Boomer’s Blog

Since government-sponsored financial services giants Fannie Mae and Freddy Mac announced a foreclosure moratorium through the holidays in November, government efforts to stem the foreclosure tide have heated up in hard-hit states such as California, Connecticut and Florida.

It is likely that state and federal lawmakers — and other officials convening in the New Year also are gearing up to take action to slow the foreclosure process. New and emerging policies in this trend are likely to give beleaguered homeowners some space to breathe — and RE investors a vast open field of profit opportunity.

Join the Revolution: Short Sale Manifesto 2.0
Ohio-based Strategic Real Estate Coaches Josh Cantwell and Greg Clement see green pastures ahead for pre-foreclosure and short sale investors who are keen on building stronger real estate businesses and cashing  in on recent market changes. Moving into the holiday season, they’re offering investors a steady stream of absolutely free, timely information, tools and resources you need to adapt to changing market conditions in this motivated seller market.

Timing Isn’t Everything
More than 10 million homes currently are over-leveraged with mortgage debt and have no equity, Josh says: If we can take advantage of these opportunities as real estate agents or investors, we can capitalize on these market conditions — big time.

Update Your Strategies, Tap Warming Markets
There are some common-sense tactics you can use which are incredibly cost-effective to deploy in your business, such as ramping up your personal and real estate marketing efforts that can have a dramatic impact on your bottom line. Some require more effort than others, but the focus should stay fixed on preparing your business to thrive in pre-foreclosure or whatever markets you choose.

It’s clearly no secret that property values have dropped significantly in the past two years. Today’s market conditions for short sale and pre-foreclosures are evolving, Josh says. And changing times call for different strategies.

Refine and Define your Strategies
Earlier this year, Josh updated several elements of his original “Short Sale Manifesto” to reflect what real estate investors need to succeed in today’s challenging and increasingly more competitive pre-foreclosure and short sale markets.

Josh updated this book because he is serious about helping his students to deploy only the most cutting-edge strategies and techniques in tapping these markets and the “Short Sale Manifesto 2.0” leaves no stone unturned in its  pages,

Josh breaks all the mission critical aspects of short saling down into small, manageable tasks that emphasizs networking and skill-building.  Central to his Manifesto are key techniques that, when implemented properly, will strengthen your professional support system and build your business.

Like Candy for Short Sale Investors
While Josh gives great guidance on the steps you need to take to make the short sale deals happen — and keep a constant flow of new deals in your pipeline, he also tells you all about the pitfalls you need to avoid.

If you only have 10 minutes to spend reading this ebook, check out the details Josh provides regarding the Top 9 Mistakes even the best real estate investors make and how you can avoid them. These investment blunders include:

1. Paying too much for a property,
2. Underestimating the cost of repairs,
3. Neglecting to stage property,
4. Failure to build a workable buyers list,
5. Failure to secure private money,
6. Failure to plan multiple exit strategies,
7. Failure to focus on revenue producing activities,
8. Lack of a coherent system to organize your business, and my favorite,
9. Failure to implement an effective and consistent marketing strategy.

Some of these errors may be all too familiar, while some may be new to you, but in all cases, Josh offers clear strategies to protect your business and build wealth by keeping your wits — and your money — about you while you’re investing in short sale real estate.

Free Videos and Info Clarify your Short Sale Mission
Visit Josh at his Strategic Real Estate Coach Web site and prepare yourself to be amazed by the high-quality information he is willing to show you this month absolutely free of charge, all in celebration of the season. While you’re there, be sure to catch the free videos. They make great companion pieces to the “Short Sale Manifesto 2.0.”

Stay tuned to this blog for the latest on SREC’s Special Giveaway Bonanza slated to kick off Tuesday, Dec. 9.

As the number of U.S. home foreclosures topped one million this month, cities in the states hardest hit by foreclosure: Arizona, California, Florida and Nevada were named by Fortune magazine as the hottest markets for real estate investment. In addition, emerging reports of real estate market overhang are not surprising. Especially in light of the mid-decade building frenzy in Arizona, California, Florida and Nevada that was spurred by gravity-defiant home prices and easy money loans.

