Archive for September, 2007
An Appeal for Credit Amnesty
There is a tsunami of wrecked credit that has only begun to hit the credit reporting bureaus.
Many of the victims are those whose FICO and credit scores have been demolished by short sales and foreclosures. With the short sales, or short pays as they are sometimes called, the mortgage lender has agreed to accept less than what is owed on the home–and where more is owed on the home than what it is worth. In the case of foreclosure, the home is auctioned off for non-payment. In both scenarios, credit scores of the former homeowners are generally ruined, which will likely prohibit them from purchasing another home anytime in the near future–or perhaps for years to come.
Many will argue against the idea, but perhaps it is time to consider credit amnesty for those who have lost their homes to foreclosure and short sales. Sure, there were those homeowners who were greedy, who used their homes as ATM machines, who foolishly thought the crazed real estate market would continue forever–or at least until they managed to sell at the top of the market.
We have even met a few of those people. They are among the legions who followed real estate flipping shows and late night television gurus. They followed the promises of big and easy money.
But most of the defaulted clients we counsel have a history of home ownership, pay their bills on time, and were lured into mortgage financing that was so easy to obtain and which offered irresistible terms. Most relied on the counsel of a loan broker or real estate agent (often one person who wore both hats), who assured them of the wisdom of such loans.
It was a diabolical match: Gullible and sometimes greedy homeowners paired with greedy and sometimes crooked mortgage and real estate professionals.
The finger pointing can go on for years, but very soon there will be tens of thousands of people who will no longer be able to purchase homes. Add these numbers to the huge pool of buyers who are already afraid to enter the burgeoning real estate market and we have an economic problem of near-Biblical proportions.
I’m not sure how the details of a credit amnesty plan might work (and the devil always lurks in the details), but something need to be done quickly to help bolster buyer capability in this market. To disenfranchise such a large group of home buyers will only magnify the expanding real estate market glut and lengthen its recovery.
And as with any amnesty plan, there will be a percentage of borderline criminals who are more deserving of jail than being forgiven.
But with tougher mortgage loan underwriting, better oversight and raising the bar on real estate and mortgage lending professional standards, the rotten borrowers would be weeded out. This would also encourage the discouraged to stay current with their other debt obligations instead of giving up entirely on their FICO scores and future home buying opportunities.
It might be a solution that could help our markets recover–and credit amnesty just might offer hope to the hopeless. Might not the rewards outweigh the costs?
read comments (10)What Do Luxury Home Buyers Expect from their Agents?
by This is Part One of an ongoing series about Luxury Home Buyers, their expectations, origins and trends.
This first article in the series will look at these buyers and what they expect from their luxury real estate agents. For some reason, I thought market knowledge and keen negotiating skills would head the list for luxury home buyers, but a recent 2007 membership survey conducted by the Luxury Home Council, and authored by Jim Remley, shows something far more basic.
So what to luxury home buyers expect? According to this survey of luxury Realtors, luxury home buyers want real estate representation that provides, in order of preference:
- 86% Help in finding a luxury home
- 56% Help in managing the transaction
- 43% Expert negotiation counsel
- 34% Advice on purchasing a luxury home
- 28% Assistance with paperwork
- 13% Help understanding the process
- 9% Help locating jumbo financing
Other tidbits?
- The average down payment for the luxury home buyer is 33.6 percent.
- The typical luxury home buyer spends 11 weeks searching for a home prior to purchase.
- Luxury home buyers, on average, look at 12 homes before making a final decision to buy.
- The typical (if such a thing exists) luxury home buyer is seeking a residence with 3500-4000 square feet, 4-5 bedrooms and 3-4 bathrooms. (Note: In the San Diego luxury home market, I believe the average square footage required by our luxury buyers will be higher.)
Like many, I might have guessed that the internet would have diminished the role of the real estate professional in the home search.
That appears not to be the case–and perhaps with good reason. Luxury home buyers, as a group, are more accustomed to seeking professional advice and reap the benefits of that counsel. Local luxury home specialists will understand market and neighborhood nuances that might not be revealed in internet searches. These luxury home Realtors will also, hopefully, have a good working relationship with other luxury specialists and will know of properties that may be available for sale, but may not be listed in the MLS. Those properties, of course, will not show up on any MLS search. They will also know neighborhoods, both private and public schools, country clubs and other factors that would suit a particular luxury home buyer–especially one is is relocating from another area.
Finally, most of us who deal in luxury real estate have found that our luxury buyers already have mortgage financing in place–and from our experience, it generally stems from a trusted professional advisor and financial institution.
The wealthy, it appear, tend to have trusted advisors in their lives–which leads us to wonder: Is that part of their wealth strategy and success?
I am inclined to think so.
Also Read:
Breaking All Barriers: Luxury Homes Reach Nine Figures
United States a Bargain for $1Million Homes?
