A WEIRD reason housing inventory could re-hydrate in 2016

No, I don't have a crystal ball, or a direct line to The Wizard of Odds. But, I do follow the news; and, have a memory like a steel trap, when it comes to issues of interest. I've always been intrigued by real estate. I'll leave it at that.

Shark attacks and lifeguards

Around 2006, when the housing bubble began showing signs of a burst; less homeowners could qualify for refinancing or HELOCs (Home Equity Loans), as most were arcing upside down in their mortgages. That term upside down (or underwater, as some say) simply refers to, owing more on your home than it's current market value. This bubble was partially a result of a slowing economy, and greed in the mortgage industry (yes, I said it...AND, out loud) offering home owners up to 125% LTV (loan to value) on their homes. I was a Realtor in the San Francisco Bay Area at the time; and was repulsed by the way my clients were being sucked into this predatory funding funnel. It's a basic rule of thumb...what goes up, must come down. There was a reason many mortgage originators were dubbed sharks...you couldn't see them coming, as they swam in for the kill (and, yes...of course, not all lenders were or are like this; there are some really good Cash Cats out there). But, I am happy to report, as the market began to recover...this time around we had lifeguards, with an established set of rules for lending money. Baywatch with bankrolls, if you will.

In 2009, at the critical juncture of the housing disaster; I was a Sales Director for a loan mitigation company. Please do not judge me...I had to work, in a sagging market. It was around that same time, The Treasury Department launched it's Home Affordable Modification Program (HAMP), part of the Stimulus or Recovery Act; and, my head was spinning with business. I couldn't keep up fast enough with the requests to "modify" home loans. Initially, I saw this as a good thing; the government swooping in like a superhero, and saving drowning homeowners from foreclosure. However, there were very few regulations, if any...and, when it was all said and done; many companies claiming to "modify your mortgage" ended up with new wardrobes and addresses, IE: Mr. Smith, Cell Block #1, Leavenworth, KS. Those that opted to stay legit, rode out the wave of mortgage mods, until the damn backed up.

Yet, as desperate request continued for help, so did the demand for stricter guidelines...and, ultimately we ended up with programs that resembled some sort of genuine relief for the home owner.

Tsunami coming

Question...what happens with every loan, of any kind? Eventually it comes "due". Guess what's comin' due? Yep, HELOCs, HAMPs, Mods, etc. COMING SOON to a theater near you...RESET - 2015. This is not the first tidal wave of mortgage changes taking place; but, it's the first mass amount since the 2010 forbearances, so to speak.

"Wait, I thought I heard there was an extension on these?" Yep...you've got one "til the end of 2016 (on a case by case basis...sounds about right for government programs; vague and non committal).

But, what does any of this have to do with where the buried treasure of housing might be? In a market that desperately needs a freight of Pierre saturating it...I'll share, how I believe this influx of housing could wash up to shore.

STICKER SHOCK.

Many of these mods had ridiculously low interest rates; some even had 0%. Various programs had home owners set up on interest only payments, or a ginormous principal reduction, lasting anywhere from 5 - 30 years. But, as a good chunk of these arrangements near their end; many owners will not be prepared financially for this catastrophic marriage of mortgage payments. The momentary relief (well, a half decade, plus is hardly a stint)...is soon to revert back to a fully amortized amount. Ouch! Tsunami underway, the climate is right.

Now what?

Washing onto the shore

Throw your fishing line out there; and see what you catch as an idea, regarding these house payment adjustments. Did the word default come to mind? Foreclosure? Wait, what? You don't think that could happen, twice? Here's a bite out of a stat provided by TransUnion, recently.

"After loan modification, close to 40% of owners remained current on their mortgage, 18 months into the modification. After 18 months, 59.1% of mod loans had a re-default; meaning they went 60 days or more past due. And, within 12 months, 42 percent had gone 60 or more days past due".

This post isn't about whether or not the bailout worked; it's about a concept...that a countless amount of these homes, are headed back into default; and, eventually foreclosure. And, they have to go somewhere. My highest, and best educated guess...surfing right back into the housing inventory. So, you think we are dry as The Sahara, now? Watch for that 2015 reset. My personal and professional opinion...a re-hydration of homes will be floating to the surface, very soon.

