years ago was a different President and a different economy. Do you get my drift?

So what's Fannie Mae's goal here? Read further....."We're taking these steps to highlight the importance of working with your servicer. Walking away from a mortgage is bad for borrowers, bad for communities, and our approach is to deter the disturbing trend toward strategic defaulting." says Terence Edwards, Executive Vice President for Credit Portfolio Management (obviously someone important I guess).

And there you have it. What I would refer to as the goverment's version of Grandma's wooden spoon. I'm not out there with some folks who are pointing the finger at everyone in trouble on their mortgage, declaring they were foolish to take these risky loans. Lets be honest. This market has tanked in our area about 25%. So unless you have 30 - 35% in equity, you yourself are one life event away from being in the same boat.

That being said - it makes me sick when people are gaming the system for personal gain at great expense to the rest of the community - and that's what these strategic defaulters are doing. (May I just remind everyone that when you signed your mortgage contract you did not say you would pay UNLESS the house dropped in value? You said you'd pay until the obligation was met or until you sold the property......'member?????)

So friends, lets all do our part to help right this real estate boat. We all have a stake in it. To preserve the right to future borrowing, under reasonable rate and terms, protect yourself if you find defaulting on a mortgage becomes your reality. Contact your lender (but check what they tell you with other local advisors), contact a Realtor who has the CDPE or CDPD designation, contact Consumer Credit Counseling for help with a loan modification (it's free). All these people can explain your options....those that will keep as many possibilities open to you in the future.

But most of all, don't expect to bank the mortgage payment while "strategically" defaulting on your loan. It could cost you a lot more than just a low credit score.

DID I JUST HEAR THAT ON 60 MINUTES?

Did you just see what I saw on 60 Minutes Sunday night? If you didn't, then here's the link. It's really worth 12 minutes of your life to see this clip titled "MORTGAGES, WALKING AWAY": http://www.cbsnews.com/video/watch/?id=6470184n

My mouth was hanging open after watching the report. I don't even know what to say, except that this clip speaks to so many things that are going on in our culture right now.

There is no question that there were some shady mortgage brokers, some shady Realtors, some borrowers who pushed beyond their limits during the building of the real estate bubble. But it wasn't everyone.

And now our real estate market is in such a place that people who made responsible choices are often just one life event away from dealing with a house that's not worth what was paid for it. But does that mean you just walk away?

I say no. There are so many options. Renting, loan modifications, short sales, and then finally, foreclosure....to name a few. But what this report does, is make celebrity of a shoulder shrug that will affect us all.

Two couples, who for no other reason than they don't want to pay for a house that's now overpriced, are choosing a strategic default.

A young married couple, still employed, who see no sense in paying on a house that's worth less than what they paid for it and a 50ish couple who's house has lost about 75% of its value. They don't see how they'll ever recover the equity in their lifetime.

Both couple's in the piece seem to have forgotten there are real people behind those "evil" banks. People who loaned their life savings, their retirement portfolios and their investments, so that most of us could have a home far better than our parents or grandparents had.

And although the walk-away is easy, and the featured young couple's credit will be repaired in 7 - 10 years, I wonder if we'll have investors, at reasonable interest rates, who will provide the kind of cash we've become accustom to in the mortgage market? Would you put your stash into mortgage backed securities with a generation that has the attitude toward a contractual agreement that was displayed in this piece?

And don't think I'm letting the 50 year olds off either. I'm not. We all seem to have forgotten that a mortgage is a contract to pay....and there is no clause that says, "but only if the market continues to appreciate."

Oh, and don't even get me started about the so called "counselors" who have made a business of helping people get over their fear and guilt about walking away. Really?

I've said many times in the last 3 years, how fortunate I felt, to have had a Grandmother who lived through the Depression, and at the same time was a storyteller. I heard many stories of how that generation survived our last financial turmoil. And the lesson? They survived. Wait, scratch that thought. THEY THRIVED! My Grandmother lived on to own property again, to build a successful business (when women didn't really do that!), and to enjoy a comfortable retirement. I'm so grateful she passed on her perspective to me. Along with that perspective came the lesson that, "if you are nothing else, be a person of your word."

