You paid who, how much, to get into REO?

Posted by Jesus (Jesse) Gonzalez on April 25, 2012 at 7:15am

I just heard an incredible story that I don't know is true or not but, the point the story makes is going to be a key to any aspiring REO agents success and that is what I want to talk about.

So, Lisa the REO Listing Agent calls me wanting to know if I had ever heard of Rodger the REO Expert. I told Lisa yes, I had heard of Rodger. She stops me mid sentence and ask me if I think he is any good. I wasn't sure exactly what she was referring to so I asked her, good at what? Lisa tells me that Rodger is selling a program where he can get you into REO Bank of North America and he only charges $20,000.00.

After I picked up my chin from the floor I started laughing, it's only $20,000.00, I would charge more than that....I thought to myself. She asked me why I was laughing and I asked her, if Rodger guaranteed she would make her money back. She said on yeah, he told me he could get me in to REO Bank of North America in a couple of months when I join him and a representative of REO Bank at the conference in Dallas later in July. So, I asked her, did he give you that guarantee in writing? She said no however, he was sending over documents via email. I told her to call me when she got the documents.

So, a couple days go by, I heard nothing back from Lisa so, I called her. She got the documents, she was all excited, she was finally going to be in at REO Bank of North America in just a couple of months. So, I asked her, did he give you a guarantee. She said yeah, it's right here in these documents so, I asked he if she wouldn't mind letting me look them over for her, what could it hurt, having an extra pair of eyes, right? A few minutes later, I have the agreement .....and.....well, I didn't see any guarantee.

I called her up and I was like, Lisa, Lisa, Lisa, can you tell me where the guarantee is. She says, yeah, look at page 3, first paragraph......

I read it over and I didn't see any guarantee but I did see, a statement on their commitment to doing all they can to help her get introduced to a Bank of America employee.

I explained to her, what my thoughts on the agreement were and I told her, Lisa...one part of this you are not catching is something the Bank refers to as "Business Need". The bank, regardless of how experienced, nice, bubbly, and charming you are has to have a business need in your area before they are just going to add you to their ranks. Without that, regardless of how much you pay for access, you won't get in. Well, she just didn't want to hear that. Rodger the REO Expert had this big, nice agreement, had a nice car, was at all the conventions speaking, he had to have the inside scoop. In fact, Rodger even gave her references of others he had helped, 2 in fact. So, against my advice, off to the races she went. Paid the $20,000...all up front and now we are about 8 months down the road and she still isn't a REO Listing Agent...with anyone, Rodger is telling her that he is going to shop her out to a couple other banks.

Needless to say, she is beyond pissed off, that $20,000 she paid was her 401k she cashed out and here we are in the midst of tax season and she doesn't have the money to pay the penalty. She can't do much about Rodger, the agreement she signed was very clear and specific, all he was doing was selling access to one person....one bank and if that didn't work out...for whatever the reason, he would shop her around to others.

I guess she got what she paid for.

How much bailout is still in progress has it been enough?

Posted by Brandon Jordan on June 5, 2011 at 2:24pm

The movie to big to fail showed for the first time on HBO this past Monday. I am sure this will bring many to do some research on the current status of the relief programs that are out there.

Capital Purchase Program (CPP), under the Emergency Economic Stabilization Act (EESA) in October 2008.

Four groups of entities receiving CPP funds have been created for this report:

CPP (I) Assets greater than $100 billion.
CPP (II) Assets between $10 billion and $100 billion.
CPP (III) Assets between $1 billion and $10 billion.
CPP (IV) Assets less than $1 billion.

Detailed information on reporting can be found at the Federal Financial Institutions Examinations Council website (http://www.ffiec.gov) and at the Board of Governors website (http://www.federalreserve.gov) under "Reporting Forms". In general, only bank holding companies with consolidated assets greater than $500 million are required to submit Y-9C reports.

