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A lot of blog posts have been written about what the National Association of Realtors is doing wrong or what they "ought to be doing" with regard to this or that.  I have written some of those posts myself.  I think it is important if one is going to find and point out things that are wrong that they also see and point out things that are right.

I believe that all members of the NAR have a debt of gratitude to the NAR.  Not just for the MLS either!  This includes all the various people who do nothing but find fault with whatever the NAR is doing - they do too.  I don’t know if what we have was by design or if there was a really really bright man or woman on some committee back in the day who realized the future impact of what they were doing or it was just a series of lucky breaks.  Either way, they did good.

Anyone who understands marketing (and there are NO exceptions to this rule) understands that you can be thought of by a public (whichever particular public you are marketing to - as there isn’t "a public" or "the public") just one way.  The result or "product" of marketing is owning shelf space in the mind of that person.  And you get to occupy precisely ONE slot.  They will think of you one way.  How they think of you may have nothing to do with how you would like them to think of you or it may be exactly how you want them to think of you - that all depends on the effectiveness of your marketing - which depended totally on who you were marketing to and how carefully you crafted the single way that public should think of you.

If not for the word "REALTOR" - which became our NAME, thanks to the individuals on some NAR committee a long time back, we would most likely be referred to by the home buying pubic as "Used House Salesman".  I like the title, Realtor a lot better.  I’m thinking you do too.  I’ve mentioned this to a few Realtor friends in person and thought it was about time I mentioned it to my friends here.

Thank you, NAR!!  Nice job.

Here is a link from an email I just received.  The people writing at this website http://narscandal.com/ may or may not have something worthwhile to say.  But there is pretty much nothing they will ever say that will get any applause from me.  Why?  Because they go WAY out of their way to hide who they are.  Maybe it isn’t a "they" but only a "he" or a "she" - pretending to be a group of "concerned people".

This isn’t a defense of NAR.  It is saying loud and clear - don’t take potshots or engage in name calling if you want to keep yours hidden.  Otherwise, you are just a covertly hostile weasel who can’t be trusted to tell the truth.

Nowhere on the site does it say who is writing any of it or who supports them.  I have nothing but contempt for the sort of passive-aggressive person who puts up a site like this.  You want to say something and be respected?  Simple: don’t hide who you are or who you work for.

Maybe I should have titled this post, "Attention All Lawyers - Bank of America Has Lots of Free Money For You".  What you are about to read might seem like something out of a Franz Kafka novel or a Salvador Dali painting that was somehow brought to life.  Only it is verified and real.

It is no secret in the real estate community what Bank of America does (and doesn’t do) regarding short sales.  In fact, typing, "short sales bank of america" into Google has this post right on the first page of Google.  Bank of America has routinely forced homeowners into foreclosure when a short sale was possible.  But when you read the next paragraph and get to the bottom of that paragraph - you will go back to the top and read it again because you will think you’ve misread it.  It just can’t say that.

In many instances - where a trustee’s sale has been postponed in order to complete a short sale - once the short sale is successfully completed and title transferred to the new owner - Bank of America then forecloses on the new owner.  Investors who have purchased the home at auction will then go the house, change the locks or in some cases break in to the home, thinking that the former owners simply haven’t moved out yet. 

The following all happened in my office with my staff:

Apparently BofA has no system in place to cancel trustee sales after a short sale is completed. Our office is currently working on getting trustee sales canceled on 3 files that have closed escrow on a short sale with BofA recently. On one file we closed escrow 26^th of January. The trustee sale was scheduled for February 4^th and BofA would not discuss canceling the trustee sale until 2 days before it was scheduled. So on February the 1^st (and 2^nd, and 3^rd) we spent over 5 hours trying to get someone at BofA to cancel the trustee sale. In exasperation on the 3^rd day of this, we finally told them “go ahead and sell the house that you have no legal right to foreclose on and you can undo it after the fact”. At that point the supervisor urged us to calm down that they wanted to work it out and they couldn’t understand why no one was doing anything.

They told us that Recon Trust (their appointed trustee for sales) charges them $3800 per foreclosure and that they didn’t want to pay that to foreclose on a home that was already sold. We had already spoken to Recon Trust trying to provide copies of the HUD1 that showed the sale had been completed a week ago, but they will only take instruction from BofA (plus there is that $3800 per trustee sale – legit or not). So far we have gotten called off 2 of our 3 homes that are closed but still scheduled for a trustee sale. This has taken hours and hours of our time to get BofA to do a job that is theirs to do. Buyers are reporting notices of sales being posted, investors trying to break in and look at their homes, etc. all because the trustee sale is not halted. The only bank currently doing this to our knowledge is BofA.

