New Housing Strategy – Bulldoze Homes
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Love your show but have to correct you. It’s Sheboygan, WI not Sheboigan. But since I grew up an hour away from Sheboygan, WI, I will agree there is nothing to do there at any time of the year!
You are right on with the brokers getting the bad press when it is the banks that invented the programs and we just sold it faster and cheaper than they could. Since I do loans in Las Vegas, NV, I am in a situation that is kind of like “A Tale of Two Cities”. It is the best of times and it is the worst of times. Basically #1 in foreclosures and unemployment at any given time yet my business has doubled since April of last year when the changes went in effect. The easy thing for me was I never charged origination and YSP so I never made 5% on a loan like most of my colleagues did. Therefore the change didn’t effect me at all.
As far as Citi leaving the wholesale market. Who cares? I don’t know anyone that used them in wholesale, although I am sure some did. Whenever these “too big to fail” banks exit the wholesale market, a couple smaller banks fill the void. The smaller banks seem much more in tune with mortgage brokers plight and are willing to work with us. So to Citi I say, don’t let the door hit you in the ass on the way out!
Brian, you dont have strong feelings about the comment do you?. I send many of your shows to my congressman and senator just to get the message across. I love the “Eat, Work, and Play concept”. Small dry cleaner, coffee shops, hardware, small grocery, beauty salon, all within (dare I say it) walking distance. Park the car and get out in the community in which you live in and enjoy it. Bring back the era of the Beav! (not to be confused with the Beib, LOLOL)
Have the banks give a Vet a house program; with 10,000 returning armed forces back to the states; the government can give the bank a credit on there tax just like it would be when they forclose on a borrower; a 1099 or 1098 is issued and a large amount of money lost would be given the bank as a right-off; the returning Vets from the combat areas would receive a house which would be free and clear, they have to continue to pay the property tax (which is higher than vacant land) thus creating better community resorces for schools and fire; neighborhood stabilization… having a Vet next store.. crime rate goes down. House does not get destroyed; Vet has money to re-hab the property due to the lack of house payment P & I; will still have tax and insurance (creating jobs for insurance company).
I see this as a Win for the Bank (loose toxic asses with tax credit), Win for the Vets (a thank you for serving), Win for the neighborhood (have a vet next store – crime goes down). A triple win, congress could not really think this is a bad program regardless if they are a donkey, elephant, or monkey.
Just my two cents.
Kevin in Redding, CA
Here is an easy way to fix to major problems, housing and social security. Make all payments to social security be required to purchase single family home loans. Let the actuaries come up with the rate that would be needed to properly fund the future needs of social securtiy requirements. I would be surprised if the rate required would be much more than 4-5%. This would provide mortgage rates at a very low rate for the foreseeable future. At the same time it would take the funds away from Congress. Given how it wastes the money this would actually be a third benefit. Let the borrowers of today fund the retirement of the older folks. Takes the generation problem out of the equation too and allows young people to not only have low interest rates but the feeling that social security will, in fact, be there for them down the road.
I even have a name for the entity that will own these loans and control the cash flow. It is the “Social Security Housing Investment Trust”. What better acronymn could you have for a federal program?
Rusty McInerney
The Feds generated our industry and the problems and, whether R or D is running it, the ‘crats in DC control it. They live the budget cycle and grasp constantly for power, more power, more power. If they think NMLS is the solution, bulldozing is just as logical.
Two guys who couldn’t successfully pimp, which is what you look like, (more tats coming I see) on a troop transport want to teach us how to sell and be successful. old saying if can’t do then teach. surprised you’re in on a Friday.
Oh Kurt. Kurt, Kurt, Kurt… Thank you for giving me this opportunity. Kurt, to get where we are today took years of hard work, dedication, and a relentless obsession in something we believed in. For two years we worked 14 hour days. We would get in at 3:30am to gather the east coast news feeds and have enough time to write, record, edit and publish a show early enough for those on the east coast to find it relevant. We would knock out a show, do loans, develop software, deal with problems and fight each and every day to keep the show alive.