Ultra-Luxury Home Sales to Soar in 2007?
Luxury Home Management: Ask for the Butler
Montana Luxury Real Estate Coup?
Easy Feng Shui Tips for the Luxury Home
A Second Plea–for a Young Widow
Just yesterday afternoon Real Estate Rainmaker Lani Anglin wrote on this blog, and spoke of her grandmother who had sold her home and earthly possessions so she could go help the less fortunate in an African orphanage. This was in response to our underwear plea for children in a Kenya orphanage.
Not long after that blog response, April Groves at R.E. Revealed says Lani received word that her younger brother had been killed in a car crash on his way over to visit her. In the car were his wife and their two babies.
Lani’s younger brother, 24 year-old Aaron Anglin is survived by his wife Aleisha Anglin, 25 and their two babies, Eleanor, 1 and McKenzie, just 6 weeks who is still reported to be in ICU at this writing.
Lani relayed this message via R.E.Revealed earlier today:
“To me, the important thing to know is that the crazy kid in the funny video is my newly 24 year old little brother Aaron who died yesterday on impact. He was driving to my house (to make another silly video) and was driving with his wife (Aleisha Anglin, 25) and their two babies (Eleanor who turns 1 THIS week and McKenzie who is only 6 weeks old). Aleisha & Eleanor should be released today and McKenzie is in the ICU in improving condition. We have tons of family surrounding us and St. Thomas More parish is providing food this week for our entire family! Aaron was awesome and his marketing work can be found at http://benaaronanglin.carbonmade.com. He was confirmed in the Catholic faith last week, laughed his butt off at ICanHasCheezburger.com with me this week. We were born 18 months apart (Irish twins) and grew up as best friends with so many lame stories.”
Lani, writing to April, further explains:
My brother and his wife are not rich by any stretch of the imagination and Aleisha has a very hard time ahead- if you or anyone else can think of any way to aim finances at her, she really needs it. Assisting in an optometry office is a great profession but pays very little- certainly not enough to cover a funeral, medical bills for three people and a life ahead as a single mother.
The green icon is a link that will help guide you to assistance for this young mother who very unexpectedly became a widow yesterday afternoon,
The story was additionally reported by Greg Swann at The Bloodhound Blog, and was followed up by Brian Brady on Active Rain. Once again, donations are being sought to help tide over a young mother and her two fatherless babies.
Again, please follow your heart.
A Plea for Underwear
by I took a break from San Diego real estate this weekend and went shopping for underwear instead.
I bought 30 pairs, and fear it won’t be nearly enough.
You see, a very cool lady named Rocky wrote a very compelling blog, that inspired me to not only go shopping, but to start blogging for underwear–and posting up some very unprofessional photography. But that is inconsequential. Her Underwear for Africa project will go far to help put some smiles on some needy African orphans–and that is a worthy goal.
In Kenya, at least, it is illegal to buy or sell used underwear, because authorities fear the spread of disease. That might not be a problem, except that average wages run under $1.00 per day and a bra in a store might cost $30 or more.
There is a predictable black market in used underwear, but not one that is available to needy orphans. That is where Rocky Turner and the Underwear for Africa project steps in–and where I got hooked.
This afternoon, I am packaging the collection of boys’ and girls’ underwear into a new backpack–and have discovered some extra space.
All it took was a call over to my Dad (Bob Michelson) and husband Mike, who are watching the San Diego Chargers getting demolished by the Green Bay Packers. I explained what the backpack and scattered underwear was all about–and snagged another $40.00 from them for underwear shopping. I discovered, too late, that the Encinitas 99-Cent Store is selling underwear at 3/.99. If the inventory is available, I just might be able to parlay this into over 100 pairs of underwear.
For which I would happily buy another backpack!
If you would like to do a little shopping or collecting for these kids-in-need, please feel, free to call me at 877-818-8197 or simply follow this link and your heart.
Stop Identity Theft: Freeze Your Credit
Become a victim of identity theft, and you could be in for the nightmare of a lifetime.
We have known several identity theft victims. One family lost its home because of it and another even fears for his safety. It is a vicious crime that can take years to to resolve and the damages can last far longer than that.
Almost 10 million Americans are victimized by identity theft each year, and it is one of the fastest growing financial crimes.
The best solution is prevention and freezing your credit may be one of the simplest steps you can take to help stop this crime. A security freeze will prevent thieves from obtaining credit in your name by locking, freezing and blocking access to your credit report and credit score.
The cost to do this is fairly minimal ($10 in California), and is a solution available to residents of:
Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Indiana, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.
What happens if you want to obtain new credit? The consumer is given a PIN to grant access to the credit file. Again, a nominal fee may be charged to do so.
How does the credit freeze work? Simple. If a business or lender cannot obtain credit information, new credit will not be issued to the thief.
For additional reading about this subject, click here.
Click for instructions on freezing credit in California
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