Shades of Gray- Ethics of walking away

Are banks to blame for people signing the Note for the loan they sought?   Businesses (and Banks) are only as ethical as the leadership running the ship.  This is a very complicated issue with many moving parts.

Strategic Default Homeowner of 2004-2007:

“I hate the bank for forcing me to sign the Promissory Note for the loan (I mean the monthly payment) after I have considered my purchase for the 30-45 days it took to close and after my inspection contingency of said property.   I could probably keep making the payments that I knew I signed my loan paperwork for but I just never thought the market would turn down so much.  My value has dropped by 30% from when I purchased it.  I know that I refinanced since I purchased.    I’m aware of neighbors walking and have read that many are doing the very same.  I’m considering walking too.”

Homeowner of 1988-1990:

“I hate the fact that the market turned shortly after my purchase.   I can make the payments and ride this out even though it may be tough.  It might take several years for the values to go back up but if I live within my means I should be ok.  I love my house, my neighborhood and am part of this community”

My mother living on Capitol Hill (23rd and Prospect) in 1979-1980:

“Since the economy soured it has been tough.  My husband lost his job and has been out of work for over a year now.  It’s stressing us to be sure.  We’ve saved and been frugal.  Some of the improvements to our home will not take place.  We’ll have to forego some of the things we’d like to do and we’ll take the bus to get around or ride our bikes.  To get to soccer practice our kids will have to ride their bike, take the bus or walk.   Our kids will work after school to help defray tuition.  I’ll take on any additional work, tutor kids and earn extra money by holding swimming lessons downtown at the YWCA and YMCA in the Central District.

Christmas?  Well, we will make wreaths and Yule logs and should be able to sell quite a few.  We should make enough so that we can get a Christmas Tree on Christmas eve when the prices drop.  Although gifts will probably be few, I’ll probably make some gifts and knit some hats to keep you kids warm during our cold days.

Today (2011)  times are different.  I think back to my mother and father (Dr. Claude Fly) who got us through the great depression in Oklahoma.  This is nothing compared to that.  People of today seem to have lost the work ethic.   With my arthritis and back problems I try to hire kids to help me around our current home.   It’s hard to get them to work for an hour straight around the yard. “

Social Media Overload = Un Social Skills.

No Social Media

Shorecrest High School is doing an experiment.   The staff and students are doing what they term a social media “blackout” for a week.

  • No Facebook.
  • No Twitter
  • No e-mail.

Conversing old school.  Homework is getting done.  Chores are being accomplished.  Mothers and sons are talking more in a few days over the phone than in the past six months.  Relationships are blossoming.   Others are finding it difficult to converse, almost like learning how to ride a bicycle all over again.

I wish people in business and, in particular, real estate would give this a try.   People sometimes  hide behind their e-mail and, in my opinion, much is lost when people don’t call and more is gained when you talk on the phone.   Do agents really need to know every single detail of a file in escrow?  Do you want an e-mail when a minor title issue has been resolved or title has been amended?  Do you need to know when a water bill has been received?  Do I need to know when the oil pan screw has been tightened from the serviceman working on my car?  Should they trigger an e-mail to me or text me?   What is a good balance?

Professionally,  I have found that the more I take the time to call and  talk personally to my clients whether they are in Brecksville, OH. , San Diego, CA., First American Title in Clearwater, Florida, or an Attorney in Washington DC,  I tend to build and foster longer term clients.

Talking things over on the phone is also one of the most effective ways in finding resolutions to transaction problems.  On the other hand, total transactional blackout is also a problem that still occurs: that’s code for agents that never respond or converse with escrow,  no matter what social media tool they have at their disposal.

IRS and Homebuyer Tax Credit: obtaining a”signed” Final Settlement Statement

This is tax time.

Sometimes escrow offices wonder if we are CPA firms during tax time.   Our office has received numerous phone calls from clients that are in need of their “signed” Final Settlement Statements.   Lynlee wrote a quick post on our blog with an IRS link addressing what the IRS may need from borrowers to claim the tax credit.