We were broke. Bankrupt. But we believed in what we were doing and we worked at it day and night sacrificing time with our families because we wanted it so badly. We saw the vision of what we could do, what we could be, and we worked extremely hard to achieve our vision.
It sucked. it was hard – really hard – but we did it any way. Even when we didn’t feel like doing it, we did it. Even when it seemed it was all stupid and for nothing, we did it. Even when our wives were pissed off at us because we were gone at 3:30am, home at 8:00pm and in bed by 9:00pm, we did it. We paid a very dear price to get here.
Get where might you ask Kurt? Well, we’ve traveled the country speaking and training on modern marketing methods such as video blogging and social media. We’ve been to the New York State Attorney’s office discussing the downfalls of HVCC. We’ve sat in on a house financial services committee meeting and watched a congressman sleeping, and when we called him out on our show, his office called us demanding we pull the video – which we didn’t. We’ve had the FDIC chairperson Sheila Bair issue a press release on us contending our views on the loss share agreements they have with One West Bank.
Over the past four years we’ve amassed about 50 million views on our videos collectively and we made the Inman 100 for 2010 which is the 100 most influential people in real estate.
Do we have tattoos? Yeah. Do we drink a little to much? Yeah. But do we have something to offer? I can boldly say yes.
But I’m sure you’ve done a bunch of cool stuff too.
So have a great day Kurt! Love to talk to you sometime.
Can we start by bulldozing the houses of Congress ??
More great workable solutions from TBWS, it’s viewers and the industry which continue to fall on deaf ears.
After many years in this business I have found that a possible solution is in products we already have and have used before. How about allowing a group of investors to form an agency. Agency purchases a group of homes and then we allow “buyers to purchase using “Lease Purchase Program” allowing them to lease for two or three years to work on credit and then converting to owner when credit requirements are met. If they don’t meet agency can continue renting or they move and sell to another buyer. Have FHA do lease purchase mortgage incorporating 203K type of rehab in it. Real estate agents complete sales, contractors back to work, foreclosures and potentional foreclosure’s gone.
I’ve been an investor for about 15 yrs and an owner of a mortgage company with my brother in Monroe, LA for about 8 yrs. We have about 55 properties that we either rented for cash, rented on Sec. 8, or have set up as rent-to-own for those that could be homeowners except for credit limitations.
I like a combination of some of the ideas discussed above. I can tell you after spending 20 yrs in the Nat. Guard, working with several different govt agencies across the military and in business that there is a lot of waste in govt in most areas right now. I think the best thing the Govt. can do is look at ways to remove barriers for home buyers, investors, banks, lenders etc.
1. Repeal DODD FRANK for starters.
2. Have a streamlined set of standards for buyers purchasing a foreclosed home whether they want to use Fannie Mae, Freddie Mac, USDA, VA or FHA. The selling banks a lot of times right now don’ t want to meet the new lender / program requirements for property standards for the buyers. The problem is there aren’t a lot of cash buyers / investors willing to pay 80-90% of appraised value for a home over $100K selling as is. You must have a solution to allow a credit worthy family to buy and put as little as 3-5% in repair escrow in lieu of downpayment to pay for repairs needed to bring the house to lender required standards. Basically the HUD 100 down program could be applied to all foreclosures with minimal repair requirements. It’s a win-win for the buyer and the selling bank. Brokers and bankers handle the loans just as they would a HUD 100 down program today.
3. Fannie and HUD could also liquidate a lot of distressed/foreclosed homes quickly if there was a program that allowed investors to be purchasers without needing a 20% downpayment. Basically they have an investor like my self who is willing to accept a property as is doing a higher rate loan on a 10-15 yr term like I get from all my commercial bank loan officers today. The problem is all these commercial lenders base loans on the purchase price and require 20% down where in the past they would use appraised value and base the loan on 80% of appraised value. If there was something like an SBA revitalization program that would accept the risk for 10-15% of the downpayment so investors only needed 5-10% down, a lot more property could be moved quickly. I can get a loan to start a business thru the SBA but I can’t use SBA loans for investment property or non-owner occupied properties. This is a huge gap in connecting willing, qualified investors with revitalizing properties that could be fixed up and resold or rented. We keep several people employed when we are buying, fixing up and making houses livable again. It is not our full time job and we spent over $150K in labor and materials this year thru our rental businesses. That is a win-win for the local banks, economy, community and ourselves.
