Erica Muller

By: Erica Muller www.MySunnyHolidayVilla.com

Washington Mutual, one of the largest bank chains in the United States, has finally sunk under it's enormous load of mortgages that went sour. This is now the largest bank failure in U.S. history. The Federal Deposit Insurance Corp. seized the bank on Thursday and the thrift's banking assets were then sold to JPMorgan Chase & Co. for US$1.9 billion. What makes this story so intense is that WAMU was just one of your everyday savings and loan institutions that was obviously a bit too lax on their lending standards like many others.

I fear this may be the first of many banks to follow suit. The last time we saw a bank even close to this size go under was back in 1984 when Continental Illinois National Bank failed with assets of $40 billion followed second by IndyMac, which was just shut down in July of this year, with $32 billion in assets. WAMU's assets were valued at $310 billion so you can see the magnitude of this situation. The good news is that because JPMorgan swooped in and saved the day the FDIC's insurance fund (which could have been depleted) did not have to cover the funds that could have have been lost.

What does all this mean to the WaMu customers? According to the Canadian Press Sheila Blair, FDIC chairman told reporters, "For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks. For bank customers, it will be a seamless transition." Until today, dismayed depositors have been pulling almost a tenth of their money out over the past 10 days, regardless of the FDIC guarantee of all deposits up to $100,000. All credit card debts and deposits will remain the same but will just be paid to JPMorgan.

It's pretty clear that the U.S. economy is in peril. With imminent danger of a recession looming, financial institutions going under, the rising unemployment rate and increased home foreclosures when will the government finally make a descision on their proposed $700B bailout? Whether it's a bailout or not I sure hope history does not repeat itself and that our American consumers, banks and lending institutions learn from their mistakes going forward.

Sound the trumpets and beat the drums the prodigal landlord returns to Summerport! Back from his four month getaway in Turkey the runaway landlord is back and apparently in the governments good favor. I spoke with his attorney's office who is handling all of his foreclosures and they said he is in the works to work out a deal with the bank to keep all of his homes that were previously going into foreclosure. The foreclosures have been placed on hold just a few weeks shy of the property auction dates on his homes. Now that's what I call great timing.

What does this mean for the tenants who have not been paying their rent? This could result in one of the most unethical, slimy attempts to make a recovery I have ever seen. Depending on what He works out with the bank, the landlord may be entitled to not only start collecting and raising rents again but also receive back-rent. That could add up to thousands of dollars for some of the tenants as I seriously doubt they were stashing away the free money they were saving every month.

In any event, it would be a good idea for the tenants to start regrouping and considering their options. Many of the tenants are bitter and feel abused by runaway landlord for just taking off with their security deposits and leaving them high and dry. They may want to entertain the idea of trying to purchase a home in the area or finding a more reliable landlord. Of course when you take into account the whole moving expense and inconvenience that may be enough motivation to work something out and stay.

It would be in the landlords best interest as well to try and make amends with his tenants. Trying to collect back-rents and raising rents on his current tenants may cause them to engage in a nasty legal battle that will end up costing him more in the end. I know some of the tenants are talking about a possible class action type suit against him which would be a pretty rough start to his new life here. There is always the possibility that the landlord may just pick up where he left off, keep the rents the same and renew the leases. That would be the ideal solution for everyone.

If you are trying to sell your home in Summerport with little or no luck at all this may just be your window of opportunity to reach out to many of these burned tenants who will be looking for a place to go. Some will want to buy and others rent but either way you have a flood of new prospects literally right next door. May I suggest considering renting your home if you already have another place to live? Chances are it will rent quickly right now, just try to stick around and don't flee the country anytime soon if you want to keep collecting rent.

By: Erica Muller
www.MySunnyHolidayVilla.com

Come one come all to the most overgrown, abandoned street in Summerport. I like to call it Foreclosure Alley and it's an investors smorgasbord. On Foreclosure Alley you will find homes by the dozens that are going into foreclosure. If you take a drive down the street you will see all the yards that are overgrown and the homes that are abandoned. Many of them were the victims of the runaway landlord I previously blogged about and many of the homes are from different individual investors that just couldn't wait it out.