As always, please contact your CPA or tax professional for specific details regarding claiming the homebuyer tax credit.

We contacted a CPA and they responded:

“we generally have found that the Final Settlement Statement (with NO signatures) are acceptable.”

Why?  Because in Washington State (and other escrow states) Final Settlement Statements do not have signatures from borrowers.   Final Settlement Statements are mailed to clients after a transaction is closed.  Estimated Settlement Statements are signed at escrow prior to your transactions being closed.

Photo: Weekend Funnies

Weekend funnies:   I picked up my kids from school and they spotted this hilarious scene.   They took the photo from inside the car, so it’s grainy.   “Dad, loooook !…’s just like the Ikea TV commercial!”  The occupants of the car were actually smiling and waving at each car passing by.  A complete hoot.   Maybe they just purchased a home and are furnishing the bedroom.

Car mattresses

Getting Hired in 2010

Many small business owners in Washington State receive numerous resume’s over the last couple years and our office is no different.    With the economic issues surrounding us and the slow slog of the real estate market trying to find some equilibrium without “intervention,” scores of real estate related jobs have been shed over the last three  years.

Many former workers that have been laid off from mortgage, title and escrow related fields submit resume’s as a matter of protocol due to unemployment benefit requirements.   Employers understand this but once in a while a gem comes across you as it did us earlier this week.

Here is why the individual caught my attention.

I didn’t receive a resume via fax.  I didn’t receive a resume in the mail, again and again.  I didn’t receive the resume by e-mail.   The individual stared at us face to face by taking the time out of their day and shook my hand and introduced herself  to us in person.   Call me old fashioned, but the impression you leave by being professionally presented and having an authentic conversation, unscripted and raw, going in knowing you will be rejected 9 out of 10 times and still having the COURAGE  to look up a company and personally drive to the office not knowing how you will be received, will always receive high consideration of getting an interview at our office.

All the best to those who are looking for work in 2010.    Keep your chin up and remember this:  as Warren Buffett said in his interview this past November at Columbia University in New York, “betting against America and it’s economic engine is a bet I would never wager.”

Update: lender conditions just get nuttier

I don’t make this stuff up folks.  It is getting to the point where I think loan officers need to seriously think about who they do business with.  It matters zero how low the rates are for this lender if they can’t close or create an atmosphere where it is so difficult to work with that it places stress on your long term business relationship with your customer:

A fully executed, signed and on-time delivered loan package was rejected resulting in a full re-draw due to:

“the vesting on the Deed of Trust said, Husband and Wife, instead of Wife and Husband.”

This is an extremely easy fix, but yet it was rejected.   No progress was made in trying to convince the lender how absurd this was nor how foolish the lender looks to the professionals involved in closing the transaction, never mind how dumb they look to the borrowers who have every right to request another lender.  This places the borrowers loan lock in question and adds expenses including wastes an unbelievable amount of time that could be spent on transactions placed with lenders that have their act together.

Stop Acting Rich: Household struggles go beyond the mortgage payment

This past Sunday, I was given a book by a gentleman who by most measures is financially well off and more importantly is a success story both personally and professionally.  The book he and his wife offered me is called, “Stop Acting Rich,” by Dr. Thomas Stanley (Ph.D) of famed bestsellers The Millionaire Next Door and The Millionaire Mind.

The real estate industry is an incredible laboratory.   It provides us with an interesting foray of social and cultural samples and Dr. Stanley heavily uses housing early on as the springboard for this book.  Perceptions of wealth and happiness seem closely correlated to what the cultural norms place on us and pressure people to become what Dr. Stanley terms, “aspirational Millionaires.”   But, is true wealth achievable and what does it look like?   If you emulate most real millionaires profiled, you won’t be driving a top tier BMW or always wearing Enzo Angiolini, Ferragamo or Allen Edmonds shoes.