4. Like or not on the bulldozing, I agree with the Detroit guys. There are just some things that can’t be revitalized and shouldn’t. We are finally starting to see old, dilapidated homes get torn down that have been adjudicated for taxes, abandoned, and will never be livable. Some places need to go for health, welfare and neighborhood revitalization. I’m not talking about 10 yr old homes in CA, AZ, or NV where overbuilding just took place and jobs may have been displaced. Eventually, those can come back. Or they will get so low priced that if we have the right investor program the capital markets will work. The bulldozing has to occur where code enforcement is being violated to the point 50 yr old plus homes are abondoned and no longer inhabitable. This would create some jobs as well.
How about new programs like giving $$ to Veterans to buy foreclosures, or giving incentives to investors to buy foreclosures, or easing up on requirements to get new loans so we can have more potential homeowners shopping.
Thanks,
stu
At the bottom of my last statement I mean WORD not “work”. The system filters out the spelling of the state of TX.
I worked in the RE business in northern California for several years. I was based in Walnut Creek, CA my hometown and a desirable area east of San Francisco. I moved for Fort Worth, TX in 2009 because I couldn’t find a way to adapt to the drastic drops in value. TX wasn’t as impacted at California and I jumped back into the business here. I’m now Vice-Chairman of the Community Outreach Committee at the MetroTex Association of Realtors. I signed up with three committees last year and this is the only one that I stuck with because this committee has a very interesting way to approach sales. Sell to EVERYONE! It has been a bit if a culture shock living in “the South.” While TX is very progressive compared to most southern states, there are still plenty of old school Realtors who limit themselves as to the kind of people they will work with. THAT is a shame for them but good for me and the others who participate in the association’s diversity activities.
Fair Housing and Diversity is a call to (business) arms for many agents throughout the DFW region (better known as the Metroplex). It is our goal to educate both agent and the public on how mutually beneficial it can be to work together using the various fair housing and fair lending programs that are out there. Frank and Brian, you both know there are lenders who are accused of being predatory toward certain groups. It’s not without basis. We’re encouraging people to use regional lenders who understand the dynamics of their local market and are more likely to live there. By using regional lenders who have a strong track record of loan approvals based on fairness and business principles, we earn the trust of our clients and it encourages them to share their satisfaction with others.
To you loan and RE sales professionals, that translates to REFERRALS!! The old-school “professionals” are seeing their revenue dwindle because they are holding out for their network of clubhouse client to generate business for them. Many of these clients are very intelligent and postponing investment decisions and moves because they can. For me, I don’t need a million dollar listing that can take up to a year to sell. It may be harder work but give me 10 $150,000 properties (that would be worth over $250k in California) that I can sell throughout the year in addition to my other business. We as RE professionals must realize that this is a time to not be picky. I’d rather do more transactions at lower price points right now because if I make my clients happy by treating them fairly and with respect, they will likely appreciate it and return to use me in the future and refer more business to me. My business is now growing here as a result. It was not easy being completely new to the area. I felt like a rookie again but pushed through it. With hard work, everyone can generate an image that will draw business to them. Treat all client prospects with respect and work with others who embrace the same high standards. It may pay (once) to do the quick and profitable deal but if you compromised your client, they will eventually know and you might never hear from them again.
Golden rule time. “Do unto others…” There’s a reason this rule/law has endured for centuries. It’s true. Bless others and they will, in turn, bless others… and so on. That’s in your personal life. If you incorporate these values in your professional life, the blessings will return to YOU.
