Perrysburg Blog

One of my favorite real estate writers posed a similar query in the Wall Street Journal’s excellent real estate blog – Developments.

James Hagerty posed the question: “Will the bank take my iPhone?”

Which is sobering – I have an iPhone.  You can’t have it.  You can’t take it.  It’s addictive and it’s mine . . . and I have a hard time imagining it being surrendered to a creditor.

Which made me do some thinking.

And then some investigation.

Since I deal with many homeowners today who owe the bank MORE than the market value – what can happen to their iPhones?

And their cars?

And their retirement savings?

And their other assets and possessions?

5 or so years ago this was a pointless, absurd question.

It just did not happen in Perrysburg.

Today – it’s a vital, important, timely question.

According to the Fed (specifically the Federal Reserve Bank of Richmond VA) in their monolithic report “Recourse and Residential Mortgage Default:  Theory and Evidence form U.S. States) Ohio is considered a “recourse” state.

That means that lenders may have MORE remedies against a defaulting homeowner than just taking the house back in a foreclosure.

(N.B. – for this entire post, please remember that I am not an attorney and you should and are highly recommended to hire your own attorney to answer your questions!  You need a good, honest attorney . . . call me, and I will recommend one to you)

If I am a defaulting homeowner, I do not like “recourse”.

What is interesting about the lenders right of recourse in our state is that only in Ohio and Iowa does the lender have a very short period to seek recourse – and in Ohio, and thus Perrysburg, it is only for 2 years after the foreclosure.

Y0u can download their 50+ page paper yourself and read the gory details.  The financial equations on page 10 caused me to have a regression attack and revisit my finance classes at Duke University.   I was so shook up by this I had to go out and sell 5 houses today – but that’s another story . . .

2 years.

That is the time frame for recourse that your bank has to get more coins from you.

Lose your house to the bank . . . and they get an automatic deficiency judgment against you.

But they only have 2 years to collect it.

And many banks are taking 12 months to return phone calls right now – so what are the odds they will get your iPhone?

This recourse is usually obviated when a short sale is negotiated – which reinforces my belief that 2010 and 2011 will be the year of the Short Sale in and around Perrysburg.

Because then you will get to keep your iPhone.

A empty shell.

Crabs like them.

But they are terrible for helping homeowners to pay their mortgage.

And if you drive along Alt20 – aka Illinois Ave. in Maumee, you will see a lot of empty shells.

And “FOR LEASE” signs.

And vacant factories, offices, and businesses.

It’s a vivid reminder of what has happened and what has helped residential real estate to collapse in value.

The collateral damage from this one street’s empty and shuttered businesses and factories is felt in every subdivision in Perrysburg.  I know clients that have lost jobs in Crandenbrook and other Perrysburg neighborhoods who used to work on this street.

But now their jobs are gone.

You want reports of the economy getting better?  You want to know when the residential market is better?  You better go for a drive . . .

Which meant that my clients were all invited to pick up a Schmucker’s Pie . . . . (which is highly rated it seems).

And not many could resist!

Since they are acknowledged to be the best pies in Northwest Ohio . . .

(N.B. Cherry was the number one pick . . .)

Had a great time – meeting about 100 “old clients” and friends.

And many asked me . . . . well you know what they asked me.

“When will the market in Perrysburg turn around.”

The short answer was . . . not now.

The long-winded, blogy answer is when Dr. Holly Beard is out of a job.

Who?

What?

Dr. Holly Beard.

You and I just hired her.   With our precious tax dollars.

She now works for the “Ohio Housing Finance Agency”.

And her job is to do research on how to help “deeply understand the affordable housing world.”

Seriously.  Having an entire AGENCY is not enough.  We need MORE state employees.

And the New OHFA Office of Affordable Housing Research Director (the aforementioned Dr. Holly Beard) is going to do some research on “finding the number of homeless or newly homeless in need of permanent support for housing.”

Which I, being an MBA and a 20 year veteran of the housing business can translate for you to English:  “We are going to help people who are homeless buy homes with your tax money.”

Now you think about that.

Because I have.

Homeless men don’t need to increase their rates of home ownership.  They don’t need help with mortgages.  They don’t need studies.  They need help.  Usually with drug and alcohol issues.  With a job.  With someone to help them make wise choices.

But they DO NOT NEED a house with a mortgage.   Especially one funded by your tax dollars.

Because I can practically guarantee you, with no research costs, that each and every homeless person you give a mortgage to is going to be a “future foreclosure” as we call them.

I am certain that the people at OHFA mean well.

But as long as it is a government mission to get homeless people mortgages, this current real estate crisis is not over and it seems to be increasing in volume and pain.

The homeless could use a pie I suppose.

So, if you are at the Cherry Street Mission tonight – enjoy the Schmuckers Pies from the Jon Modene Team.

