Let me explain a Short Sale to you

Many people today are facing really stressing decisions. When someone is unemployed for a while their bills start to overwhelm them. The first instinct is to try to save the house. Some people will take every penny they have just to make that mortgage payment. With home values in a drastic free fall most homeowners have lost most of their equity. If you can hang in there until the market returns you might be alright but what do you do if you now owe more than your house is worth? You do a short sale.

Some people just sit back and let their home get foreclosed on. This is bad for you and the entire economy. A short sale is when you negotiate with the bank to sell your house and they accept less than you owe. The Realtor Association has been vigilant in getting the government to push the banking industry into working with you and me (the Realtor) to get your home sold. This past April they sent a standard set of rules that the banks are supposed to adhere to.

The best rule for you the home owner is if you work with them at the time of closing of the sale they will give you cash for keys. It is anywhere from $1000.00 to $2000.00. this is to help you move. The government has told the banking industry that they have pay the Realtors commission but limit is to 6%. This is good because a short sale takes an incredible amount of time out of the Realtor. Before this rule a Realtor would work sometimes 18 months only to be told by the bank sorry no paycheck for you!

If you are employed and have decided you don't want your house anymore and that you'd like to just get rid of it because there is no value a short sale will not work for you. In order to be an acceptable candidate you must have a hardship. Losing your job, losing a spouse, getting transferred these are acceptable hardships.

Another good thing about a short sale is that the government has passed a little tax loop hole for you. If you short sell your house the difference between what you owe the bank and what your house sold for used to be a taxable gain! I know this sounds nuts but if you sold your home for less and the bank forgave you the difference our government looked at that as a gift or some kind of gain and they taxed you on it. Really you can't get blood from a stone but they do try. Now if you short sale your house the tax rules give you a pass on this tax. Now here is where you have to pay attention. . . If you get foreclosed on you may be responsible for this tax!!!

So I'd say there is incentive to work with the bank and not just walk away. Also by doing a short sale the price of the house usually sells for 30% more than a house that has been foreclosed on. So by working with the bank and your Realtor it benefits all of us and helps stop this spiraling decline of values.

You would think that the bank is eager to work these out. No they are not! There are all sorts of reasons for this. I call it getting through the gatekeeper. The bank likes to see a house on the market for at least 90 days before they are willing to even talk about working out a short sale. The want to see a market history that you actually tried to get a sale price of what you owe on the house. They also want to see your financial statement. If you have 25g's in the bank forget about it! If that money is in your retirement account they won't touch it for now.

My job as a Realtor is to get through the gatekeeper. I will call these people several times a week and be treated like an idiot from them until one day they decide to work with me. One day they will be kind and the next day we can end up starting all over again. I often wonder about these people that work for the bank. Are they so overwhelmed with calls and other short sales that they can't possibly work effectively? Do they sleep well at night knowing that they made it a step harder for some poor guy in Ohio to work with the bank? Do these people have any training or do they know what they are really doing?

By the time you really get the bank on board you have usually had a offer that you called them about for several weeks. Finally you will know if they are working with you if they order an appraisal. The problem is we are in a declining market. An appraisal in todays market is worth less three months from now. So if that buyer walks away from the offer after waiting patiently for the bank to respond you now have an appraisal that will be too high in the present market.

If your loan on the house is an FHA loan the bank will only order two appraisals. I have to tell you the appraisers can only give todays market value and some of these guys aren't really that good. The bank has to handle the short sale according to FHA rules. The bank is going to ask FHA to give them the difference in what the house sold for and what you owed. This is what FHA is all about it is the insurance on the loan. Our government insured that you would pay this loan. That is why you paid extra money in closing costs when you purchased and you also had that ugly monthly MIP (mortgage insurance premium). I think our government has to get a little tougher with these lenders before they reward their business behavior with the insurance checks.

It is a quagmire but it is still worth the effort because it helps our entire country to do the right thing and try to get the best price for your house.

Some thoughts on the Health Care battle

Stop me if I'm wrong but is John Boehner on our side? He wants to stop the health care bill that was voted on last year. I understand this fear of socialized medicine. I am a self payer. That means I don't work for the government or a big company that gives me health care insurance. I don't look forward to big fat pension or double dipping into retirement. Again I am self pay, which means I am a "have not". It seems it is "The Have Nots" against "The Haves". Or maybe it is the other way around.