Best to all! Thanks Frank and Brian! I’m hoping to visit Contra Costa and Solano Counties within a couple of months. Maybe we can get together for a “tasty beverage” if you guys are in town then.
Tony
By the way, your system doesn’t like the work for the state, TX. It refused to let me post my commentary with the state name spelled out….why?
NAR…Bernie Madoff would have more credibility if he started up a new hedge fund from jail!
How come no comments on Citibank stopping wholesale lending?
Guys!!!! Been doing this mortgage stuff for over 40 years: Big Bank (S&L) Exec, Secondary Mrkt guru, retail & wholesale lender, everyhting imaginable. Now a Broker for the past 14 years, based in AZ. So I’ve ssen it all. The most important thing I’ve learned, as true today as ever, is the market will correct itself. The economy tanks, people lose jobs, they get sick; they lose their home. It’s the American way. Now we add to that the crap loans done and it’s just another piece of the American Dream puzzle. Let the market work.
I am already closing purchase loans for those who were foreclosed or filed BK, most 3 years a go, some 2 years. So while you are scrambling to find alternatives to poor behavior, I’m making a killing doing loans in one of the most beat to helll markets in the country. Not yet where we were ‘back in the day’, but making a living. ANd the future is brighter: HARP 2.0 when it finally rolls out will be the biggest boom we’ve ever seen. We’ll capture 2 points on $300,000 loans on $100,000 houses with little effort.
So in areas like Detroit, where a friend of mine bought an entire city block of homes for $18,000, rehabbed and all are rented, some areas are best leveled. Lower costs to the cities for police, fire, etc. Got some tax breaks as a result. LET IT HAPPEN. Life will go on. Change your thinking from Fantacy Land to THe Real World.
You are right. Some neighborhoods, like the one where I grew up in Dallas, are not suitable for rehabilitation. On the bright side, our local market has more positives than negatives at the moment. Residential property listed for sale (abt. 27,000) down 35% since peak in 2007 (41,647). That is only about 5 months. I know many people are having a difficult time in this economy, but our outlook is different. Seller’s mkt on horizon? Buyers looking for houses may have a more difficult time finding them in some areas of the city. We have to remember that real estate markets are extremely local.
left out the word “Supply” after “5 months.”
Guys You are terrific, TBWS is refreshing and gets my mind thinking. It just ocurred to me that the government has a huge inventory of homes that need rehabilitation. Once these homes are livable they could fullfill the basic need of shelter for someone. Perhaps the government could rehab determined amount of homes in each state, then have a $1.00 Lottery…..win a house. With the proceeds from the lotery rehab more homes and go on and on. It is a win win situation…for government, local municipalities and people …..all for the cost of a dolar.
Let me know what you think!
We are located near Detroit. I work with several investors who would love to take advantage of the inexpensive homes to be able to sell or rent out to people less fortunate. Problem? That one half of one percent of people that will strip a house before, during, and after repairs are completed. These investors do not want to waste their time or money because of this. Add to the extremely high cost of insuring the home, and they buy elsewhere in the suburbs. So for some areas, bulldozing may be an option for this and curing blight if nothing else.
Although I’ve never been to Detroit I can say I grew up in a neighborhood in the midwest that was built before indoor plumbing. We actually admired people that lived in mobile homes because they didn’t have to go outside to take a dump (especially in the wintertime)! So, yeah, sometimes it cheaper to bulldoze everything and start over than to remodel and retrofit.
Everybody hates government handouts unless they are getting them. The market tanked and now you have some kids you didn’t have before. Why is this the government’s (us taxpayer’s) problem? Our governments at every level are bankrupt. How on earth are we supposed to keep everyone from any hardship? By the way, thanks for the raise on my VA disability this year!
Show more bloopers!
And is that an orange tattoo on the bottom of Brian’s right forearm?
New government programs, no matter how well founded, are not the solution. Government is slow to react, rarely understands the problem well, and in an effort to be inclusive usually ties itself in knots. I am a Realtor who is also an investor and I have been doing it for over 30 years.
