Roberta Murphy - Carlsbad Real Estate North County San Diego Realtor

There are very profound fears that our credit markets are crumbling, and that life as we have known it may be in for serious change.

Now, as never before, we as real estate professionals need to help create solutions for our clients and bring sense to the market wherever and whenever we can. We need to know not only available mortgage programs (and savvy mortgage pros), but also become familiar with creative financing and alternative ways of selling real estate.

One thing lenders could do immediately is to allow existing loans to become assumable.

Many agents are unfamiliar with assumable loans, and might wonder how they work.

Let's use a simple example: Home Seller has an outstanding mortgage balance of $150,000 and is willing to accept a $195,000 sales price. Home Buyer pays $45,000 plus closing fees and assumes the existing financing. Seller exits the transaction with that amount, less closing costs. Future mortgage payments are now made by Home Buyer to the loan servicer.

In some cases, lenders (and sometimes the Seller) might offer secondary financing to help with the difference between asking and sales price--as long as the buyers had a cash stake in the deal. This could be done via a simple second, an all-inclusive trust deed or wrap-around mortgage.

I can't help but wonder why mortgage lenders don't revive the assumable loan, help kick start the real estate market, and save at least a portion of their own and investors' portfolios in the process? Their investors would surely rather have their loans paid off by another borrower, rather than suffer near-certain loss in a foreclosure sale.

In many cases, sellers have no equity. Why not allow them to offer their mortgage debt (or renegotiated debt) as assumable financing for potential buyers? Lenders might be relieved to have mortgage payments brought current--and might even require the new buyer to deposit two or three month's payments with them as insurance against future default.

By allowing assumable financing, lenders would fare much better vis-à-vis short sales and foreclosures--and more homeowners would be able to save their credit and exit their homes with dignity. Most lenders now force homeowners to be in default with their mortgage before they will even consider a short sale or modification of terms.

It just makes sense to get the mortgage debt seamlessly transferred before it ever goes default.

And with the strangled liquidity in financial markets, it makes more sense than ever to transfer debt rather than forcing buyers to secure new financing--which may or may not be available.

Last week, I had the opportunity to interview Southern Califoria and Nevada real estate legend Bob Dyson. He has been in real estate for 40 years and has a long track record of success--ranging from owning the master national Red Carpet Real Estate franchise to Dyson & Dyson Real Estate in Southern California and Nevada, to Broker for Sotheby's International Realty in San Diego and Riverside Conties.

But the interview wasn't about Bob Dyson.

It was about a radical proposal that is quickly being embraced by Realtors, lenders and local Real Estate Boards.  We taped a total of four short interviews, but the last two will probably be of most interest to the Active Rain audience--and I am posting them here.

Why resort to radical resolutions?

Because, says Bob Dyson “This is a real estate depression–a serious, serious issue.”

He sees an immediate need to stabilize real estate markets and neighborhood values. He also believes the mortgage lending industry needs to get out of the “asset management” business, and instead focus attention on new loan originations.

So what to do with all those defaulted loans and pre-foreclosures?

That’s where Dyson’s proposed “American Incentive Resolution” saves the day.

How would it work?

1. The American Incentive Resolution Corporation (as a government entity) would buy defaulted loans from lenders at 50 percent of face value.

2. Re-market these homes through Realtors at retail market value.

3. Offer these homes to first time buyers and those whose credit and FICO scores have been damaged by short sales and foreclosures the last couple of years. The initial terms would be a 12-month lease-purchase, with all payments accruing to a down payment as long as payments are made on time. Lease payments would equal what loan principle, interest, taxes and insurance would be under normal loan terms at 5 percent interest. Initial move-in would entail first and last months’ payments.

4. At the end of 12 months, the lease would become a purchase with all payments made under terms of the lease being applied to the full down payment.

Some will argue "Be careful whom you make your protector lest they shall become your jailer." In other words, keep government out!

Bob would likely reply that "Better we oblige the government to offer these properties to the American public, than to spread the spoils among congressional cronies."

The first video below details Bob Dyson’s proposal for restoring neighborhood values and the real estate market, while the second  explains how YOU can involve your local board in helping to create and implement the American Incentive Resolution:

We have a great couple looking for a San Diego condo near the beach. They were hoping to locate second-home with a price under $250,000–and were more concerned about a coastal location than the size of the unit.

We looked at condos in Oceanside, in Pacific Beach and Ocean Beach. What we didn’t expect to find was a lovely one-bedroom condo in Encinitas–at the gated community of Pacific Pines. It offers granite surfaces, brick fireplace, dishwasher, refrigerator, stove/microwave and washer/dryer. It is small at 650 square feet, but the price was remarkable at $195,000.

The gated community of Pacific Pines offers a pool, spa, tennis courts, club house, BBQ areas, picnic tables, sandy volleyball court, racquetball court, nearby hiking trails, and a location exquisitely close to the San Elijo Lagoon and Cardiff by the Sea.

We quickly wrote a full price offer on this Encinitas condo and submitted it this morning. It’s another one of San Diego County’s real estate foreclosures, so we are prepared for the inevitable bank and bureaucratic delays.

Below is the quick video I made for the clients prior to their drive down to Encinitas:

This morning, I thought I would drop by the Grand Opening of Apple's new store at the Carlsbad Forum before heading out to show properties.

As I pulled into that large parking lot, I couldn't believe my eyes. There was a line four-deep that stretched from one end of the Forum to (and around) the other. There were young and old and every age in between.

Black-coated security guards maintained crowd control, and Jimbo's Market from around the corner offered crisp organic apples to those waiting in line. Everyone seemed in good spirits, and I heard cheering in the distance coming from within the store, which had not yet opened. Orange-shirted Apple employees were lined up ready to greet excited customers, one group at a time.

When asked, one of the security guards volunteered that the queue had started before 4 a.m.--and I was astounded.

Why?

Because most people I know use PC's--if only because Windows-compatibility is require for our San Diego MLS and some other real estate programs--and I thought most everyone already had an i-Pod:-)

The long lines were a definite surprise, but then I recall hearing some background buzz on CNBC this past week about Apple overtaking Google.

Thoughts?

I’ve never really given much thought to San Diego County’s two nude beaches: Black’s Beach in La Jolla and San Onofre State Beach at the northern tip of San Diego County. Both are pretty remote-- and it appears the nudists are a pretty peaceable lot.

At least until this morning.

It was reported in this morning’s San Diego Union Tribune that San Onofre park rangers will start enforcing a ban on nudity September, 1, 2008. It seems there have been public complaints, and some park employees objected to working in a place where not everyone is clothed–which specifically targets the Trail 6 beach area at San Onofre.

And like other beach workers who object to picking up cigarette butts, used baby diapers and assosrted foul debris, maintenance workers at San Onofre State Beach object to occasionally having to pick up sex toys, condoms and other “paraphernalia.”

Guess it’s a long trek to carry those bags of debris up a remote and steep path that goes up a 60-foot cliff.

Can’t blame either group of park employees for their complaints–and many would personally campaign for users of all San Diego beaches to never leave any debris behind.

On the other side of this issue, nudists are proclaiming that their nudity is protected under First Amendment rights as “free speech” and the Naturist Society has issued an action alert, encouraging its members to email and send letters to politicians protesting the nudity ban.

It’s tempting to take my camera and authenticate this Active Rain blog article with photos, but I’ll pass on the assignment because I’m just not dressed for the terrain.

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