John MacArthur

I have watched with great interest the way that the government is attempting to fix the housing crisis. I have read more laws and proposed laws and guidelines and possible guidelines than I ever believed could exist. I have read financial wizards explain the problem so cryptically that it is impossible to reveal the actual truths that exist. I have read the op-ed pages. I have talked with other agents. I have heard the whispered truth at the root of the problem. No one is talking about the truth.

Most of the talk has to do with derivatives. This is related to the bundling of mortgage "pieces" into something that can be bought and sold and apparently leveraged. This is a very convoluted scheme that has created a great deal of income for some and an impossible web of transactions to sort out. These derivatives may also be called "toxic assets". The government seems to be doing all it can to sort out who is who and who owns what and who might be hurt and who might be made whole and ....well, you get the picture.

If investigators search through enough paper, the will figure out whose name is on which document. The problem is that it will take more time than we have to sort it out. Even if we could put a name on each transaction, we really do not have the time to research and analyze who was at fault (without any regulations in place, it may be impossible to assign fault that would stand a court test). As emotional as the issue has become, we are not in any position to be judgemental.

The problem must be fixed.

If we break it down to its most simple element, our problem began with the purchase of a home. The person buying the home was not really qualified to purchase the home. The person that bought the home, at some point could no longer pay for the home. The home became the true toxic asset. This happened many times in many areas and the subsequent spiral of home prices has left good solid neighborhoods staggering.

Why not fix the problem focusing on the root issue.

The current situation has homes foreclosed on and empty and becoming blights and reducing the surrounding property values. The longer they sit, the more their value goes down. As their value decreases, the homes nearby are impacted and their value decreases.

The other tale to tell involves homes that are going unpaid and are in the limbo between solid home ownership and foreclosure. Negative equity reigns.

Let's address each issue.

The Federal Government has created several programs designed to stimulate the market. They are not addressing the problem. Rather than offering a $8,000 tax credit, it may be wiser to use another method to jump start sales. The tax credit may look like a give away that is a real plus, but it does nothing for the buyer that does not have the wherewithal to purchase a home. It does very little for the people that do not have a tax bill of $8,000. It seems to overlook the fact that in the first year of ownership, the bulk of a home owners mortgage payment goes to interest and that interest deduction may wipe out the need for the full amount of the tax credit.

It sounds great but has little substance. I don't know about you, but most of the buyers I deal with need money now...........not next April.

Here's a thought, why not address the foreclosed homes and log jam of buyers with one small action. Offer buyers that qualify for a FHA loan a interest free down payment assistance loan equal to 3.5% of the purchase price, when purchasing a foreclosed property or pre-foreclosure property (addressed in the second part of this plan).

The money would go directly to the lender. The money would be paid back when the home is sold or re-financed (or sooner if the buyer chooses to do so). The property would be priced according to a third party appraiser. The government would pay 50% of the first trust deficiency balance to the holder of the first trust. The holder of a second trust would receive 25% of the amount due on the second trust. Any subsequent trust on the property would receive 10% of the loss.

The buyer would be required to live in the property until such time as the 3.5% loan could be repaid or the property is sold. This would target the foreclosed homes and begin the process of reducing the inventory of toxic assets. If homes received this sort of treatment, we may see an end to falling prices which are at the bottom of the lost equity barrel.

The other problem we see is the short sale dilemma. Some happen, some don't. The government needs to step in and pass a regulation that prohibits the owner of a property that is in a distressed sale position from proceeding with the sale unless they have sufficient funds to complete the transaction.

If they do not have the funds, a limited power of attorney must be provided to the holder of the first trust to enact the sale of the property. The holder of the first trust will negotiate with a Realtor to sell the property. The holder of the first trust will determine the asking price for the property through the use of the independent appraiser. Holders of second trust and/or other trusts will have no say in the final sale.

The government will subsidize the holder of the first trust 60% of the amount between the sale price and the amount of the first trust. The holders of subsequent trust will receive 10% of the money due them.

The homeowner will receive absolution from any tax consequences resulting from forgiven money in the transaction. The home owner will vacate the property once the power of attorney is signed.

Once again, we would be attacking the problem as it exists in the real world. Once again, we would be attempting to generate sales and stopping the plummeting home values. Both plans would generate activity.

Keep it simple, stop digging into derivatives and start putting home buyers into homes.

I have long believed that the NAR's approach to advertising and supporting our industry is way off the mark. They kept running those ads advocating that buying a home was an investment and it was a great time to buy. Any fool could compare housing to a stock market that is on an apparent roller coaster ride to oblivion.

Just because interest rates are low and just because housing prices are low does not automatically mean that it is a great time for everyone to buy. Somewhere in the mad rush to make millions, it seems many agents forgot what they are supposed to be doing. People come to us for advice, not a quick ride around a few homes and a quick settlement. It seems when borrowing got real easy, our industry forgot we are dealing with people's lives. There are living, breathing people behind all the statistics you read.

We are supposed to sit with potential buyers, listen to their desires, evaluate their position and offer sage advice as how to proceed to reach their goals. Our job is not to show homes. Our job is not to sell houses. Our job has always been much more than that.