During the Boom
Back then CNNMoney says, dramatic price surges were fueled by investors who used risky mortgages to cash in on hot market activity, Today, these four states combined hold one-third of the nation’s foreclosures, with nearly 400,000 homes hanging in the balance.

According to the Mortgage Bankers Association Q1 report, Arizona, California, Florida, and Nevada combined represent:

• 62 percent of all foreclosures started on prime ARM loans, and 84 percent of the increase in prime ARM foreclosures;
• 49 percent of all of the subprime ARM foreclosures started in the country during the Q1, and were responsible for 93 percent of the increase in subprime ARM foreclosures
• 29 percent of prime fixed-rate foreclosures and 60 percent of the increase in those foreclosures; and
• 25 percent of subprime fixed-rate foreclosures and 53 percent of the increase in those foreclosures.

Fortune’s Five Hottest REI Markets
Especially now that the chips appear to be down, it seems that everyone wants in on the real estate game, and Fortune magazine has named five cities as ideal for real estate investing. These markets are generally the hardest hit in the foreclosure epidemic:

1. Miami
   According to the S&P/Case Shiller index, prices and sales here appear to be circling the drain. Miami house prices have dropped a whopping 21.7 percent in the past year, and dwindling median condo prices. Miami condo and home sales have plunged 40 over last year, and market activity has slowed dramatically. Fortune recommends that the following markets are ripe for real estate investment: Aventura, Bal Harbour, Sunny Isles Beach and Coral Gables
2. Tampa
   The Case-Shiller index reports that in the past year, real estate values have fallen 17.5 percent. Still, Fortune predicts a rebound is in the forecast for Tampa because of its strong local economy and other market forces. Currently, the median home price is $222,000, down from $275,000 last year, and the National Association of Realtors (NAR) predicts 20 percent or greater appreciation value over the next five years. Today, home prices are 50 percent lower than they were during the boom. Those surges may be attributed primarily to speculators flipping houses for quick profits, Fortune says. When the deals began to recede and the investors started started pulling out in 2006, the prices began their free fall. Now, Fortune says, this market is ripe for high-end real estate investment: Gulf-front luxury condos in Clearwater or St. Petersburg, are down from the $1 million a few years ago, to around $600,000 today.
3. Las Vegas
   Here, the real estate bubble swelled with annual price increases of up to 50 percent, making for today’s dramatic price drops and hot bargains. According to the Case-Shiller index, Las Vegas is the hardest-hit locale nationally, with prices dropping nearly 23 percent in one year, and one in 44 homes hitting foreclosure Q1 alone. In this market, with the third-highest rate of foreclosure in the U.S., Fortune predicts that the sun-drenched climate, proximity to pleasure, and glut of luxury homes, combined with the absence of state income tax will attract droves of retirees — and a speedy market recovery. Here, Fortune recommends investing in new construction in outlying areas like Summerlin and Providence, or in high-rise condos, especially in light of their 10 percent price drops since last year.
4. San Diego
   Prices here have plunged nearly 10 percent and foreclosures have surged in the past year, according to Moody’s Economy.com. Despite the fact that the Council for Community and Economic Research deems San Diego County’s cost of living 47 percent higher than the national average, the area’s natural beauty and beach-front locations give it the strength to conquer adversity and recover quickly from the mortgage crisis. Again, Fortune’s forecast is growth in the high-end property appreciation, as these properties have been the slowest to move in the inventory glut.
5. Phoenix
   Although Moody’s Economy.com shows its real estate values plummeting by 8 percent over the past year, and RealtyTrac reports its foreclosure rate has tripled since 2007, Phoenix, like Las Vegas will continue to attract retirees. Here, Fortune says, the planned communities that surround the metropolitan area offer hidden bargains. Also, amenities such as golf, shopping and luxurious recreation centers add additional value for the retirement crowd. Fortune suggests that here, areas like Sun City Anthem, Palm Valley, and Avondale are great places to find housing bargains that’ll likely offer healthy returns as the markets continue their recovery.

California foreclosures and the mortgage meltdown have been making international news headlines for some time. But this month, news  from the Golden State went from bad, to the Twilight Zone.

