This is the plan forwarded to our elected officials.
We Need to Save Ourselves
An outline for Moving Forward and ending the Real Estate Crisis
Terence L. Whitington III
888.706.0011
The problem:
a.
Exotic mortgages lead to skyrocketing property values
b.
Clients were placed in mortgages beyond their means
c.
Adjustable rate terms were hidden from borrowers
d.
Payment increases beyond borrower’s ability to repay
e.
Market changes eliminated the ability to refinance
f.
Unemployment and underemployment are increasing
g.
Exotic mortgages were originated through August 2008
h.
Upwards of $2 Trillion of resets and adjustments due to occur by
2010
i.
AAA rated borrowers are defaulting in historical quantities
j. The worst of the problem is in front of us, not behind
2.
Many people are underwater and feel helpless
a.
Clients owe as much as $500,000 more than the property value
b.
Zip codes where over 50% of the homes are underwater
c.
Lack of viable solutions, flexibility or desire by lenders
d.
Public perception of indifference
e.
Servicers are not trained, capable nor have the tools to help
a.
Unscrupulous lenders targeted the elderly
b.
Loans terms create scenarios which fixed income borrowers have no
hope of repayment or escape
c.
The ability to re enter the work force to recoup their losses are
next to impossible
d.
Many used their equity to help their children purchase homes, now
underwater and foreclosed on
e.
Equity has evaporated eliminating a significant asset and safety net
f.
Pensions are at risk as companies fail
g.
Investments are earning less
h.
Do we really want to be the generation to watch our elders go
homeless?
a.
Servicing companies/departments are designed to collect payments
b.
Servicing was designed to deal with .02% foreclosure rate
c.
Servicing employees are not trained negotiators
d.
Centralized, international locations
e.
No enforcement of servicing laws
f.
Many servicers are located in states or countries with lax or no
servicing law by desig
a.
With the best of intentions, every program has failed
b.
Top down thinking
c.
Detachment from real problem and solution
d.
Centralized, one size fits all solutions
e.
Increased and escalating foreclosure actions
f.
2500 foreclosures per day and rising
g.
Every section of the national economy is affected
h.
Historical first for a recession caused by real estate
i.
Action needs to occur QUICKLY to stem more damage to the economy
a.
Unemployment, housing, food stamps will all need more resources
b.
Unemployment leads to higher crime rates
c.
Police services are strained with additional vacant homes and calls
d.
Social services are having cope with increased demand
e.
Cities and counties have additional maintenance of vacant homes
f.
Property tax revenue is dropping significantly
g.
All levels of government are asked to face budget cuts
h.
More foreclosures lead to more strain on public services
The Solution:
a.
Home ownership is a cornerstone to our economy
b.
Home ownership increases pride in self, neighborhood, community
c.
Cost of foreclosure can no longer be measured by individual terms
d.
Stop the downward spiral of foreclosure/value
declination/despair/indifference/walking away
e.
The recovery of the national economy begins with increasing home
ownership
f.
Realize there are not enough buyers to purchase all the foreclosed
homes
g.
Retention mitigates the immediate and overall loss to the
investor/community/state/nation
h.
This crisis is unique in real estate and American history
i.
The effects are statewide/national/global
a.
Loan negotiations need to be face to face
b.
Factual, complete, accurate and unfiltered information
c.
Knowledgeable, empathetic professionals
d.
Stop treating customers like criminals
e.
Neighborhood and community information as part of the solution
f.
Long term solutions which are permanent and attainable
g.
Local and individual authority to negotiate
h.
One size or solution does NOT fit all
i.
Commitment to eliminate foreclosures
j.
Enforcement of fraud/collusion with authorities
a.
Foreclosure is expensive in actual dollars
b.
Foreclosure decreases returns the subject property
c.
Foreclosure decreases the values of the entire portfolio
d.
Quick resolution turns an expense into revenue
e.
Savings to the investor of 25 to 50%
a.
