If over the last three years you’ve asked yourself, WHAT IS ROBO SIGNING —- this is it!
Open heart surgeon, NFL football coach, OJ Simpson’s defense team. These are what most would consider high stress, high pressure positions. If the surgeon, the coach, and the Cochran team (RIP, Johnny) “f” up, chances are they’re gettin’ a boot in the ass (or a razor-clean slice across the throat in Cochran’s case). Oh wait, that’s right….the glove didn’t fit! If you can’t get the job done right, consequences are to be expected, right?
But who knew that “legal process specialists” shared the same job stress. What’s a legal process specialist, you ask? Just like it sounds…of course. Basically a legal process specialist is someone who sits all day in air-conditioned cubicles preparing sworn affidavits, so lenders can take homes from distressed homeowners. Like Nike’s little Indonesean kids toil away building $100 Air Jordans, these foreclosure slaves build foreclosure files. God Bless ‘em all for their mad-skills!
The legal process specialists are bombarded constantly with reminders of daily quotas, usually 10 files a day, and if they don’t fulfill those quotos, they first receive a verbal warning. Then there’s the infamous written warning (ya gotta love corporate America’s discipline policies). Don’t even think about two written warnings; that would cost them a paycheck. All that stress only to make peanuts. Actually, peanuts would probably be better. Put it this way, Lucy the legal process specialist is probably working a “night job” to make ends meat and put food on the table for her kids.
You don’t have to be a genius (or maybe you do) to figure out that too much pressure will inevitably lead to costly mistakes, so you’d think these so-called managers would quit breathing their stale, coffee-saturated breath down the necks of these hard workers. A recent settlement involving Wells Fargo resulted in the loss of homes, because someone somewhere in some sterile office said “oh crap” when he realized he forgot to check the fax machine for crucial financial documents.
Contrary to what some lenders are saying, the state attorneys general, federal investigators, and state & federal judges say it’s even worse than it appears. Thousands of families are losing their homes because of errors and in some cases, fraud. Problem is, someone has to have the balls to question the process. Unless they’re challenged in court, most questionable procedures will go unnoticed and unchanged.
What is Robo Signing?
MSNBC (a network NO ONE watches) has been investigating these foreclosure “sweat shops” and intercepting emails from stressed out workers who are coming forward to expose what’s really going on.
“Get ‘em out!” is what they hear at the Wells Fargo in Charlotte, and I would imagine that “Get ‘er done!” is the command at just about any Wells Fargo in West Virginia. Point is, managers are pushing, pushing, pushing like a woman in labor (epidoral please!) to meet quotas without sufficient time to properly review information. Workers are told “no breaks” and “ask me for more when you’re done”.
BTW, are these the white-collar jobs Obama was promising? We need those well-paying factory jobs BACK in America people! (but I digress)
Not even halfway through the year there have already been 575,000 new foreclosure filings (can you say, Cha-Ching?) in the U.S. and over 200,000 homes sold, according to RealtyTrac. Wells Fargo and four other major banks have implemented an agreement (effective earlier this month) to improve the foreclosure process. Banks will have 90 days to synch up with the new guidelines and twice that time to implement them.
More on this story, HERE
It’s a hot topic for sure, and now there’s even more talk about short sales and expedited processes by Fannie & Freddie (who, by the way, sound more like a brand of women’s panties and a rapper, respectively). No disrespect, of course…just sayin’.
New Short Sale Process
For those real estate agents and homeowners awaiting a decision on their short sale offer from Fannie Mae and Freddie Mac, June 15th is “D” day, thanks to new Servicing Alignment Initiative guidelines issued by the GSE that will demand greater focus and speed when it comes to short sales and all-things pre-foreclosure related. Fannie and Freddie are taking measures to minimize response times in attempts to silence the incessant whining of real estate practitioners and to make the short sale transaction process more efficient. The pressure is on the GSE to provide concise information about foreclosure alternatives, and the GSE has no choice but to comply with new deadlines set forth for short sale evaluations. Hence the June 15th deadline. And speaking of deadlines, servicers have 30 days to make a decision after they receive an offer within the short sale program or a completed Borrower Response Package (BRP) through the Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.
What happens if they exceed 30 days? No, they won’t turn into pumpkins (although that alternative would be way more pleasant); servicers will need to give the borrower a weekly status updates (ew), and they will need to shit or get off the pot no later than 60 days post BRP. Say the servicer wants to play lawyer and counteroffer? The borrower has to reply within five business days, and then the servicer has another 10 days to respond back. It’s a reciprocal game of cat and mouse to see who gets the cheese.
What do you think, will short sales actually get faster with these new Govmt. regulations?
