Big Legal Disclaimer: I’m not an attorney nor do I give financial advice, etc. Consult an attorney, accountant, psychic, OBGYN or anybody else you deem necessary to help you make the right decisions.

Enjoy,

Gerald Romine

Professor advises underwater homeowners to walk away from mortgages

Brent T. White, a University of Arizona law school professor, says that it’s in the homeowners’ best financial interest to stiff their lenders and that it’s not immoral to do so.

Reporting from Washington -

Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don’t feel guilty about it. Don’t think you’re doing something morally wrong.

That’s the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.”

White contends that far more of the estimated 15 million U.S. homeowners who are underwater on their mortgages should stiff their lenders and take a hike.

Doing so, he suggests, could save some of them hundreds of thousands of dollars that they “have no reasonable prospect of recouping” in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume, he says.

“Homeowners should be walking away in droves,” White said. “But they aren’t. And it’s not because the financial costs of foreclosure outweigh the benefits.”

Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, “one can have a good credit rating again — meaning above 660 — within two years after a foreclosure.”

Better yet, homeowners can default “strategically”: Buy all the major items they’ll need for the next couple of years — a new car, even a new house — just before they pull the plug on their current mortgage lender.

“Most individuals should be able to plan in advance for a few years of limited credit,” White said, with minimal disruptions to their lifestyles.

What kind of law school professorial advice is this? Aren’t mortgages legal contracts? In so-called anti-deficiency states such as California and Arizona, mortgage lenders have limited or no legal rights to pursue defaulting homeowners’ assets beyond the house itself, White said. In other states, lenders may decide that it is not worth the legal expense to pursue walkaways, or consumers may be able to find flaws in the mortgage documents, disclosures or underwriting to challenge the original contract.

The main point, he said, is that too often people’s emotions get in the way of clear financial thinking about mortgages, turning them into what he calls “woodheads” — “individuals who choose not to act in their own self-interest.” Most owners are too worried about feelings of shame and embarrassment after a foreclosure, and ignore the powerful financial reasons for doing so.

Buttressing these emotions is a system that White labels “the social control of the housing crisis” — pressures and messages continually sent to consumers by the “social control agents,” namely banks, government and the media. The mantra that these agents — all the way up to President Obama — pound into owners’ heads, White said, is that “voluntarily defaulting on a mortgage is immoral.”

Yet there is an inherent imbalance in the borrower-lender relationship that makes this morality message unfair to consumers, White says: Banks set the rules during the housing boom, handing out home loans with no down payments, no income checks and inflated appraisals. Now that property values have dropped 20% to 50% in many areas, banks have been slow to modify troubled mortgages and reluctant to reduce principal debts.

Only when homeowners cut through the emotional fog and default strategically in large numbers, White argues, will this inequitable situation be seriously addressed.

How does White’s 52-page manifesto go over with mortgage lenders? Predictably, not well. Officials at Fannie Mae and Freddie Mac — investors who fund the bulk of all new mortgages in the country — disputed White’s characterization of how quickly after foreclosure a walkaway borrower can obtain a new loan. It’s not three years, they said, it’s a minimum of five years, absent extenuating circumstances such as medical or employment problems that caused the foreclosure.

“Borrowers who walk away from their mortgage obligations face serious consequences,” including severely depressed credit scores for extended periods, said Brian Faith of Fannie Mae.

In addition, he said, “there’s a moral dimension to this as homeowners who simply abandon their homes contribute to the destabilization of their neighborhood and community.”

While forecasting results is a guessing game the statistics don’t lie. Business Week’s article PENDING HOME SALES RISE FOR THIRD STRAIGHT MONTH is further proof that the markets are now coming back.

To summarize the article:

• Low interest rates are pushing sales
• First time homebuyers are active
• The Northeast is the hottest geographic region
• The only decrease in sales was in the South region
• “The market has already bottomed in some areas.”

What we are seeing in the markets is that a bottom is forming! This “floor” is likely to represent the bottom of staggeringly low levels and present a phenomenal opportunity to buy real estate at prices we are unlikely to see ever again.

Three Super Simplistic Steps For Success

1.      Start looking for houses.
You have to learn your market and there is no substitute for getting active and looking at houses. See what is available.

2.      Determine values.
Right now home values are all over the board and this can be very confusing.  As a buyer you want to focus on the best buys which are currently REO’s and pre-foreclosures (short sale investing).  To determine the best buys in the market start by looking at REO listings which should be the lowest priced properties for sale in the area and serve as a benchmark for the lowest comps you can find. You’ll want to buy at or below the recent sales of those homes.

3.      Line Up Your Money.
Even if you are flipping or wholesaling houses you may need to line up your conventional, private, or hard money.  If you’re looking to live in the house yourself get qualified with a lender. If you need private or hard money line it and be ready to go.

