REOPro - Real Estate Default Professionals

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First off, let’s make sure we all agree on what a Communist is, in reference to the topic of Default Residential Real Estate only.

Communism is egalitarian or has a political doctrine based on the idea that all people are equal and have all the same rights or in other words, believes that all economic inequalities should be removed from society.

Now, understand that I do a lot of default counseling. I see 3-5 people a week, on average that are in some sort of default with their home. Here lately, it seems that more often than not, I am visiting homes where owners are 5, 6, 7, 8 or more months in default but, the foreclosure auction hasn’t even been scheduled.

This seems a bit odd to me because I can’t remember a period in history when homeowners in default were given so much time before the bank foreclosed. My realization that it seemed banks were holding on to more and more of this default inventory unsettled me because I didn’t understand why. Why would a bank continue to loose money on a non performing asset? This was crazy to me…..foreclose, force evict if necessary, sell the asset, recoup what you can, write off the balance and allow capitalism to work however, this isn’t happening.

Here lately, I have been hearing a lot of buzz about America’s shadow inventory of REOs and I have to admit, it seems very possible that his “shadow inventory” is much more than a conspiracy theory but possibly a concept designed to purposely create a economic disaster of unprecedented proportions that would allow the government to take over wall street in the name of “Saving the Country” from financial ruin.

Carlos Silva, here on REOPro wrote a great blog titled, “Why you won’t see a Tusnamie of REOs” and here is the link, I challenge you to read his blog and then ask, why?

Was the passing of the Community Revitalization Act along with the formation of Fannie Mae and Freddie Mac as well as the key de-regulation of lending guidelines all framework to set up a disaster in this country that would usher in a Communist / Socialist revolution that would change the fabric of this country?

I really don’t have answers to these questions but, I do know this. TARP…not working, it’s keeping people in homes, yes..but, these people can’t afford these homes anyways so, why are we (tax payers) shelling out billions just to see these people go back into default 3-5 months later? Is this a Communist agenda to force egalitarianism on us, the American People?

Stand up, question boldly and hang on to the truth.

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Comment by Susan Cook, RDCPro, CDPE, SFR on September 2, 2009 at 6:40am
No one, absolutely no one who does any real estate related activity in this niche would question your thoughts. There is a buzz in our brokerage because we do live in one of the most recoverable real estate markets in the nation, the Washington, DC area, specifically the N VA area is doing very well. Yet, we too are doing a CRAZY amount of bpos, working till the wee hours on TS assignments, taking short sale listings that are FLOODING us and helping with loan mods. Assignments from the GSE's are starting to come..but they are reassignments from big boys who dropped the ball in my new jurisdictions. At least I'm here to pick them up. But yeah, I know that there is a big, big fall about to just doesn't make sense that the market is so very hot. What will happen to all the buyer's of 2009? and the value of their purchase?
Comment by Victoria Frieberg on September 1, 2009 at 9:28pm
You know, people need to question what is happening in this country, and be open and abrupt. I am so tired of people asking the politically correct questions, hoping for the simple answers and the pablum we keep getting dished. I was questioning this a year ago, and could not come up with a good answer, when sheriffs sales kept getting delayed for a $100.00 payment. Kept thinking, wny in the world is CW taking $100.00 per month to extend and delay the sale? I don;t have answers, but most scientists don't when they begin to work on a problem. We have immense problems in this country, and if people don't start to think and ask outside the box, there won't be any answers. Let us hope your questions get out to a broader audience, and let the ideas flow.
Comment by Carlos H. Silva Sr. on September 1, 2009 at 11:09am
Jesse- Very good! You must have been in a debate team in school. Your points are well proven and I like you would rather be unpopular to some than to sit on the sidelines and watch our country go to hades in a hand basket. If nothing else we should speak our minds in a civilized manner to stir some sense of curiosity in our fellow citizens. It's amazing how many people sit in front of their TVs and don't take the time to learn anything. Yet they are always complaining how bad things are and that somebody needs to change it.
Comment by Steve Adkins on September 1, 2009 at 11:00am
With so much going on right now at the federal level, I have to wonder myself where this Country is headed. The federalization of major banks, lenders and insurance companies was just the first step. So many smaller banks are being shut down every day due to “rule” changes. At the current rate, there will be one bank left in this Country within the next year! Now they are trying to do the same thing with health care?

Watch and see if some currently unheard of federal agency starts shutting down doctor offices that are not part of a major medical group or insurance plan. They are already forcing the individual doctors to stop taking some insurance because of the reduction in what they will reimburse for… or flat out not pay all together. It’s going to get a lot worse, just wait and see! Maybe like our current housing or financial market?? And then the Government will come to our rescue, once again!

And when it comes to corporate greed, don’t get me started! Most of these folks should have been charged with criminal offenses, but no… they are rewarded with large bonuses right after causing the biggest banking failure in history! And the bonuses were only available because the PEOPLE bailed them out!

This Country is in trouble on so many levels and I’m deeply concerned. But the PEOPLE are starting to notice and stand up, asking questions and speaking out! As we ALL should. If we do not speak out when we see something wrong, then we are just as guilty as the person committing the crime! And then we loose our rights, one at a time, slowly over time. But when they are gone, they are gone forever!
Comment by Jesus (Jesse) Gonzalez on September 1, 2009 at 8:45am
Hi Tyrone:

First off, let me quote from my own blog, "I really don’t have answers to these questions" and, I am completely upfront and sincere when I say that. Now, if in your opinion, asking the question or making the observation is credibility destroying....well, we will have to agree to disagree because, I believe not to ask, not to form opinions, not to question motives, not to seek the truth no matter which road it takes you down, is far worse and corrupt than being concerned about onces credibility. As I said, "Stand up, question boldly and hang on to the truth." and this is something I live by.

