financial - Blog - REO Pro Network

I Want To Short Sell My House, Now What?

Posted by Marcy Moyer on August 31, 2011 at 11:11am

If you find yourself in the position of having to sell your home and it is not worth as much as you owe, you may be wondering what you should do. I am assuming here that you have either been turned down for a loan modification or have to move because of divorce, job transfer, or other circumstance.

So you have to sell. Here is what you should do.

1. You can not do this on your own. The banks will want the home to be extensively marketed and you can not do that as a FSBO. Since the lender will pay the real estate commissions that should not be a concern.

2. Gather your financial information. You will need 2 years tax returns, 2 months bank statements form all accounts, 2 months statements from all investment accounts, profit and loss for 2 years from any self employment.

3. Fill out a financial statement which shows all your income and expenses

4. Write a hardship letter which explains why you need to do a short sale

5. Make your home available for showings and open houses

6. Keep your financials updated every month and give the bank everything they ask for

7. Accept the best offer you can get on the property

8. Be PATIENT

If you have any questions about short sales in San Mateo or Santa Clara County please feel free to contact me.

Marcy Moyer

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E. 01191194

Marcy Moyer Keller Williams Realty Palo Alto, Ca. Specialist in Short Sales and Trust and Probate Sales

Financial Meltdown LOOMS!

Posted by Jesus (Jesse) Gonzalez on January 31, 2010 at 4:46am

Regardless of your opinions on the necessity of the bank bailouts aka TARP, let us all agree they haven’t worked. I am not sure any other industry knows this better than ours, the default industry because, we still see the direct effects of frozen credit markets, the shadow inventory and bank failures throughout this country. At the quarterly report of the Special Inspector General’s office, Neil Barfosky warned our country in a report to Congress that TARP only made things worse because ultimately it never addressed the underlying problems that created the financial crisis from the start. Think of it like this, let’s say you break your leg and you are rushed to the Emergency Room for treatment. You get the x-ray and the diagnosis is, your leg is broke. The doctor prescribes some really good pain medicine and says, “Take 2 of these and call me in the morning” however, he never re-sets the leg or even puts it in a brace or cast. In other words, the doctor is just covering up the pain hoping you won’t notice your leg still looks like the golden arches outside your local McDonalds. The worse part of this whole story is, instead of raising hell and getting a new doctor, one that can fix the problem, you end up riding a wheel chair out of the ER, a leg contorted like a Chineese Acrobat smiling and saying, “The pain medicine is necessary to prevent amputation; it will help me walk again”. Ok, so…..the story is a bit absurd however, it really is what we did as a country, oh wait a minute, I forgot to add this part of the story. So, it’s 2 weeks later…..all you have been doing is popping pain pills left and right and, in fact, the pain seems to be getting worse. You start to notice you can’t feel anything in your pinky toe so, it scares you and you go back to the Emergency Room but, this time you go to a different hospital because, deep down inside you’re not to sure that other doctor knew what he was doing. The new doctor is dismayed, shocked, stunned, repulsed and even angry at what the ignorant, incompetent, doctor did to you. He goes on to tell you, that now, the bone has started healing, in the shape of an arch and to fix the problem, they will have to re-brake it, do surgery to fix nerve and vessel damage and potentially, you could loose the leg due to infection setting in. The doctor explains to you that the broke leg was never “fixed” and now the damage has had time to fester and cause more damage than originally. So, the cure is going to be worse than if it was all handled correctly the first time. Pay special attention to that last line, “The cure is going to be worse than if it was all handled correctly the first time.”…………..this line is very important because, we were all told by our leaders in Washington that the financial crisis would have been another Great Depression, double digit unemployment (oh wait, we have that now), bankers jumping from their windows (haven’t heard of this yet) and soup kitchens with lines three blocks down (maybe sooner than I thought). So, if that is what we averted by simply taking pain pills (TARP) and now it’s potentially worse than before because the problems were never fixed…………………….AAGGHHHH! ARMAGEDDON!?!? Well, I don’t know if it will be Armageddon but, as I have always maintained, TARP was never a fix…..it was just a pain pill and, it seems our leadership in Washington is now a prescription drug addict with a couple TRILLIONS dollar habit and is looking for their next fix! Make no mistake America, we did this to ourselves……go all the way back and Google the Community Reinvestment Act, see how Barney Frank and the GSE’s screwed this country so bad that now we poo sideways. Make no mistake, plenty of blame to go around. Democrats are the only party guilty of this. Progressivism is the problem, this idea we can move beyond our Constitution, this concept of wealth re-distribution but, I digress. Here is the reality. We never fixed the problems with the banks, all we did is momentarily stop the pain. Now, the pain pills are loosing their effectiveness and either we go and get better pain pills or we head into surgery, re-brake, re –re-set and fix the problem once and for all however, I have one question to ask you….just one. ARE YOU SURE THE DOCTORS WE HAVE ADDRESSING THE BREAK ARE UP TO THE JOB? You may re-post this blog as long as you give me the credit for writting it. Thanks for reading.