Homeowners in fear do not spend
b.
Neighborhoods look like war zones
c.
Vacant homes become hotbeds of crime/decrease surrounding values
d.
Every sector of the economy is in decline, many in free fall,
collapse or bankruptcy
e.
The working person needs a solution NOW, it needs to be clear,
direct and to the bottom line
a.
Home ownership is responsible for the health of the American economy
b.
The investor will receive a better return on investment with
increased home ownership
c.
Main street needs to return to profitability
d.
No amount of “bailout” money will provide the simple pride of
earning one’s keep and paying your own way
e.
People want solutions, people want what’s fair, and people want to
be self sufficient
f.
When people feel confident and proud, they are willing to spend for
goods and services, increasing profits all around the globe
How we get there:
a.
Subprime borrowers are not “credit criminals”, but were often placed
in subprime loans based on increased commissions
b.
Borrowers who fall behind are harassed, threatened, intimidated,
insulted and belittled
c.
Unemployment and underemployment are not crimes
d.
Yes, EVERYONE is affected by foreclosures
e.
Servicers are giving lip service to the public about their due
diligence to aggressively complete loan workouts
f.
Recipients of loan workouts are not getting a “free ride”
g.
TILA, RESPA, ECOA CRA and Predatory Lending laws were not, and still
are not being followed or consistently enforced
h.
We hear how certain corporations are “too big” to be allowed to
fail, The New Deal started with realizing no American is “too small”
to be allowed to fail
i.
A Zero Tolerance Policy on allowing bad lending decisions to further
erode our American Dream
a.
There is a solution for 99.95% of the homeowners
b.
Current retention programs are insufficient to meet demand
c.
The foreclosure cycle is destructive to the economy
d.
Most foreclosures net the investor less than the value determined at
the decision to foreclose, often significantly
e.
For the relative few who no solution can be found, property values
will have stabilized and net the investor a higher return
f.
We need new original ideas to meet the crisis in front of us
a.
Decentralize and regionalize servicing in areas needing attention
b.
Change legislation to mandate servicing on delinquent accounts to be
completed by new/neutral/strictly governmental controlled servicing
c.
New servicing would kick in when accounts become 45 days past due
d.
Servicing would continue and similar revenue structure and payments
to investor
e.
Hire professionals who understand real estate, lending, are fluent
and able to intelligently document conditions and find solutions
f.
Extensive training and supervision
g.
Friendly/non confrontational approach
h.
Clients will work the same Professional during their entire case
history
a.
All laws regarding servicing rights remain in force, protecting the
borrower and investor
b.
Correspondence and contact with borrower will be with respect and
consideration
c.
Face to face contact will be initiated
d.
Proactive contact by servicer to solve each case
e.
Failure is not an option
a.
Each regional center to be authorized to negotiate within
established parameters
b.
Solutions to include lowering payments/interest
rates/principal/defer/forbearance/solicit new ideas
c.
All solutions to be time oriented/reviewed as circumstances dictate
d.
Bottom line solution oriented
e.
All forms of income to be documented
f.
Neighbor and community information/sales/trends considered
g.
No punishment for the truth, no “gimmicks”, no need to “trick” the
system
h.
Help clients who are overstretched purchase property within their
means
i.
No free rides or fraud tolerated
a.
Fraud is small by percentage and should not prevent helping those
who truly need help
b.
Zero tolerance for intentional fraud
c.
Safeguards and QC to be implemented to verify and document all data
d.
30 day eviction process empowered by legislature
e.
Fair treatment will net fair results
a.
Solutions only for the direct property owner/no cosigners/straw
owners
b.
Property taxes and dues to be paid directly
c.
Utilize payroll deduction services
d.
Jointly share in future appreciation for a reasonable period of time
e.
30 day eviction for those who do not comply with assigned
Professional
f.
Safeguard and adapt as exploits are uncovered
g.
