Memphis Real Estate Buzz » mortgage

CBS weighs in on strategic mortgage defaults

Joe Spake — Tue, 11 May 2010 04:01:22 +0000

The Wall Street Journal has been publishing about strategic mortgage defaults for a while now, and probably coined the phrase.

In April, I posted on the topic after an NBC report.Â CBS filed it’s story on the subject on the May 9, 2010edition of 60 Minutes:

Watch CBS News Videos Online

This is just another indicator that it will be a while before the real estate market stabilizes. How do you feel about the so-called strategic defaults?Â Would you walk away if you could still afford to keep your home?

Emotion Drives Many Defaults (online.wsj.com)
The Psychology of Strategic Defaults (blogs.wsj.com)

Thanks you for reading CBS weighs in on strategic mortgage defaults. For similar Memphis Real Estate articles visit Memphis Real Estate Buzz ,

Special note for current RSS Subscribers – If you subscribe to Memphis Real Estate Buzz via RSS feed, Please subscribe and start following this new feed for spake.com. This will assure that you do not miss any items from either blog as I begin the process of merging the 2 blogs into one feed. Watch for future updates

So you want to buy a Short Sale?

Joe Spake — Wed, 27 Jan 2010 16:06:19 +0000

Second only to Foreclosures, Short Sales create a lot of buzz among investors and home buyers looking for the almighty good deal.Â A short sale is a property that is sold for less than is owed on it.Â Pretty simple concept:Â you bought a house for $200,000 in 2004, with 10% down.Â Over the years you pay down your $180,000 mortgage to $160,000.Â Then for one reason or another… say, you lose your source of income, you REALLY need to sell.Â BUT, because of the current housing market, your house is now only worth $130,000.Â A tough pill to swallow, but you have to unload the house.Â Well it beats having a foreclosure on my credit report.Â But what about the $30K difference?Â How will I come up with that money?Â Welcome to the world of Short Sales.

Jay Thompson, The Phoenix Real Estate Guy, wrote one of the most concise and informative posts on short sales that I have read,Â Â so I will skip the mechanics here and just say that the banks, being the altruistic entities that are, just love negotiating short sales with distressed owners, and what they love even more is working offers from buyers expecting a deal.Â Maybe love is the wrong word, as it implies some human element.Â The banks are not human, even though there is an interface with an Asset Manager, who, supposedly can make decisions.Â Human decisions can be measured in milliseconds, but bank decisions can take weeks.Â The bank does not care if your buyer’s loan lock or lease is running out, or even if she is a well-healed investor paying cash.Â It’s the bank’s way or no way.Â Oh, and if there is a second mortgage, double the trouble, because in a short sale, as opposed to a foreclosure, subordinate mortgage holders get a piece of the action too.

I closed my first short sale this month.Â My buyer clients fit all the criteria for Successful Short Sale Buyers:
1.Â They were not in a hurry to close
2.Â They could have and would have walked away from the deal at any time.
3.Â They had a very high tolerance for the erratic and inexplicable behavior of the bank.
4.Â They stood their ground when the bank’s foreclosure representative tried to squeeze a fee out of them for delaying a foreclosure auction (the bank backed down and canceled foreclosure sales- twice).
5.Â Their lender was flexible and helpful throughout the process.

So, for a purchase project started before Halloween with me preparing them for the process, Dave and PhoebeÂ were rewarded with a really good deal on one of the largest homes in their neighborhood.Â Was it easy?Â Was it worth it?Â Let them tell you.

Joe Spake is a Memphis, Tennessee based Consultant, Real Estate Broker, and Blogger. Call 901.214.5563 for a consultation or click to make a social connection.
If you enjoy this blog, please subscribe to the RSS Feed.

If you use Google+, I have just started a brand new business page. Visit it HERE.

Thanks you for reading So you want to buy a Short Sale?. For similar Memphis Real Estate articles visit Memphis Real Estate Buzz ,

How’s the RealEstate Market?

Joe Spake — Sat, 09 Jan 2010 23:17:39 +0000

When people ask, “How’s the real estate market?” these days, I don’t know whether they are making small talk of if they are really interested in what’s happening in the national, local, orÂ micro market.Â If they are interested, I don’t respond with the usual pat real estate agent superlatives: Great, Amazing, Exciting, but with the word, “Interesting”.Â The market cannot be easily described.Â There are just too many things going on that don’t make sense and too many people doing commentary.Â Sorry, I guess I fall into that category, too.

Let’s look at some Headlines:

Pending Home Sales Drop, Housing Market Too Reliant on Government? (Agent Genius)

We keep hearingÂ a lot about Pending Sales (homes under contract, but not yet sold) from national and local writers and bloggers, and, reasonably, an up tic in Pendings should lead to an increase in sales down the road a month or 2 when those properties close.Â There was a huge up tic in Pendings as the first round of the First-time buyer tax credit was running out.Â Â Did the tax credit impact sales?Â You betcha.

Here’s a Similar headline from one of my favorite Real Estate Blogs, Matrix (link is active)

Pending Sales, the Tax Credit Wild card, Matrix

and another from our own Commercial Appeal:

Home sales up, pending sales plunge, sending mixed signals for November

What thes folks are writing about is thatÂ Pendings rose in October, but fell in November, as closed sales rose in November (a result of the October pendings).Â Duh.Â This kind of reporting, spawned by the National Association of Realtors, avoids dealing with the real issues in the market.Â Â Â Spin pendings, month over month sales, inventory however you wish, but bottom line, units sold are down 13.7% year to date, from 2008 in the Memphis market.Â The hoopla about the first increase in Y-O-Y sales for November is just an aberration.

For me, there are 4 major issues lingering fromÂ 2009 and carrying over into 2010, and perhaps beyond, that consumers, Realtors, main stream media, and maybe even the pundits should be watching more closely:

1.Â Shadow Inventory – Banks have done the foreclosures, or are legally empowered to do the foreclosures, yet we don’t see the properties on the market.Â This is probably theÂ biggest factor in the touted decreased inventory, which many report as a favorable sign.Â Also contributing to shadow inventory is the large number of Expired, withdrawn, or canceled listings which have not gone back on the market.
[1-b - i forgot to mention that the market numbers have been whipsawed for the last 3 years by the number of foreclosure sales and the depressed prices the properties sold for.]

2.Â Home Values I am not talking about the ubiquitous median price number.Â I am much more concerned about prices at the micro level – my neighborhood, my street, my house.Â What are the best “comparables”?

2-a. Coming to grips with lower values – It’s really hard to tell a potential seller who bought her house in a hot neighborhood at the top of the market in 2005 that she has lost money (at least on paper).

3.Â Mortages – RPR, Fannie Mae, Freddie Mac, FHA, RESPA…. it’s all changing, making the process even more complicated for the consumer.Â Going forward, finding a competent, well educated, up-to-date mortgage person will be a lot more important than “shopping rates”.

4.Â Real Estate Agents and Companies- More progressive real estate brokers and companies are adapting to the ever increasing transparency of every aspect of business.Â New business models that don’t concentrate on the “percentage” model are making inroads.Â Empowered consumers will look for alternatives.

So, how about thinking about something other than pending sales, month-over-month blips, and size of inventory, and address some of the other complexities of today’s real estate market?

This blog publishes a weekly post of articles I aggregate about national real estate stories, marketing and social media.Â See this week’s HERE.