Well I am proud to say that Long and Foster Real Estate is stepping above the fray and offering to head in a new direction. There is so much confusion in the market now, isn't it time that someone stood up and said...

"Yes, they say it is a great time to buy a home...but is it a great time for you?"

Even as I type this, Dave Stevens has announced a new ad campaign is being launched. Agents are being given the tools to conduct meaningful discussions that will reveal whether it is the time to buy ... one client at a time. Our agents will be focused on the right result for the consumer. It is very comforting to see that once again Wes Foster has taken a long look at the market and developed a program that meets the needs of the consumer.

If you want to know if it is a great time for you to buy, feel free to call me at 301-537-4377.

My name is John MacArthur and I am proud to manage the Olney/Brookeville office for Long and Foster Real Estate, Inc.

Okay, so I open with an admonition, pay no attention to the man behind the curtain. That man may be me, but I will let you be the judge. I was just sitting back enjoying the brisk 35 degree morning, having a cup of coffee on my porch and a thought hit me.

O.K., maybe a question came to mind, but something made me put the coffee down and start typing.

It was only 6 months ago that I was having a chat with my son about golf equipment. He swore up and down that if I could go out and buy a new set of Mizuno clubs, my game would improve tremendously. I did to out and price the clubs. A brand new set would cost well over one thousand dollars. A used set would be close to eight hundred. I did the quick math and figured I could play over a years worth of golf with the clubs I owned and spend the same amount of money.

Then a friend mentioned some fancy on-line site where I could probably find the clubs at a much better price. I went on-line and was amazed at the prices.

$200

I bought the clubs. Last week, I was attending a golf products show and saw the same clubs and they still cost over $800. Hmmm, I checked this Ebay thing again and they still had some left at $200. Hmmmm. I suppose that was the genisis for this post.

Is the illusion of home values going down created soley by short sales and foreclosures? Should the pied piper of falling housing prices (local appraisers or media spin doctors...take your pick) be so focused on distressed properties or should someone stop the madness.

I realize the latest group on Capital Hill have their collective hands full. New programs are announced daily to jump start whichever segment of the industry is squeeking the loudest that day. I don't have to mention that they seem to dance all around the biggest problem. Sure, they offer a $8,000 tax credit. Why yes, they have advocated that judges have the authority to jam prices during bankruptcy. Oh, I read where they are going to help those in distress re-finance their personal mess.

The 10,000 lb Gorilla in the Room.

Meet...Negative Equity

There can be no resolution until the problem with negative equity is addressed across the board. Rather than continue to toss money into untraceable black holes, all the people that are upside down must be given some relief. People will not continue to re-finance and toss good money after bad. The first payment failure rate on upside down re-fi's is going through the roof. The only people getting relief are the lenders. Short sales are not going smoothly. Properties are decaying in neighborhoods everywhere. There is no amount of money available that will maintain empty houses ad infinitum.

It is time the powers stop listening to pied pipers and begin addressing that large ape in the room.

It doesn't take much more than a monkey to do the functions of pushing papers around and cavorting in front of a captive audience. It is safe to say that having those skill sets don't make you, the agent, any money. Administrative support is nice, but it is also available anywhere. You need a little more to turn your personal ship around.

You can always find an office that uses this style of management(?). Let me know when you get tired of the old see no evil, hear no evil and speak no evil style. When those hands are not in place they are firmly planted across their rear end.

Before you read any further......I don't walk on water.

If you needed hand-holding.........you would call your mother. If you wanted a problem solver........you could call Dr. Phil. I know that successful agents don't want or need the same support and focus on yesterdays marketing. I will sit down with any agent and learn about the current flow and strategies of their business, and then I will share with them other ways that might be more productive and systemized. I will gladly craft a business plan for an agent based on their strengths and transfer skill sets to them in their greatest areas of weakness.

Think about it.

All any experienced agent needs is a coach!

If you can keep on target, if you can stay on course, if you can just do the things that you know will keep you successful.........you will reach any goal that you set. You know it and I know it. If you were to peel back all the layers that obscure the reason why successful agents suddenly fail, you would discover that all the excuses fall into one category. Agents get busy and habits begin to change and then things come up and then one day you are so far from your original business plan, it seems impossible to get back.

Markets change and what was once a beautiful tree gets lost in the forest. Agents go outside and seek help. Agents go outside and seek coaching and accountability. Agents attempt to re-invent the wheel.

This is not the way to success. This will fail.

I will not promise you outlandish splits. Long and Foster prefers to remain stable and be here in good times and bad. I will not dazzle you with a promise to put out any fire that shows up. I will not bore you with promises that obscure the truth. I will hold you accountable to a plan that supports your strengths. I will help you succeed in spite of yourself. You know what to do.

Let me make sure that you do it.

John MacArthur

Branch Manager

Long & Foster Real Estate, Inc.

Olney/ Brookville MD

301-924-7620

(Please note that this is based on true events, the names have been changed because I don't think it is necessary to share names. These skunks know who they are.)

