Mr. M Soliman

Not but why wait. Lenders are dropping the amount they are owed on negotiated settlements.

Recent examples:

Brentwood $ 1,165,000 to $200,000 Pending
Antioch $ 650,000 to $180,000
San Leandro $ 495,000 to $200,000
http://www.borrowerhotline.com - Sat Sep 13 2008, 14:42

Oh yeah! Take that to the bank. Let's all meet here in 12 months and talk about how high prices use to be in summer of 2008.

Thanks Wall Street ....for the CDO debacle. Hey what do you call a lender crossing the str....forget it! - Wed Jul 30 2008, 04:21

Pre foreclosure is not really a clear or properly stated term for a question! This site often awards "Best" answers where the responding party is "assuming" they know what the question intended. That's frustrating and promoting reckless industry jargon. Wikipedia will not even let you come close to this type of corresponding amongst parties.

So, correct me if I am wrong but;

1) after 60 Delinquent - borrowers receive a notice of intent. NOI
2) after 60 to 150 days - Notice of Default
3) after 150 Notice of Sale
4) after 21 days Sale date and let's assuming one week - cash for keys offer.

Nothing is set in stone here as to a lender postponing. It's after 180 days the property, If not sold at auction; it becomes a classified bank asset or REO.

My take is that at 60 days delinquent, TWO PAYMENTS, an asset is considered delinquent and the receivable considered impaired. That means it is potentially non collectable but prior to reserving pursuant to GAAP. Therefore it becomes a "classified" asset or "PRE RESERVE" non-current asset. At that time prior to a Notice of Default you have a true pre foreclosure. After the NOD you are in foreclosure.

The Notice of Intent period is brief and hell to gauge. That however is the best period of time for acting on a true Pre Foreclosure.

Nearly 25 years in banking and I never heard of a pre foreclosure outside of my explanation. Erick’s answer is probably most appropriate in that it is nearly impossible to know such a status unless you have access to a person’s credit report or servicer’s records. Both scenarios are unlawful. So my question here is – What are you all talking about? http://www.borrowerhotline.com - Sat Sep 13 2008, 13:31

Forced short sale‘s: Though highly controversial the FSS is a realistic third option to the other alternatives. A lender can arbitrarily stall a proposed sale that falls short) of the outstadning principal . Lenders will require updated financials on the seller and often information about the buyer. They will take forever ordering and then losing and then reordering a BPO valuation. Then they may say no! - absent of a reason. That’s very frustrating considering most short sale prices are at a higher anticipated value than the home will fetch as an REO. Buyers also tend to back out as they get frustrated waiting.

Don’t forget the fact the seller is doing all the lenders disposition work in order to get a 1099 charge to borrower tax liability at year end for the deficiency. It is almost insane for a seller to consider

The key is to negotiate the sale regardless of the short amount through an attorney. Calculate the estimated closing statement and determine the net proceeds to the bank as a payoff. The attorney will call the lender and ask them to accept or reject (demand letter) the wire amount which he will represent can be assured in whatever the closing term is. Since attorneys will talk only to the lenders counsel (generally) no servicing agent bozo’s to contend with. The seller can even reduce the amount offered the lender by including himself for 5% of he sale. Realtors will also find this a great way to avoid lender's unethical grinding tactics related to commissions.

Forced short sale’s work - Trust me! After 25 years as a lender I decided enough was enough. Let the public have a fighting chance. The process works with ten times the efficiency of a lender short sale. Remember, the lender does not, never ever, need to see the HUD 1. There adults, take the money or they can lose altogether and forget the deal. Otherwise, everyone wins with a Forced SS. http://borrowerhotline.com admin@borrowerhotline.com - Fri Sep 12 2008, 06:46

1) $ 100,000 at 8% interest with allowances for amortization, depreciation and interest deductions [YES ]
2) $ 666 a month rent and happy new year kiss it good bye [NO ]
1) $100,000 (see above) with a 12 month loss in vaue totaling $ 12,000 [ BREAK EVEN ]
2) $ 50,000 REO next door bought by the renter above in month 12 [ WINNER! ] - Wed Jul 30 2008, 04:09

You say in your answer that “If 70% of all Americans own a home how can we have so many buyers on the sidelines?”

