Antoine Pirson

I have in the past written about the fact that lenders actually are "unwilling" to lend and are using every excuse in the book not to lend. It is still happening today, and if it is not the lender that rpevents a deal from closing it is the appraiser. So what can be done about it?

Here is perhaps a suggestion we should consider. If the bank refuses to lend based on appraised value, then we should make the banks pay for the appraisal. Here is the logic. Who is protected with the appraisal? THE BANK, not the consumer. So if the bank wants to use a process by which they can refuse to lend, then they should pay for that service and not the buyer. The buyer was already pre approved for a certain loan amount (based on percentage of purchase value of property). If the banks wants to do a risk analysis and deny the loan, that is part of THEIR process and protects them. They should pay for the appraisal up front. IF and only IF the bank approves to fund at the pre apporved values, then, maybe, they could be reimbursed by the buyer for that service.

I think this will get more loan funded at the level the buyer was PRE APPROVED already. It also makes the appraiser not the dictators they are today ( it is my way or the high way), mostly working for the banks, not the buyer.

Looking forward to your responses.

Antoine

What is really happening in the foreclosure / REO real estate process / market?

Is it possible there is a corrupted process at the very top (wall street executives, wall street investors,

bank executives, hedge funds, etc.)

Here is a thought: We know banks are not willing to reduce the principle loan amount for owners 

under water. That can easily be measured by the number of completed loan modification that include a 

principal reduction. Very (very) few: About 49,000 of all the proprietary modifications completed reduced 

both the loan principal and monthly interest payments. Out of how many foreclosures again? About 1.2 mil? 

The ones that are done are merely to keep the politicians at bay so the banks can say they are following 

their guidelines.

But.......banks are very willing to foreclose on any property, and sell the properties in REO bulk at 55-60% of current market value. This allows rich "investors" to buy these properties, and then turn around and sell them back to the consumers market at 85% of value and make 20-25% of the investment in about 4 months. We are talking about $60 - 100 million REO investment per deal (read "tape") . You and I cannot take advantage of these incredible returns, as we have no "insider" at the bank who will give us that opportunity (and I also have no $100 mil available in my bank account). These opportunities go to "connections" so they can make a ton of money on foreclosed properties. Pretty easy money, no? Then here is this question: If banks are willing to write down the REO to 60% of value, then why can they not do a principal forgiveness for say 25% to the home owner? The write off to the bank is the same "loss" no? The big difference is that in the first scenario, the profit goes to the big investors at wall street. In the second scenario the "advantage" goes to the home owners.

So what would be the difference in the real estate market today (read values and prices), if we had used the second scenario? Well for sure there would be a lot less "distressed" properties. The home values would not have declined as much, which also means there would have been much less of a "recession" in real estate, and home owners would have felt very good about staying in their homes, so no strategic defaults, and thus a much "happier" consumer who might have been able to spend some money on the economy.

When will we learn to do the right thing for all Americans?

For those who are interested in knowing and understanding the numbers in a real estate (investment) buying transaction can come to my meeting tomorrow night. I will make a presentation that includes the comparison between buying and renting.

You can sign up at http://www.meetup.com/realestate-376/events/16652926/

See you soon.

Antoine

In this scenario:

You represent the buyer in a short sale. There is an other offer on the property. That offer is from the listing agents client. Do you trust that the listing agent will also submit your offer to the bank? And how can you verify s/he did? My experiences are pretty negative. I am willing to hear yours.

Thanks

I know that many real estate agents will not really appreciate this, but it has to be mentioned as it impacts all of our business. I am talking about the incorrect information on MLS, and the listing agent does not update the status or correct the problems. The list is enourmous. Wrong zip code vs. area, wrong status, wrong phone numbers, wrong email addresses, etc.

Why is this an issue? Because any agent who knows how to "use" the mls system, needs to be able to use the right search criteria to retrieve the right listings for his/her clients. So you can understand that if the data put in the system is incorrect, the search will not deliver the correct listings. In information technology it is called: garbage in garbage out.

For me that is an incredible waste of time, as now I have to "find" listings manually. Something can take me literally one hour for a job that could be done in minutes if and only if the listing agents would put in the correct data in the first place.

It has become more and more of a problem particularly with REO agents, who apparently have no time to update the mls listing with the correct status information. I wish more agent would complain about it to their board, and have something done about it.

Kind regards

Antoine