Commitment letter shmamittment letter. What’s the difference between Pre-approved vs Pre-qualified? Well for starters, you’re a complete DB if you’re still trying to get a deal using a commitment letter. But pre-qualification letters or a “letter of funds”…..now that’s a horse of a different color. And a solid Proof of Funds (POF)….well, that’s the Big Red Cadillac of letters, baby! If you plan to go after bank owned and HUD homes and you can’t verify cold hard cash in your bank account, you’re going to need a pre-qualification letter or, at best a solid POF.
Well, other than the fact that you’re trying to compete with guys like me who are showing POF’s of bank accounts holding amounts of cash - you must let the seller know that you give a damn, that you’ve taken the time to meet with a lender, and that you are qualified and for real. Its like opening up your KIMONO and sayin’, “Hey Bud, I’ve got the money it takes to party.”
Just know that most banks won’t even look at pre-qual letters from buyers making offers on REO’s. They want to see cash in the bank. Ask yourself this…If you’re making an offer with a pre-qual letter from a hard money lender, and I’m making an offer on the same house with a P.O.F. that is essentially a print out of my bank statement….which offer do you think is gonna get noticed?
TIP: If you want to play the REO game, you’ll need a solid POF showing that you have “cash money” to buy. Email me if you want to know where to get a genuine P.O.F. letter.
Now, you can be a rocket scientist, a genius of monumental proportions, the top executive “suit” at some major corporation, but that doesn’t mean you can write. In fact, when it comes to written corporate communications, most people are fish out of water. The key to a solid pre-qualification letter is to use the “ABC” rule. (your lender will write this for you)
A – avoid small talk and conversational information; you may be tempted to use an overly conversational tone in your letter in an attempt to befriend the seller – but don’t. The seller doesn’t care about your experience, funny anecdotes from your past or that your kid scored his first goal in soccer last weekend. Keep the content professional, period.
B – be brief; the seller’s time is valuable, so show in your letter that you recognize and respect this by keeping your letter brief and getting right to the point, quickly. Be sure to state clearly that you are, in fact, pre-qualified for a loan and that the pre-qualification is subject to additional review.
C – be courteous; being brief doesn’t mean being blunt to the point or rudeness. Show your appreciation with phrases and words like please, thank you, and appreciate.
Example PreQual Letter:
To Whom It May Concern:
This is to confirm that Joe Investor has been pre-qualified for a purchase/rehab loan for a single family residential property based on a 65% loan to value appraisal, but with no cash out. Please note that this pre-qualification is good for 60 days from the above date and is renewable by mutual written consent.
As always, final loan commitment is subject to the appraised valuation of the property by an appraiser chosen by our firm.
I appreciate your time, and thank you for your cooperation.
Joe Bagadoughnuts Investor & Hard Money Guy Extrordinaire
What’s the sweet play right now in real estate investing? Well before I tell you and you go off in search of this next shiny object I’m about to lay on you – I need you to ask yourself; what are you good at, what do you love to do? Then once you’ve done some serious soul searching – and you’ve really figured it all out —- ask yourself, what’s the market giving you? Bloomberg recently posted an article entitled, “How to Play the Home Price/Rent Gap.” The story details how landlords are lining up en-mass to buy property for profit!
Tenants & Toilets is AWESOME!!!
Its no secret that there are plenty of suppressed markets out there in our great country. Another badly kept secret is – you’ve go to be a pretty damn strong buyer to get home loan. And finally – consumer confidence is still shaky at best. I mean, if O’Bama farts the wrong way, consumers are scrambling to put their money back in their mattresses!
Add it all up and what do you get in terms of housing? In a nutshell you get – a big stinky, steamy pile of rental opportunity.
Bloomberg Business reports foreclosure investors can earn well-over 8% returns (in some cases in less than one year), which is pretty damn significant in a time of all-time low interest rates. Florida, Cleveland, and Chicago are among some major foreclosure hot spots, but in general, the sale of foreclosures nationwide could reach over $100 billion, according to CoreLogic. If you’ve got the means, wouldn’t it be something to get a piece of that action?
Look at what your federal govmt and banks are doing to make it easy for investors to purchase rentals. I don’t know weather to jump for entrepreneurial joy or to throw up in my mouth!
Read more at Bloomberg HERE
Is clear that more foreclosures are coming. I think I’ve been beating that drum pretty loudly of late. Here’s some interesting foreclosure news: There is one county in my market of Maryland where 75 REO listings hit the market in one week (week of April 22nd). That’s pretty astounding given the fact that in some recent weeks there have not been more than 75 total bank-owned listings.
U.S. Foreclosures Will Increase
A recent report (see the video) below from Bloomberg.com affirms what we have all believed for a while. Foreclosures will surely increase. Look people, I don’t care what the media is telling you, the economy is NOT getting better. People are still unemployed or under employed, and as such mortgages are simply not getting paid. And now that the robo-signing scandal is largely behind us, and the banks have received their $26-million dollar “how do you do” from Obama and friends, I think the flood gates are about to open!
