Sunday, October 25, 2009
Friendly Banks ???
After looking at her original loan documents with her Realtor, it was clear why this bank wanted to get her to come into close with $75,000 and switch her from a balloon, to a 3/1 ARM at 5.5%. When she emailed asking why they sent her a ARM rather than a 30-year fixed, they responded to her by saying, "you can always refi in 3 years". Whats frightening is that this bank sent her a Residential Mortgage Loan Commitment that lacked the necessary legal disclosures for her to clearly understand what the loan would cost her.
What we found after some due-diligence was horrifying! To summarize the facts, we will begin with the first loan. The original Truth-in-Lending Statement (TIL) was off by .25%. She
never received her final HUD-1 closing statement and there were significant issues with the way her original loan was cast. Next, the bank was trying to literally steal her liquid assets from her bank account which she needs to support her disable daughter. The banks goal was to get into a positive equity position on the property instead of being upside down. There was no reason for the bank to send her a commitment letter for another Adjustable Rate loan when they could have easily offered a 5% 30 year fixed rate mortgage. Further, the new loan documents (which she never signed) also had mistakes on the Truth-in-Lending (TIL) just like the first loan.
We are thankful for the quick thinking of the homeowner and our Realtor partner who brought this to our attention. We're in the process of notifying the lender in writing of the violations and ECA has already begun to go to work on behalf of the homeowner without any up front fees. For anyone who gets that tinge in the gut saying "somethings wrong" it's usually always right. Listen to your gut instincts, call your Realtor, if you have one, to get an objective opinion, or call EC Advisors for honest objective advice at no cost.
Tuesday, October 20, 2009
Short Sale Negotiations
1. The Realtor should spend the appropriate time with the homeowner gathering information and setting expectations about the process up front prior to signing the listing agreement.
2. The SS package should be completed and submitted to the bank in a timely fashion.
FYI - many banks are now requesting that a modification be attempted and documented before they will accept a SS package.
3. The homeowner has to be involved in the process and committed to keeping the home in optimal show condition. If the homeowner is ready to walk away and is only listing in the hopes of getting lucky, they won't.
4. The homeowner needs to open to showing the home with 2-3 hour notice. If a buyers agent calls and requests a showing, the homeowner should jump into action, clean up the home and allow them to show it. Many people miss opportunities to sell by being lazy and unmotivated to put the effort into showing the home.
5. Similarly, the homeowner should keep the property up. There are so many homes on the market, the key is making your home show better than the one down the street that likely has been empty for 2-3 month. This is not hard to do. But does require participation by the seller.
6. Be patient, the process takes time. But if all parties are doing their job, and the Realtor has a strong negotiator calling the bank once the offer does come in, it is possible to close on short sales in 90-days.
EC Advisors provides objective advice and education to partners, affiliates, and homeowners. Please don't hesitate to call or email with questions.
Saturday, October 17, 2009
A sign of the times
Yet another Wall Street big wig finds himself in cuffs and on camera after being caught insider trading through a series of contacts and informants. Media is once again stating "this is a wake up call for Wall Street", but how many time have we seen this in the last 7 years? Over 100 high profile executives have been found guilty of fraud. I suspect that most Americans are like me and don't even blink at these stories. By now we understand that this is just the way the system works.
Wall Street is rampant with fraud and corruption, government targets those high profile people that get headlines. The Attorney Generals get on camera saying this is our way of protecting consumers. Funny, American consumers never see a penny of their lost investments - instead the government fines the firms and uses that money to expand an already bloated Government.
CNN Money just reported the nation's tally of bank casualties hit 99 Friday night when state regulators closed San Joaquin Bank, based in
Goldman Sachs, the New York-based investment firm turned another eye-popping profit Thursday, earning $3.2 billion in the third quarter, as revenue from trading rose fourfold from a year ago. As Wall Street firms typically do, Goldman set almost half that sum aside to compensate its workers. Through the first nine months of 2009, the firm socked away $16.7 billion, enough to pay the average Goldman worker $526,814. The bonus pool is on pace to hit $21 billion for 2009, which would match the record bonus payout of 2007. Goldman said it won't decide the size of the bonus pool till year-end. WOW all this while the average consumer is trying to figure out if they should modify, short sale, or walk away from their home. Not a full year ago HUGE sums of taxpayer dollars were funneled to financial institutions. Critics charge that the lion's share of Goldman's profits comes from making big bets using cheap dollars printed by the Federal Reserve. Plus, given the crisis that followed the failure of Lehman Brothers, there's a sense that government officials won't let big firms go bust. That in effect gives too-big-to-fail firms a license to bet the house. Again we see big Wall Street firms using tax payers’ hard-earned dollars to bet on investments with no guarantee of success.
So what do you do? Educate yourself, reduce your debt, manage your money effectively, and don't gamble. EC Advisors provides objective information that helps homeowners preserve their equity and capital. Find out more about the Empowered Consumer movement at www.ecadvise.com