The current efforts to remedy the delinquency issue in domestic housing are significant and concerning. 1 in 6 is in foreclosure I believe. However, the liquidation and methods for disposing of the institutional "bad" assets (REO) are more problematic and requires further review. With confidence I offer that as much as 30% of all housing should be labeled as impaired due to negligent and or fraud related borrower lender circumstances - who ever or whatever, doesn’t matter. Add another 7 % to 10% of the population of consumer SFR 1-4 housing should be classified as 120 days out to becoming delinquent. ...impacted due to job loss or other regional economic problems making long range earnings unlikely.

That said consider the data that is out and what is happening with in the SFR housing sector of banking. The data we are using for arguing forecasts is failing to divulge the real foreclosure numbers which are far too conservative given the real numbers being withheld and the anticipated reserve requirements that otherwise will cause further banking failures and untimely further government response or "bail outs'. The capacity for the market to absorb the excess units coming on line over the next 24 months at depressed prices are the real overbuilding that was guised as controlled growth. The balance was not in line with the markets capacity as realtors and brokers made a market out of low to moderate income families moving from outhouse to penthouse under unethical and deceptive lender programs and practices. (Not the agents fault - - it’s the CDO markets (joke, what a mess really) and their demand for yields that filled inventory with unqualified borrowers. The distressed assets or percent of housing inventory lenders call REO is backlogged 6 months in this draconian and archaic foreclosure process. Is domestic banking feeling the crunch of added reserves, losses and weak earnings to date? Add in the added cost added for each REO whereby 6 more months of accrual is added to your basis in the assets required under GAAP when booking combined capital cost and cost to carry. Of over 1 trillion in originations considered excess and artificial or synthetic, institutional balance sheets will carry these assets at twice the value of the Real Estate. Wake up friends. There are no traditional models that can truly quantify the problems without rethinking the calc's. or adding to it a variance for these extraordinary factors. Again, it’s the Streets algorithmic that never came to fruition in the CDO and derivatives securities models which threw in a phony or make believe assumption for housing supply and absorption relative to the population of homeowners, affordability, capacity and low teaser start rates which distorted real economic capacity.

My finely tuned and intellectual friends! Your models are too sterile! As for the comment "I have one friend out of 50 that is renting”. Throw a total of 100 pennies into the air and watch at least another 34 come down tails.

MSoliman / Stop Predatory Lending / http://www.borrowerhotline.com - Wed Jul 30 2008, 03:49

There is no crystal ball to gauge bottom and housing values. SFR housing is something that could work using an asset “dollar cost average” method. That’s if you bought a home once a year. (If you miss bottom but bounce up in year three and move up from there, you’re on track and positioned buying way ahead of the speculators).


Of course -- only if you have the financial capacity or understand the game of syndication (use a PPM under a REIT structure). The volume of REO and back log of delinquency over 120 days and not in foreclosure is wrong bizarre and unethical (loans that can never be cured) yet again , the consumers and press are being mislead, duped and fed incorrect delinquency numbers. (Lender faux assistance programs, fix it pal offers and modifications offers that are out of reach are all delay tactics to try and manage the tsunami due to hit shore by year end!) It’s again unfathomable. Sarbanes Oxley will kick in (Enron law) after the election and law makers will discover the deceitful withholding of real delinquency figures and misstating the numbers. Why….Hmmmm. MAYBE TO KEEP THEIR CAPITAL LIMITS IN CHECK AND DOORS OPEN! This will be SOME administrations first “man of the hour” good deed.

But here is your best gauge. It's been long forgotten in terms of decades when purchasing property and balancing debt to rents was possible. Here’s the pencil neck “Freddie Blassies” alternative to a crystal ball. Rents are colliding with mortgage principal and interest payment affordability.

Its coming and it won’t be a function of lower rates dropping through the bottom as much as the ongoing liquidation of property down at 20 to 30 cents on the dollar. (Hint - - ask your local stock broker what MSNBC means when they say the “vulture’s” are quit…they are yet to be seen) . M Soliman http://www.borrowerhotline.com - Sat Jul 26 2008, 08:11