Maybe someone from Bank of America reading this could alert someone in a position of authority to actually DO something about it?  I know a whole bunch of people who would be very grateful.

One of the more remarkable methods used (even by "Intelligence Agencies") to establish if something is true or not is to is to label it true if it came from a "reliable source".  Who said it?  If he or she is considered reliable or an authority the data is considered true or factual.  The other - perhaps even more silly - system in use is multiple report.  If a report is is heard from several areas or people it is "true".   Five or ten people hear the same thing and pass it along, it becomes a "fact".

I have been hearing about the Shadow Inventory for well over a year now.  It is HUGE.  It is sensational.  A Big Giant Tsunami (BGT) of inventory is going to be unleashed by the lenders.  Get ready.  Like nothing you have ever seen.  The housing market will be flooded with inventory like never before.  No doubt it will change life as we now know it.

Only it is complete crap.  Nothing but invented data dreamed up and endlessly passed along by organizations and individuals who heard it from someone else (I have not yet tracked the original source for this shadow inventory nonsense as it seems to emanate from "everywhere").  What is really interesting are all the "new facts" dreamed up by "industry observers" to make the Big Giant Tsunami theory still possible - in spite of the overwhelming abundance of easily observable data that would directly contradict the idea of the banks having this huge inventory that they are holding back to be released later.

I bet I have your attention now.  Some of you may even be angry - you damn well KNOW there is a shadow inventory!!!  So lets look over why I am publicly saying it isn’t true and what the thought process was for the people and organizations who have been saying (and continue to assert) it is true.  These people would have no reason to intentionally forward false data.  So what data did they look at to conclude there was a Big Giant Tsunami of inventory the banks have and aren’t releasing?  Charts like this - graphically showing the Shadow Inventory are all over the the media and the internet.

So what system is being used by economists and others to calculate this shadow inventory?  Simple, take the cumulative total foreclosures recorded (the big number) and subtract the current active and pending inventory in the MLS, plus the sold MLS properties (the little number) and the remaining number is "the shadow inventory".  Simple, quick and it requires NO LOOKING at anything - just grade school level math.

To be clear, I am NOT referring at all to any foreclosures yet to come.  Inventory the banks may wind up getting in the future.  I am only talking about NOW.  It is no secret that REO agents are losing market share as they, as a group, have less and less inventory being given to them by their asset managers.  These same asset mangers who - last year - kept telling them that they had a lot more coming in to give them.  It just never arrived for them to give.  The only REO agents I know who are doing better these days are those REO agents who deal in higher end homes.  Those high end agents are getting inventory, lots of it.  This is not to say that all across the country there is no REO inventory, there is - just less and less of it.  The BGT crowd has invented the idea that the banks have the inventory but are keeping it until the prices go up!

How about a few facts that I know are true here in the Phoenix area - and I have every reason to believe are true right across the country (as I can think of NO reason for these facts to only be true here).

Fact: In my local MLS, there are about THREE TIMES as many bank owned homes listed in the MLS as the MLS actually shows.  I know this because two guys who actually look counted them all.  One by one.(Mike Orr of The Cromford Report and Tom Ruff of The Information Market)  They counted them and compared the addresses shown in the MLS, one by one, with the County Assessor records.  These are homes listed by banks who instructed the listing agent to NOT use the term "bank owned" in the listing.

Tom Ruff and Mike Orr spent months going over every deed transfer in Maricopa County (Looking at each foreclosure going to the bank and tracking that house for its current ownership and they could directly account for all but about 5,000 houses) and established that for the Greater Phoenix Area THERE IS NO SHADOW INVENTORY. 

Fact: Major banks often off load huge portfolios of inventory to hedge funds.  Huge portfolios.  Anyone or any organization who is claiming that they are "tracking" what the banks are doing who does not have sufficient access to track those portfolio sales is simply engaging in the simple grade school math referenced five paragraphs above.