Financial Crisis Inquiry Commission

Posted by Billie Dalessio on January 13, 2010 at 5:50pm

All REO Brokers, for that matter all Real Estate Professionals should watch the panel questions to learn about the financial crisis. It is available for viewing at www.c-span.org In the on-going blame game that has been in effect since the beginning of the crisis, this is the most fair and balanced of each parties viewpoint, without media bias one would find on politically motivated networks. Most people have an opinion on the root cause of the meltdown. Some think it rests on a residential real estate housing bubble. I have never been in agreement with that viewpoint. Real Estate is unlike a dot com, it cannot truly be a complete bubble. By definition when a bubble bursts, nothing is left, in real estate, the underlying asset remains, although at a reduced value, it still retains some value.Others believe that the cause is Wall Street greed. Many others believe it was the push for increased homeownership rates.These thoughts are over-simplication, although there is plenty of blame to go around, it is a combination of many factors that created the perfect storm. The purpose of learning where the system went wrong is to prevent repeating the behaviors that brought us here.It's my opinion that there was a whole circle of responsibilty. An environment of appreciating real estate values, and low interest rates had Main St wanting to invest in stocks & real estate rather than put their cash in safe low return savings accounts, or T bills & the like. Wall St under pressure to out perform year over year, as the bar is set higher and compensation tied to investment returns to the firm looked for new investment vehicles to sell. Mortgage loan brokers. some of which didn't even need a license depending on which state they did business in were looking for new loans. Institutional investors looked to maximize returns on their portfolios and pension funds. Enter new products; mortgage backed securities and credit default swaps. CDS were basically a bet that a package of loans would fail, sort of like shorting a stock. In order to sell these new products they needed to be rated, so Credit Rating Agencies such as Moody's & Standard & Poors evaluated these new products. They developed sophisticated models based on extrapolating real estate appreciation. Real estate purchasers counted on rising values and incomes to sustain their mortgages. Relaxed qualifying opened the market to more borrowers, it was now possible to purchase with no money down, lower credit scores and low documentation of income.There were some mortgage fraud where borrowers or originators lied on applications. Some borrowers decided to cash in on their equity to purchase home improvements, vacations, toys or anything else they wanted now. Homeownership rates went up and helped to fuel the economy, So the circle went- until it broke down.Here's why I think it broke-1. Real Estate values are not constant, they fluctuate up and down.2. New sub-prime loans were more profitable than conforming loans, so too many were written.3. MBS & Credit Default Swaps needed an increased amount of loans to package, Wall St wanted more.4. Mortgage applications were taken by inexperienced unlicensed people, including some real estate agents.5. The riskier the loan, the higher the profit to the mortgage broker, and demand for the loans increased.6. Mortgage Companies solicited home owners to refinance, and spend their equity now, rather than build it up.7. Credit Rating Agencies formulas of taking B & C paper, repackaging and rating AAA, (which I liken to taking B & C student and puting them on the Honor Roll) led to global institutional investors purchasing the MBS & CDO's, thinking they were safe.8. Government watch dogs that started to raise red flags were squashed.9. Banking regulations did not apply to Investment Companies.10. The Fed kept long term interest rates low.11. The new finacial products were complex, and some buyers did not understand them, and relied on their ratings.12. No transparency in capital reserves and product mix at major lenders.13. Consumers take loans which they don't understand have pre-payment penalties, balloon payments, negative amortization etc. This one gets alot of bad press, as in "they should have know better" but I know that I have signed documents to purchase a car without reading it, and have many times checked the box on a website that states I have read & understand the terms & conditions without reading them.- and I deal with legally binding contracts everyday.14. Economic conditions weaken, Real Estate values decline,Foreclosure rates increase placing downward pressure on values, Market liquidity tightens, Panic starts. I am not sure which fueled which, but the combination led us here.