Are you ready? If not – you better get ready!
We’re coming into a hot season, I can feel it. Those of you who know how to scour the internet for great deals are about to ride a pretty sudsy wave. Those of you who are lacking the knowledge on how to capitalize, are gonna be left in the dust. I’m currently rallying all my private money sources and I’m recruiting more. I’m also marketing and putting the word out to wholesalers. What will you do to get up to speed?
Will you know the REO agents in your area? Will you have a good solid proof of funds letter? Will you know your target markets like the back of your hand – meaning – will you know the comps and the ARV’s? How about buyers? If you’re a wholesaler will you have buyers like me already lined up and salivating for you to find them HOT HOT deals?
Now the’s precise time to start planting those seeds of success. The next wave is coming.
Check out the video below. Then, if you’re not ready, click on the banner to the left and get you some solid education from one of the hottest wholesalers in the county. This girl really knows her stuff!
May Not be a Tidal Wave of Foreclosures
Its an age old question amongst real estate investors, entrepreneurs and really – all of human-kind. The Quality Quantity Conundrum. Where do you fall in the spectrum? You better have an answer to this question. Here’s why.
MORE MORE MORE = GOOD BETTER BEST?
Everywhere you look, there’s a quest for more, more, more. Bigger cars, bigger houses, bigger bank accounts, bigger boobs, bigger lips. You get the picture! I just gotta say it – what is it with these crazy woman who do this to themeselves? What is so lacking in their lives?
But I digress – let’s get back to real estate.
A DNA-level human quality tells us the more deals we make, the more successful we will be, but that’s a typical rookie-intermediate mindset and a common investor mistake.
A TALE OF FREE AND CLEAR
My good buddy Steve Cook likes to tell a story about three very well-known, successful and well-off Baltimore City Landlords who decide to take a 7-day trip to Europe. The first investor owns 1000 houses with bank financing, the second owns 150 houses with bank financing, and the 3rd owns 20 houses, free-and-clear. Round about the 5th day of the trip, one says, “Guys, I’m having such a good time – why don’t we stay another week.”
Can you guess which of the three made this comment? Can you guess how the other two responded?
Investor one with the 1000 houses, and investor two with the 150 houses, both rich guys each said, “No can do.”
Both their phones were ringing off the hook for the entire week. Tenant calls, management calls, vacancy issues, maintenance issues. You name it – the phone was ringin. With 1150 houses between them – each was sacked with issue after issue and each was tied to their respective business like a cinder blocks chained to their ankles!
Investor #3; Mr. Free and Clear, waived good-bye to his buddies as he alone stayed for the extra week!
I WANT IT ALL, CRAIG!
What if your competition is closing deals faster than the time it took for Kim Kardashian to file for divorce? Who cares! There’s one person and one goal you should be focused on – is you. Don’t obsess over how many deals you’re working. Seriously, this might be the best advice I could ever give you!
Here’s the deal. I’ve been there. I’ve lived the stress filled, anxiety ridden life of juggling 7-8 big rehab projects at a time. I know what its like to have several hungry lenders simultaneously looking for their monthly juice. I know what its like to manage a bunch of knuckle-head contractors. And let me tell ya, it ain’t fun!
When you’re working a ton of big deals at once, you don’t control the deals. They end up controlling you, and before you know it, your life and your time are no longer your own.
I once did a poll in a room full of investors. I asked them, “Why did you get into real estate investing? What are your goals?”
Almost every one of them responded, “Freedom. I got into real estate investing for more freedom!”
Let me be clear, there is very little freedom in working more than 3-4 deals at a time. Especially when those deals are “rehab” deals. The key to quality of life, and to your precious freedom is quality deals NOT quantity deals. Those investors who go for quantity are often the same who end up broke, divorced, and wondering how their kids grew up so darn fast.
Your business goals should never supersede your personal goals. The business MUST fit in to the personal. Never the opposite.
The internet is littered with Guru’s who claim to be doing 100′s of deals per year – and I know a lot of these guys. Most aren’t making nearly the money the claim to be making! Trust me on that!
It’s easy to be attracted to great deals – especially when you don’t have a firm grasp on what your end goals are, and that’s when the deals slowly start controlling you. You’ve got to go into every deal knowing precisely what you want to get out it, and your goals should be driving your decisions, not the appeal of taking down yet another deal.
Here’s an example;….say your short-term goal is to make money quickly. A few weeks later you come across a smoking hot rental where you know you can clear $500 a month after expenses. You then decide to buy the rental, which (as you well know) is a long-term investment. The decision to buy a rental completely contradicts your short-term goal for quick money, and now the deal has not only dictated your decision, but has also negated your original goal, and chances are you’re going end up with less money and less freedom.