I have seen a multitude of local programs to repair blighted neighborhoods but none work as well as letting investors take the risk. Currently investors are thought of as a scourge and the government is working against them rather than with them. Government requiring lenders to try selling foreclosures that are trashed to first time home buyers makes no sense. Let investors buy them (usually for cash) and fix them up. Remove the FHA restriction on financing that makes it difficult for an investor to re-sell a house within 90 days of purchase. (some banks and even Fannie Mae put clauses in the deed to prevent re-sales) Another big problem for investors trying to re-sell a home is the appraisal. Appraisers are afraid. Allow reasonable appraisal concessions for higher appraisals on renovated homes versus foreclosed homes. 1st Time homebuyers are still interested in buying. They were a big part of the meltdown as they bought homes they could not afford but at today’s prices they can buy with payments lower than rent. This is a golden opportunity to set them up for success. Additionally, as you mentioned in your video, the government needs to cut back on all the rules that put the liability on lenders and let them lend.
Of course many large banks don’t want to carry mortgages and are using the restrictions as an excuse, they are making too much money in the world wide derivatives market. (Think Vegas)
How about this for an idea .
NO CREDIT NEEDED
Why not have investors ( BUYERS OF REO PROPERTIES ) work with local ” GOV ” and small local banks and credit unions. come up with a progam to revitalize urban neighborhoods by offering down payment assistance to low income families. the investor holds the note for a set time given them a chance to restore their credit which is part of the program .
Once they have restored their credit they can repay the down payment money and refinance the investor out a WIN WIN !
P. S. THEY MUST HAVE A JOB
I find offensive the comments that Realtors guide their work habits by how much money we make. We all do many many things for free and in the public interest. As for rent to own, statistics are that 75% do not work out. I do not believe these rental programs are a good idea. There is too much ongoing maintenance and property management. The better idea is an educated buyer- a thorough schooling of homeownership, budgeting, responsibility etc. and then a purchase. Some of these properties need to be bulldozed, they are energy inefficient, lack modern layouts and are unsafe without a thorough rehab which can be just as expensive as re-building. The cities should be looking at selling these at reasonable cost with financing AFTER they have been rehabbed. I see too many REO’s where buyer’s started renovations, underestimated the costs, and couldn’t finish. There are many such ongoing programs, the City of Lake Worth, Florida has one offering grant money to purchase after City rehab.
First – Do what we did in 1982 – accelerate the depreciation schedule. It is currently 27 years for residential properties. Many systems in a home are way beyond their useful life long before 27 years. Go to a 15 year schedule and make it 10% for the first 5 years and 5% after that.
Second remove the “passive” loss limitation from residential 1-4 unit properties.
Third allow investors to have up to 12 agency mortgages. Current requirements for the first 4 properties. Then require at least 25% down on the next 4 and 30% down on the next 4.
Investors will not mind the cash investment because with the depreciation they will be making a 10 to 12% annual return off of the cash investment!
My son bought his house 6 years ago, and according to county assessment (done yearly) his home has gone down in value 24.5%. He has NEVER been late with a payment. Now, with 2 kids he didn’t have when he bought it, they want and need a bigger home. They can afford it, but to cover the loss on their home, they would not have any downpayment to buy the next one.
How about a program to help those that have never stuck their hand out asking for “freebies” (i.e. unemployment, food stamps, SSI, etc). They are both working, paying taxes, and their mortgage, and NOBODY has discussed helping them out of a DEEP HOLE!
Been saying this for some time, Woody. These over-deflated comp prices will have a not yet addressed suppressive influence on purchases where existing borrowers who would normally be out buying a bigger house – can’t as their equity has dissolved. It’s going to impact the buying traffic in the future unless equity recovers when comps reflect real value.
