I just read a great article by nationally recognized financial guru Dave Ramsey. In the article, appropriately titled, “Don’t Foreclose on Your Future,” Dave gives three sound reasons why walking away from your mortgage just isn’t a good idea. The three reasons are:

Reality #1 – Your home is an investment, and any investment—even real estate—will go up and down in value. Walking away from your mortgage now is the equivalent of selling your stock portfolio at the bottom of the market. You guarantee yourself a loss if you don’t stick with your investment until values come back up.

Reality #2 – Home values will recover. If our homeowner sticks it out and stays in his home, he’ll be back to even in five years, based on a conservative 5% rate of appreciation. In less than 20 years, his home will have doubled in value. That is wisdom!

Reality #3 – The bank is not letting you off that easily. Lenders are covered up with foreclosures, so while homeowners who walk may not hear from the bank right away, they are by no means off the hook. Some banks will pull credit reports to see who is current on their other payments to determine if a default is “strategic.” Banks will go to court to garnish wages or hijack tax refunds—whatever it takes to get what they’re owed.

You can view the whole article on Dave’s website. Dave Ramsey is a bestselling author and radio host. I have been a huge fan of his Financial Peace University program, and strongly recommend it to everyone.

There are alternatives to foreclosure. A loan modification or short sale could be possible options for you. Your local real estate professional can help you with these options. Don’t be afraid to contact your lender, either. By staying in touch with your lender, you’ll find many more options available to you.

Don’t just walk away, though. As Dave points out in Reality #3, banks can, and eventually will come after the money they lost.

Don't walk away and let your home go into foreclosure

Advertisements

New RESPA regulations now require additional “cooling off” periods when the HUD Settlement Statement is changed. While the intent of the changes is to protect the consumer, the changes are causing delays in the time it takes to move a home sale from the time the offer is accepted until the time the closing of escrow occurs.

The majority of the burden of these new changes falls into the laps of Mortgage Companies and banks. Starting at the time of loan application, the mortgagee (bank) provides the buyer with a Good Faith Estimate. From the time the buyer receives the GFE, the buyer has ten days to review the GFE and decide whether or not to move forward. OK, great idea, no problem.

If the costs in the settlement statement change, for any reason, the borrower must be informed in writing, and there will then be an additional “cooling off” period. If the written changes are presented face-to-face between the borrower and the buyer, then the waiting period is THREE days. If the presentation of changes is done by fax, email, mail, etc, then the wait is SEVEN days. This is for every time something changes on the HUD.

So how is this different? Lenders have always advised the borrower of when there were changes. The borrower would look at the changes, decide whether to accept them or not, and move forward. Now, because of these new RESPA changes, the borrower must wait the 3-7 day cooling off period.

To me, it’s as if the government is telling the buyer, “You’re not capable of making a mature decision about your finances, so we’re making you take a few days to think about it.” Imagine if you changed the HUD three times through the course of a transaction. The inspection costs came in higher, the seller agreed to pay more money in seller concessions,  and a second appraisal is required. You are now looking at postponing the closing by 9-21 days, plus the time it takes to do the appraisal, and/or inspection repairs.

Closings are already taking 45-60 days on average. It used to be 30 or less.

You can learn more about RESPA at the US Department of Housing and Urban Development website http://www.hud.gov

From the HUD website:

“RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD.”

“…designed to help homebuyers be better shoppers…”

Laws to help homebuyers be better shoppers. This is the part that just rubs me raw. Essentially the government is saying that the average consumer isn’t smart enough to make an educated decision, so they’re going to pass  laws to do it for you. Protecting the consumer is a noble idea, but I question if perhaps this time it’s gone a bit overboard.

Decide for yourself. Like it or not, it’s in effect, for better or for worse. Just be advised that it may take a bit longer to close your home purchase.

