THE SECOND STORY | October 2nd, 2008

Gnarly, Greedy, and Oops- just kidding about that loan…

Often my Saturday mornings consist of listening to the lighter side of National Public Radio as I go about chores, padding around the house. Last May I was spell-bound and amazed as I listened to an episode from This American Life . In it, someone was speaking freely about his involvement as a borrower. He wouldn’t make a loan to a guy like him if he were the lender. And the guy who tells of leaving bartending to making at least 70K PER MONTH after some customer who came into the bar offered him a job amassing mortgages. He now has nothing. This is the penultimate story of OPM. Other People’s Money. And how so many got so much for so little in such a short time, and how it all backfired.

So if you are interested in a real story with real people and real events (the Wall Street guy, a borrower, the loans, the hunger for mortgages, the degradation of standards i.e. deregulation, all bundled together with their particular stories), I’d like to encourage you to listen to, or download onto your portable device The Giant Pool of Money.

It certainly confirmed everything I’d read in my commercial real estate trade newsfeeds, magazines, and investment articles (the few I could comprehend). I remember reading and re-reading about CDO’s – Collateralized Debt Obligations and trying to understand what they were, over a year ago. Of course, what they were was BOGUS! No substance behind them. For me, hearing this program helped me tie all the loose ends together. And as ‘the mess’ has continued to get messier in past couple of weeks it is clear there is plenty of blame to go around for it all.

Real estate this week in Alameda…

I’ve put a new listing on the market 1233 Regent Street (between San Jose and Encinal). Check out the property website. Loads of photos, a virtual tour, and then when you are on the virtual tour home page you can click on the upper left and connect to the video tour. I’ll be there Saturday and Sunday 2-4. Come by and say HI!

Read on for three first-hand financing stories I’ve been involved with this week.

1) Hey, what happened to the loan program we were using? It’s on the cutting room floor. The buyers who were using a state of California loan program in conjunction with another government insured program to purchase a condo I have listed found out a week ago that the California program got cut by the Governator when he approved the budget. So the very good agent, with whom I have worked since we both started the biz over 22 years ago at the same office, is all over it. Based on some facts that came to my attention quite by accident, but that were unknown to the Buyers’ agent, it became obvious her clients needed to dump their ‘friend’ who was ‘doing’ the loan. So they did. And while the issues are not fully resolved at this time, they have a true expert working to get them this specialized financing. If she can’t do this gig, nobody can.

2) Hey, where’d the lender go? Oh, they closed their processing office and sent all the biz to a southern California office. Well, the Buyer is mightily qualified and well-represented, but somehow the loan papers just never showed up – for nearly a WEEK! Only today did the mortgage broker find out that the file has been in a huge pile no longer close by, dumped on people who didn’t expect to see their work load increase. So we missed the closing date and nobody had any reason why. My client, the Seller, is buying an upleg investment property out of the area, moving plans have been rescheduled and utilities turned back on since the move date is the only thing moving at the moment. The agent representing my Seller on the Buy-side has been scrambling with the agent representing the Seller on the other end. Yep, it’s a stack of pancakes and we’re on the bottom, driving everything else. Easy to get mad, better to make nice. Need to stay focused that everybody is working to the same end.

3) What do ya mean you want more money? A contact I’ve come to know through a separate transaction told me today that his previously approved loan for the purchase of an investment duplex out of the area has a few more demands from the lender. What was originally 20% down now must be 30%. What was a 0 points loan is now 2 points. And that’s that.

What do all these transactions have in common? The financing. A Buyer needs to be plenty secure that the financing won’t be changed unilaterally by the lender when it is least expected, i.e. at the last moment, at the end of the transaction, even when the loan was previously approved in writing.

Sellers may see contracts with the Buyer’s financing contingency staying in place through the actual funding of the loan (like 2 days before the closing). It’s about the only way the deposit won’t be at risk if the lender gets gnarley and greedy.

Been there, done that. It helps to have been through several of these market situations over the years. Pity the ones who are trying to figure out to solve problems rather than just write up orders. I LOVE IT! This market gets the riff-raff out and lets the rest of us take care of business.

Active listings 186, 192 last report

Pending listings 71,75 last report

Highest priced new listing Click Here to View Listings

Lowest priced new listing Click Here to View Listings

Tuesday Tour 8 with 2 repeats Click Here to View Listings

New 13 Click Here to View Listings

Price change 10 Click Here to View Listings

Pending 12 Click Here to View Listings

Sold 12 Click Here to View Listings Don’t be fooled, 1621 High Street was on the market a long time and started at 899K – sold for 799K

BOM (back on market) 2 Click Here to View Listings

Expired 9 Click Here to View Listings some may show up as new listings.

Withdrawn/cancelled 5 Click Here to View Listings some may show up as new listings.

Listing Awards this week…remember this is only my perspective. Too many awards, not enough recipients again.

Winner, Cute/Charming, Bang for the Buck (my new listing!) 1233 Regent

Get Me to Rehab Click Here to View Listings great location, tough floor plan

Have a great weekend. For all our sakes, I hope it rains but may it not interfer with your plans!

Carry on! Marilyn

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I arrived in Alameda in 1973, as a new bride...with husband Carl Schumacher, both of us from Newport Beach. He was embarking on his career as a Naval Architect (i.e. yacht designer) under Gary Mull. Please see the 'ABOUT ME' page in this website! to see how it has all turned out! I'm so blessed!