why (5)

The Reasons Why We Do Not Have High REO Inventories

The business head lines today read, “US Labor Participation Rate at Lowest Level in 30 Years” or “US Labor Participation Rate at Lowest Rate Since Carter Administration” and yet, I am trying to figure out why my REO inventory this year has shrunk to pre 2007 bubble bursting levels. To make this point a little more pointed, let me share a little statistic from the Bureau of Labor Statistics. Our current unemployment rate is 7.3% and the last time we were at 7.3% was December of 2008. Now, think back to December of 2008, think of your REO inventory….are you at that level today? I would venture to say, likely not. Are you still confused as to what my point is? Well, let me say it this way. If you add in the participation rate with the unemployment numbers, you get a “real” unemployment number of 9.4% and the last time we were at 9.4% or higher was May of 2009 thru November 2010 so, think back to you REO inventory then….are you at those same levels today? Once again, I venture to say….likely not.

So, how is it that we have a “real” unemployment rate at or higher than the worse unemployment we have had accordingly to the Bureau of Labor Statistics in the past 4-5 years and yet, we don’t have a correlated REO inventory?

Well, I am no economist however, I have some speculative theories, let me share.

  1. Obama Administration Homeowner Assistance Programs: Obama has directed HUD and the US Department of Treasury to stop the foreclosure crisis by implementing several foreclosure avoidance programs through joint department efforts like the Making Home Affordable programs. Do you know how many entitlement programs there are? Likely you don’t so, let me share…..
    1. HAMP (Home Affordable Modification Program)
    2. PRA (Principal Reduction Alternative)
    3. 2MP (Second Lien Modification Program)
    4. HARP (Home Affordable Refinance Program)
    5. FHA2LP (Treasury / FHA Second Lien Program)
    6. UP (Home Affordable Unemployment Program)
    7. EHLP (Emergency Homeowner’s Loan Program)
    8. FHA Forbearance
    9. HECM (Home Equity Conversion Mortgage)

So, you had no idea…did you? Granted, my blog isn’t long enough to go into details on each of these programs with you however, for more information you can call the NSC at 1-877-622-8525. The Obama administration has used all of these foreclosure avoidance strategies in a very similar way the Community Reinvestment Act set up , built up and ultimately collapsed our economy in 2007 with the bursting of the real estate bubble. Oooops, “did I say that?” HELL yes, I did.

That’s right, the reason we don’t have REO inventory as REO Professionals is because our President has decimated our industry by artificially and manipulatively used foreclosures as a political tool for re-election of himself and his party. Sadly, most of the American public don’t understand what this does to home values……so, let me explain. It artificially inflates home prices by restricting legitimate inventory from hitting the market place. It sets up our country for a 10(+) year trickling of these vacant, distressed, properties to the market place. Ok..sure, it can be argued that by doing this we are stabilizing the housing market and sure, I will relent and say….it does however, only for the short term. In fact, it makes things a little worse because, we end up sitting on inventory and God forbid, another economic crisis hits or the current one drags on for longer than expected and we end up with more and more and more and more water behind an aging, over burdened, crippled, dilapidated damn that is ready to blow.

Think of the housing crisis as a man mad lake with one side plugged up by a huge damn. Think of the water in the lake as all of the houses that are distressed, under water, risk of foreclosure. Right now, our lake is so full, we have foreclosures literally spilling over the top. Our economy…the damn, is barely holding and with a growing “Shadow” inventory of REO homes, high unemployment, high “real” unemployment and these continuing foreclosure avoidance / rescue programs……we will have a seriously problem, eventually.

Read more…

Why you should attend the Short Sale Symposium at Sea.

In the past couple days, I have gotten a few calls and emails from members wanting to know what my thoughts are on the Short Sale Symposium at Sea by the Short Sale Specialist Network so, let me make this easy for everyone and just write a blog about it.