No doubt there will be some readers who remain convinced that what they have read about and then co-created must be true.  That’s okay.  If you are happy believing that a Big Giant Tsunami is coming - enjoy the wait.  However, I’m betting you remain completely dry.

For his ground breaking book, "Good To Great", Jim Collins and his research team looked into just about every public company in the United States to find those companies that made the transition from good to great.  Good is the enemy of great - which is why most companies and most people never make that leap.  They are good. They are not great.  To get on Jim Collins "great list" a company had to significantly outperform the other companies in that industry for  a minimum of fifteen years.  Making the great list wasn’t going to be a fluke.  Collins first wanted to isolate the companies, then study them to find out what the great companies all had in common - which is the subject of his book.  A very interesting part of his study was also the direct comparison company chosen that had the same opportunities as the great company - but did not make the leap.  Those companies were studied, as well - to find out what they had in common.

The good to great company that made the grade in banking was Wells Fargo.  The direct comparison bank - that had the same opportunities, but did not act upon them and did not move towards greatness - was Bank of America.

Currently, Wells Fargo is the very best bank to deal with for a short sale.  The very best.  The other banks that are factually as good as, if not better than Wells (Wachovia, World Savings) are owned by Wells Fargo!

I’ve written before about Bank of America.  When it comes to short sales, from an agent’s, buyer’s or seller’s perspective, B of A / Countrywide has been, and is still currently, the absolute worst lender in the United States to deal with - and pretty much everyone in the industry knows it.

Now the good news.  A month or so ago one of the most powerful and truly influential people in real estate, Dave Liniger  assembled some top B of A executives and several United States Senators in the same room.  I think it is fantastic that Dave Liniger can contact them, tell them when and where he needs to see them and have them actually arrive.

Mr. Liniger proceeded to tell the B of A executives that their reputation - in the area of short sales was just awful.  He told them that he had about 100,000 agents with RE/Max and that he doubted very many of them would even consider directing loans to Bank of America.  He pointed out to them that if they had any hope of keeping their agent driven business they had better stop making enemies over in their short sale division.  The senators were a little surprised and dismayed at all the specifics Mr. Liniger pointed out had occurred with regard to loan modifications that never happened (after people were put on wait for six to nine months) and that the same thing was happening with short sales.

The Bank of America executives were shocked and said they had no idea such things were happening and (the good news) vowed to correct each and every one of types of behavior that Liniger had pointed out to them.  Dave Liniger is predicting that B of A short sales will soon be as easy to do as Wells Fargo short sales.

To be fair, B of A is already improving.  The loss mitigation companies they’ve hired to handle some of their short sales is not (repeat, is NOT) difficult to work with, at all.

I personally do not believe that B of A will ever consistently achieve the stellar results that Wells does.  The reason?   The executives were shocked at what Dave Liniger had to tell them - they didn’t already know.  A great executive would have not only known it was happening, they would have been able to predict it and prevent it from happening.  Great executives make it their business to know what is happening in their business.  That said, I still believe that B of A will make great strides and improve tremendously.  I want to add, I am grateful for Dave Liniger stepping up and to B of A’s top management for owning up.

Short Sales are only going to get easier!  So, THANK YOU!

I’ve personally written about B of A Short Sales before and so have many others.  I don’t know if this will get any real traction but below is an unedited (and unsolicited) email I received that was sent out to Realtors across the country.

It’s crazy. Agents are Bank of America’s biggest customer. But they treat us like dirt on short sales. It’s like we don’t matter to them at all. However, we do matter and a whole lot more than they realize. Did you know that their mortgage division is one of their largest profit generators? That means when you send them a buyer, you’re actually helping them make more money. Why are we helping them out by sending them our customers? 

Let’s simply stop sending them business. Hey, we all know they’re making money! They have enough in the bank to pay Ken Lewis seventy-one million in retirement bonuses. And now they’re paying out forty-five billion to the feds so they can hire on a new CEO. Maybe they could use that to hire on more staff to negotiate short sales. Nope! Getting a new CEO is more important than taking care of their most important customers.

Here’s the scary data. We all know that short sales save money. One study showed a 20% higher net on a short sale versus an REO. That’s a lot of money! On a $150,000 mortgage, that means a savings of $30,000. This is their Achilles heel But, they aren’t taking the losses personally. No wonder they don’t want to hire on more staff. But, it costs Uncle Sam. Let me explain.

