| Stop Foreclosure Using Private Equity Investments (real estate)
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Stop Foreclosure Using Private Equity Investments
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Florida Real Estate
Florida is no longer thought of as a must-visit tourist destination in summer. Though Florida has breathtaking beaches and sceneries, this state is not only a great venue for vacation but also an ideal place for permanent residence all year round. You can purchase a beach front property in Florida and get a view of the ocean right in your veranda. It is almost like a sanctuary for the high stresse... Read real estate article
Freddie Mac Secrets
Acronyms seem to be everywhere in the mortgage industry. Freddie Mac is one such acronym and an important one when trying to understand how the mortgage industry works.
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Stop Foreclosure Using Private Equity Investments
As more stories come out every day about the sinking housing market and rising interest rates, the amount of homeowners who have missed more than one mortgage payment is increasing by large numbers. It is in an environment such as this that both homeowners and investors can pool their resources to accomplish two things that debt financing never will: save homes from foreclosure by putting the homeowner in a better position, and make an investment in the community that is not relied upon by debt.
Many homeowners will try to refinance their homes when they begin missing payments, in the mistaken belief that they can find a "magical" new loan program that allows for missed payments, low credit scores, and very little income. Unfortunately, it is doubtful these types of programs exist for any homeowner who has failed to pay their mortgage. Even the most generous hard money or conventional loans will have high interest rates (11-20%), high origination fees (5-7%), and require low loan-to-value (LTV) ratios to exist (50-65%). All of these factors will stack up against the homeowner, who is constantly told by mortgage brokers that they will keep working on looking for programs that are simply not available.
And even if the foreclosure victim does manage to obtain a conventional mortgage, how long can he expect to pay the loan before missing another payment? The high monthly payments on the new loan will prevent the homeowner from being able to establish any kind of emergency fund to begin saving in the event of another hardship. Although possible, it is unlikely that anyone, let alone a former victim of foreclosure, will be able to establish the means to last 2-3 years without needing to fix a leaky roof, have a car repaired, or fight off a medical condition. Addressing any of these situations will be nearly impossible if the situation is compounded by a high mortgage payment and no emergency fund.
Homeowners who have plenty of equity and are able to qualify for new debt in the form of a mortgage are also more susceptible to mortgage servicing fraud, a topic too broad to cover here. However, high equity, high payments, and low credit scores are all contributing factors to this type of fraud, and homeowners should be very careful to watch out for signs of it.
Most of these problems can be lessened or eliminated with the use of equity investing, as opposed to using debt to obtain a mortgage loan. Equity investing requires a private investor, usually located in the same geographic region as the property, using his own cash or means of getting cash to invest in the house. Many private investors, even within a few years of beginning a serious plan of real estate investing, can self-finance homes out of foreclosure.
Using equity investing to help a homeowner stop foreclosure has a number of benefits over a homeowner obtaining more debt.
First of all, the investment by the private lender will keep money in the community. A self-financed investor can purchase the home out of foreclosure and do with it what he will. This can include allowing the original homeowners to live in the property and purchase it back from the investor over time. This creates a mini-economy in the community and decreases the homeowner's and investor's reliance on debt financing. The investor will reap a benefit from the monthly income from the property, and the homeowner will be able to stay in the home.
Another benefit is that homeowners may have more freedom after using equity financing than using debt financing. If a sudden hardship occurs, and the homeowner can not afford the house, the responsibility of paying hundreds of thousands of dollars is not present because there is no loan. Many homeowners are now finding themselves trapped in their homes, unable to stop foreclosure due to little equity, unable to afford the current payment due to the hardship, and unable to sell due to falling home values. Conceivably, no homeowner wants to be trapped in a house due to a debt that is almost impossible to pay off.
One final benefit of equity financing over debt financing is the obvious personal relationship that is achieved between the previous foreclosure victim and the investor. Problems with payments may no longer be met with spending twenty minutes on hold with a mortgage company or mortgage servicing company, only to reach an interchangeable human being, different from the last time the homeowner called, and who will not be the same one to "help" the client the next time they call. Swift foreclosure and aggressive collections tactics may be lessened, as well. And, in general, having a human face on a housing payment responsibility, rather than the mechanical facelessness of a corporation can help all parties involved come to a mutual understanding in the event a pressing circumstance arises, such as a hardship that will result in a missed payment.
In conclusion, the homeowner in foreclosure who wants to save the home and is presented with two options. In the first, by using debt financing to obtain a new loan, the mortgage obligation is left with a faceless company with no interest in the benefit of the community and which has a prime opportunity to prey upon the recent hardship situation of the borrower via mortgage servicing fraud and other sinister, cunning tactics. In the second, by using equity investing from a local private lender, a benefit is felt among the community, as people work together to keep money in the local economy and achieve a mutually beneficial situation, where mortgage obligations and property ownership responsibilities are shared by all parties, rather than lain at the feet of a trapped borrower who has no way either to escape the trap or even to cause it to loosen its tightening grip around his neck.
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Real Estate Agents
When you deal with realtors, it is important to identify the good, the bad, and the indifferent. Good means the realtor has the qualities described in this article. Bad means they do not. Indifferent means the realtor may have a few and you like them, but overall, you can take them...or leave them. This article was written over a period of months. Many work hours went into the creation of this article. The main goal was to condense these qualities into a select few in order to keep it simple.