The slide from Quality to Quantity is a slippery slope to an erosion of your freedom.
Remember, a quality deal is one that will contribute to the overall success and completion of your goals. It’s simple. If a deal won’t keep you on track and on your way to meeting your goals, it’s “talk to the hand time.” Stick to your plan, and invest your time, energy, and money on quality deals, and don’t worry about the competition. Trust me, they’ll be wondering why they have no life, while you seem to have it all.
Ok, so it may not be as exciting, titillating, and erotic as Fifty Shades of Grey, but the IRS Publication 590, a comprehensive guide to Individual Retirement Arrangements (released in December or 2011) covers new rules for 2011 and 2012. Bust out the whips and chains, ’cause here’s 103-sultry-pages of what’s new and good with the Publication 590 and IRS Updates for Your IRA.
There is no income limit for IRA contributions, at first glance, but don’t get too excited. If you want those but for these contributions to be deductible, however, there has to be limits, and those limits THANKFULLY increased in 2012.
What if My Job Covers My Retirement Plan?
If you’re fortunate enough to work for a company that covers your retirement plan, you should know that deductions for IRA contributions get phased out if your modified adjusted gross income (AGI) meets any of the following criteria:
- More than $92,000 but less than $112,000 for a married couple filing a joint return or a qualifying widow(er),
- More than $58,000 but less than $68,000 for a single individual or head of household, or
- Less than $10,000 for a married individual filing a separate return.
Now let’s talk about your Roth IRA. If you’re starting to look as old as Diamond David Lee Roth – guess what – you need a ROTH! For those who don’t have a Roth or need a refresher, a Roth is a special type of retirement plan that is typically tax-free, provided certain conditions are met. The tax law of the United States allows a tax reduction on a limited amount of saving for retirement. The Roth is different from other tax advantaged IRA’s in that the tax break is given on the money withdrawn during retirement, rather than on the money contributed. There are a few stipulations that can impact the amount you can contribute. If your AGI falls into any of these categories, be prepared for the modification.
- at least $173,000 and your filing status is married filing jointly or qualifying widow(er). You are disqualified from making any Roth IRA contribution if your modified AGI is $183,000 or more.
- at least $110,000 and your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2012. You are disqualified from making any Roth IRA contribution if your modified AGI is $125,000 or more.
- is more than -0- and your filing status is married filing separately, you lived with your spouse at any time during the year. You are disqualified from making any Roth IRA contribution if your modified AGI is $10,000 or more.
You can contribute to your IRA anytime during 2012 or by the return filing due date (excluding time extensions).
There ya have it, kids. The 2012 IRS 590 Cliff’s Notes. Fifty Shades of Grey – pshhhh, who needs it.
I have often said that flipping houses is a roller coaster ride. Its not a job for the faint of heart. Recently I came up with a new analogy. If you want to learn How to Invest in Real Estate, how to, “flip the house,” as I say – you must first understand that flipping is like a shaky, wobbly, 3-legged chair. Its fragile, baby – so be careful how you sit.
Even though it seems every one and there mother is now investing in real estate (let’s face it the barrier to entry is pretty low), there are three critical variables to real estate success. Miss any one of the three and your little wobbly chair will fall over faster than Snookie after a night of partying down at the Jersey Shore.
Real estate investing is a serious business played with serious money. You owe it to yourself to make sure that you stand on solid footing before you venture into a deal. Wanna know how to get it right? Watch this video below.
(Shameless alert: THIS MIGHT BE MY BEST VIDEO EVER!)
Well, here’s another update on this fast moving house before and after; Rolling Thunder. My little version of Flip This House. In this 2.5 minute episode, I talk about what I think I do better than any other rehabber in the country – “sizzle with the steak.” Ever been to Ruth’s Chris steak house? You know when they bring that $40.00 steak to your table and its still sizzling? Ever wonder why they do that?
I’ll tell you why – BECAUSE IT COSTS $40 FRIGGIN’ DOLLARS! The sizzle is like that added bonus that makes you feel like your getting something really special.
Well, that’s how I do my rehabs. Lots of sizzle. And THAT is why my houses sell for more dollars and in less time than most other houses in the neighborhood.
Check out this video below where I show you what I’m doing with the basement.
S0 many stories lately on the next wave of foreclosures. Is the foreclosure dam ready to break? Maybe its wishing thinking, maybe I’m just bored as I twiddle my thumbs through one rehab at a time – but I oh, how I dream of riding that next sudsy wave. Frank and Brian over at ThinkBigWorkSmall.com are all over this story in a wildly entertaining way that only they can report.
What do you think? Is the foreclosure dam ready to break?
How does 1.6 to 8 MILLION foreclosures sound to you? Tasty, huh?
Watch below. These guys are my heroes!