Anyway yesterday I received a letter from Medical Mutual my health care insurance. This letter was to inform me about what to expect with the new health care reform. I was a little nervous when I started reading it. In fact, I waited to read it when I had time to really think about what I was about to read.

I was shocked by how wonderful the news was! In this new reform;

1.I am allowed to go to the doctor and get immunizations without charge.
2.I am allowed to get preventive health care with out charge!
3.My son can be on my insurance until he is 26 years old.
4.If I have a child that has health issues they have to insure him until age 19.
5.They are no longer allowed to put a lifetime cap on my insurance just a yearly one.

Can someone please tell me what is wrong with this?

I have been afraid to go to the doctor for over two years. Every time I have gone it has cost me big bucks! Once my doctor wanted a test done and told me to go to a certain place to get it. I had to pay for the test out of pocket because of some insurance double talk that made the place I got the test not to be covered. Do you think my doctor would call me back after I got the bill? Do you think the insurance company cared? No, it took me two years to pay it off!

Am I missing something here about Health care? I was thrilled with the news I received yesterday. John Boehner can you please explain to me why this is bad?

Sandy Maline Cleveland Real Estate: Big Versus small

Sandy Maline Cleveland Real Estate: Big Versus small: "In today's world it seems people keep thinking with the Big Box mentality. Some think Big is better. Sometimes Big is better! Sometimes yo..."

Big Versus small

In today's world it seems people keep thinking with the Big Box mentality. Some think Big is better. Sometimes Big is better! Sometimes you can get a better price when you order in large quantities. Sometimes a large company can out do a smaller company on price because of shear volume.

In Real Estate this is not the case. In fact the larger the company the more expensive it will be to work with them. Usually when I pay top dollar for something I want the best quality or the best service. There are a few industries that have been able to duplicate their service or product in such a way that they can deliver the best quality and service while continuing to grow to enormous sizes.

The hotel and entertainment industry such as Disney, Harrahs and Marriott come to my mind as symbols of large companies that have been able to keep quality and service while becoming huge entities.

Real Estate service can not simply be duplicated because of the enormous emotions that go into a purchase or sale. I've trained some really great agents when I have been in management roles. Everyone always adds their unique personality. Most of those really great agents are also no longer selling real estate because of the emotional and financial roller coaster they found this business to be.

I guess you can say I'm a little fish in a big pond and that suites me just fine. Like the big box company you don't see my sign on every other street. I don't tend to have my houses on the market forever either. If a seller will actually listen to me, we will get the house sold.

The other Advantage (love that word) is I can change my marketing strategy. The big box real estate companies have what I call a broad marketing campaign. Every house gets put on that campaign. The only way something different happens is if the agent is willing to pay extra money on top of what they are paying the big company already for the broad based marketing campaign.

Evey home is unique. With the internet I can get a home in front of the right buyer by being extremely internet savvy. I am constantly learning new tricks to stay on top of this ever changing technology. A large company can't do this. Have you ever seen a real estate listing on line without a picture? You will never see one of my listings on line with out a picture. That is just a small example of quality and service you can expect with a little fish in a big pond!

A brief description about Mortgages

The American dream of home ownership is becoming a nightmare to the middle class. It absolutely amazes me that the general public still has the mind set that because they are "American" and live in the United States that they are some how protected from fraud and theft. People sign mortgage documents without reading what they are signing.

When you purchase a mortgage there are a few different options to keep in mind. First is the Government backed loans referred to as Ginnie Mae loan products. These are VA and FHA loans. What this means is the government issue insurance to back the loan. These loans were designed to give the people of this country an opportunity to purchase a home with a fixed rate over a manageable period of time like 30 years.

A VA loan is a loan product specifically designed for our Veterans. If you served in our countries Navy, Air Force, Army or Marines Corps you are entitled to a zero down loan. The cost of this loan is a little more expensive than a traditional loan and most of the cost can either be mortgaged or paid by the seller. The mortgage insurance for this loan is paid by the government. The benefits of this loan are that the mortgage insurance is paid for you and you can purchase with no money down. You will need to show some money however to qualify for the loan.

