Love's Real Stories

Uncle Sam wants to sell his house. His houses, that is. In fact, he has hundreds of thousands of houses to sell.

Uncle Sam owns houses all over the United States because he foreclosed on them. Uncle Sam doesn’t want to own houses. He has sold a bunch, but he’s stuck with the worst.

Some of the houses have been stripped and peeled to the bone. Some stand unfinished; others need to be torn down.

Some of the houses stand out like a bad tooth in nice neighborhoods. Some stand together like a mouthful of bad teeth in neighborhoods where nobody lives anymore, and nobody wants to live.

Uncle Sam has a new plan for selling his houses, and Californians don’t like it.

The plan is to package these houses together, thousands of them per package, and offer them up like grab bags for investors to buy. The minimum bid for each package is fifty million dollars. Yes, that’s right, $50,000,000. The investors must remodel or rebuild the houses, and agree to rent them out to tenants for at least one year.

The idea is to bring families back to ghost neighborhoods, reseed swaths of blight across the country, and bring life back to dead zones.

Californians don’t like the idea because the state is reseeding on its own. The California market is absorbing foreclosures, and life is coming back to dead zones.

The president of the California Association of Realtors, Le Francis Arnold, put it this way: “It’s a terrible idea for most California homeowners and small investors. So strong are sales of foreclosures in our state, the inventory of properties has fallen to levels considered low even in a normal real estate market.”

At fifty million a pop, the likely buyers for Uncle Sam’s houses are Wall Street investment syndicates, hedge funds and institutional investors.

“The government should let small local investors participate who have a stake in their own communities,” said Arnold.

“Wall Street does not need another gift at the expense of taxpayers.”

Realtors are asked one question time and again: “How’s the market?”

The classic answer, one word: “Unbelievable!” The word covers a lot of ground; the wide dry deserts of short sales, the jungles of foreclosures, hard times and good times. Unbelievable was the giddy ride to the top of real estate sales 1998 to 2005, then over the peak, into free-fall down the other side.

The six- year slide down from that peak may be leveling off, according to recent reports. We’ve even heard claims of an uphill climb. That seems unbelievable.

I gazed out my office window pondering, “Which way are we really headed?” I should call my assistant and begin an investigation. I jumped in place when my assistant blasted in, smacking the door against the wall like a cannon shot.

“Must you?” I said.

“Hey, you called me.”

“No I didn’t. I mean, I did? Anyway, let’s go,” I said.

“Where to?” he asked

“To find out where we’re really headed,” I said.

He looked at me with a twisted brow and a hanging jaw as if to say “Haw?”

I slugged down the last layer of sludge from my coffee cup, flipped the lights, said goodbye to everything familiar, and hit the road.

I travelled six doors down the hall and walked into the office of a realtor. “How’s the market?” I asked her. “And don’t say unbelievable.”

“Okay. Different,” she said, “very different.” She said open houses are busier than they’ve been in a long time. Multiple offers are commonplace. Inventory is low, and buyers are competing for the few properties on the market.

“I’m working with buyers who are so frustrated they’re going crazy,” she said. “We’ve written full-price offers on six properties, and lost every time to buyers offering all cash, no loan.”

All-cash buyers are more prevalent than she’s seen since pre-peak days.

My assistant met me back at my office. “An appraiser told me sales are higher and prices are rising here in the North Valley,” he said. “Unbeliev—-“

“Hard to believe,” I said.

Eighteen out of twenty-five is a good record. Pitchers, hitters, and quarterbacks are smokin’ when they have a record like that. California got a smokin’ 18 out of 25 billion dollars when Attorney General Kamala D. Harris stepped up to the plate and hit a home run at the National Mortgage Settlement negotiations.

The settlement is a $25 billion fine paid to the states by banks for their rampant robo-signing and massive mortgage misconduct.

Attorney General Harris and California walked out of the multistate negotiations last September when the estimated relief to California was $4 billion. Harris held out for more. She also demanded the right to enforcement if the banks don’t live up to the agreement, and the right for California and other states to continue investigations into the banks’ misconduct for possible prosecution.

“California families will finally see substantial relief after experiencing so much pain from the mortgage crisis. Hundreds of thousands of homeowners will directly benefit from this California commitment,” she said. “This outcome is the result of an insistence that California receive a fair deal commensurate with the harm done here. We insisted on homeowner relief for Californians and demanded enforceability so homeowners actually see a benefit that will allow them to stay in their homes, and preserved our ability to investigate banker crime and predatory lending.”

As part of the separate California guarantee, banks must spend a minimum of $12 billion on principal reductions and short sales for an estimated 250,000 homeowners within the first year of the agreement. Failure to achieve this will result in cash payments of up to $800 million to the state. Unlike the larger multistate agreement, which is enforceable in a federal court in Washington, D.C., this payment provision empowers the Attorney General to summon the banks to California state court.

The Attorney General said other financial benefits for California include $849 million for refinancing 28,000 borrowers who are underwater but current on their payments; $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011; $1.1 billion for unemployed homeowners, transitional assistance, and repairing blight; $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners; and $430 million to the state attorney general’s office for costs and fees. To speed investigations and strengthen prosecutions of these mortgage cases, California will expand its. Mortgage Fraud Strike Force, and will look to collaborate with other states focused on law enforcement response to the wave of mortgage fraud.