Much like the classic TV show, first made popular in the 1950s due in large part to host Rod Serling’s melodramatic gravitas, California’s housing market begs for a prelude to prepare readers for the truly bizarre. As Serling said: “There is a fifth dimension beyond that which is known to man,” He might as well been introducing late-breaking developments in California’s foreclosure crisis.

Here are the five most most startling, weird and ugly foreclosure stories to come out of California so far this month.

1. California REO Foreclosures Selling like Ipods
   This month, the LA Times reported that in April, California home auctions sold nearly 23,000 foreclosure properties at courthouses throughout the state. That’s is a 44 percent jump from the number of REO auctions reported for the state in March. That’s 1,000 homes sold at auction each business day for an entire month.
2. IRS Tax Delinquency, Lies and the Lawmaker
   Although she denied it earlier this week in a written statement, public records show that California Congresswoman Laura Richardson’s Sacramento house was sold via foreclosure auction on May 7. When she bought the 1,600 square-foot home in 2007, she paid more than $535,000. By the time it sold at auction, she owed $600,000 in unpaid loans and fees, including nearly $9,000 in property taxes, reports Capitol Weekly.
3. Countrywide Exec’s Email Debacle
   When an e-mail sent by a distressed homeowner inadvertently landed in his in box, Countrywide Financial Chairman Angelo Mozilo mistook the “reply” button for the “forward” button and sent his caustic response directly to the sender. The LA Times reports that not only was he unsympathetic in his response, he characterized the online foreclosure counseling service that encouraged the homeowner to contact his lender as “unbelievable” and “disgusting.” Mozilo has been under fire for cashing out while Countrywide, and the rest of the mortgage industry was tanking. In 2006, Mozilo was paid nearly $50 million in compensation; between 2006 and 2007, he cashed in stock options then valued at $140 million.
4. Never Neverland Again?
   Mid-month, entertainer Michael Jackson averted the scheduled foreclosure sale of his 2,700 acre Encino Neverland Ranch when his $23.5 million loan was purchased by real estate investment giant Colony Capital, according to Reuters.com.
5. REO Lender Takes the Bat to Canseco’s Portfolio
   At the beginning of this month, news got out that baseball great Jose Canseco let his 7,300 square-foot Encino home slide into foreclosure. He bought it in 2005 for $2.8 million, and when foreclosure struck, the property already had an IRS lien from a judgement levied against Canseco for starting a fight that leveled a Miami night club several years ago. This week, the Chicago Tribune reported that Canseco, who blames his two divorces for his financial woes, intends to generate wealth in his new career as a celebrity boxer.

As the number of foreclosed homes continues to skyrocket in many real estate markets, an increasing number of pets are being abandoned by families who are forced to vacate their homes and rental properties. Since the mortgage meltdown began, animal shelters in areas with high instances of distressed properties have been reporting over-crowding, and neighbors complaining about an influx of stray animals roaming streets and alleyways.

Although abandoning animals is illegal, people leaving distressed properties, such as those in foreclosure, often move to locations that don’t allow pets or they find their finances are too strained to continue caring for their pets. Whatever the reason for abandonment, pets often are the helpless victims of their owners’ bad decisions, and the law offers them few meaningful protections.

Where Helping Hands Are Tied
Currently, bank employees, property inspectors and others who enter abandoned homes usually are advised to leave property, including pets, untouched until the foreclosure is complete either for legal reasons, or because because the real estate owned (REO) lenders don’t want responsibility for the animals.

In most states, pets are defined as personal property under the law. Often with foreclosure, property remaining after the home is vacated by distressed homeowners is subject to seizure by the lender. In some states, the law fails to provide for personal property forfeiture until a designated time has elapsed in accordance with the terms of the foreclosure. So, under prevailing laws in many states, REO lenders and others are prevented from removing the pets, even if they would like to help. This is where animals can really fall through the cracks.

Abandoned Homes and Neglected Responsibilities
When people such as property inspectors, REO lender representatives, real estate agents and brokers are allowed to enter an abandoned house, they often encounter the rubble of deliberate destruction. Widespread instances of abandonment-related animal abuse and animal neglect have garnered a great deal of media attention.