Public-Private Investment Program for Legacy Assets

SIGTARP:

“The Legacy Securities Program continues to develop, and on July 8, 2009, Treasury announced the selection of nine PPIF managers that will receive debt and equity financing of up to $30 billion in TARP funds during the initial capital-raising efforts for the PPIFs. Treasury has stated that PPIP, originally intended to involve up to $1 trillion in total funds, may involve up to $75 billion of TARP funds. ”
“According to Treasury, “the goal of the Legacy Securities Program is to restart the market for legacy securities, allowing banks and other financial institutions to free up capital and stimulate the extension of new credit.” For the purposes of PPIP, legacy securities are ABS supported by real estate-related loans issued before January 1, 2009, and originally rated AAA (or an equivalent rating) by two or more NRSROs. Private investors and Treasury will co-invest in PPIFs to purchase these assets from financial institutions. Furthermore, Treasury will offer debt financing to the PPIF equal to or double the total private equity investment. Treasury, the PPIF manager (which is required to invest at least $20 million of its own money in the PPIF), and the private investors will share in PPIF profits on a pro rata basis. PPIF losses will be shared on a pro rata basis up to each participant’s investment amount. As of September 30, 2009, there were no asset purchases.”

Term Asset-Backed Securities Loan Facility (TALF).

Oct. 22 (Bloomberg) -- A U.S. government program aimed at reviving the mortgage-backed securities market returned more than triple what stocks or bonds gained in the past year.

October 22, 2010, 4:21 PM EDT

(Updates with professor’s comment in eighth paragraph.)

The eight funds created under the Public-Private Investment Program, or PPIP,

PPIP Funds Surge 36% in First Year, Treasury Says

How much loss will a bank accept?

Posted by Jesus (Jesse) Gonzalez on January 9, 2009 at 4:09pm

Have you heard that banks will accept a certain amount of loss on their default real estate portfolios as a rule of thumb across the board? Have you heard that all banks are willing to take 20% less than the listing price?. Have you heard that all banks over price their listings because they know they are going to take a less on their properties? If you believe any of these rumors, urban legends, or false hoods then, you have just been suckered. Let me explain how banks determine their price when they go to list a home. First, they order an appraisal as soon as a home goes into foreclosure or as soon as they receive the first offer on the home. In an effort to be clear, let me tell you what an appraisal is. An appraisal is an estimate of your homes Market Value by a professional. It is important to understand the difference between Market Value and Price. Market Value as defined by the USPAP (Uniform Standard of Professional Appraisal Practices) says, "...a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal." So, in other words, it's the opinion of a trained professional as to how much the property should sell for in a fair market. So, I bet now you are wondering how these appraisers analyze a property in such an un-certain market as that we are in now, right? Well, that can be answered by the definition of Market Value used by the residential mortgage financing industry and it says, " ...the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." So, in other words, adjustments for any reason, are made to the comparables sales price not the subject property. Ok, I am sure this may be confusing but let me explain it this way. You want to put an offer on 1000 Money Pitt Lane but the asking price is $150,000.00, which you think is too high because it's a foreclosure. Well, the bank isn't going to care if it's a foreclosure, short sale or once belonged to one eyed, one horned flying purple people eaters because, they have comparables, from the appraisal, showing that similar homes that are true comparables, alike in almost (no property is ever the same due to it's uniqueness and immobility) every way sold for or above $150,000.00. So that offer of $115,000.00 you put in thinking that banks are taking less because that is what they do, is foolish and a waste of everyone's time. Well, maybe the Appraiser was smoking some serious blow that day and you (as the buyer) know that the home just isn't worth $150,000.00 so you want to stand by your offer and have it submitted. Truth is, the bank isn't just relying on the Appraiser to get the appraisal right. By the time you submitted your offer, they have accumulated approximate 2 appraisals, 1 from the previous homeowner and 1 upon foreclosure, and they have had a Realtor provide a BPO (Broker Price Opinion) monthly for the time before it hit the market and while it was on the market. My point here is, the bank is going to know the value of the home, the monthly average depreciation for the neighborhood and how long they are willing to wait for the "right" offer to come in the door. On average, per my friend at one of America's largest banks, they have 5 price analysis on a home before it is every put on the market so, they know, you can bet on it. Ok, so now that I have explained that, can you see why thinking a bank doesn't know how much a home is worth is just silly. Granted, banks are dumping some properties due to the large amounts of real property on their books however, that isn't because they have made some secret policy that they will accept a general loss on all their properties. In reality it's more about that specific home and how much loss they are willing to take and, that isn't something they are advertising. So, if you come across a great deal, then most likely you were at the right place at the right time with a Realtor who was looking out for you versus, anything else.

much (3)

You paid who, how much, to get into REO?

How much bailout is still in progress has it been enough?

PPIP Funds Surge 36% in First Year, Treasury Says

How much loss will a bank accept?

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