Recently in Intermediate Information Category

Today over at my consumer advocacy site, I have published Eminent Domain Abuse: Putting a Stop to It. Eminent Domain abuse hurts everyone who owns property. If it's not your property today, it could be tomorrow.

The new consumer article for today is Automated Underwriting In Pre-Qualification or Pre-Approval Letters. Not to put too fine a point on it, automated underwriting is useless until all details of the transaction have been finalized. If you're selling a property and want to know how qualified a given buyer is, manual underwriting is the gold standard.

The new consumer article for today is Some Offers Are More Equal Than Others, talking about how to evaluate two different purchase offers even though they may be for the same or similar amounts of money. This is primarily important for property owners looking to sell, but those looking to buy should also be aware of these issues and take steps to deal with them. For sellers, just choosing the higher offer is a recipe to end up disappointed, frustrated, and out thousands of dollars to no good purpose.

The new consumer article for today is Short Sale Negotiators and the Interests of Potential Buyers. An awful lot of nonsense gets tried with short sales, most of it for the benefit of lazy listing agents who shouldn't have taken the listing rather than any of the principals in the transaction.

The new consumer article for today is Real Estate and "Priced for Perfection" talks about the house that is too beautiful to pass up - but that you should.

The new consumer article for today is I'm Competing Against Multiple Offers. How Do I Proceed?. It's an article directed at consumers, not real estate professionals, so it doesn't go over some things such as alternatives to money that are context sensitive, but it does give a solid overview of the issues you should be considering.

Articles like this one:

Foreclosures: 'April was a shocker'

have gotten an awful lot of play in the media these last couple weeks.

Here's what they're not telling you - or not explaining why it's important: This particular article actually mentions it in passing "That's due, according to Saccacio, to the many legislative and company moratoriums that have prevented the foreclosure process from starting on delinquent loans." However, they don't really explain what it means. Yes, Virginia, there was a moratorium on foreclosures in effect. Actually, there were several, some voluntary, most not. Most were related to what happened when Fannie Mae and Freddie Mac were taken over by the federal government last year, and one of the conditions was a moratorium on foreclosures for six months. These days, Fannie and Freddie hold just about every sort of mortgage paper there is except "hard money." Everything from the bluest chip mortgage given to people with immaculate credit, a huge down payment, and three times the income they needed down to the iffiest subprime loans ever. So when the moratorium on foreclosures hit, it cut a broad swath through the market, slowing down the process and delaying it by months for absolutely no improvements from the borrower. Didn't matter how many payments they missed; there was a moratorium on foreclosures in effect. Many of these borrowers took full advantage of this and several miles beyond; they didn't send a single dollar in for those months. This didn't help their situation any.

(How Fannie and Freddie got so deep into subprime, which was never their mandate and in fact was supposedly forbidden them by their charters, is a story guaranteed to make you hate Congress, and particularly, certain members of Congress, if you research it. After all, it's your taxpayer dollars that are going to make good the bad debts those clowns got them into, short-circuiting, obstructing and frustrating the regulatory oversight that was in place.)

So when that moratorium expired during March, Fannie and Freddie started moving forward on foreclosures that had been delayed six months or more, it took them a while to get up to speed. March was way up, but April was even more up. Shouldn't be a surprise. When a logjam breaks, there's going to be an abnormally high amount of water (and logs) going downstream for a while until the backlog gets dealt with. Those borrowers that just skated on what they thought was good fortune were the first ones in for a rude awakening.

Look at what they're telling you: "filings inched up 1% from March and rose 32% compared to April 2008." April 2008 wasn't just after a months-long foreclosure moratorium was lifted. It's a rotten, intentionally misleading comparison without that datum. They weren't going gaga over the drop in foreclosures in other months. I remember reports - buried deep in the "who cares" middle of the financial pages. Average out the numbers over the months the moratorium was in effect, and we're actually seeing a statistically significant decline in average foreclosure activity.

There is good news in the background. First, in the past six months, lenders have finally gotten serious about mortgage loan modification. No, they're not writing off grievous amounts of principal for everyone who asks. That's actually quite rare, and correctly so. But for borrowers making a serious effort and who can maybe kind of afford the properties they bought, the lenders are modifying interest rates downward for long periods of time - more than enough to permit the markets to recover, and long enough to prevent a future huge wave of foreclosures from hitting all at once.

Second, there's a minor but still helpful group of programs now being used to refinance people who formerly couldn't refinance: Both Fannie and Freddie now have programs offering up to 105% refinancing (maybe) without PMI in effect. For those who were otherwise able to finance, but prevented by deflating values, this is all they need to make it good and be able to keep their property. Particularly with sub-5% loans available right now.

Neither of these covers everybody, nor do both of them together. Nor do they help those who went the most overboard in terms of seeking out new and innovative financing forms, to paraphrase Star Trek. But they don't have to cover everyone. All they have to do is make enough of a dent in the future foreclosure market to keep the markets from being foreclosure saturated. Both of them are taking huge chunks out of the short sale market already. People don't (or shouldn't) do a short sale if they have another option, and these alternatives give a large number of people those other options.

We're not out of the woods yet; particularly not if the federal government persists in the sort of undesirable meddling in the markets they've been doing way too much of for the last year. But absent that interference, the trees are definitely thinning out, especially in the markets that took off early, crashed early, and have economic reasons to drive their housing demand back to where it was a few years ago. San Diego is one such. I am certain there are others.

Caveat Emptor

The new consumer article for today is Confusing Past Performance and the Present Situation with Future Planning.

If you are sitting on the sidelines thinking about buying property, you need to read it. If you have a property you're thinking about selling or walking away from, you also need to read it, albeit for the exact opposite reason.

The new consumer article for today is Lipstick on a Pig: Selling the Property You Should Never Have Bought. It talks about general techniques for selling properties with issues that make them less attractive to buyers.

The new consumer article for today is Transaction Coordinator: For The Agent's Benefit, Not The Consumers. Transaction coordinators are mostly a good thing, helping agents ensure compliance and coordinating between various parties to the transaction. But asking consumers to pay for them is asking those consumers to pay a second time for things their agent has already agree to do, and there is a danger that the agent leans too much on a transaction coordinator and disengages themselves from the transaction.


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