Too bad both those couples didn't know my Grandma.

Your thoughts?

THE BEST WAY TO ROB A BANK IS TO OWN IT! says Author William K. Black

From Bill Moyers Journal Page:

The financial industry brought the economy to it's knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980's. In this 30 minute interview, Black offers his analysis of what went wrong and his critique of the bailout.

http://www.pbs.org/moyers/journal/04032009/watch.html

I look forward to your comments and any questions.

Your friend,

Amy

How Serious Is The Foreclosure Issue?

Foreclosure on your home is an extremely serious issue. Unfortunately, many people do not realize the extent or the severity of this financial nightmare until it is too late. Foreclosure on your home will result in the loss of your rights as the homeowner and also presents many legal challenges.

The foreclosure process on the home begins when a homeowner has neglected to make their required monthly mortgage payments. A homeowner , in most cases, will be delinquent on their mortgage payment anywhere from 90 to 120 days. In today's economic climate, many homeowners are finding it difficult to make their mortgage payment and as a result are facing foreclosure.

Once the homeowner moves beyond 90 or 120 days without curing the delinquency, the mortgage lender will initiate action to legally foreclose on the home. The homeowner will be served with a foreclosure complaint by the court. Once you have been served with the foreclosure complaint your next steps are vital in trying to save your home from foreclosure.

Service of the complaint is often the point at which many homeowners choose to ignore their mortgage lender and the foreclosure action. In most cases, homeowners are unaware that once served with a foreclosure complaint they must respond in order to preserve their legal rights and to enable them to take steps to try to save their home from foreclosure or take the steps to sell it.

In most states, the homeowner has a specified period of time by law to respond to the foreclosure complaint of the mortgage lender. It is highly recommended that you seek legal counsel to understand your legal rights as the homeowner and to explore your alternatives in resolving the foreclosure action.

Lenders, even during the foreclosure process, can work with the homeowner to help them save their home. Your lender will require you to submit information to possibly help you modify your mortgage loan. A loan modification may help you to cure your delinquent payments and may even lower your payments or rate over the life of your loan. There are also government programs that you may qualify for if you are experiencing financial hardship and facing foreclosure.

If you are unable to modify your mortgage loan or qualify for assistance then you have other options to help you avoid foreclosure. You may be faced with the fact that you will need to sell your home. In this case a short sale may be an option. Check with a real estate professional who has received advanced education and certification, like the Certified Distressed Property Expert designation, for your options.

Again, it is vital that you seek legal counsel and keep the lines of communication open with your mortgage lender. Although the lender has begun the process of foreclosure they can still work with you to try and find an alternative if one exists.

If you ignore the foreclosure of your property or are ignorant of the law and your rights you will lose your home. It is crucial to understand the serious nature of foreclosure and take action to save your home and your legal rights.

Don't hesitate to call our office for more information, and referrals to the many professionals who can help.

REALTOR MYTHS - PART 1

Ya know, everything in real estate has changed. But the one thing that hasn't seemed to change is all the myths around Realtors; how they work (or do they?), what motivates them, or even more sinister - just what are their motivations, AND just how much dad gum money do they really make?

Just when you think you've found out everything you need to know about the "dirty, little secrets agents don't want you to know" from a bazillion of misinformed and, in all fairness, probably well meaning Web sites, here's what you really need to know.... starting with my favorite - - -Realtors are always late!

Out of my Marine Corps training came the lesson; "To be early is to be on time, to be on time is to be late, to be late is unacceptable!" So you can see how I roll !

Every person, whether a client or not, deserves respect. So there's no excuse for habitual tardiness among professionals. I've even picked a Doctor who sees me in his office - ON TIME! (His Dad was a Marine....do you think that changes things?!?)

Respect is providing what is promised. Anytime, we as professionals don't honor that promise, then we've put our own interests above our clients. Not OK.