1. It's a CRUISE! Ok....do I really need to say more? Surely not....but, I will....lol.

  • Hassle Free: This is the best part for me. I pack and unpack once. I don't have to drive around, look for a hotel, wonder if the part of town I am in is safe or where I am going to eat.
  • Get Away: I love being out of the country, truly away from the daily grind.....it's so refreshing. No alarm clocks, no PHONES, no emails, etc... (NOTE: If you really need it, you actually can get email on the boat, if you want to pay a little extra)
  • It's First Class: The cruise staff treats you well. People are nice, they go out of their way to make your experience a first class experience.
  • Do It All or Nothing At All: It's a cruise, you choose what you do, when you do it.
  • A New Place Daily: I love being able to come back and tell my friends and family about all the places I have been, Jamaica, Grand Cayman....all on one trip.
  • I Am Never Bored: These ships have all kinds of things to do. From shows, dining, events, activities, etc.... you can't get bored. Just between us, I am more a cocktail pool side kind of guy.
  • Shopping!: Yes, we love shopping at all the local shops in port, getting to experience the locals and having a good time on land.
  • Friends Everywhere: Cruises are designed to network....you're on a ship and everyone is there to have a good time so, meet some people and have a good time, make a friend or two.
  • Romance: Ok...yes, cruises are very romantic, something about taking your spouse with you, having a day full of classes and learning, then a nice romantic dinner on your cabin balcony, watching the sun set......uummm, well, that is enough of that, you get the point.

That about sums up the first reason I give people why I love the Short Sale Symposium at Sea now for reason # 2.

2. The Short Sale Symposium at Sea is the most unique and fun-filled conference our industry has. Who said a conference can't be a freaking blast? It doesn't have to be filled with suits and ties, stuffy lecture halls and crazy schedules. Instead, why can't we learn and network in shorts, t-shirts and flip flops? Oh...wait, we can, it's called Short Sale Symposium at Sea. It's a relaxed environment and offers incredible opportunities to learn, network and get to know other professionals and how they are working in their home markets. It really is a conference but, much more fun.

After those two reasons, do you need anymore? Well, you don't have to take my word for it, go to www.ShortSaleCruise.com and listen to the testimonials of the other attendees yourself, then you decide.

I really hope to see you there.

Jesse G.

Read more…

I read an old forum thread from a REOPro member from back on 1/8/2012 titled, "What is the best REO Certification to have?" and based on what I know about REO Training, I stopped to read. She goes on to ask more specifically, which "training" actually gets people business or a return on the investment.

As expected, many people stood up, and answered her question and for the most part, the respondents were either looking for an answer themselves or just simply said they got their first REO and didn't have a lick of training to boot.

This plays right in line with everything I have been saying about REO training for years now and that is, REO training doesn't equal ROI (Return on Investment).....at least directly, that is. Well, this maybe a bit confusing since, everyone out there offers training. Conferences have their training, banks have their training, outsourcers have their training and in fact, independent 3rd party real estate trainers have even come up with their own training. Everyone has training so, it has to have some value, right? Maybe not.

First thing to know about REO training is, everyone has a training program and they are a dime a dozen. Or at least $399.00 your first year and $199.00 every year after that....lol. Seriously, it seems like you can go down the street to the local bakery, pick yourself up a dozen donuts, get your taxes done and oh...why not go ahead and pick up that REO designation you always wanted. With the hodgepodge of REO training out there, it seems everyone has one. It's more than an assumption, it's a fact, everyone has one so, how do you choose?

Now choosing a REO training program seems more the appropriate question here and I think, this is really at the heart of what Bonita wanted to know. This can be a bit tricky, so much REO training out there, the general agent who isn't in the know isn't going to know which ones to stay far away from. My point is, the question it's self tells me exactly what I need to know about your REO experience...not much? An experienced agent isn't going to ask about training because he will be so involved in the community, he is going to know which ones to steer clear from. If you have been paying attention to that last sentence, you will have noticed a key word, "involved". Involvement in this community of professionals is more than a couple forum threads and a blog or two. It's about knowing how this community works and who we have black balled. A lack of involvement is going to leave many people without any ROI and that is to be deserved. Trust me, some of us have paved the path before you where we have attended so and so's training just to write about it later to tell the world...DON'T GO! Staying involved in this network, know about how to query a search, becoming a regular reader......all of these things keep you in the know, keep you involved and as such, you can also steer clear from unscrupulous business solicitations.

Ok....so, I guess I will jump off the soap box here and give you a bit more of a technical answer to the question, which certification gets you business.....direct business.

Well, the short of the answer is, none of them do. You see, business in this business is obtained by developing relationships and getting to know people. In my time as a REO agent, I have worked for at least 4 different outsources and not a single time did I get my business by simply putting in an application and waiting to hear back. Yes, I put in an application, yes, I uploaded my E&O and all that stuff but, by doing that I wasn't granted a REO. In fact, I had to work harder and smarter. I got involved. I went to conferences, I shook a lot of hands, I had a few drinks, I told some dirty tasteless jokes (yes...I really did) I bought a few dinners.....I did the "conference" thing, I got involved. From there, people learned my story, the got an idea of who I was, how I worked, what type of dedication I had and that is exactly where education came into play.