I was just doing my job. An agent came in with a counter offer on a property in which they represented the buyer. It was a short sale and my agent was not familiar with some of the forms.

I flipped through the first eleven pages of our standard contract...so far, so good. I began going through the various addendum's and disclosures. I reached the bottom of the pile and came to the last four pages that had been sent over.

I read the document once, set it down and thought about it. Then I picked it up and read it again. Surely the good brethren over at Loo-Hell-on Realtors has made a mistake. I called for my agent to come into my office. I smiled and said..

"o.k., you got me. first week on the job and you play a practical joke"

"my agent just shook his head and said, nope, didn't you know those guys would squeeze blood out of a stone?"

An image flashed in my mind...............

Sure, I knew the firm. They were famous for their reputation of being a conservative Christian company. They took the time to leave presents on the doorstep of everyone in their farming area.

got jam?

For as long as I can remember, their agents march through neighborhoods on Flag Day and the Fourth of July and plant flags in front of every house. I will even admit that I kind of like that old town feel that the flags create.

Their little gambit on short sales indicates that they have little concern for what the flag stands for and a lot of concern for taking advantage of people when they are down. This flag is supposed to stand for something and not be used to hide behind.

People inside our industry should have a complete understanding of how we got into this crisis. People in this industry should realize that we are supposed to be the trusted adviser. I happen to be proud to be a Realtor and I am very proud to say that I work for a Broker that does not seize every opportunity to make a quick buck at the expense of the people that look to us for help.

I have to say that I am ashamed that Loo-Hell-on is practicing in this area. The word on the street and within the industry that they are a "Christian" firm. They act is they have a franchise on ethical behavior. They have a dress code and operate by marching to their own drum. For the longest time, I have felt..more power to them. Everyone has to find their style and brand and go with it.

I have more than a passing knowledge of the New Testament. I was raised as a Christian. I know the rules. I know the stories. I know the basic tenant of "love one another even as I have loved you".

Oh, the cause for my concern? Why these self righteous folks include a little item in a short sale contract that tells all parties that above and beyond any commission they might earn listing and selling the home, the seller will owe them a fee of $2800 for handling all the aspects of the short sale. That's right, they require that an individual that can not pay their mortgage and has to sell their home at a loss, pay them a hefty fee of $2800.

As I type that..........another image pops into my head....

It is like the police beating an unarmed man. The very people that are supposed to protect us, violate that trust and the crime makes national news. It is wrong. Charging an exorbitant fee, on top of commission to handle a short sale is the ultimate betrayal of homeowners in trouble. I know that no one is forced to this. I know that there are several firms in this area that will not charge on extra dime to handle the transaction. There are brokers, agents and title firms that do not charge a fee. Homeowners in trouble don't know any better. They usually call one agent and ask for help. Any slick, fast talking, evangelist style agent can gloss over the fee and point out all the work they have to do to get the sale completed. A beaten man will sign and hope that the realtor will help him out. Trust is violated.

This sort of behavior is usually seen following a natural disaster. This mindset is found in people going to hurricaine stricken areas selling water $5 per gallon to people that have no access to public water. This is the behavior of leechs that suck the blood from anyone. The leech has no conscience, just an insatiable appetite.

I wonder how dark a company's true moral compass must be before it blocks out the light of decency and compassion. I wonder how these folks can rush to the front pew on Sunday. I suppose they missed the story about Jesus and the money changers. I guess they are caught up in the letter of the law and never quite grasped the concept of intent. Just because it is legal does not always make it right.

Then again, may be I just have never read their internal training documents or had the opportunity to read their vision statement.

So, I guess I just wanted to share that there are many ways to make a dollar in this market. You can do your job. You can understand that some people need your help. You can understand that sometimes you have to do just a little more to get the job done.

I told the agent that it was a perfectly legal addendum to the contract. It had been signed by the agent and the seller. He shrugged his shoulders and said..."it takes all kinds". I sat back and wondered what words were coming from the pulpit in the church they attend. I was sure that I had heard time and again... "trust in the Lord with all your heart and lean not on your own understanding".

I just have to wonder. Isn't it better to walk the walk than talk the talk?

Now, if you are up against it and don't know what to do? If you are falling behind and think you may have to sell your home? If you just don't know what to do? You can call me. I won't charge you anything to review your situation. If you need to sell your home, I won't charge you more money for the privilege of helping you just because you are upside down. I won't charge you for arranging the short sale. I won't ask you to go into your pocket and pay me money to help you get out of your situation. I will treat you with the dignity and respect you deserve. You have enough problems already. My goal is to help, not hinder. I take ethics seriously.

My name is John MacArthur. I am proud to be affiliated with one of the most honorable and decent brokers in the Washington D.C. market. I work for Long and Foster Real Estate, Inc. and I can be reached at 301-537-4377 or 301-924-7620. I won't clutter your doorsterp with a jar of jam or fill your driveway with flags. I will give you sound real estate advice and that advice will be on my dime. You need a Realtor, not an opportunist.

If you are looking for sound real estate advice regarding buying or selling a home, you might want to look behind the curtain.