The number one quality a realtor must have is confidence. With confidence, all things become possible. Confidence enables the realtor to do all the things necessary to get you the best deal, while at the same time, make them some money. I do not want a realtor who is timid about money. I want a realtor who is comfortable in their own skin. You might say that knowledge is the number one quality. Certainly, you don't want a realtor who is not knowledgeable about real estate. Certainly you don't want a realtor who is not knowledgeable about real estate investing. However, confidence requires knowledge. Without it, you've got someone most like many car salesman, they're winging it and exuding a completely false sense of confidence. No good. Confidence requires knowledge. Try talking to a timid realtor about calling another realtor to get information on the seller. Pay close attention to their reaction. Let's say that you are attempting to gain valuable information regarding a seller's mortgage. If the realtor starts to give you reasons why you can't assume a mortgage, that's a red flag. A realtor should be like an intelligent robot. It should give advice when needed and then just do exactly as it's told. If it does not, it is dysfunctional. Terminate your relationship with it. And that goes for the robot too!
Real estate is about money. Money is not about being nice or timid. Money is greenbacks; the more you can save or earn, the better! A realtor with confidence will recognize this important element to purchasing real estate. It's not about their feelings, it's about money. You will find many of the things mentioned in this article revolve around confidence. If a realtor is willing to learn about a new way to purchase real estate, he/she has confidence. If a realtor can tell you something is not legal, they're smart, which brings us to our next quality.
A good real estate agent is smart. Smart is not the same as being knowledgeable. Smart has many characteristics. Smart includes quickness on one's feet. Smart includes their organizational skills and follow up practices. Smart involves their marketability or salesmanship. A smart realtor is a salesman. A good salesman sells themselves along with whatever it is they want the buyer to purchase. The ABC's of closing are simple and if you ever watched the movie "Glen Gary, Glen Ross", you would know that a salesman, like a realtor, must ALWAYS BE CLOSING. If they are not, they will not sell your properties. Smart realtors know their business and have an answer for any question and that doesn't necessarily mean the actual answer to someone's specific question.
A smart realtor will always have a song and dance. Saying to someone, "I don't know the answer to that off the top of my head. I'll get back to you on that," will decrease saleability by about 50% (that's just a guesstimate). A smart realtor remembers ALWAYS BE CLOSING. "Well from my experience, I know that...," or some variation is absolutely the better approach to sell yourself and the property! A smart realtor must avoid seeming disingenuous or like he/she is "pouring the BS on". That would be the opposite of smart. Smart does not mean being untruthful. Smart means projecting confidence and knowledge that helps to assuage any fears in the buyer that might keep him or her from closing. A smart realtor will always attack an opportunity proactively to establish trust with buyers and sellers. If you're trying to sell an investment property or your personal home, you might consider looking for the realtor who wins your confidence personally. Forget about names of realty companies. Reputation does carry great weight, but there's nothing like a realtor who carries a big old stick of confidence, brains and our next characteristic, tenacity!
Tenacity. This word means resolve. A realtor must be tenacious in their approach toward helping you, the investor, make the best deal possible. For example, we were considering a property to purchase subject to mortgage assumption. The savings on closing costs alone would be over $9000. When we asked our realtor, Joe, to obtain information from the sellers agent regarding current mortgages held by the seller, Joe responded, "Most mortgages these days are not assumable." At this point, it would have been a good time to start shopping for a new realtor. In our attempt to work with this particular realtor, we explained that we were aware of this likelihood, but still preferred this information. Joe called us back, informing us the sellers agent told him the current mortgage was unassumable. We told Joe this was unacceptable. After a day of trying to convince Joe of our preferences, we went to the local public records office and obtained the information we wanted. Joe did manage to also provide us with the same information from his resources online. End result, someone else purchased this property.
Now while we do not know for sure what Joe actually said to the sellers agent to acquire needed information, our personal opinion is the conversation went something like this, "I've got an interested party for the property but they're talking about assuming the mortgage. Can you give me any information?" Rather than, "I've got an investor with cash interested in the property who can probably close in a week. They like the property and I'm thinking they'll make a generous offer. They want to know who the current lender is, the interest rate and terms of the loan." You can see the difference in approaches. The former will get Joe exactly where he thinks he'll end up - nowhere. The latter will maybe at least get some information so that Joe can work towards...CLOSING THE DEAL.
A tenacious realtor will look at every challenge as an opportunity for the advancement of closing the deal. A tenacious realtor will not sit back on their toes and lose control of the flow and continuity of conversations, missing one opportunity after the other to close the deal. A tenacious realtor will not whine about a slow market, but will be on the cutting edge of ways to sell his listings and earn more listings all at the same time. A tenacious realtor will keep his/her ears open for new opportunities to pounce on. Tenacity is important if a realtor wants to Always Be Closing.
Finally, if a realtor is to be successful, he/she must have an imagination. Imagination is the key to creativity. The bigger the imagination, the less road blocks to creativity. If a realtor has a good sense of the possibilities for real estate investment, the more willing they will be to follow up and not hold back when they should be moving forward. And we're not just talking about "creative financing techniques". We are referring to the their personal approach to life in general. If a realtor uses words like "can't", "no", "not", "won't", "forget it", etc., then it might be prudent to look elsewhere for another realtor. We say "might" because if the realtor is telling you something "can't" be done because it violates state law, then obviously, this is an entirely different usage of the word. However, if they use them often to describe investment ideas that you know to be quality approaches to investment, they're showing a lack of imagination.
Sure there are other qualities we could list here, but many will fall under the ones spelled out in this article. Remember, this is our opinion of what counts. Confidence, smarts, tenacity, and imagination encompass many areas including: genuineness because a smart realtor knows they must not only market themselves as being genuine, but must actually be the genuine item; faith because without it, how truly confident can you be?; communication skills because a smart realtor knows when to listen for information and has the confidence to let others speak; integrity because if they're not honest, how confident can they be?
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