With those three steps in place you are ready to start evaluating deals and making offers.  If you are buying property as an investment make sure you are buying based on your CASH ON CASH RETURN. More investing knowledge can be found in “Real Estate Magic 101 – How To Get Rich In Real Estate Even If You’re Dead Broke!”

Author: Gerald Romine

About The Author:

Gerald Romine is a nationally recognized real estate expert that has been featured across North America sharing the stage with political leaders, film stars, and business leaders. Since 1989, Gerald has been involved with real estate as a real estate agent, broker, rehabber, investor, and builder and has been involved with everything from houses to apartments. For more information about Gerald’s products or services visit www.kickassrealestate.com

Starting with the past is was just a few short years ago that real estate investing was all the rage and everybody was doing it. It was a fad and it seemed as if you could buy anything, mark up the price, and turn it for a quick profit.

During these times everybody buying and selling was making money and seemed to be a genius. Over time people started to realize that investing fundamentals were being broken and a chain reaction ensued… and the bottom fell out of the real estate market.

Loans dried up faster than a desert oasis. Properties stopped selling quickly. Builders stopped building. And then people stopped making payments… then foreclosures… then REOs… and then prices started falling faster than a bad souffle (yeah… the “Kick Ass” guy used the word souffle)!

What began as a strong real estate market quickly turned into a buyer’s market and the housing market has taken down the US Economy. The idiots running Washington are clueless and if you are thinking they have any answers then know that I believe in Darwinism (survival of the fittest) and am hopeful your gene pool is heading towards extinction.

So the real estate markets have changed, new challenges have risen, and a new market is upon us.

Yes, we are in a buyer’s market but the question is for how long?

The Future. Have We Hit The Bottom?

Phoenix Arizona is one of the hardest hit falling real estate markets in the US and there is evidence that we have reached the bottom.

Let’s be clear… I do not believe in forecasting(guessing) so for me to even put in print that we may have reached a bottom is huge.

Here’s what I’m seeing that leads me to believe the bottom may have been reached:

1. Prices are trending up. Especially for properties under 200K

2. Inventory is decreasing. In the last 60 days their has been a major shift if inventory. Unbelievable.

3. REO’s are stabilizing. One agent I know of is getting an average of 8 offers per REO and people are in price wars.

When looking at the various stats for the market one thing has become evident… The markets are changing and strengthening very quickly. Even builders are coming back and Maricopa County (Phoenix) is seeing a rise in building permits.

And that’s why I’m so excited to share this news with you… The markets are changing and you need to participate if you are going to take advantage of what may be the end of the biggest buying opportunity we have ever seen.

It is very likely that we are at or just past the bottom right now. And if we are things then watch out when the lenders make it easy to get money again because their will be a surge in buyers!

Author: Gerald Romine

About The Author:
Gerald Romine is a nationally recognized real estate expert that has been featured across North America sharing the stage with political leaders, film stars, and business leaders. Since 1989, Gerald has been involved with real estate as a real estate agent, broker, rehabber, investor, and builder and has been involved with everything from houses to apartments. For more information about Gerald’s products or services visit www.kickassrealestate.com

There are a lot of useful comparisons between real estate investing and sex so we are going to have a candid article with the intention of furthering your success as a real estate investor. If you’re a little squeamish you might want to surf to your next real estate investing website.

Great sex isn’t easy… ask anyone who has been the recipient of a mediocre experience. The concept is simple enough but the reality is most people are not very good and never will be unless they take the time to study and learn. Not surprisingly the better you are, the more success you will have, the better you will become, and you will become experienced and successful.   In fact, when you become skilled at your craft there will be no shortage or opportunities.

Same principle applies to real estate investing – you may be able to go out and get lucky once in awhile but if you want to have long term success you are going to need to learn how to solve the seller’s needs. In other words, you are going to need to have a specialized knowledge. Having the advice of knowledge from someone who has the investing experience is the quickest way to learn and become profitable as a real estate investor.

There is a famous Zen saying that is very appropriate: “To know and not to do is to not yet know.”  Whether we are talking about sex or real estate investing theory is not enough… you need to get out there and take action.  With real estate investing many people have dabbled in it a little bit but those that are truly successful have earned their success because they take action consistently as well as increase their investing knowledge.

Unfortunately there is a lot of misinformation and scams which can complicate things for those wanting to learn real estate investing. First, you should understand that all businesses involve selling and that includes those businesses selling real estate information or your business as a real estate investor.  In fact almost everything you do involves selling in one form or another and even a person working a 9-5 job is selling their time for money and the resume that got them the job was selling their benefits as an employee.

Who should you learn from? Who should you trust? Should you invest money? How much?  Those are all tough questions but the first thing I would tell you to do is to ask yourself “how much of your time and effort are you willing to commit to your success?”  If you are unwilling to commit a set amount of time and effort to yourself then don’t buy any book, course or system because if you are unwilling to work then no matter what you touch it will not work either!