An FHA loan is 3 1/2% down with mortgage insurance. There are several FHA loan products. One of the best loan products that is frequently overlooked is called a 203k. This loan allows the borrowers to purchase a home that may need work. Say you have your eye on a house that needs a new roof or replacement windows. You can purchase the home for whatever price you negotiate with the seller then add the cost of repair to the loan. You will have to put 3 1/2% down on the total amount that you will finance. The great thing about this is the house transfers title and then you can have the work done and the money is in an escrow account to pay the bill when the work is finished. This loan isn't cheap but you usually get a house for a better price when it needs work so it all evens out at the end.

There are traditional loans called Freddie Mac and Fannie Mae. These generally start at 5% down. Some of these will stop charging mortgage insurance at 15% loan to value. Meaning if your home is worth $100,000 and your mortgage is $85,000 your $15,000 in equity is 15% loan to value. Private mortgage insurance prices vary depending on how much you have in equity and what your credit score is.

When I refer to Ginnie Mae, Freddie Mac, and Fannie Mae these are the names of the products that resell on the secondary mortgage market.These are called Mortgage backed securities. People invest in these and until recently it was a pretty good investment. By making this an investment product it frees the money up to lend more. What has happened is it kind of got out of whack. This was a good thing and it helped get our country out of the 1930 depression. When people lose jobs and were unable to pay their mortgages it created a financial tsunami. When people default on their loan these securities go down in value. If there aren't investors in these securites there is no money. The Federal Government has been investing in these and of course selling these securites.

There are several types of loan products that you can get in all three groups. The best and safest is the fixed rate. This can be for any amount of time. Generally people do 30 years. If you make one extra payment a year you will save thousands of dollars and payoff your mortgage in 20 years. There is a loan product that is kind of hard to find it is called a biweekly mortgage. It is set up on the extra payment principle. You take whatever the 30 year mortgage payment is and divide in half and pay that every two weeks. This will result in an extra payment a year which will pay down your loan in 20 years. You can get a 20, 15,10 year amortized loan as well.

The adjustable rate loan (ARM) is a little more tricky. This is where you really need to read the fine print. If you see an ARM described as 3/2 that means every 3 years it can adjust up or down by 2%. These loans are based on different indexes. Most are based on Treasury securities rates. The lender adds a margin to whatever index they are basing their ARM on. Basically the cost of money with a profit added in.

Always make sure there is a cap on the ARM. There are different kinds of Caps. There is a cap of the life of the loan. Meaning it will not ever adjust over say 7.5%. There is a cap on the amount you can adjust on in every adjustable cycle. Like 5 years or 3 years.

Third Federal has an interesting ARM. They are showing a 5/1 and a 3/1. This means the rate is locked for the first 5 or 3 year cycle. Then it adjusts every year up or down by 2%. They state that you can re lock your rate anytime for the cost of $495 The cap on the life of this loan is 5%. This is a great product if you are planning to move soon or want to take advantage of the lower rate and make extra principle payments. In general adjustable rate loans are risky especially when we are at the bottom of the market. You know it can only go up. The savings is usually 1%.

Another loan is the interest only loan. This is one that I think the banks should start to take another look at. When you have people in a recession like we are in. If we can modify their present loans to interest only for a set time like 5 years then we can keep people in their homes. If after 5 years they haven't been able to correct their situation, they probably won't and should look for less expensive living situations. An interest only loan can cut the cost of the payment in half.

There are interest only loans out there, but the problem is most of these products are put out by mortgage companies. Mortgage companies are in the sales business. Their entire goal is just to sell mortgage loan products. After a mortgagee purchases one of their products Mortgage companies generally sell the loans.The servicing of these loans go to several companies that get paid a fee to collect the money on the debt instrument. The problem with that is the companies that do the servicing aren't that great. I have heard horror stories about the servicing company double charging, or foreclosing on a home because money that was withdrawn from an account went to the old servicer and didn't get credited to the new servicer. By the time a borrower can get the situation repaired there is usally all sorts of penalties and fees that you have to try to get waived. Most of these companies are incredibly hard to work with.

In short get a fixed rate loan try to make principle payments or one extra payment a year if you can. If you do a ARM be careful understand it completely before doing it. If you find you are in some sort of hardship call your bank before you get behind and try to work something out. As you can tell I'm not a fan of mortgage company loans because your loan becomes a piece of paper with no face behind it. If you work with a bank that you use on a regular basis hopefully they will help you with some sort of modification. Most important make sure wherever you get a loan from make sure they service their loans. Third Federal does not sell their loans and will always be the servicer. They do not have FHA or VA loans and tend to prefer at least 15% down. Most banks keep the servicing of the loan as another tool for the bank to earn income. Always ask about the servicing to avoid the nightmare to can result from ending up with one of the bad companiesout there.

