The 2012 Loan Process and "Other" Associated BS - by Mik Cohen

As I sit here, reflecting on real estate of the past and experiencing the present real estate mortgage market, it's hard NOT to feel bitter toward banks/lenders, on behalf of those who, now, need a loan to purchase some real estate.

Assholes ("Pioneers"), like the, now, defunct Countrywide, contributed to the mess we find ourselves in.

While it's yesterday's news, we all know why Countrywide, and many other "pioneers", no longer exist.
They "developed products", they knew were designed to fail - and they disregarded the people they trapped within their f*cking GREED ! - in the worse-case scenario we reflect back on, today.

I'm using Countrywide as a representative of the masses of banks/lenders that FAILED and were dissolved and/or sold/traded off to "responsible" such institutions.

Listen,  our economy is in shambles because of greed, NOT capitalism.
Technology has turned us into robots - and unrealistic robots, at that.

We have so much information flying at us, from every direction, that we can't filter it all.

What does this have to do with getting a loan ??
PLENTY !!

What if you had a loan on some real estate, back in 2000 something, and the bottom fell out  ? 

You were always earnest in paying your, monthly, debt - believing your "investment" would provide shelter (as in taxes (mortgage interest/1099) and physical shelter too) and payoff in the end, relating to cash value.

Well, here we are, in 2012.
Cash value ? IF....with emphasis on IF, you purchased pre-2005 and did not over-leverage your real estate, you're probably sitting ok, generally speaking.

That said, now you're thinking about selling and you're expecting to get more than your investment back, at the POS (Point of Sale, or closing), resulting in a nice payday AND your ability to, now, take advantage of the real estate prices of today's market.

So, you get an offer on your property, that you believe is acceptable - and life is great.
Your buyer has a pre-approval or they're pre-qualified and you just keep smiling at the purchase and sale agreement, imagining how you're going to use the funds, after the closing of the sale.

25 + days go by and the closing date, as reflected in you PSA (Purchase and Sale Agreement), is approaching.

You haven't heard much, if anything, from your buyer/buyer's agent - or even your listing agent (DON'T EVER USE A LISTING AGENT/PAY 6% TOTAL COMMISSION) and you're concerned.

You decide to inquire and find that your buyer is having a tough time getting financed.
Underwriters are not satisfied with, what would have been acceptable in "reasonable times", your buyer's ability to re-pay the proposed debt that would result, as a mortgage, on the property you're trying to sell them.

NOT only that, but the lender's appraiser, who arranged to come out to your property, came back with a value that is less than what your buyer contracted to purchase your property for.

Remember, the real estate agents AND the lender all assured you that "everything will be fine".
So, 25+ days rolled by and all your emotions and dreams ran their course - now you're losing your buyer AND have to accept the fact that your real estate is not worth (according to the appraisal) what you were selling it for.

HERE'S THE DEAL:

There are many ways to find out if you're over-leveraged.
Simple ways are to Google/Bing/Yahoo....or whatever, the address of the property you're trying to sell.
What's the, CURRENT,  tax assessed value ?
What have, similar, properties - in a 1 mile, or less, proximity to your property, sold for - in the last 45 days ??
Simple due-diligence will help you to arrive at a realistic value of what your property is worth, in today's market.

That will help your expectations too AND the research will, also, help you to understand today's mortgage market.

I believe that education is paramount in anything you opt to do, but when it comes to understanding the purchase and sale of, possibly, your most significant "asset", your understanding is most critical.

Lenders have gone from one extreme (Lending to everyone) to the other extreme (20% down and/or highly constrained guidelines).

Couple those "guidelines" with a challenged GLOBAL economy and "struggling" housing values and you have all the information you need to price your real estate accordingly, or to "HOLD" that real estate until things improve.

Whatever the outcome, it's VERY cool to have options.

Peace..........................................................................................................out
Mik
New To You RE, LLC

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