But, if you are the type of person that is willing to make a commitment and take action then following a good “guru” will likely produce good results.  If you were new to real estate investing and asked if my books, courses, or software would make you successful  I would tell you that I believe unequivocally in my products and that they could help you but YOUR success is ultimately up to you.

It all comes down to common sense.  You might consider reading Real Estate Magic 101, How To Get Rich In Real Estate Even If You Are Dead Broke because that will give you a ton of information for a very low cost.  Then, if you are successful with that information and have results you may want to consider other tools and resources because they will likely give you even more success.  Another option before you spend any money is to sign up for a person’s free newsletter and real estate investing tips and get a feel for what the person is about.

In conclusion sex and real estate have a lot in common because what you put into it you will get out of it.  Nobody is great to start with but the skills and knowledge can be learned and with practice you can become an expert.

About The Author:

Gerald Romine is a nationally recognized real estate expert that has been featured across North America sharing the stage with political leaders, film stars, and business leaders. Since 1989, Gerald has been involved with real estate as a real estate agent, broker, rehabber, investor, and builder and has been involved with everything from houses to apartments. For more information about Gerald’s products or services visit www.kickassrealestate.com

While in Oregon I was able to visit what many call the 8th Wonder of the World – Crater Lake. It’s absolutely beautiful!

If you’d like to check out some amazing pictures they are posted in my Facebook account. Just search for Gerald Romine.

My Mother is a real estate broker and Klamath Falls was hit hard like most of the nation but right now foreclosures and REO’s are what’s hot and selling in today’s real estate market. In the week I was there she had a flurry of activity with multiple offers coming in and a rush of new activity. All good things for her and good signs for real estate investors.

And… I’m big on the opportunities for short sales and REO’s. Right now they are the hottest thing on the market (that will change over time) and you should be looking here for deals. I’ve got a huge resource site that is absolutely free at www.kickassshortsales.com that you should check out because it has more info there then you can find in most short sale courses.

By,

Gerald Romine

Yesterday one of our great customers asked the following question:

I see other gurus advocate giving the seller cash for items in the house (washer, dryer, etc) on short sales but Gerald Romine does not. Why? Banks even give sellers “Cash For Keys.”

The short answer is “I don’t want to go to jail.”

If you give the seller money for itmes that you would not have otherwise purchased if it were not for the possibility of a short sale you could be found guilty of mortgage fraud which is a felony. The lender can offer cash for keys because they are a principle in the transaction.

If it smells like a fish it probably stinks!

Think about it… Does buying personal property from the seller at an inflated value (5K 10K, etc) make any sense if you were before the judge on 5 counts of felony mortgage fraud? When opposing counsel starts asking questions is the story going to hold water? How did you and the seller meet? How long have you known each other? Would you have bought the property if not for the foreclosure and short sale possibility? Do you consider yourself a real estate investor? Would you have even met the seller if you were not looking for real estate deals? You get the idea.

Be careful who you listen to because there are alot of so called experts giving out advice that could land you in jail.

Now Go Buy A House!

Author: Gerald Romine

PS – One of the best sites I’ve ever created is www.kickassshortsales.com. It’s a resource site and currently all of the info is free AND it’s more complete then most short sale courses and systems that people are selling.  Enjoy.

Last week I was hanging out with Jesse James and Desmond Howard in Baja Mexico. Check out the pictures and short movie I did with Jesse In MY FACEBOOK ACCOUNT.

Baja was a killer experience and racing across the dessert at 90 MPH is awesome! Combine that with the business sessions and meetings and you have an unforgettable experience!

The baja racers are fitted with a special helmet that has radio communications with your group (when you press a mic button) and constant communication between the car’s driver and co-pilot. So imagine haulin’ ass through the dessert and getting lost because your just carrying on a conversation. That’s exactly what happened when I was riding with Jesse and I learned quite a few things about Jesse and his wife Sandra Bullock.

You might want to catch Donald Trump’s next celebrity apprentice because Jesse’s on it and I can guarantee you it will be very interesting. Jesse shared a few colorful things with me that I can’t repeat… and I was rolling when he described some of the other apprentices. He doesn’t mince words.

And speaking of not mincing words… you should be on my webinar tonight.

I’m in the middle of a huge product launch and before we shut it down I’ve agree to do a FINAL LIVE webinar, answer the TON of questions that have come in, and spill the beans in a no holds bar session. Plus… I’m even going to give away two laptops on the call!

Monday, February 9th:
Eastern:   (8:00-9:00)
Central:   (7:00-8:00)
Mountain:  (6:00-7:00) and Arizona
Pacific:   (5:00-6:00 )

Register for Gerald’s Last LIVE WEBINAR – LINK

I’ll be taking questions and answering emails that he’s received over the last few days about the Ultimate Real Estate Investing 2.0 System and exactly what’s included with the 11 built in real estate investing systems.