Program is intended to help honest, hardworking people who are out
of their depth or resources, not to provide free housing for
freeloaders
a.
Currently investors lose principal, interest, hard costs
b.
Significantly reduces the amount of principal loss
c.
Increase the interest income/decrease the period of time without
payment
d.
Eliminate the out of pocket expenses associated with foreclosure
e.
Stabilize the real estate market/increase or level the mark to
market of the remaining portfolio
f.
Take an asset that is non performing and converts to performing
a.
Multiple cities and states are in foreclosure spirals
b.
Historical solutions no longer apply
c.
Continued foreclosures will only exacerbate the problem
d.
Stopping foreclosures will allow the economy to recover/employment
to stabilize and eventually recover
e.
Foreclosures damage everyone and every entity in the chain:
borrower/lender/investor
f.
Foreclosures ruin neighborhoods/communities and have led to
financial damage around the globe
a.
The social and personal damage far exceeds the financial
b.
Denial, depression, loss of confidence and self worth
c.
Neighborhoods and communities suffer downward spiral
d.
The solution lies in breaking the cycle
e.
Breaking the cycle requires bold moves and a very strong proactive
approach and the courage to do what is necessary
a.
Every crisis attracts the cockroaches
b.
Foreclosure scams/schemes abound
c.
Victims of predatory lending become victims in foreclosure
d.
The prey would have safe harbor, one safe catch all, no confusion on
who to call or contact
e.
The cockroaches would have no market or scheme
a.
The mortgage industry was unregulated and unsupervised
b.
Take the profits fund education/enforcement/prosecution
c.
Eliminate predatory lending
d.
Use this opportunity to learn from our mistakes
e.
Housing is too important to our economy and society to allow this to
happen again
a.
Create a mandatory education program for First Time Buyers
b.
Establish a neutral review of purchase contracts and mortgage
documents BEFORE signature
c.
All states practice Good Funds Laws
d.
Elimination of Prepayment Penalties
e.
Purchase transactions to have 3 day rescission rights
f.
Better tracking of criminal histories of violators nationally
g.
Prevention and screening of violators from working in the industry
in another location
h.
Simplify the process and documentation to insure borrowers
understand what they’re signing
i.
Eliminate certain types of loans to certain borrowers
j.
Lower income borrowers, elderly, unsophisticated borrowers gain
protected status
k.
Establish a review panel to suggest further safeguards
l.
Higher accountability to those in the industry
m.
Institute a National Amnesty for foreclosure victims to purchase
homes
a.
The cost to the investor would be similar to current industry norms
b.
No front or backend cost to the taxpayer, investor or borrower
c.
No hidden or surprise fees
d.
Opportunity to prove the program on current portfolio of foreclosure
status loans
e.
The cost to our economy of allowing this crisis to run its course
will be in the trillions
f.
The opportunity to turn something negative into a positive
g.
Complete transparency to GAO and State Controller
a.
This is not a contained issue, but one that affects everyone in the
country, as well as the global economy, and will continue to spread
b.
More than a trillion dollars of loans are still due to reset,
possibly more than 2 trillion, the problem is far from contained
c.
Too often we pass people by who need help, but for the Grace of God,
we would be in the same place
d.
Rarely does an opportunity present itself to help so many for so
little cost
e.
Having one clear solution eliminates all the confusion by the
public, prevents abuse, and returns the profits back to the people
who need help
f.
Every program, with the best of intentions, has failed
g.
If not us, then who?
I believe there will be good that comes from all of this.
We will experience a new time where people are not slaves to
a mortgage, buying a house will cease to be a confusing, excessively
expensive and stressful event.
Buying real estate will simply be a home for families to live
in, financed fairly and at a reasonable cost.
We have the opportunity to safeguard against the abuses of the most recent real estate bubble, and insure our children and grandchildren never face this same crisis.
We are of the same stock that overcame The Great Westward Expansion,
The Great War, The Great Depression, and The Cold War.
We will overcome this, too.