I remember reading somewhere that 45% of BOA’s loans were owned by Uncle Sam, thru Freddie Mac or Fannie Mae. When we show the American Public that BOA is costing Uncle Sam and the taxpayers tons of money, they will be outraged. So, join me in telling them how we feel and help me get the word out on this atrocity. We can get them to hire on more staff and do a better job on the short sales. But, I need your help.

Go to my site, http://www.SSAgentAdvocate.com and sign up to stop sending your buyer’s loans to them. Do your part to help make short sales work so everyone benefits.

Sincerely,

Ben & Chris Curry - We work at KW in Gainesville, Florida

P.S. Don’t think BOA’s CEO, Ken Lewis, cares about agents. And don’t think that REOtrans is going to solve the problem either. No amount of technology is going to change the fundamental problem. They don’t have enough staff. How can negotiators even think straight when they’ve got 400 files on their desk? Would you?

REOtrans is like putting a band-aid on, when you lost your leg. Rather than take care of their most important customers, BOA think they have more important things to do. What do they consider more important than treating agents with respect? It’s paying their departing CEO seventy-one million in retirement pay and forty-five billion to the feds. Why don’t they use that money to improve their short sales?

If you think that’s outrageous, then pledge your help at http://www.SSAgentAdvocate.com .

P.P.S. Forward this e-mail to your friends. Let’s get everyone we know on board. Then, we can actually get them to change their policies. Here’s a story from one broker whose buyer got lied to by them.

"I just had the worst experience as a broker in the twenty years of selling RE. The local BOA prequalified a client of mine and gave her a prequal letter saying she was qualified for a $105,000 mortgage. I was concerned with her going to BOA  and was skeptical about them qualifying her because she had her own business and did not show a lot of income, but she had a good bit of money in their bank and I screwed up and trusted them. I tried to get her to check with another lender with no success.

Long story short,  after BOA made her pay off her car, transfer money out of CDs, having the loan processor go on vacation the day before closing without telling anyone. The final loan approval guy calls one week after the closing date to say that the Buyers ratios are over 30 points off!

I am not a mortgage broker but even I know that the first thing you check is credit and the second thing is Dept to income ratios.

The moron’s they have working for BOA allowed this poor lady to go through the expense and hassle of their loan process with Dept to income ratios that where nowhere close to being where they need to be.

They had the nerve to call her a week later to ask for a $400 fee they say she owes them for the loan process. Worst experience with a lender in 20 YEARS!" Paul. 

Pledge to stop your sending your buyer loans to them here http://www.SSAgentAdvocate.com .

Sent By: Ben & Chris Curry P.O. Box 2287, Lake City FL 32056.

If you found the above viewpoint interesting - look for my next post on the subject of Bank of America and short sales.  I think you are going to love it!

I haven’t been blogging much lately (for some months) and needed an easy one to get myself started again.  The gift to me is being able to post this here now.  The gift to you is a really (really really) cool book from Seth Godin you can download for free, here.

I think you will really like it.  I know I have.

Merry Christmas to everyone!

This post started as a comment to Matthew Rathbun’s brilliant post.   At the end I decided to make it a post

Truly a great post, Matthew!

I believe that the bulk of the clamor for “more professionalism” that emanates from agents is mostly self-serving gibberish. A person gets into real estate and then observes that the public does not tend to hold Realtors in extremely high regard. Personally, they want to be held in extremely high regard but can’t really see how they can differentiate themselves in the eyes of the public from all the other Realtors – so naturally, establish how “professional” they are by endlessly talking about how “unprofessional” some other Realtors are.

All the while, without once ever bothering to even trying to define “professionalism”.

You hit the nail on the head here with regard to more education: lawyers, for example, are all “highly educated” and yet are not much more highly regarded than Realtors. Why?

Professions that are “highly regarded” tend to be professions where the advice being given is *exclusively* for the benefit of the public or the person receiving that advice: a librarian, for example. The librarian’s personal biases and preferences may well be part of their recommendations – but few people would suggest that certain books get recommended for reading so the librarian can get extra money. The same “high regard” holds true for professions like nursing but tends to fall off a bit when it comes to physicians (they *are* sometimes thought of as money motivated).

We are all salespeople and therefore will always be – rightly - regarded by the public as salespeople. Some of us are quite “professional” at selling, some aren’t. No set of rules or regulations is going to cause people who have low or questionable morals to suddenly act right. Enforcement alone does that.