Agents who don't practice respect, first by honoring your time, are just simply not professionals. Get rid of them. Believe me, there are plenty of us who treat this business as a profession by first giving you the respect you deserve, as evidenced by the honoring of your time.

So, don't make the assumption that all Realtors can't keep time. The Pro's will !

I'll see ya on the other side!

THINKING OF REMODELING?

If you're like me, it doesn't look like we can escape the projects in our house anymore by moving every couple of years! I'm so disappointed. It sure was a great strategy that worked for over a decade!

But now the smart money is on buying a house for the right reasons; shelter, quiet enjoyment, a place to build family and memories....and after a LONG time - maybe some equity. Wow, how things have changed.

So that LONG time we'll all be spending in our houses, means we need to get better at taking care of them, keeping them updated and making sure they're repaired before things get out of hand.

A good strategy starts with a good Home Inspector. You're probably familiar with the home inspection process, if you've bought a house in the last few years. But did you know it's really important to have your home inspected regularly while you live in it? Ideally you'd have it looked over every year, but for sure have your favorite inspector out at least every 3 -5 years. He'll help identify those things that are starting to cause problems; like moss on the roof, leaking gutters and bushy plants that can easily lead to bigger (read "more expensive") projects if left untouched.

With the inspectors report in hand, you now have your "honey do" list. And that list most likely will include those projects that are perfect for the DIY'er and those that are , well, NOT!

Great home projects are things like pulling back barkdust from your siding (6" of foundation is what the inspector wants to see). Just that little job will keep the critters from snacking on your siding. Purchase vent wells from your favorite home improvement store to keep that barkdust away from the vents and out from under the house.

How 'bout those gutters. Have you cleaned them? Are they draining into a drain pipe or right down the foundation? It's that gutter water that's helping water run into your crawl space - creating unwanted moisture. Find some splash blocks to draw the water away from the foundation while you're at the store as well.

How about that slight shade of green on the roof? The dreaded beginnings of moss. QUICK - get it while you can. That little bugger will be working it's way under the shingles of your roof as quick as it can!

Furnace filters are another often forgotten home maintenance item that leads to BIG dollar costs if ignored. HVAC technicians tell us the filters should be changed every month....and those that aren't are costing you efficiency and money, as well as wear and tear on that very expensive piece of equipment that goes out at the least opportune times! So change that filter!

Lastly, the bushes. Keep those lovelies 6 - 12" off your siding. Rose bushes, rhododendrons, azaelas and any other "woody" bush provides a nice little bridge for those darling carpenter ants and wood boring beetles we all know and love in the Northwest.

So there it is. The short list that starts with a Home Inspector. Give us a call if you need a referral, and then strap on the carpenters belt!

See you on the other side!

Don't we all wish we had a crystal ball right now. But who's got it? During a recent interview on MSNBC, Robert Schiller of Case-

Schiller said this real estate market is not behaving similar to any past market that we've seen. Great....so now what???

So here's what we know:

We have record low interest rates.....but not forever.

The Feds have stepped up their purchase of Mortgage Backed Securities. In essence, they are the money behind the mortgages being issued. Last week they purchased $14B in MBS, whereas the most recent prior purchases were around $9.5B. But this pot of money will not last much longer.

The Fed now has $113B left of their $1.25T allotted commitment, with the buying program set to wrap up on March 31st. The Fed's purchases have helped home loan rates stay historically low - and although there has been some buzz about an extension of the program, it seems unlikely that will come to fruition.

When the Fed purchases stop, home loan rates will be very susceptible to moving higher - so if you or someone you know is thinking of selling/purchasing or refinancing.....I can't make it any clearer than to say...."Get the Lead Out!" Rumor has it that interest could bounce at least a point to 3 points higher when the Fed's stop providing the mortgage money.

Well so much for Amy's crystal ball. I wish we could see further into the future to know what we're facing....but for now we can only see out about as far as the Spring.

So, don't hesitate to call us if you need help making sense of this, or if you need a referral to a lender. We're here to help with all your real estate needs.

Till next time,

Amy :)