My wife and I have been in our house for 12 years and based on homes selling in the market (lower then what we pay for 12 years ago) we are unable to move. We have never refinance, both work and have always made our payments. Does this bother me…. YES, but on that same note, it is what it is. I’ve been an appraiser for the past 14 years and I’m also a realtor and I could see all the signs on the wall, one reason I didn’t jump on that bandwagon to refit, or sale up to a much larger newer home when we had our child. I didn’t refigure that prices would drop below what we purchase our house for in 2000 but they have. But until job market starts to come back, the housing market will continue to see declines. All those people which have purchase their home and or have refinanced to take money out in the past 6 to 10 years are more then likely to find themselves upside down on their home. Look at it like purchasing a new car…. for the first quarter of the life of the car you will be making payments and you more then likely wouldn’t be able to sale what you own on it. That’s the case now in the real estate market… people got so use to being able to buy and sale their homes in less time then most people own a car.
Idea – Have the local municpal gov’ts take “control” of distressed property on paper, evaluate repairs needed, put together a suggested rehab list, put purchase/rehab financing in palce for qualified buyers, give to Realtors to sell “before and after”.
Target neighborhoods, give early adopter incentives, you know “sell” it.
Who would benifit? Well, buyers would get rehabbed homes, contractors would get rehab work, lenders would get loans, Realtors would get nicer houses to sell, neighborhoods would be revitalized, cities would get properties back on the tax rolls, most of the money would stay local, improving local economy,etc.
Just an idea.
For god’s sake….keep the …government out of it. That’s the reason we are in this mess.
Realtors, Investors and Banks can do this on there own if they work together. It has been done before but now the idustries have NO imagination and depend on the government to muck up the situation.
I just can’t believe anyone wanting the government to be involved with private enterprize after witnessing the results the past 3 years.
Agreed!
Dear Brian and Frank: Problem one: most realtors don’t like to do rent-to-own deals, which get people with problem credit into homes with a reasonable down payment (3.5% on a $150,000 home is only $5250), even if their working hard to repair their credit so they can BUY that home in 12-24 months. Why you ask? It’s the Blimpy principle: “I’ll gladly pay you half your commision today, for a hamburger, (aka the rest of your 3%) in a year or two.
Problem two: Most realtors (personal observation, no empirical data) don’t know HOW to structure a good, solid RTO contract, so the seller’s happy, the buyer gets to live in the home he/she eventually will own, and the realtor gets some money, i.e., 1.5%, which is better than zip. Realtors, get on the stick. Sellers will do this faster than you think, and there are more buyers out there qualified and wanting to do this than Carter has liver pills. Does Carter still have liver pills? Whatever.
Guy’s that is exactly what the Mayor of Detroit is proposing. The sad thing about is that Detroit is full of beautiful homes that were built in the early 1900′s. The city is about to declare bankruptcy or be taken over by the state. Detroit is the biggest example of what happens when government gets too big and serves the politicians interests instead of the peoples. Obama Just spent 6 trillion and no money to help one of America’s great cities? The people of Detroit were the arsenal of democracy. Paid billions in Taxes, perfected the assembly line, put the world on wheels, if we could ever get rid of city council and the corruption….wait, never mind we’re doomed.
Good talking points this morning that were right on with the problems.
One thing to possibly look at is the Property Management part of this equation. A couple of my Realtors have received their CPM cert., has some constant income and has control of the property that will eventually go on the market for sale….guess who will probably get the listing?
Bulldoze and Fencing areas use to be called intentional blighting…So you better start petitioning you politicians that this is a bad idea. Maybe NAR and NAMB will step up this time and not wait until the govn. buys the bulldozers…They have a tendancy to protest through the rear view mirror.
A better idea than bulldozing homes is The Homestead Act of 2012 (my name). Look let any family with $1, a reasonable credit history and a good job history buy any government owned home at the current appraisal. Underwrite them like VA loans, collect some MIP to cover future losses. Buying is now cheaper than renting. Banks should be required to the same thing after they have owned a home for longer than 6 months. Voila inventory of unsold homes liquidated. Can you image what a costly, corrupt inefficient mess the government gearing up to rent REO would be?