Here’s the best part…

I’ll be giving away two… yes two… killer laptops to people on the call. Everyone who asks a question will be eligible to win and the winners will be announced LIVE on the call!

This will be your last chance to take advantage of The Ultimate REal Estate Investing 2.0 System. What’s more is you get 15K in real bonuses, but only if you take action during this launch..

Register for Gerald’s Last LIVE WEBINAR – LINK

Be on the call tonight,

Gerald Romine

PS – About flipping you off… Well… let me explain the picture on facebook… Jesse wasn’t cool with being put into a headlock by me and suggested we show the picture you see on facebook. He’s got a “bad boy” image to keep up!  Be sure to check out all the pictures and my movie with Jesse James on Facebook.

I live and die by the quote “You are the same person now that you will be in 5 years except for the people you meet, the books you read, and the new information you acquire!”

Hollywood, Florida. 4:00 PM.  – I arrive for a 2 day mastermind session with Yanik Silver and friends. Walking into the Hollywood Hardrock I stumble upon my buddy Justin Tupper who invites me out for dinner with a “Power” group of friends, fellow masterminds, Mavericks, and international Businessmen.

At 8:00 we jump into the super stretch limo and head out for dinner.

A lot of you may recognize my good buddy Craig as an international fitness expert from his articles and columns in Muscle and Fitness magazines and his best selling book “Just Say No To Cardio”.  I love hanging out with Craig – the guy’s got a phenomenal business mind and knows his fitness. Craig is famous for NOT working out at the gym but staying in phenomenal condition.

Some of the other superstars that night:

• Perry Lawrence – The “Ask Mr. Video” guy. Responsible for producing some big time infomercials.
• Barry Dunlop – One of the Biggest Publishers in Britain.  Th guys a riot!
• Justin Tupper – He’s got the next big thing in golf with revolutionary swing for anyone.
• Carrie Wilkerson – The girl behind The Barefoot Executive & a super success story.
• Mike Dillard – An Internet Marketing Machine
• Mike Hill – This guy scares me… he can drive internet traffic that literally melts servers.

What I love about mastermind groups and just hanging out with superstars is how much you learn. There’s no better way to get new and fresh ideas than sharing a meal, drinks, and a having a night out with superstar entrepreneurs.

The last two days I’ve been surrounded with ambitious, smart, and creative entrepreneurs moving ahead in their businesses and reporting growth, and breakthroughs in sales and profit increases… It is great to be distanced from the economic chaos dominating CNN and the news headlines.

Sure, there is an economic crisis and uncertainty sweeping the nation with enormous uncertainty hanging over the economy and future. As an investor you might have experienced reversals of fortune, personal hardship, maybe even experienced hard times. But……

Could there be a better time to be investing in yourself, your real estate education, and in real estate?  Given that everything else is outside of your control… shouldn’t you take control of your life and your situation?

Right now people ARE buying houses at 50% of market value. People ARE flipping houses for quick profits. People ARE cash flowing properties.

This is an exciting time and YOU and you alone dictate your future.

Author: Gerald Romine

PS – If you need a blueprint for success get Real Estate Magic 101: How To Get Rich In Real Estate Even If you Are Dead Broke.  It can change your life.

Last week I had lunch with a good friend of mine who is a successful real estate investor and in the last several years he’s bought, sold, flipped, rehabbed and rented countless houses.

But the times have changed and he now finds himself owning several houses that he does not want.

With the values dropping/correcting he owes more than the houses are worth plus he has negative cash flow. Let’s just say with all the houses he owes 500K more than the houses are worth.

Financially he’s doing very well and has plenty of cash. His credit score is in the 700’s.

There is no bailout for him nor should there be. Nobody forced him to do anything. Nobody expected values to drop so fast or hard. It is what it is.

He asked me what he should do and my answer may surprise you.

I told him to make a business decision and asked him the following question…

Would it be worth 500K to trash your credit?

The answer should be obvious.

The challenge for many is pride and ego. The truth is when the loans were taken out the agreement was if the loan was not paid the lender could foreclose and the borrower will lose the property. As much as I am against losing a home to foreclosure tough decisions must be based on an intelligent decision and not emotion.

The markets have changed. If you are carrying negative equity you should consider making the best business decision available and this may include letting a house go to foreclosure. You could literally owe 200K today and buy back the same house or one like it for 100K as a foreclosure or REO on the same street.

Donald Trump has had companies file for bankruptcy several times and even the Governor of Texas filed for bankruptcy while they were governor.

These are changing times and even though my friend is well off financially he has to decide if it is worth 500K or more to lose several houses to foreclosure and rebuild his credit. The alternative is to keep losing more and more money every month.

What would you do?

Please post a response in the blog below.

Author: Gerald Romine