The 5 Biggest Mistakes made during a home loan process

Tweeting birds, dancing squirrels, brightly colored floating hearts swirling through my mind; as a voice that mimics Mini Ripperton, says...."we are clear to close". I hang up the phone with a heavy sigh of relief, and gratitude. I quickly begin a celebratory series of text and emails to all parties involved; reiterating the lovely words I just heard. "We are clear to close"...I type. Now, on with my day, and my latte. Yet, no sooner did I hit the last send button; my cell rings, again...this time with a far more serious tone. "Caitlin". I reply...yes. "They bought a car, today. They just signed the loan docs". Silence. I can hear us both holding our breathe, as if it was our last; waiting to determine how the other will respond. 20 seconds, or so pass...and, without warning, and with all the force in me, I project just 3 precise words to convey my thoughts at this moment..."OH HELL NO!"

Suddenly my "Loving You" melody has turned to AC/DC's "Highway to Hell". No more, chirping chicks, or twirling animals...just a dark canvas in front of me, with the 3 new words...DEAL IS DENIED.

A Massive Waste of Time 

I would venture to guess that more Realtors have heard these words, than clients; as we deal in quantities. Regardless, of who or how often they have been uttered; it is heart-wrenching. For the real estate professional, it means anywhere from 4 - 8 weeks of work, having been wasted (sometimes more, if you've had a client with special needs or is a bit particular). And, as much as I know we are NEVER to mention money in this business (as it makes us seem like mongers)...we just lost our pay check. Let's be crude, here...do you know of anyone that would be cool with going a month + without income, anticipating it; and, then snap...gone. Me, neither.

Now, let's flip the coin...client; buyer or seller, this is not good. The majority of real estate sales involve people moving from one location to another; and more often than not, those funds to do so, have to come from the sale of a home. So essentially, you outta luck, padn'r.

So, having dumped salt on the "what if" wounds of what could happen if your home loan is NOT cleared to close; let me soothe that burn, with a list of medicinal suggestions to prevent it.

5 Simple Tips 

#1. Do not put anything on credit, while in contract. I don't care if the Encyclopedia Britannica dude shows up at your door, with a book that is guaranteed to parallel you with Einstein. "Only $29.99, on approved credit". Send him packing. If the extra cash isn't in your stash...then it's a...no!

#2. Do not spend any of the money you have saved for closing (per the suggestion of you lender). I have seen this mistake. "Well, we have 30 days to replace it. I have that bonus coming in. I was promised overtime this week." A month comes and goes quickly, sales quotas don't always get met, and overtime should never be in the same sentence as, promise. Leave the stacks be.

#3. Don't get married. Now, the title issues are all messed up. Don't get divorced, either. Just chill for 30ish days. Your honey will still be around; and, unfortunately so will your ex...lol.

4#. Don't take a new job...and, for god's sake; don't quit one! I get that it's an opportunity of a lifetime; but, any respectable company wanting to hire or promote someone equally respectable (insert your name) will understand you are in the middle of buying home. Change the date on your offer letter to match your CEO (close of escrow). And, if you quit your job...um, how did you think you were going to pay for your new house? Right.

#5. And, finally...don't transfer big chunks of money from one account to another. I know, how could this make any difference; it's still your money, in your accounts. Here's a little insider tip on securing a home loan...it's all about "the trail". The paper trail that is. When you buy a home, you will be asked to provide more paperwork than you ever have in your lifetime, or that to come. So, if you know a potential home purchase is on the horizon; save every paycheck stub, direct deposit receipt, pay off letter, wire transfer record...heck, even keep you receipts from your last Starbucks purchases (I'm sure they will want it to verify cost of living expenses; I normally write if off every year, as therapy).

Break your heart...Break the bank

These mistakes could be costly; not, just financially, but emotionally. Imagine the scene...boxes neatly taped, labeled and stacked to load on a truck, going to your new home. All the dishware is secured in bubble wrap, which means dinner at fast food joints for the next few days; but, you don't mind. You are about to move into YOUR own home. No more rentals, no more living with friends or family. And, you love this place...it is not just a house; but, a home. The circular driveway, french doors off the kitchen, and stone fireplace welcomes you into the family room. Sigh.

But, you can't return a car...no changing your mind. You can't instantly remove a credit inquiry, that has brought your score down to a non-qualifying state. These things, along with a variety of other derogatory marks cannot be easily removed; which changes your DTI (debt to income ratio). That's it...no new home.