Look what our Congress it up to now!

I recently got this in an email and it really bothered me!
The Time Has Come:

Governors of 35 states have already filed suit against the Federal Government for imposing unlawful burdens upon them. It only takes 38 (of the 50) States to convene a Constitutional Convention.

This will take less than thirty seconds to read. If you agree, please pass it on.

An idea whose time has come!

For too long we have been too complacent about the workings of Congress. Many citizens had no idea that members of Congress could retire with the same pay after only one term, that they specifically exempted themselves from many of the laws they have passed (such as being exempt from any fear of prosecution for sexual harassment) while ordinary citizens must live under those laws. The latest was to exempt themselves from the Healthcare Reform ... in all of its forms. Somehow, that doesn't seem logical. We are not supposed to have an elite that is above the law.

I truly don't care if they are Democrat, Republican, Independent or whatever. The self-serving must stop.
A Constitutional Convention - this is a good way to do that. It is an idea whose time has come. And, with the advent of modern communication, the process can be moved along with incredible speed. There is talk out there that the "government" doesn't care what the people think. That is irrelevant. It is incumbent on the population to address elected officials to the wrongs afflicted against the populace...you and me. Think about this...
The 26th amendment (granting the right to vote for 18 year-olds) took only 3 months & 8 days to be ratified! Why? Simple! The people demanded it. That was in 1971...before computers, before e-mail, before cell phones, etc.
Of the 27 amendments to the Constitution, seven (7) took 1 year or less to become the law of the land...all because of public pressure.

I'm asking each addressee to forward this Email to a minimum of twenty people on their Address list; in turn ask each of those to do likewise.

In three days, most people in The United States of America will have the message. This is one proposal that really should be passed around.

Proposed 28th Amendment to the United States Constitution:
"Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States ."

We need to do something about this! Like write your Congressman today!

I agree with Donald Trump

Donald Trump is known as a great Real Estate investor. I have not always been a big fan of his, but I have to side with him on this one. Donald called Inman Feisal Abdul Rauf, lets just call him Inmam for this article. He is the man who wants to build the Mosque in New York close to Ground Zero in New York. Donald offered this man 25% more plus all closing costs to purchase the building from this man with the agreement that Inman would not build a Mosque within a certain amount of blocks from Ground Zero. The man countered Donald.

Her are the details. Inman bought the building for 4.85 million and some change. Donald offered 6.2 million and some change. Inmam countered at 20 million.He has since been quoted to say if someone wants to give me 18 - 20 million I will sell it. Donald's take on this guy is that he doesn't have the money to build a Mosque. In fact Donald thinks this guy is using emotional blackmail on the people of the United States to get rich or richer! Talk about cold hearted business!

Are we going to let this guy pull this off? He has gotten the public so upset and outraged using our countries laws of freedom to fuel the fire. Like a game of chess what is the next move here?

Donald doesn't want to give into Imam's use of emotional blackmail to make him rich. Inmam has a pretty shady background. Otherwise this is this guys style! Ugly yes but do we let him win and get the best of us?

Donald has stated that Inmam has stated that he would be interested in selling. Donald and I think this guy is grandstanding and the he has no real interest in building a Mosque. Do we call his bluff? What happens if Donald and I are wrong and he does build this Mosque so close to Ground Zero.

I say lets call his bluff and see what he does. If he comes up with the money to actually get the building started then we can start using other methods to delay and add expense to his plans.

I looked at the building site and it really isn't that big! Usually a Mosque takes a lot more space. I thought that a Mosque would require more area for parking. This property is a building that has buildings on both sides of it with no space in between. Every Mosque that I have seen is a monument style building with lots of space around it. Plus the entry of the site has to face Mecca their most holy city in Islam. Does this site allow that? I can't tell from Cleveland, Ohio. So unless I'm wrong the property might not be the proper site according to their Islamic rules to even construct is correctly!

Lets get smart here and stop letting Inmam manipulate us on our emotions. Lets use our heads here. I believe that Donald Trump is on to something. This guys is trying to pull off the biggest real estate deal in New York with the use of emotional blackmail! I guess that is a legal form of terrorism!