Before I got my first REO, I had no REO experience so, the only thing I knew to do was to get an education. Like Bonita, I got on a local network and asked, "What is the best REO certification out there" and someone who would later become a colleague of mine wrote back, something to the effect that no "best" certification exist however, I have these 4 certifications myself. I thought to myself, 4 certifications....DAMN, that's a lot of money, money I didn't have at the time. So, sacrificing I did, coming up with the money, getting the certifications and boom, I had them. Oh, I felt so proud of myself, I was on top of the world, I just knew I was going to get some REO business now. Back at the conference, I was at a bar with some vendor managers for a major outsourcer who was surrounded by desperate agents like myself. The question, what training do we need to have came up and the answer was surprising to me. This gentleman stood up and said, "we don't care, just as long as you either have training or experience."

Training or experience....well, I had 4 certifications while most everyone else I was around had none or one. I pushed myself up to the front, told the man about the INVESTMENT, I had made in my education and impressed he was. I remember him saying to me, "are you sure you haven't worked for Fannie before".  I said no, I really don't have any experience and he said something like, I couldn't tell from talking to you. The point here is, yes....REO training is a dime a dozen and yes, REO isn't going to be booming forever but, it will always be here. No specific training is going to lead directly to a specific asset....well, it's highly unlikely however, it shows people one thing and that is, you are invested.

So, if I had to leave you with one thing to remember about training. It shows you are invested. If you remember nothing else, if you take training that sucks, if you pay too much, if you feel you got nothing in return, just remember, it shows the world, you are invested and that is worth something.....maybe much more than you will ever know.

Read more…
1. Unemployment: Until people have the income to afford their mortgages, we will not see a recovery in the housing market. I believe a direct correlation exist between unemployment and mortgage defaults, the higher unemployment gets the more defaults we will see. This ultimately leads to more inventory and of course, lower home prices. 2. Tightening Credit Standards: The harder it gets for people to obtain the necessary credit to purchase a home the slower it will take to reduce the inventory we have. Make no mistake, I don’t believe in loosening credit standards for the sake of it but, it’s a fact that if people can’t get credit, inventory won’t reduce quickly and therefore slowing if not halting a housing recovery. 3. Artificial Government Inventory Control: In other words, arbitrary influence by the Government to keep unworthy homeowners in their homes at all cost. Make no mistake, this is housing inventory control in the most negative way. I have GSE Investor loan reinstatements after foreclosure on my desk right now where Fannie / Freddie is offering to reinstate a homeowners loan where they will consider unemployment benefits as income……..seriously! 4. Energy Prices: Did you realize that you are paying .86 cents more for gas this week than you were this same week last year? Most likely you haven’t noticed because we have all been pre-occupied with the nations job losses, underwear bombers, Massachusetts election, and Washington bleeding red ink. You may not have actively noticed it but, if energy prices continue to rise people will have less discretionary spending and that pulls buyers out of the market and couple this with Great Depression level unemployment and we end up with more housing inventory. 5. Risk of Hyperinflation: As the US currency continues to looses value against it’s competitors we find ourselves having no other choice but to increase inflation. If the Government continues to spend / make money with less and less value people refuse to hold onto the Dollar and start to move their assets into other currencies or metals and therefore an uncontrollable rise of inflation begins.
Read more…
Many factors go into answering this question and the truth is, I don’t have the time to explain each one so, let me give you my top 3. 1. REO Experience = REO Listings; I know for many of you, this fact is frustrating but, it’s a fact none the less. Why is this the case, you may ask? It boils down to what “Experience” really represents. In other words, if you have REO Experience then you have a direct knowledge through direct exposure to REO and, therefore you have the “know how” or “procedural knowledge” it takes to get the job done. Keep in mind that the rule isn’t REO Training = REO Listings, it is REO Experience = REO Listings. 2. A Proven Track Record of Sales: It may be hard to believe, because your calls never get returned by that power house REO listing agent but, a REO Agent with a large number of listings has a proven track record of sales. This proven track record establishes confidence on behalf of the lender providing the listings and as long as the sales are occurring with little to no problems, that agent will continue to be given the opportunity to do so. 3. The Asset Managers are Graded as Well: Just like a REO Agent has a performance evaluation, so do the Asset Managers. If an Asset Manager is performing poorly because they have a poor Realtor in the field, it’s the Asset Manager who is held liable and risking their job. The banks consider the Asset Managers ability to choose high quality, high performing Realtors as a part of their job and if they can’t do that, they don’t keep that job for long. This is why points 1 and 2 are critical and most Asset Managers will not budge off them. I hope this has given you a different prospective, if you have questions, comments or concerns I would be happy to help out.
Read more…