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Questions and Answers on the Foreclosure Crisis - 2010-03-14 |
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QUESTIONS AND ANSWERS ON THE FORECLOSURE CRISIS
Last week we talked about the continuing foreclosure crisis and how it is undermining a recovery in the real estate market. I suggested more loan modifications, expanding common sense financing to investors, and streamlining the rehab process for major repairs. Here are some follow-up questions on those topics:
Q: Why do we need more loan modifications when we already have a major effort underway called "Home Affordable Modification Plan"?
A: The HAMP program is simply not having the impact that the government had hoped. According to recent statistics, only 116,000 homeowners have received permanent modifications in the past year, about 11 percent of the number who have actually applied. In the meantime, lenders continue to foreclose on borrowers, many of whom could afford to make some level of payment, but lose everything because they are temporarily out of work.
In addition, that particular program is targeted at a specific group of borrowers, at least 60 days behind on payments. If you are still current on your loan but having difficulty making payments, you don't qualify. It also disqualifies anyone who no longer lives in the property.
A broader, more inclusive program could help many more homeowners while they still have a chance of continued ownership. It could also prevent more abandoned properties in our neighborhoods.
Q: You suggested making "common sense" financing available to investors. What does that mean?
A: Because home lenders have been burned by massive loan fraud in recent years, they have over-reacted by eliminating most investor financing programs. In addition, because many banks have experienced losses on construction projects, the FDIC is discouraging all loans secured by real estate.
As a result, investors are staying out of this market in droves. And investors are the most likely purchasers of bank-owned homes. It's simply unrealistic to expect a first-time home buyer to purchase a house in need of major repairs. They have neither the means nor the skill for the task, and they certainly don't have the desire.
By "common sense," I meant that these loans should have strict underwriting requirements and require a substantial down payment. In that way, the new borrower is motivated to finish the repairs and return the house to market.
Q: Why would we want to make exceptions to lead based paint regulations or water conservation requirements? Aren't these important societal goals?
A: Lead-based paint contamination is an extremely serious problem that must be addressed as a public health issue. We have made great progress in just the past few years in terms of public awareness and education.
Likewise, water conservation is a vital necessity, especially in the metro Atlanta area.
But our nation is currently in the grip of a serious financial recession, and the real estate industry is contributing to the problem.
I am suggesting that we might want to rethink the timing of some of the more aggressive measures we have slated for introduction into our laws and regulations. A delay of 12 months might encourage the recovery in a tangible way, and the education element could continue during that time.
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Upcoming Events
"EPA CERTIFIED RENOVATOR" TRAINING
Do You Work with Real Estate? You Must Be LEAD SAFE CERTIFIED as of April 22nd.
To all owners, realtors, investors, property managers, contractors, electricians, plumbers and painters. Do you ever engage in any level of renovation? If so, read this:
Any renovator, from owners to contractors, from plumbers to electricians to painters, who disturbs lead paint while working in a pre-1978 home, school or day care center, now must be Lead-Safe Certified. If you’re not, you can face tens of thousands of dollars in fines. Plus, you put the health of yourself, your workers and your customers at risk, which could result in lawsuits. One simple 8 hour class certifies you for five years. It’s that easy.
Since April 22, 2010, there are new Federal rules regarding how you perform any work that disturbs lead-based paint in homes, child-care facilities and schools built before 1978. You now must be EPA certified and follow specific work practices to prevent lead contamination.
Failure to follow the new rules can result in federal fines of up to $32,500 per day or up to 5 years in federal prison, or both. Don’t take a chance - it’s not worth it.
How To Become an EPA Certified Renovator:
In just one day, John Adams will teach you how to meet all EPA requirements and become an “EPA Certified Renovator.”
Don’t wait - register now! Click on “Seminars” and choose your day!
- Friday, July 30th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 06th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 13th at Suburban Plaza, 2643 North Decatur Road and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 20th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
- Friday, August 27th at Suburban Plaza, 2643 North Decatur Road
and Church Street, Decatur , Lower Level, beneath Hancock Fabrics
8:30 A.M. to 5:30 P.M.
Total Course Cost: $295, includes exam and EPA-HUD 400 page manual
Space is limited to 20 participants.
Training services provided by Seagull Environmental Management Co, Inc.
Courses are approved for purposed of certification under Section 402 of TSCA for the Certified Renovator.
This course has been approved by the Georgia Real Estate Commission for 7 hours of Real Estate Continuing Education
For more information, call toll-free 888-373-0029
Click above on the "Seminars" button to register
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John Adams Presents
“The MetroVestAtlanta.com REO Bus Tour”
Get on the bus for a tour of South DeKalb County’s “Real Estate Owned”
homes. Each house you visit will be available that day for purchase at
a giveaway price, regardless of current condition. Financing is
available!
Throughout the day, we will hear from mortgage providers, people in the
construction business and property managers all discussing today’s
situation with Bank Owned REO properties.
Who Should Attend: Investors, Realtors, Lenders, Prospective Buyers, and
anyone who might want to buy a super-bargain house and either do the
rehab themselves or have all the work performed by the pros.
You will see abandoned dumps and finished products, and everything
in between. And Snap will be there to answer all your questions and
explain the rehab and rental strategies.
Saturday, August 21st, 9:30 AM to 4:00 PM
Your $49 fee includes the bus tour and lunch. You must make reservations. No walk-ups.
There is limited seating and the seats are filling fast. ACT NOW before you miss the bus.
We will be meeting at Suburban Plaza, 2643 N. Decatur Road and Church Street, Lower Level, Decatur 30033 (beneath Hancock Fabrics, in the arcade.)
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