90 Minutes with Jon Bumstead

February 17, 2010

The elections this year may just be the most important election of our lives. Michigan’s economy is in a deplorable state, unemployment is the worst in the nation, and Michigan needs jobs. Our current elected leaders just haven’t done what’s best for Michigan.

This November, there are several seats up for grabs in Lansing, and a Congressional seat in Washington. I’ve been spending a lot of time researching the candidates in each race, and have even interviewed or talked with those I favored.

What I’ve done is sought out candidates whose moral, spiritual, and economic beliefs fall in line with my own, and I evaluated their leadership ability and their willingness to serve the people.

Today I clinched my pick for the 100th District State Representative Seat.

Jon Bumstead for 100th District Michigan State Representative

Photo courtesy of http://www.jonbumstead.com

Jon Bumstead of Newaygo sat with me today for about 90 minutes in my office. We shared our stories with each other, and I asked Jon where he stands on some of the issues Michigan is struggling with.

Jon agrees that what we really need to do in Michigan is get control of our spending, and reform our tax code to make Michigan more attractive to prospective businesses. We need less government interference in business.

Jon is pro-life, and a member of Newaygo United Methodist Church. Jon is a family man, with three kids, four grandchildren, and has been married for 23 years. He respects the importance of family.

One thing I always look for in a candidate is candor and work ethic. Jon has both. He knows where he stands, and he’s not afraid to let you know it. Jon has been a homebuilder and a firefighter, so he knows the value of a hard day’s work. Having been self employed, he knows first hand the struggles a small business owner deals with.

I support Jon, and will be voting for him in the Primaries this August. As always, I encourage you to do your own research and make your own opinion. For what it’s worth, though, I recommend Jon, and I think he’ll do an outstanding job for us in Lansing.

You can visit Jon’s website at www.jonbumstead.com

You can also find Jon on Facebook .

Get involved. Your future, and the future of West Michigan is at stake this year. If you’re not registered to vote, get out today and register. Help us get Michigan back on track, because Michigan is worth saving!

To those who know me, it should come as no surprise that I have a high opinion of my own personal situational awareness. I pride myself on knowing what’s going on, who’s doing what, and who they’re doing it with.

So how the heck did a guy like Jay Riemersma slip under my radar?

Jay is a Republican candidate for Michigan’s 2nd Congressional district. I learned of him via an email message I received this morning (ah yes! Grassroots FTW!). I headed over to his website, http://jayriemersma.com/ and started reading.

Jay Riemersma for Congress

Photo courtesy of http://jayriemersma.com/

My first thought was, “Holy crap, I could save this, do a little copy pasta, and this website could be about me!”

  • Pro-life.
  • Supports the 2nd Amendment.
  • Supports Sanctity of Marriage.
  • Wants to Improve education.
  • Favors Small Government.
  • Opposes the Michigan Business Tax.
  • Wants to Restore the Republican Party.
  • Christian
  • Supports a Strong National Defense (I can dig that!)

Where’s a polling booth when I need one?!?!

I’ve been working to get your support for Pete Hoekstra for Governor, and Goeff Hansen for State Senate.

Now I’m reaching out and asking you to support  Jay Riemersma for the Michigan Congress.

These are the kind of men we need in Lansing to get Michigan back on its feet.

Over the last couple of months, the wind turbine tower project proposed for the waters of Lake Michigan off of Oceana and Mason Counties has generated a lot of debate and discourse. As Realtors, we have a vested interested to stay informed of this project, and the ramifications, good or bad, that it could have to our communities.

I recommend that all local community members familiarize themselves with the proposed projects, and do some research to understand the economic and environmental repercussions, good or bad,  that such a project could potentially have on West Michigan.

The wind turbine project is being proposed by Scandia Winds, LLC of Chanhassen, MN and its Norwegian partner, Havgul Clean Energy. Scandia Wind has dubbed the project “The Aegir Project”. They have developed an informative website for the project. To read more, visit http://www.scandiawind.com/Aegirproject.html

Suggested view of what a Wind Farm could look like.