Hi Michael:

Conspiracy, maybe....and, you're right, it would make a great movie but, Harrison Ford, he is sooo over played, what about Antonio Banderas as a hard nosed beat the streets investigative reporter who will do whatever he has to in order to find the truth and unviel the secret corrupt intentions of our politicians? This is really too good, I have a friend who is a film student, maybe I can write it and he can film it for a school project? Thanks for the idea.

Hi Chris:

Yes, this country is in enough distress but, emergency or urgency, no matter, we should still allow for peoples rights to question thier government, thier leaders and allow opinions to form and be questioned. Yes maybe some opinions are a bit more fantastical than others but, sometimes it's those fantastical opinions that have a shred of truth.

Hi Angela and Angelique:

Now isn't this interesting, the 2 people who understood, maybe not agreed but at least understood my piece have the root name Angel, maybe my blog was inspried by the devine and He sent His Angels to comfort me? Ok, maybe that is really disturbed but, it's a nice sentiment anyways....right?

Now for some history:

The Community Reinvestment Act or 1977 (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a federal law! It basically told banks that they needed to stop being so "discriminatory" in thier credit practices and start lending to low income peoples. In other words, it told banks to practice egalitarianism. The Fed's wanted to remove or lessen this economic inequality by forcing banks through regulation and oversight to take on more risk and loan to low income borrowers. However, you cut this pie, this is not Capitalism, at the very least, this policy is socialist and it for sure is egalitarian.

Now, this law went through some key revisions and changes, the most potent change was in 1992, the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac, to actually purchase and securitize a good number of these high risk loans these banks were making as a part of thier mandate.

So, then, we end up with banks being told by the government to make risky loans and now we have the government using tax dollars to securities risky loans in order to encourage more of them. Keep in mind, that in 2000, this policy went to an extreme with Fannie Mae announcing that it would dictate that 50% would go strictly to these low to moderate income borrowers. The best part of all this, who was watching the banks to make sure the low to moderate risky loans they were making weren't so risky it would potentially cause an entire collapse of our national economy, oh thats one, why?

Our one saving grace that never was taken serious because he was "fringe" and lost his credibility because he had the courage to stand up and speak the truth was William A. Niskanen chair of the Cato Institute. This man all but predicted the housing bubble. He believed the CRA (Community Reinvestment Act) would cause banks to fail, in the long term. Granted, he didn't know when but, he held to his belief from way back in 1995 when he urged Congress to repeal the Act.

You may not agree with me, you may have even lost respect for me but, that will not deter me. I will always ask because it's simply not in me to sit back and watch from the sidelines. I may not always be popular but I almost always will stir your soul!
Comment by Tyrone Henderson on August 31, 2009 at 9:42pm
The united states government wants to usher in a Communist Socialist revolutionthat would change the fabric of this country? Wow,Jesse.I would never have thought that a person smart enough to organize such a great website,would so recklessly destroy their own credibility by throwing out such a wild theory.And as far as all people being equal and having the same rights,I seem to remember reading that in the United States constitution and I don't think it was written by Karl Marx
Comment by CJ Oliver on August 31, 2009 at 3:01pm
Puhleeze........Isn't this country in enough distress without flaky conspiracy theories. FYI - the US government didn't create credit default swaps which are really what tipped the scales into major recession. The housing market would be coming back now if it weren't for the recessionary loop of job loss and default. Most of the subprime has washed through. This is second tier stuff now and it' s going to get worse.
Comment by Angelique M Norton on August 31, 2009 at 2:21pm
Hi Jesse - love your peice and would very much like your permission to use it. I too work with an incredible number of homeowners many professionals who have through no fault of their own found themselves having to ask for a loan mod due to work situation or other circunstances. While I agree many do end up back in the same situation within a year I am happy to report I have many succes stories. This year has been different loan mods are not happening, taking longer and banks are just playing the game. NODs are taking forever I have families that have been in their homes and in default for over 18 months! TARP? Really? That's a joke.
And why is it that the minute anyone expresses an opinion lately we have to be subjected to the name calling?
Dear Mr. Howard do you think we can all express our opinions in a profesional manner? Thank you both for your opinion - I'd like to hear what you think about all the "third party sales" we're seeing lately - do you think they're hurting the reo market as far as agent getting the listings?
Comment by Michael Howard on August 30, 2009 at 8:46am
Jesse, sounds like the makings of a great movie, maybe Harrison Ford can play the lead. Conspiracy? I doubt it. Most of this has to do with PR and $. Banks get TARP as a trade in part to give the perception via moratoriums etc that the administration is going to help people stay in their homes. The reality is a very small % of borrowers qualify for loan Mods. The ones that do will be back in default with 2 years. The government buys up a ton of bad debt from the Banks and sells it right back to them for pennies on the dollar (at tax payers expense of course). The debt that was not bought gets a "Mark to Market" adjustment so the banks can write off the rest at what they perceive as fair value. All the while borrowers stay in their homes giving the illusion to the media that things are getting better. This is about $$ pure and simply, the free market is alive and well. All the birthers, deathers, socialist chasing, tinfoil hat wearing wing nuts need to take a deep breath. Our democracy may be changing but it's becoming more corporate controlled not government controlled. I'm Michael Howard and I approved this message.

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