"Getting Tough" with Predator Financial Institutions

Posted by Carlos H. Silva Sr. on March 20, 2009 at 6:37am

AIG, Larry Summers and the Politics of DeflectionFinally the US authorities have gotten ‘tough' with the predator financial institutions. The world has been waiting for such decisive intervention since an unending series of Government bailouts of financial institutions began early in 2008 amounting to now trillions of taxpayer dollars. Now, with the world's largest insurance giant, AIG, the White House Economic Council chairman, Larry Summers has expressed ‘outrage.' President Obama himself has entered the fray to promise ‘justice.' US Senators have threatened a law to change the injustice. The only problem is they are all exercising ‘politics of deflection,' taking attention away from the real problem, the fraudulent bailout.The issue is over AIG announcing it was obligated to pay its traders in its high-risk London unit a sales bonus totaling $165 million for the year. Obama Treasury Secretary, Tim Geithner has announced a novel strategy for ‘justice.' AIG will ‘reimburse' the taxpayers up to $165 million for bonuses the company is giving employees. AIG will pay the Treasury an amount equal to the bonuses, and the Treasury will deduct that amount from the $30 billion in government (taxpayer) assistance that will soon go to the company. But he said that the Obama administration hasn't given up on efforts to recoup the money from the employees who got the bonuses. Good luck.Larry Summers is the man directly responsible for the mess. As Clinton Treasury Secretary from 1999-January 2001 he shaped and pushed the financial deregulation that unleashed the present crisis. He was Treasury Secretary after July 1999 when his boss, Robert Rubin left to become Vice Chairman of Citigroup, where Rubin went on to advance the colossal agenda of deregulated finance directly.As Treasury Secretary in 1999, Summers played a decisive role in pushing through the repeal of the Glass Steagall Act of 1933 that was instituted to guard against just the kind of banking abuses taxpayers now are having to bail out. Not only Glass-Steagall repeal. In 2000 Summers backed the Commodity Futures Modernization Act that incredibly mandated that financial derivatives, including in energy, could be traded between financial institutions completely without government oversight, ‘Over-the-Counter' as in where the taxpayer is now being dragged. Credit default Swaps, at the center of the current storm, would not have been possible without Larry Summers and the Commodity Modernization Act of 2000. He is now the White House Economic Council chairman, mandated to find a solution to the crisis he helped make along with Tim Geithner, his friend who is Treasury chief. Foxes should never be asked to guard the henhouse.Theatre of the absurd or deflection?This all makes great food for tabloid headlines and popular outrage. They can write that elected politicians are finally acting in taxpayer interests. Until we look a bit more closely. Paying $165 million in employee bonuses or any amount for a company that is in the middle of a multi-trillion dollar fraud that is bringing the world economy down with it is ‘outrageous.'The problem is the tax bailout haemmorrhage will go on. The reason is the Obama Administration like its predecessor refuses to take consequent action with AIG, despite the fact today the US Government owns at least 80% of AIG stock, bought for $180 billion of, yes, taxpayer dollars. To demand AIG ‘pay back the government' is absurd as the government is in effect demanding it pay itself back with its own money. The latest claim that the Treasury will subtract the $165 million bonus money from the next $30 billion tranche it will give AIG says it all.Preserving the CDS bubbleThe political ‘outrage' expressed by the Obama Administration is an example of ‘perception management.' The population is being slylyduped into believing their officials are working in their interest. In reality the officials are channeling growing popular outrage over endless bank bailouts away from the real problem to an entirely tertiary one. The US Government has injected $180 billion since September 2008 to keep the ‘brain dead' AIG in business and honoring its Credit Default Swap obligations. In effect, they are propping up the casino to continue endless gambling with taxpayer dollars.The rise of a market in derivatives or ‘swaps' contracts supposedly to ‘insure' against a company going into default and not being able to honor its debts, the Credit Default Swaps market, is at the heart of the global financial catastrophe. The market was ‘invented' by a young economist at JP MorganChase, interestingly enough one of the few big banks recording profit today.As noted, CDS trading was created free from US Government regulation by President Clinton when he signed the Commodity Futures Modernization Act of 2000 that mandated that financial derivatives not be under government regulation scrutiny. Enron crony and UBS bank adviser, Texas good ‘ol boy Senator Phil Gramm helped pass the laws at a time his wife, Wendy headed the putative regulator, the Commodity Futures Trading Corporation (CFTC). That gave the green light to a derivatives market nominally worth more than $62 trillion in 2008. No one knows the exact size because this is a ‘phantom banking market' completely private and between banks, so-called OTC for Over-The-Counter, ‘just between us.'Michael Greenberger who headed the CFTC Division of Trading and Markets in the late 1990's at the time of the financial deregulation acts, says that banks and hedge funds"were betting the subprimes would pay off and they would not need the capital to support their bets." The unregulated Credit Default Swaps, he says, have been at "the heart of the subprime meltdown. In 1998 Greenberger proposed regulating the growing derivatives market. At the prospect, he says, "all hell broke loose. The lobbyists for major commercial banks and investment banks and hedge funds went wild. They all wanted to be trading without the government looking over their shoulder."The confidence between banks, the ‘just between us,' collapsed after the ill-conceived