Now is the time to pick these babies up! Many of these homes are on the golf course with beautiful views and boast almost 3,000 sq. ft. of living area if not more. Most of these homes will not have a real estate sign out front though there are a few that do. You have to drive by and view the homes individually to see which ones are foreclosing. I've never been one to cause hype or sing some sleazy sales pitch but this neighborhood is the deal of the year. I really believe that. With a Windermere address and a community in such a hot location these homes are a steal if you can snag them under 200K.

You know what they say. . . Finders Keepers!

Erica Muller
www.MySunnyHolidayVilla.com

I'm sure by now most of you have heard about XL Leisure Group, Britain's third largest holiday company, going under and leaving stranded nearly 50,000 holiday-makers abroad. Due to the skyrocketing price of fuel and the sagging economy it may not be the last story you hear about a large tour operator going under.

How does this affect you, the investor who owns a small piece of the pie in Florida that just wants to get some solid bookings to help cover your expenses? It may have a bigger affect than expected due to the fact that 80% of the bookings that come through your management company are directly from tour operators such as XL Leisure Group. This means that if more tour operators start tanking you could also see a dramatic decline in your bookings. This is not necessarily something to be too concerned about as I don't think it will last long term and as the economy bounces back so will your bookings.

My suggestion to you would be to contact your management company to find out if your bookings have been affected at all. If they do not do business with XL than you have nothing to worry about however, it's highly likely that they do and you should find out what their plan is to fill those bookings. On the bright side, this may be a fantastic opportunity to those of you who depend on your own bookings. With thousand of people out of a holiday they will most likely be looking online to make other arrangements. Now would be a great time for you to start advertising your villa. www.VRBO.com is a great site to list your holiday rental villa on without having to pay any management fees.

In closing I just want to say that this is yet another reason why management companies need to start becoming more independent of tour suppliers. If you are in the process of looking for a management company please find out how much of their bookings come from tour suppliers vs. their own marketing. It's very important and it DOES affect your rental income.

For many of you buying short sale properties is nothing special. you practically do it in your sleep. For the rest of you who have never done this before I advise you to make sure you are working with an agent who is seasoned in selling short sale properties and please heed their advice. It could costs you thousands in the end if you don't.

I ran across a situation with one of my colleagues who was selling a short sale property to her clients. It was the first time they have ever attempted to purchase a piece of real estate and they were so excited. Since the market had crashed and home prices came tumbling down they could now afford to purchace a cozy home in their price range in a nice neighborhood. They couldn't be happier.

After looking at about a dozen homes, their Realtor (my colleague) had finally found them "the one". It was a short sale property that was being sold by a trust for the owner...the trust consist of 7 people who were investors. They quickly rushed back to her office to write the contract up along with the short sale addendum. They gave their Realtor a good faith deposit to be placed in escrow to show the bank it was a solid offer.

Their offer was presented to the Trust and the trust insisted that they remove the short sale addendum stating that if the response time from the bank goes past a certain time frame (2 months) her clients were released from the contract and were to be given back their deposit. My colleague insisted that her clients NOT sign the contract without that addendum and she warned them that if they did it could be difficult to get their deposit back if they changed their minds.

Needless to say, her clients did not heed her advice. They were so excited to get the home they signed without the short sale addendum. Three months went by and still no response from the bank on their offer. Nothing. Her clients decided to start looking at other properties as a back up plan. They find another home that is now "the one" they have to have it but they can't place an offer because their good faith money is tied up in the escrow account for the short sale property they bid on.

They call their Realtor and ask her to try and get them released from the contract. She calls the Trust and explains to them that the process is simply taking to long and her clients can no longer await a response and need their deposit back. The Trust refused to release their deposit and thus began a two month battle for the money. In the end the money was finally released back to the buyers die to the law that states that taking out a time frame in a contract no longer makes it a binding contract because all Real Estate contracts have to have a time frame in them.

The buyers wasted five months of their time because they did not listen to their agent in the beginning. Luckily there is a happy ending. The buyers ended up getting the house they found and lived happily ever after.

The End