Harris says she will propose a comprehensive legislative agenda to protect homeowners in the mortgage market, and build on the three-year reforms agreed to as part of the California settlement. “This is an historic amount of relief for California homeowners,” said Harris, “but it is one piece of a broader focus. We will continue our crackdown on mortgage fraud and quickly move to pass legislation that will simplify and upgrade our broken mortgage system.”

Californians are cheering on their big hitter, Attorney General Kamala D. Harris. “The banks threw a bunch of curveballs and sliders, but Harris has a good eye.” said one Californian. “She waited ‘em out, and when they tried to sneak a fastball past her, she knocked it out of the park.”

18 out of 25 so far; keep swingin’, Harris.

A strange, unexpected thing has happened in the world of real estate; a bizarre, momentous, game-changing thing. This thing that happened is like having your bad neighbor- the neighbor who shot at your dog and cut down the tree on your side of the property line, and conducts AK-47 target practice every Sunday morning- bring you flowers and a warm pie, and smile at you without the usual tobacco juice dribbling down his chin. Wait, that sounds more like my neighbor. Maybe your neighbor just gives you the stink-eye, or maybe you give your neighbor the stink-eye. In any case, you know what I mean; friendly gestures would be unexpected, or even momentous and game-changing.

Here’s the thing that happened: a short sale negotiator for a bank returned a phone call. Yes- called a realtor back! And that’s just the beginning. This short sale negotiator, this person, gave their name, their real name! It gets more bizarre. This person took the time to explain the process for the short sale, and- get this- apologized for a slight delay, that it was the bank’s fault! It’s as if O.J. Simpson raised his hand and said, “I did it.”

The thing sounds crazy, especially to people who have been through the grueling short sale process, wherein short sale negotiators torture realtors, buyers and sellers, requiring refrigerator-sized stacks of documents filled out in triplicate, originals only (“any mistakes and they will be sent back”). Then again (“fill them out and fax them”); and again (“fill them out and email them”); and again (“do it all again because the documents were lost. Not the bank’s fault”). Days and weeks and months with no word go by (“don’t call, email only”).

One buyer said pregnancy and giving birth was like the short sale process, except faster and less painful.

Here’s the game-changer: this short sale negotiator, this person who called back, said this is a “new type of short sale”– a “DTS” short sale- with guaranteed approval by the bank in five days. That’s days, not weeks, not months. And then (are you sitting down?) this person gave the realtor a private phone number and said, “Have the buyer call me any time.” That’s crazy talk.

That’s the kind of crazy we could get used to.

Are you ready to fight the bank? Good luck, especially when it comes to short sales. If you happen to find yourself in a short sale, you’ll have a fight with a bank, alright, but all you can actually do is plead. You’ll become frustrated and angry. You’ll probably find yourself saying, “I hate the bank!” or “How can they treat us like this?” You might think that aggressive action will get results, but you might as well get in a bare-knuckle match with a brick wall. The bank is big. The bank is indifferent. You’re puny. In the end, you’ll wind up like all the contestants before you. You’ll be on your knees, pleading with the big bad bank for mercy.

Why is this so? In a short sale, the seller and buyer of a home must wait for the bank to accept less than it is owed because the house is being sold for less than the loan against it. “Wait for the bank” is an understatement. Buyers have seen their kids grow up and leave home while waiting for the bank. Realtors have suffered dementia and physical atrophy waiting for the bank.

The bank’s method for granting acceptance is to implement a regimen of slow, tedious torture. They lose paperwork, demand ever-increasing stacks of forms, never communicate, and withhold acceptance. The bank hides behind “Asset Managers” who systematically ignore the desperate struggles of their victims.

Enter the California Association of Realtors (CAR). CAR conducted a “Short Sale Satisfaction Survey” of its 150,000 Realtor-strong membership. The results not surprisingly, show overwhelming dissatisfaction. Realtors cite “unresponsiveness, onerous procedures, and long delays” in the short sale process, not to mention high rates of blood pressure, migraines, and divorce.

CAR is fed up with the banks, and has decided to do something about it. What are they doing? They’re pleading.

That’s right. CAR published an “Open Letter on Short Sales” in major newspapers up and down the state, calling on the banks to have mercy on us all. In the letter, CAR President Beth L. Peerce says, “Short sales can play an important role in our state’s economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market. Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of properties they don’t want to own in the first place.”

Ms. Peerce urges the banks to “standardize and streamline” the process, and to “increase staffing with the goal of eliminating service issues.” Then she points her verbal finger at them and says, “Poor and slow service has only exacerbated the problem. Horror stories abound from potential homebuyers and Realtors forced to wait 90 days or more for a response, or being required to fax short sale applications or other paperwork as many as 50 times.”

CAR is a powerful organization with lobbyists and political liaisons that have access to high places, and when President Peerce speaks, people listen. But when it comes to short sales, the banks might as well be on another planet. CAR is reduced, like the rest of us mere earthlings, to one option:

Pleading.