Sidney Jimenez, CDPE, Short Sale Expert, 954-665-9449,

It might be a little to early to make a judgment on the new foreclosure prevention plan announced by the Obama administration but the little I was able to read doesn't give me much hope. The fact that the refinance part of this plan would cover those mortgages that were, at a maximum, 5% over the homes value is troubling. That would have been a great plan if this were the beginning of the crisis and not two years into it. There are communities where the values have dropped so quickly that people are 30%, 40%, 50%, and in some condo communities here in Florida it reaches 80%, below their mortgages. Don't misunderstand my point, this could help a lot of people but not nearly the amount that will be needed to help stabilize the market. Until the market stabilizes there will be no recovery.

MY BAILOUT PLAN:

1) Give the homeowners who are distressed the opportunity to “re-purchase” their home, at market value, if they can afford it. It that is still too expensive, assist that family with a down payment as in order to give them a chance to purchase another home within their bracket. This technique will help keep down inventory from coming onto the market, save the lenders expenses associated with a short sale or foreclosure and give relief to the family.

    a) This would keep more homes under ownership and not on the open market. If the homeowner cannot afford that home it will then help to keep another home off the market and lowering the inventory, stabilizing home prices.

2) Re-evaluate or re-qualify homeowners that have been foreclosed or needed to do a short sale. If their overall credit is good, except for this blemish, then afford them a mortgage loan at competitive rates in order to give them the opportunity to re-live the homeownership dream. Again, this will lower the inventory of unsold homes and stabilize home prices.

     a) This will let the homeowners that were affected prior to the bailout to benefit. It will also bring more buyers to the market to helping eliminate the massive inventory.

3) Give the same tax advantage to the property owners of “investment” properties, as the homeowners enjoy with their primary home in the event they are insolvent; and automatically forgive the deficiency with the prerequisite of the owner being insolvent.

     a) This detail can help bring more of these properties to resolution instead of staying vacant and unmaintained. It could save the lenders from extra expenses associated with foreclosure sale and long term maintenance of the property.
     b) It will eliminate the legal step of suing for a deficiency that most often goes unpaid by the owner dissolving the debt through a bankruptcy.
     c) As an added benefit it will give the owner a better opportunity to correct their credit and thereby join the credit market sooner rather than later.

4) Establish a fund that can be used by the Lenders in need to keep their operations solvent and give them enough liquidity to continue lending. However, the availability will be subject to the lenders participating with the re-negotiation and cooperation with the steps outlined above. The more their participation is verified the more access they could have to the funds as needed.

     a) I believe this, with other steps included here, will ensure the participation of the lenders in need. As they help to get rid of the mess they helped create the more they will benefit from access to funds and receive the liquidity they need.
     b) At the same time they will rid their books from the bad debts they had created with the sophisticated investment vehicles they’ve used.
     c) The combination of access to funds and the ridding of non performing debt will help the turnaround of the company and Wall Street as a whole.

5) Freeze the stock options of all the executives in the participating companies to a pre-determined price (the stock price as of this morning, for instance). Their stock will not increase in value until and unless the company has been successful in ridding themselves of the non-performing debt and raised the liquidity of the company as to not need the assistance of the government fund.

     a) These executives that helped steer their companies, Wall Street and the national economy should not get any compensation for the company’s turnaround until all the pre-bailout goals have been met. In the event the goals are met and the economy is stabilized, then the executives can reap the reward of their stocks at its current price.
     b) The common stockholder would have access and receive market value of their stocks as they appreciate during the bailout. This will give them a voice in how the company is managed and assurances the bailout is being used to help the company recover and bring up the rest of the economy with them.

6) Set aside a block of stocks, as a percentage of the company’s size, from each participating company in a government held trust account.

     a) The stock will be held and gain in value as the bailout is helping to bring the economy back from crisis. As the bailout helps the companies regain their footing and profitability the government and their citizens should have a way to gain from the recovery of the market and recoup some, if not all, of the expenses from the bailout.

7) In addition to the stock options, there should be a percentage of profit sharing from each company that is being bailed out and held in an interest bearing account.

     a) That action will help the taxpayer recoup some of the cost of the bailout and share in the mutual benefit of all parties to the recovery of the market.

This is a moving target, so I believe there will be adjustments and changes as we move forward.

This is a fun story for me. I have a short sale being negotiated with Countrywide. I also have the buyer who is getting a loan with Countrywide. I have let all the representatives know that this sale could be very beneficial to them since they will turn their money around.

Needless to say, the Loss Mitigation Dept took a very long time to get their process going. In the meantime, the buyer's purchasing window was closing because of the rise in interest rates. I was able to get a letter from the buyer's mortgage rep stating that the window was closing hoping it would give this file a higher priority since it could cost them a double loss.

My answer was, "We don't care who is buying the house and we're not rushing for anyone." Well, the buyer no longer qualified for that loan. A couple of weeks later they approved a short sale for the sales price we originally agreed to. By this time the market value had fallen and they will not be able to get that price anymore. As a matter of fact, we have already lowered the price below the original offer.