They are mortgage free.

I get asked this question all the time – at least seemingly to me!

By my agents.   By my clients.  By my corporate clients.  My buyers.   By vendors and suppliers that work with or for me.

Everyone wants to know.

I repeat:  The downward price trend in Perrysburg real estate will not change, in my opinion, until people are making more money and taking it home.

The State of Ohio and the Federal Government can goose demand for a quarter or a year, they can push loans onto people who should not buy, they can do all sorts of tax credits . . . but the market will always trump the politician.

Always.

Look at this chart.

It is breathtaking in its simplicity.

We can talk all we want about jobs.  (Or “JOBS, JOBS, JOBS, JOBS” as our leaders put it)

We can call unemployed people “no longer seeking employment”.  We can tell part time employees that they are fully employed even as they march into Perrysburg Christians United for food to feed their families.   We can call part time seasonal workers fully hired back.

Not going to change the real estate market price trend in Perrysburg.

That chart above – it simply shows tax witholdings from working people and companies.

Zero Hedge Blog interprets it thus:

Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service, tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America’s consumer and the corporate world. And it ain’t pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholdings are down a whalloping 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury’s pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America’s short, medium and long-term future.

Wage payers- people with great full time jobs in Perrysburg are the ONLY way to get demand and prices improved.

Period.

Not wages paid to pizza delivery drivers or census takers or package wrappers for 30 days.

Wages paid to machinists and car assembly line workers and engineers and chemists.

Then Perrysburg will get better and your home will be worth more than it is today.

Heads up.

Hold on.

Some would say . . . that sales are up.

And that means that . . . the real estate crisis is over.

Let me share some “field notes” with those who are predicting an imminent real estate recovery.

1. I just listed 3 new REO’s today.

2. I just received a heads up from 2 different REO Asset management firms to get ready for 10 or more new assignments.  Today.

3. One of my team members is showing homes to an out of country, non-US buyer.  With cash in his pocket.  Here from overseas to pick up 10 to 20 REO homes in Toledo.  Today.

4. I just completed an appraisal on a Perrysburg REO listing.  Today.

5. My team is also showing houses and selling houses – in Perrysburg – to regular “retail” buyers – and they remain motivated to buy.  But price and value are always in mind.

6. I was just given 3 new REO listings to start processing.  Today.

The upshot – look for more inventory to be on the market.   More pressure on prices.  More lenders moving foreclosed property.  More pressure on homeowners who need to sell.  More appraisers who are being tight with value.

Hold on.

There are 74.8 million dogs and
88.3 million cats in the US. 

Many people who have lost their homes have taken
their animals to shelters, or the less responsible ones let them lose, locked
them up in the backyard when they move away. 

People are to blame, not the
animals.

I know – the economy is in the tank.

I know – people are cutting back and cutting costs.

And some are even walking away from houses.  In the City and in the Township.

But don’t hurt your animals!

Sometimes THEY, the little innocent dogs and cats, get foreclosed too.

Some resources:

Toledo Humane Society.
http://www.toledohumanesociety.com/tahs/

Maumee Valley Save a Pet.
http://www.maumeevalleysaveapet.org/

Paws and Whiskers Cat Shelter
http://pawsandwhiskers.org/

Toledo Animal Shelter
http://toledoanimalshelter.com/

Wood County Animal Shelter
http://www.woodcountyhumanesociety.org/

These shelters are immune from the economy with more than enough space, money, and food.

RIGHT.

They are hurting too – and the pets they help are in more danger than ever.

You can help by adopting a stray (and by spaying and neutering your own pets).

One of RE/MAX Master’s REO/foreclosure listings recently generated this benefit:  a cute, nice, starving cat.  Renamed Hobbs by my daughter Hannah (I think Reo is a better name).  He was alone.  Starving.  And desperate for someone to love.

Shots and neutering were extra.  But we now have a great barn/outside cat.   

Somehow, and most amazingly, he has even won over Mr. Buster, our Maltepoo and the Jon Modene Team Mascot (he even has his own business cards!).   They are now friends.

Maybe some good will come out of the REO crisis . . .

Foreclosed vs. Short Sale?

Sadly becoming an important question.

A vital question.

A confusing question.

As a CDPE (Certified Distressed Property Expert – trained and credentialed by The Distressed Property Institute -  of whom I am now on their Board of Directors) I have seen first hand how this question is impacting the decisions that many homeowners have to make this year.    Tough, gut-wrenching decisions.

As always, seek legal counsel.  But – sadly, I have attorney’s who ask ME for help and information!  So be careful what attorney you ask!

Here is a chart of the effects on your credit of doing a short sale vs. being foreclosed:

I do hear this.

Probably at least once per week.  Maybe more.

