Author: Brian Brady (page 16 of 27)

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

The best thing about being suspicious of politicians is that you learn how they think.  I actually think this is a GOOD idea.  Libertarians will hate it but I think this bill has merit.

Remember my Bailout Post, in March?

I have a little idea about how to save the American real estate market.

Let’s start with the premise that lenders are taking 20-30% hits on short sales. Then, let’s have the US Treasury loan 30% of the balance, of the aggregate debt, to homeowners whom request it, in order to pay down the first mortgage (or second mortgage). If I have $200,000, in aggregate liens against the property, the US Treasury will lend me $60,000, to pay down those aggregate liens, to $140,000. This reduces the lenders exposure.

What type of loan will the Treasury make to homeowners?

The term can be for the lesser of:

1- the remaining term of the first mortgage

2- 65 less the age of the primary borrower.

The interest rate can be the corresponding term treasury rate, plus .5% (for administrative costs). Maybe we can use some of that “yield spread” to coerce a few mortgage brokers to “originate” this government debt (okay, that was completely self-serving). For a 42 year old, with a 27 year term on his first mortgage, the term of this new government loan (in second position) would be 23 years (65-42=23). If a 23 year treasury bond yields 4.1%, than the note rate for the new loan will be 4.6%.

Well, maybe the Members of Congress are reading Bloodhound Blog; it wouldn’t be the first time that happened.  Bryant Tutas reports on HR 5830, on Active Rain:

From what I’ve read, and understand, this Bill will give distressed Homeowners an opportunity to refinance with FHA at 90% of value IF their current Lender will agree to a short payment.

One of the caveats is that the FHA will own a piece of the action. When the borrower sells they will either pay, from any profits, a 3% exit fee (a percentage of the original loan amount) to the FHA or a declining percentage of any net proceeds, attributed to appreciation, Read more

by Brian Brady

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Remember Marty Ummell? She’s the lady that sued Mike Little, a REALTOR with RE/MAX in Carlsbad, CA. Her attorney ripped a page from the ambulance attorney play book and accused Mr. Little of misrepresentation, breach of fiduciary responsibility, and fraud.

From the New York Times, back in January:

Ms. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.

Real estate lawyers and brokers say the case, which goes to trial in the north county division of San Diego Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase.

I poked a bit of fun at this frivolous law suit, with my satirical post. In the comment thread, I had learned more about the plaintiff:

FWIW, the Ummels put down $900,000 on this home and borrowed $300,000. I’m guessing they didn’t need a full appraisal (1004) but had a drive-by w/o interior inspection (2075); that report requires no valuation but proof that the property is standing. Pure conjecture on my part.

I would think that a couple that has owned property(ies) in the Bay Area, for an extended period of time, who has $900,000 to invest in a home, and holds in a family trust, is sophisticated enough to forfeit the “ignorance” defense.

Of course, the accusation was extremely watered down by the time it went in front of a jury, last week. Fraud and misrespresentation were thrown out and only the charge of “breach of fiduciary duty” stood. The jury ate lunch, did a quick crossword puzzle, and ruled for the defendant (within 2 hours).

Marty Ummel is “devastated” while Mike Little is essentially out of business. From the same Voice of San Diego article:

The Ummels contended their agent had misrepresented a reasonable value to pay for their house and had breached his fiduciary duty to them, acting to protect his commission instead of Read more