Similiar projects are proposed in various parts of the country. To read about these projects, and see photos of other proposed projects, visit the ecopolitology blog at http://ecopolitology.org. The photo above is courtesy of ecopolitology.org.

The Industrial Wind Action Group has a site that demonstrates some of the local community members’ concern about the Aegir Project. You can view the page at http://www.windaction.org/news/25129

An article on MLive.com has generated many comments, both for and against the project. To read the article and comments go to http://www.mlive.com/news/muskegon/index.ssf/2009/12/wind-farm_developers_face_hurd.html.

Legislation has been introduced to the Michigan State House of Representatives to issue a moratorium on permitting or leasing for offshore wind energy development. Rep. Geoff Hansen (R-Hart) introduced House Bill 5671 to legally prohibit development of a project until the state has had a chance to institute oversight measures. You can review this bill at http://www.legislature.mi.gov/(S(mptgzfaeef3jy1uojajhws55))/mileg.aspx?page=GetObject&objectname=2010-HB-5761

It is my intent to provide you with the tools to form your own educated opinion on this matter. If you would like to voice your opinion to your local representatives in Government, here are some links to some local Government Officials:

Rep. Geoff Hansen (R-Hart) http://www.gophouse.com/welcome.asp?District=100

State Rep. Dan Scripps (D-Leland) http://101.housedems.com/

State Senator Gerald Van Woerkom (R-Muskegon) http://www.senate.michigan.gov/gop/senators/vanwoerkom.asp?District=34

Governor Jennifer Granholm (D-Mich) http://www.michigan.gov/gov

U.S. Senator Debbie Stabenow (D-Mich)  http://stabenow.senate.gov/

U.S Senator Carl Levin (D-Mich) http://levin.senate.gov/

U.S. Rep. Pete Hoekstra (R-Mich) http://hoekstra.house.gov/

For tips on how to effectively communicate with your government representatives, visit http://www.congress.org/communicate

If you’re like me, you’re sick of hearing the phrase, “Think outside the box.” I’ve been outside the box for so long now, I can’t even see the dang box anymore!

I have had some success this year by utilizing some unorthodox means to get my real estate deals in Oceana County closed, however. The most prominent, by far, is not even original, just a resurgence of an old practice from the ’80’s. That’s right, the infamous LAND CONTRACT.

I have two pending sales right now that I wouldn’t have had I not been able to educate both buyer and seller as to the benefits of a land contract (or a purchase money mortgage, but that’s a whole ‘nother blog in and of itself).

In one of these deals, I represented the buyer, and the seller was not offering LC as one of the terms. My buyer had a three year old foreclosure, was working on repairing some credit divots, and financing wasn’t looking likely. My home buyer needed a home, though, so I got flexible. I took the time to prepare a package that would excite the seller, and convince him to entertain a land contract. This is the step that I think a lot of people are missing.

The package contained a credit report, a letter of explanation regarding the failings of the credit report, income verification (including length of employment), proof of funds for the down payment, our offer, and our earnest money deposit. Working with the seller’s agent, we presented the package, and the seller accepted our offer.

Now, I have had many calls from agents who will call on one of my listings and just ask, “Will the seller take a land contract?” In most cases, the answer would simply be, “No.” (Unless, of course, the seller and I had already agreed to that in the original listing contract.)

I have taken to getting in the practice of asking the agent to prepare a package like I described above. I then present the whole package to the seller, and have been pleasantly surprised when a few of them changed their stance and accepted a land contract offer.

I’m not suggesting that land contracts are the answer to everything. Obviously there are issues that come into play that must be addressed, such as “due-on-sale” clauses which are in most every mortgage agreement. The seller may also need the funds to move onto their next home. So no, LC’s are not for every situation.

I do firmly believe, however, that if you’re not educating your buyers and sellers on the possibilities of a land contracts and purchase money mortgages, you’re missing out on business, and I don’t know anyone in Michigan that can afford to do that these days.