The buyer calls me or emails me and has the address of a specific house that is REO (”real estate owned” aka bank owned) and wants to see/buy said house.

But the problem is . . . THIS house is not for sale yet.

It is bank owned.  But NOT for sale!

It is part of the “Shadow Inventory”.

“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.” (San Francisco Chronicle)

Many people cannot understand why it is not for sale.

There are many reasons.

1.  The foreclosure process may not be completed.

2. The former home owner may still be occupying the house.

3. A tenant may be in the house.

4. The home is being appraised/prepared for market.

5.  The lender is simply overwhelmed and CAN’T get it on the market.

6. The lender is not willing to sell it – so that it does not have to be written off as bad debt on their balance sheet.

And amazingly the most common reason is that the bank is simply not going to put it on the market right now.

Which seems to make no sense.

But if ALL the REO homes hit the market right now . . . their values would be very depressed.  So it makes financial sense for banks to parse them out “slowly” or at lease more slowly then they can be marketed.

And think about this – up until this year, in Perrysburg, we have MAINLY been dealing with “Alt-A” and Sub-prime foreclosed loans.

But there is a giant “clot” of OTHER types of bad loans/foreclosures coming right for us.

Look at this chart:

It is a forecast of the future REO inventory.

And it is a sobering picture.

John Ulmer was sentenced to prison yesterday.  The Blade had the story.

Ulmer was the criminal mastermind behind “The Westhaven Group”.

You can substitute the name Madoff, Transcontinental Savings, Bell & Beckwith, etc. for Westhaven.  They all work the same.   Someone who is wicked and venal and selfish gets control of someones money.  Then they spend it on themselves.

A Crime of Persuasion.

Where a bank robber uses a gun, Ulmer used his tongue.  To separate the money from the victim he promised and sold and scammed and lied.  And it seems to work.

In Perrysburg the Westhaven Group had a few homes.  Bought with stolen money they then rented them out to people who could never hope to qualify to own them.   With no real equity or ownership stake, some of them fell into disrepair.

And since Westhaven/Ulmer was operating during a “hot market”, the owner homes that seemed to be able to be used by him with his crooked owner financing scheme were homes that were critically flawed or had some other sales-killing problem.

I met some of these “owners” – they were also victims too.   Whatever they paid is gone and their supposed ownership interest never existed.   No one used a lawyer.  No one used title insurance.  No one used a good agent.

My experience is that real estate deals that EXCLUDE title exams, good attorneys, good agents, and daylight and that “breaking” the norms of the current market are just those deals that need close and careful examination.

Ulmer?  10 years in prison.

We’ll see.  I have learned that if you have really good and expensive lawyers, you tend to get a better deal in court.   I am sure that he has good ones. And well paid ones.   In the Westhaven saga, it seems that everyone is getting paid . . . but the ripped off investors.

What is even more sad is that all throughout the trial, investigation, etc. I believe the Ulmer has been still selling his skills and tools to the public.

Imagine that.  The audacity.

Looking at his website is an amazing experience.

I think this quote from Ulmer is award winning: “The only thing that separates you from money is knowledge. I have knowledge, that is why I have money.”

The spinning logo of money on his face:  perhaps the most honest thing in the website.

He has plenty of endorsements on the “Testimonial” page!

I wanted to let you know how much I appreciated you instruction, helpfulness, and hospitality. This was my first real estate seminar I’ve attended. I was not sure what to expect, but some friends had clued me in on how some seminars are merely a vehicle to sell more products. I can truly say that the weekend was one of learning and growing for myself and for my company. Your way of doing our business is one to closely pattern, and I intend to do just that with my new year and a half old company.
- Michael Eigsti, Midland MI

I sure hope that Michael did not mean that – unless he wants to go to jail too!

And until recently you could still sign up for a seminar.

I have a feeling Ulmer’s next seminar will be during visiting hours.

At a prison.

Don’t look for restitution.   The money is “gone” (I mean hidden in the Turks and Caicos!)

And don’t look for shame.

Ulmer cannot blush.

You don’t have to pay anyone money!

You don’t have to go to the Wood County courthouse – although the Sherrif personally runs the auction.

You don’t have to drive around and look for “Bank Owned” or “Foreclosure” sign riders.

Not any more.

You can just go to my newest website- www.ToledoBankOwned.com and you will see a map.

A simple map of Northwest Ohio.

But it is so much more than a regular map!

It’s a Google Map “mash-up” that combines all of the current Realtor listings for bank owned, HUD, and REO status listings.

You can pick you area or look at them all.

Toledo looks a little crowded, n’est pas?

Anyway, it only shows active listings.  The REO’s that are sold or pending or off the market don’t show up.

So this is a tool for buyers and investors.

I hope that you enjoy it!