In my view, much of what is written in the text is really a story about real estate and how housing shapes our habits of consumerism.   And that is why is it a fascinating read into what people perceive as true wealth.

From the Preface in “Stop Acting Rich“:

The reason why so many homeowners today are having a difficult time making ends meet goes way beyond mortgage payments.  When you trade up to a more expensive home, there is pressure for you to spend more on every conceivable product and service.  Nothing has a greater impact on your wealth and your consumption than your choice of house and neighborhood. (emphasis added)

More exerpts from Dr. Stanley:

  • My research has found that most people who live in million-dollar homes are not millionaires.  They may be high-income producers but, by trying to emulate glittering rich millionaires, they are living a treadmill existence. (I know several people who are “aspirational Millionaires.”)
  • In the United States, there are three times more millionaires living in homes that have a market value of under $300,000 than there are living in homes valued at $1 million or more.
  • Most millionaires do not reach the millionaire threshold until they are near 50 years of age.  Most became millionaires, in large part, because they led a frugal lifestyle.  By the time they reached the millionaire category, they were set in their ways, so even after becoming wealthy, they typically remain frugal. (do you know frugal millionaires like this?  I do.)

“Ours is a culture of hyperconsumerism.  Not only can and do we buy nearly everything (except for the truly outrageously expensive), but we seen to have come to believe that we can and should have it all and that who we are is dependent on the ability to live the right neighborhoods, with appropriately sized homes filled with brand-name appliances, with prestige cars parked in the driveway with expensive golf bags and clubs in the trunk, and so on.”

“In a way, the credit crisis of 2008-2009 is serving as something of an intervention.  But the for treatment to work, you must take a cold hard look at your balance sheet and at your life, and determine if you would be wealthier if you would stop acting rich.” – Thomas Stanley, Ph.D, author of Stop Acting Rich

This book should be at the very top of the list for those in the real estate business.   Get rich slowly seems to be more in vogue today but, sadly, Dr. Stanley feels that although the recession may have caused many to take a breather, every indication is that we will pick up right where we left off when gentler and more favorable economic winds blow again.





Elusive Value: Title and Escrow

Working largely in an industry within real estate that provides a service behind the scenes presents problems in conveying value to the people who recommend our services:  Realtors and Loan Officers.

It has always been an awkward situation.   Realtors and Loan officers are customers, not clients.  There is a difference, not in importance each plays in a transaction (very important), but in how the relationship is treated by each party to the other.

You have essentially two camps:

1)       Agents and loan officers who believe that they control your business by intimidation or by the threat of moving their business to a competitor or both.  They sometimes feel like title and escrow companies “owe

Escrow Trenches: nutty funding conditions

Recall those episodes where Jerry Seinfeld grits his teeth and in one exasperated and frustrated breadth says, “Neeeewman!”

Similarly, so do title and escrow staff in dealing with lender funding conditions and other challenges that seemingly are for no other purpose but to drive us to the closet for our straight-jackets.

Unfortunately, some conditions cannot be easily met at the moment the request comes over the fax or e-mail.   Some require work that delays closings.  Or, in extreme cases a condition can completely shut down all other transactions you are working on for a couple of hours to work feverishly to meet conditions or do a workaround when parties to a transaction become completely uncooperative.

Here’s a couple funding conditions pulled from our short list posted on our blog:

  • “Prove that the borrowers are not married.” (hmmm)
  • “Slight variance in borrower’s signature from others of the same borrower, need borrower to re-execute documents.”  (can cause escrow people to find a new profession.  Who’s signature is the same after signing an FHA loan package that is 119 pages long and 1.375 inches thick?)
  • “Borrower signed on the line adjacent to the one provided where the name appears.   Please re-execute the document.”  (resulted in a re-sign after tracking down the borrower).

While these are humorous after the fact it also paints a picture of what goes on behind the scenes.   Another thing that creates grins for title and escrow staff:  When there is a “rush” on a request and that request involves the collaboration and cooperation with a government agency.