decision by the US Government on September 15 2008 not to save the world's fourth largest investment bank, Lehman Brothers. By then, there was no alternative but to nationalize and then sort out the mess. Bankruptcy, as the world now realizes, was not an option. But neither was the Henry Paulson TARP ‘casino rescue plan' and Geithner's continuation any option.At the point the Government let Lehman Bros go down only months after saving the far smaller Bear Stearns and also AIG, not even a bank, there was no clear idea who would be saved and who not. No bank could afford to trust any other bank not to be holding just as risky loans as they. The crisis became a global systemic crisis. Notably, the man who participated in the decision to let Lehman Bros fail ‘to teach a lesson' was then President of the New York Federal Reserve, US Treasury Secretary Tim Geithner.The US Government has stated that AIG cannot be allowed to fail, that, to use the jargon, AIG is ‘too big to fail.' The reason the Government says it can't let AIG fail is that if the company defaulted, hundreds of billions of dollars' worth of Credit-Default Swaps (CDS) would ‘blow up,' and US and European banks whose toxic assets are supposedly insured by AIG would suddenly be sitting on immense losses. Quite the contrary, AIG is ‘too big to save' under current rules of the game that have been written by Wall Street and the privately-owned Federal Reserve, Treasury Secretary Geithner's former employer.The CDS fraudCredit Default Swaps purported, in theory, to let banks remove loan risk from their balance sheet onto others such as AIG, an insurer. It was based on a colossal fraud using flawed mathematical risk models.AIG went big into the selling Credit Default Swaps with banks around the world, from its London ‘Financial Practices' unit. AIG in effect issued pseudo ‘insurance' for the hundreds of billions of dollars in new Asset Backed Securities (ABS) that Wall Street firms and banks like Citigroup, Goldman Sachs, Deutsche Bank, Barclays were issuing, including Sub-prime Mortgage Backed Securities.It was a huge Ponzi scheme built by AIG that depended on the fact the world's largest insurance company held a rare AAA credit rating from Moody's and S&P rating agencies. That meant AIG could borrow more cheaply than other companies with lower ratingsAIG issuing of CDS contracts acted as a form of insurance for the various exotic Asset Backed Securities (ABS) securities being issued by Wall Street and London banks. AIG was saying ‘if, by some remote chance' those mortgage-backed securities suffered losses, AIG would pay the loss, not the banks.Then it got really wild. Because credit-default swaps were not regulated, not even classed as a traditional insurance product, AIG didn't have to set aside loss reserves! And it didn't. So when housing prices started falling, and losses started piling up, it had no way to pay off.AIG then issued of hundreds of billions of dollars worth of CDS instruments to allow banks to make their balance sheets look safer than they really were. Banks were able to get their loan risk low not by owning safer assets. They simply bought AIG's credit-default swaps. The swaps meant that the risk of loss was transferred to AIG, making the bank portfolios look absolutely risk-free. That gave banks the legal illusion of BIS minimum capital requirements, so they could increase their leverage and buy yet more ‘risk-free' assets.How could that be allowed? The level of venal corruption in the Clinton and then Bush Administration rivals that of the last days of Rome before its fall from the internal rot of corruption. Banks invested billions in lobbying Washington politicians to get their way.What can be done?Fortunately there is a simple way out of the AIG debacle. The US Government can step in and fully nationalize AIG, 100%, kick out responsible management, declare AIG's CDS contracts null and void and let holders sue the US government to regain value for what were in reality lottery gambles not loans to the real economy. They own 80% so the step is small to 100%. Doing that would end the global market in CDS and open the door for countless legal challenges. But AIG's counterparties, as we begin to learn, were exactly the big Wall Street players like Goldman Sachs, Citigroup, even Deutsche Bank. They have gotten enough taxpayer bailouts to cover their risk in CDS. Let them recognize risk is the heart of banking, not the opposite.Myron Scholes, the ‘father' of financial derivatives, who won a Nobel Prize in economics in 1997 for inventing the stock options model that led to financial derivatives back in the 1970's, has declared that derivatives and Credit Default Swaps have gotten so dangerously out of hand that authorities must ‘blow up' the market.Scholes says derivatives traded over the counter should be shut down completely. Speaking at York University Stern School of Business recently, he said the "solution is really to blow up or burn" the over-the-counter market and start over. He included derivatives on stocks, interest rate swaps and credit default swaps that should be then moved into regulated markets.The idea is simple and not that radical. A US law banning OTC derivatives and moving them to regulated exchanges would end a colossal ‘shadow banking' fraud. Banks would not lose much more than already, but the world financial system would get back to ‘normal.' OTC derivatives are unregulated precisely to hide risk and enable fraud by the banks. It is past time to end that. There is where the US Treasury and other Governments must focus, not on meaningless ‘transparency' calls or trading bonus ‘justice.'By F. William Engdahl

financial (4)

I Want To Short Sell My House, Now What?

If you find yourself in the position of having to sell your home and it is not worth as much as you owe, you may be wondering what you should do. I am assuming here that you have either been turned down for a loan modification or have to move because of divorce, job transfer, or other circumstance.

Financial Meltdown LOOMS!

Financial Crisis Inquiry Commission

"Getting Tough" with Predator Financial Institutions

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