What would have to change is the complaint procedure - so that agents (who are in a *much* better position to observe wrongdoing) can easily, and in a very short amount of time, file a complaint (sort of like calling 911). Then the investigation and enforcement unit would have to be able to actually look – instantly dismiss complaints without merit or grudge motivated complaints – and take swift action. In short, we would have *real* justice. As we don’t have such a thing (real justice) anywhere else in our society – in this country or any other – I’m not holding my breath waiting on that one.

The most effective thing one can do is to BE the change they hope to see in others. That isn’t an original thought of mine. But I don’t know a better one.

Bank of America is to be Highly Commended for their complete willingness to give so many intellectually challenged people jobs as executives.  Sure, year in - year out, most other banks have always been willing to hire a few people who couldn’t think straight.  But those other banks aren’t getting any awards for what they did for one simple reason: what they did was so darn common.  Now any buzz kill who cares to can go look and find some other division of Bank of America / Countrywide that isn’t being run totally by retards (for example, their REO loss mitigation department).

But I challenge anyone to find any other bank that even comes close to Bank of America / Countrywide’s short sale loss mitigation departments for non-stop, over the top policies and procedures that make life difficult, impossible or at least a lot less profitable for the following four groups (not listed in their order of importance and there may well be others).

• All agents - either on the buyer or seller side
• All potential buyers of any property where B of A holds a 1st lien position
• All of the sellers (their borrowers) trying to work with them to avoid foreclosure
• Themselves.

If B of A is in a 2nd lien position, oddly enough they have workable policies in place (seller IS going to sign a note prior to close to pay the bank a small part of what they owe).  They don’t flex on this issue but it is a knowable and not completely unfair rule.  If they are in 1st lien position their standard and unvarying behavior (if that behavior were being attributed to an individual person) is nothing short of psychotic or completely retarded - at least down at the imbecile level.  No rational judgement, no possibility at all of dealing with them the same way we deal with all the other banks on short sales.

Other than limited personal - and for the most part, completely anecdotal data, most agents doing short sales on the buy or the sell side have a very odd picture of the overall scene.  Loads and loads of mostly worthless gibberish.  Notice how Chase and Wells Fargo are grouped in the same category as Bank of America?  Wells does not ever pay any of the buyer’s closing costs and won’t pay for a home warranty.  But ….. you can routinely close an escrow from start to finish with Wells in about 30 days.  Actually close, it takes less then two weeks to get an approval.  Same with Chase.  Try that with B of A / Countrywide (who collectively have about half of all problem loans in the U.S.)  It takes a minimum of 90 days to get any response back from B of A.  And if you send them anything after submitting the original package (anything, even a better offer) that 90 day clock is reset.  So, with B of A four to five months to actually close a transaction is not uncommon.

It gets better.  Here is a charming response we received from  B of A a month or so back:

"Bank of America is now requiring most sellers to contribute to the loss in order to qualify for a short sale. Please prepare your client for that probability and be ready to let me know how much cash the seller can bring to closing. If no cash is available, the alternative is a promissory note for a larger portion of the loss. this requirement is firm–no contribution from the seller will result in the short sale being declined. There are vary few exemption made to this. The approval time once the file has been submitted will depend on the size of the loss, the investor and the MI insurer, if any."

Arizona is one of ten states that have "anti-deficiency protection" due to the nature of how foreclosure works here - it takes only 90 days from the time the lender files for a Trustee’s Sale for them to take the house back.  Therefore, the anti-deficiency protection (very basic rules - there are others: The same purchase money loan is still on the property, e.g., they never took any money out of the house via a refi and it was a residential property of 2.5 acres or less).

The response from B of A above was on a transaction where our seller would have no possible liability of any kind if the bank were to foreclose.  None.  In this case there was precisely nothing they could legally do to go after him and yet, even after being told this and being asked to please verify it with their legal department, they were not willing to budge - forcing the seller to let them foreclose.  They get a house back that they really don’t want for many reasons, a neighborhood winds up with an abandoned home that will invariably sell for less money after the bank gets it back and so it goes.   

It is as though a complete division of Bank of America executives went looking and anything they found that could slow down the process, make it more difficult for everybody involved or simply thwart the actual goal completely - they carefully noted what that was and then adopted it as firm policy.  I’m impressed.