The problem is so bad, that even Business Week reports that increasing number of these folks are discovering dogs tied up backyards, cats and turtles in garages, and rabbits and lizards left in children’s bedrooms. Many cruel and unscrupulous homeowners have left forsaken dogs and cats behind inside their homes, who have created unmeasured property damages in the process of their truly horrific demise.

California Lawmakers Tackle the Problem
A new law under consideration in California seeks to make it easier for these pets to get the help they need. It also may effect real estate investors who buy properties where pets have been left behind. The bill, A.B. 2949, as it is currently written, would require anyone who encounters an abandoned animal in a property that has been vacated through lease termination or property foreclosure, to immediately contact animal control officials.

The bill recently made its way through the California House unopposed, and it currently is mid-way through the Senate’s deliberation process. Although the bill has a few more legislative hurdles to clear before it becomes law, it raises some issues that many of us in the REI community might like to address in our business practices.

REO Expert Makes a Difference
Last month, Default Servicing News wrote a great story about Integrated Mortgage Solutions President Cheryl Lang, who has been so touched by the effects of pet neglect and abandonment she’s seen working in the mortgage industry, that she’s launched a non-profit Internet forum she hopes will affect change in how the system handles abandoned pets.

No Paws Left Behind is Lang’s Web site that allows pet owners facing foreclosure in different jurisdictions to log on, type in a zip code, and find the nearest animal shelters in the area. It also provides resources for real estate professionals who encounter abandoned pets in the course of their daily business.

Lang’s efforts began with a dog that was abandoned in a Florida pre-foreclosure her group was servicing. Since there was no animal control in the rural area where she was working, Lang contacted the police. They called the Miami Humane Society, who couldn’t reach the area for five days. Lang and her staff spent the week feeding the dog and making sure he had fresh water. In the meantime, she reports that authorities visited the property several times only to post code violations because the dog had been abandoned.

Look for the Signs
Lang advises real estate professionals to be vigilant for signs of abandoned pets when dealing with distressed properties that have been vacated. Listen for animal sounds coming from the house. Even though you may not be permitted to enter, you can contact the appropriate authorities, including the Humane Society, Animal Control or the police.

Traditionally, unless the animal shows immediate signs of distress, local authorities will post notes on the door to notify the pet owner that he or she is legally bound to care for the pet. Eventually, local authorities will move the pet to a new home or shelter. Because this process too often doesn’t work, Lang’s No Paws Left Behind Web site contains a petition geared to change the legal process from the Federal level to protect the pets.

Do the Right Thing
More distressed homeowners and occupants in transition likely would surrender their pets to animal welfare agencies that rescue pets, if they only knew where to turn. By identifying potential problems before pets are abandoned on your properties, you’re not only protecting your assets, in many instances, you may be saving a life.

Although real estate investors are generally not required by law to take any action to help abandoned pets, many of us want to help when we can because we believe it is the right thing to do. Here are some steps you can take as a real estate investor that may help you to avoid the problems and heartache you’re likely to encounter if you discover abandoned pets on your property:

Seven Ways REI Professionals Can Help Save Pet from Abandonment

1. If you you’re working with distressed homeowners or dealing moving tenants out of a property, ask if they have made plans for their pets.
2. Identify animal welfare organizations and animal control contacts in your area, and keep the contact information on hand.
3. If you know that the occupants are looking for rental properties, suggest they check with the Humane Society or local shelter for pet-friendly rental listings, or advise them to check out Web sites like PeopleWithPets.com, or HomeWithPets.com.
4. Distribute animal adoption literature, or Web resources like No Paws Left Behind whenever suspect it might be useful.
5. After the owners or tenants have moved, ask neighbors if the former occupants had pets. Check to make sure no pets were left behind.
6. Ask people you may have visiting the property to keep an eye out for abandoned pets.
7. Call your local Animal Control, the American Society for the Prevention of Cruelty to Animals (ASPCA), the Humane Society or other shelter for help with rescuing abandoned pets.

Have you encountered abandoned pets in any of your properties? How did you handle it? Please drop us a line and tell us about your experiences. Feel free to share any ideas you think could help other real estate investors who run into the same problem.