My buyer went onto buy another home in the community for quite a bit less and is as happy as can be. The Short Sale home is lingering on the market.

How did Countrywide become the biggest mortgage lender in the country?

In a recent blog, I mentioned how I was told by a lender that we needed to lower our contract price for our short sale because it was higher than what their BPO came back for (How Much?). We lowered the contract price and received out approval from the lender. The file then needed to go to Fannie Mae to get her final approval.

Well, I bet you can see where this is going. Fannie Mae came back and told us that their "state of the art" system that determines value is having a problem with the value of the contract submitted. Not only doesn't it like the amount on the contract, but even the original contract is too low.

It seems their innovative system doesn't do very well in differentiating between a condo and a townhome which includes a one car garage, private driveway and fenced in backyard. (Of course the condo does not have any of those advantages) My explanations are falling on deaf ears and in the meantime, this seller's outcome is being help hostage to a "program" or "software" that disagrees with the professional opinion of the Realtors, the TWO appraisers involved with the lender, and the lender itself. Just when we thought the lenders were our only problem.

Every time I think it's getting to the point of turning around and the system is getting better, I get slapped across the head with something like this. Wow.

Sidney Jimenez, CDPE

Certified Distressed Property Expert / Short Sale Specialist

Helping homeowners help themselves.

Many people eager to sell their homes have held hopes that the proposed tax reduction would give a much-needed boost to the stagnant real estate market. If you're one of those hopefuls, allow me to set the record straight. While I believe the tax situation may cause a small spark, it's not a long-term solution to the slow housing market, nor is it even a major contributor to the difficulty in selling homes today.

I've said before that properly pricing your home is one of the most critical factors in getting your home sold within a reasonable timeframe. In today's buyers' market, that remains a solid fact. Let's look at some solid data that supports it. The National Association of Realtors noted an 8.4% drop in existing local home sales last March, and that was the largest one-month drop since January 1989. And our region isn't immune to foreclosures either. RealtyTrac noted in June that the top 500 zip codes for foreclosures included the following: 33023, 33024, 33025, 33027 and 33029. Look familiar?

Yet as bad as you think it is here, it's worse elsewhere in the country. According to RealtyTrac, June marked the eighth consecutive month where median home prices dropped nationwide-and that's the longest period of falling prices on record. And while in the past year existing home sales have dropped by 6.2% here in the South, they have fallen by 8.2% in the Northeast, 9.1% in the West and 10.9% in the Midwest.

Pricing your home in today's market doesn't mean matching the price tag to the assessed value. The hard truth is that you'll likely have to drop your price below what it's worth if you really want to sell your home. A lot of my clients believe that the housing slump is temporary. Brace yourselves, but I think things are going to get worse before they get better.

Don't despair! Despite the scary statistics I've noted above, you can still successfully sell your home-if you accept the existing market variables and play the game right. In order to do so, you need to understand what I believe is one of the most important factors affecting home sales today. It has everything to do with buyers but nothing to do with the fact that they rule the roost when it comes to negotiating a contract. In fact, it has to do with a multi-tiered factor that buyers have absolutely no control over: the rising rate of foreclosures and its byproducts-tougher lending conditions and less money available for lending.

MarketWatch, a subsidiary of Dow Jones, reports that foreclosures are at a 50-year high. And that number doesn't take into account the more than $800 billion in adjustable rate mortgages (ARMs) that are due to reset in the next 12 to 18 months. "In October alone, more than $50 billion in ARMs will reset," says Mark Zandi, chief economist and co-founder of Moody's Economy.com. This will affect the market's reaction and recovery.

It has been reported that a foreclosure bubble is getting ready to burst. Not only will such an event keep home prices down, but the resulting financial losses will negatively impact lenders. The increasing foreclosure rate has already led dozens, if not hundreds of lenders to go out of business or file for bankruptcy. As a result, more stringent guidelines have been implemented for future loans, which will make getting approval for a mortgage-once a fairly simple detail in the home-buying process-a very difficult task for many buyers, and that's taking into account that we still enjoy some of the lowest interests rates in history. The situation has already become so dire that GE will no longer be in the mortgage business; they plan to sell their existing loans, valued at more than $3.7 billion dollars.

So not only do you have to find a buyer willing to buy your home for the set price, but that buyer needs to qualify for the loan amount in question. Your first step then, of course, is to reasonably price your home. To do that, you need to accept the realities of the market, including the financial landscape that will likely continue to change. If you're set on selling your home in the near future, you may need to lower your asking price by more than you had anticipated. But by cutting your losses now, you'll still come out on top in the end.

www.SidneyJimenez.com Certified Distressed Property Expert, helping homeowners in Broward and Palm Beach Counties, FL avoid forelcosure. Call me today 954-665-9449 or by email Info@SidneyJimenez.com