Therefore, by taking heed, and following these few simple rules...that hope for a cozy new homestead can happen! First come the keys; then comes the Klaussner. When it comes to home ownership; there are no sweeter words than "clear to close".

The TRUTH about public real estate websites; and, what they don't want you to know

"Um, I was wondering if you could check #527345, I saw it on Zillow. Oh, okay...how about 2777 Main Street, in OKC? Hm, alright then...weird, I just saw it on Trulia, an hour ago; how could it have sold so fast?" Sound familiar? Realtor or client, the conversation is always the same.

Why bother be authentic?

As a real estate veteran, I can promise you...I work hard. Long, number crunching, researching, taxi driving, prospect marketing hours. The BMW I drive; that did not come easy. That vacation, I finally took, after 2 years; I invested 70 hour weeks to pay for it. So imagine how it would feel when all the time and energy that you invested in your business, was stolen by someone else. And not only was it kidnapped; but, the numbers were changed, the text was re-written, and the dates were all wrong. Let's add a little more ammo to this feeling of frustration...in order to get your work back; you have to pay the assailant. Your own work being held for ransom. What I just described is happening to me, and Realtors like me everyday by heavy-hitting aggregators (company website programs that collect data and sell it back to the consumer). I'm not naming names; but, they rhyme with Pillow and Sophia. Take your best educated guess.

If I sound angry...you bet I am! As are many, many, many more of my contemporaries. Even those of us who have fallen into the trappings of the smooth talking CS agent who cons us into believing that we will fall desperately behind the tech 8 ball, without their services. I'm not going to lie. I paid. I did (where's the emoji of shame, when you need it). However, I have recently joined the ranks of the real estate sales professionals fighting back. I will not be cyber bullied anymore; and, truth be told...I hold the power. Without me (us, Realtors) these companies would have no business. We are finally beginning to depress the "blocked" key.

Oh sure...I want to waste my time, too

Well, blah, blah, blah...yay for me! What about you? The client. This little rant, and the potential resolution of the matter; could be more significant for you, than it is for me. Do you recall the first paragraph of this post? HOW many times has this happened to you?!!! Inaccurate addresses, wrong prices, availability not updated? Exactly! It is the most exasperating experience in the world (okay, not the world...but, pretty darn close). You want to get real? No one likes to waste time. Period. I don't care if you have the patience of Gandhi...no one likes to expend moments, carelessly. Time is money. Time is experiences. Time is valuable.

That said, this is the very reason that many people search for homes online. They supposedly save time; and in theory that makes sense. Yet, if you are using "Pillow or Sophia" type websites to search, along with various other public real estate search engines; you might as well, just get on the autobahn and toss your Timex out the window. Basically, you are driving on a high speed freeway of intersections and detours, that all reach a dead end.

Pull over...let me off here!

So, what do you do? What do I do? What do we do? We quit. We fire these search engines. I have been telling my clients for over a year now; don't trust the data on these mega home probing generators. I am person that needs more than "because I said so" to stop or start a quest. Therefore, I have some REAL facts, that might help you reach out to a Realtor instead, in your future property explorations.

How these "aggregators" truly work, is by shoplifting listing information from real estate professionals; found on various online publications and throughout the web. They then re-word, add content, use incorrect images and specifics (square footage, age, etc) regarding the properties...and re-post them, as their own. Then the "syndicators" (another word we use for them) turn around and sell the Realtors the rights for specific advertising spots, along side a bevy of homes for sale. I can't speak for you; but, how confusing is that? Now, you are not only hoping you are viewing a home with correct data; but, who in the heck has the listing? Which of those 3 - 5 Realtors that I see, is the one to call? FYI...I am the one writing this...and I'm befuddled!

I bet you didn't know any of this; and if not; then "they" have done their job. Keeping you from precise material, in an effort to make the big moola! Their intent is not to make your life easier...it is designed to make them rich.

Rhymes with SOLUTION

My suggestion...stop. Hit the brakes. Get off at the next exit, and stop the madness. If you want to be "taken for a ride"...then jump in the car with a real estate professional; and quit wasting time. Your local multiple listing service (MLS) has a far more credible search engine; that can be used to locate your new home. All you need to do is Google "Public MLS" for your city. Here's an example of one on my website... http://centraloklahomaproperties.com/CMCCOWN.

We are the real deal...have been, are now, and always will be the true source for skilled house hunting, and accurate stats. Beep Beep!