FORECLOSURE RESCUE SCAMS
If someone who is not your mortgage lender promises to save your home and asks for you to pay money up front, WATCH OUT. Fraudulent foreclosure consultants target homeowners who arebehind on their mortgage payments. Here’s what you can do to avoid becoming a victim:
1. DON’T transfer title or sell your house to the foreclosure rescuer. Fraudulent foreclosure consultants often promise that if the homeowners transfer title, they may stay inthe home as renters and buy it back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to preventforeclosure. BEWARE! This is a common scheme “rescuers” use to evict homeowners and steal all or most of their home’s equity.
2. DON’T pay money to people who promise to work with your lender tomodify your loan. It is unlawful for foreclosure consultants to collect money before (1)they give you a written contract describing the services they promise to provide and (2) theyactually perform all the services described in the contract, such as negotiating new monthlypayments or a new mortgage loan.
3. DON’T pay your mortgage payments to someone other than your lender,even if he/she promises to pass the payment on to the lender. Fraudulent foreclosure consultants often keep the money for themselves.
4. DON’T sign any documents without reading them first. Many homeownersthink that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”
5. DON’T ignore letters from your lender. Consider contacting your lenderyourself, as many lenders are willing to work with homeowners who are behind on their payments.
6. DO contact a housing counselor approved by the U.S. Department ofHousing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800877-
8339) or www.hud.gov.
7. DO consider contacting the Homeownership Preservation Foundation(HOPE), which assists consumers facing foreclosure, at 1-800-995-HOPE orwww.995hope.org. HOPE is a non-profit organization that partners with community-basedorganizations, mortgage companies, and government agencies and is part of the HOPE NOWAlliance supported by the U.S. Department of Treasury and HUD.
IF YOU TRANSFERRED YOUR PROPERTY OR PAID SOMEONE TO “RESCUE” YOU FROM FORECLOSURE, YOU MAY BE A VICTIM OF A CRIME. Please file a complaint with the Attorney General’s Office at the following address: Office of the Attorney General - Public Inquiry Unit, P.O. Box 944255, Sacramento, CA 94244, or online at www.ag.ca.gov/consumers
Real Estate Industry News:
Today's Top Real Estate News Provided by Inman News
So what does "top producer" really mean?
"Everybody respects her," an old friend once explained when I asked about his real estate agent. "She's a top producer."
Looking back, I'm sure my friend had no idea what he was talking about -- he'd never bought a house and had little interest in the real estate racket, but that didn't matter. He'd bagged a "top producer" as an agent. How could I not be impressed?
The concept of the top-producing real estate agent has survived through boom times and bad times, but as new real estate agents have flooded the field and corporate conglomerations have swallowed up the mom-and-pop shops, the label has become an increasingly prevalent tool for distinguishing the cream from the crop. Agents tout themselves as top producers on their Web sites and in their promotional cards. At the end of the year, big companies often take out congratulatory ads in Real Estate Times and other trade rags to showcase their top producers -- their brightly smiling faces glowing next to their numerical ranking like prize-winning livestock at the state fair. There is even a Web site -- Whoisthebest.com -- that directs you to a city's top producer. Last year, the Wall Street Journal published the rankings of the "top" agents from around the country.
But what does it really mean? For many an ordinary consumer, the concept baffles. It sounds good, it sounds successful. But "top" sounds like a very small pedestal -- so how can so many people crowd there together? And "producer"? Putting aside the dairy metaphors that spring to mind, isn't real estate supposed to be a service industry? How does a real estate transaction produce anything?
In fact, the concept of the top producer simply means those agents who sell (either by acting as a buyer's or seller's agent) the highest volume -- in total dollars, not number of transactions. For instance, an agent could say, "I did $12 million last year and became a top producer." It could mean the sale of a single $12 million house or 24 $500,000 houses, but, either way, the total "production" last year added up to $12 million.
The word "production" needs a little parsing. From the perspective of the broker, the product of a real estate transaction is money (in the form of commissions), so "top producer" is really shorthand for calculating which agents are bringing home the proverbial bacon. In an industry where a storied 10 percent of the agents do 90 percent of the deals, top producers are important not only for the owners (or corporate heads) but for their fellow agents as well. Top producers help pay the bills of the office, and they bring in business connections for everyone.
What exactly constitutes "top"? Well, that depends on who you ask. The word takes on different meanings, depending on the company, the time span, the geographical area and even the source of the information. In Backwater County, an agent who does $3 million a year might be the top of that field, but in San Francisco, that's ordinary pickings.
Even within the city of San Francisco the definition of "top" varies greatly from firm to firm. At Richie-Hallanan Real Estate, co-owner Joseph Moore rewards only its top-three realtors, because creating lots of top producers creates ill-will between agents. "[H]aving a disproportionately large group of 'Top Producers' stratifies the office and breeds unnecessary competition (the top 30% is absurd)," Moore stated in an e-mail. "A cooperative office where agents share information and assist their colleagues is better for everyone involved, especially the consumer."
But at a firm where many of the agents would be the top producers in other offices, managers attempt to give credit where credit is due. Yet calling dozens of agents within a single office "top producer" raises questions. Perhaps that's why Dawn Ross, the office manager at TRI/Coldwell Banker on Van Ness, took pains to define the term in the end-of-the-year ad.
"I made it clear in the ad that all our top producers had sold at least $20 million in sales, because I wanted people to know what it meant." she said. Although this puts about 30 percent of her high-flying office into the top tier, she still felt it presented a clear distinction for consumers. In time, she noticed that some companies are content to call nearly all of their agents top producers. "But at some point the word become meaningless. Over the years, the idea of the top producer has gotten diluted."
Indeed, the special label is as much an manager's motivational tool as a marketing gambit. Typically, it is used as the measuring stick for doling out perks. Katharine Holland, of McGuire Real Estate, who joined the ranks of the top producers a couple of years ago, says that the label continues to be a source of motivation. "It wasn't like I thought, 'I want to be a top producer,'" she said. "But I just wanted parking. At my old office, the top producers got parking and an office. After I got it, I thought, 'This is pretty nice.'"
But parking and private offices are not the only perks that come with the elevated status. At the end of the year, many companies throw exclusive parties for their top producers or treat them to a day of wine tasting. In our region, the privileges can be quite generous: The top-producing 1 percent of TRI/Coldwell Banker agents in Northern California are pampered with a free trip to Hawaii. But for some agents, the real advantage is escaping the high-percentage splits with the broker. In many offices, the more an agent sells, the more of her commission she gets to take home. Initially, the splits run around 50-50, but at the top tier they can rise to 90-10.
And not all offices go in for the "top producer" term. "We don't really do that stuff," says Tim Brown, founder of Brown & Company. "If people don't like their commission split, I tell them to come talk to me."
But how do you separate the cream, from, well, the mascarpone? That's easier said than done. Last year, the Wall Street Journal named Barbara Callan at McGuire Real Estate the top agent in San Francisco, based on the cumulative numbers in the multiple listing service (MLS). "I didn't know about it," said Callan. "A friend called me who had read the paper."
But according to Dawn Ross, TRI/Coldwell Banker's top agent Malin Giddings was actually the city's top agent, completing a whopping $152 million in sales last year. Yet, she says, because about $30 million of her sales were from unlisted sales, her numbers were not reflected in her MLS ranking. In any case, both Giddings and Callan took pains to say it wasn't "a race."
As Giddings put it in an e-mail: "It would be a misconception regardless to state that Barbara & I compete on a regular basis. Her territory and mine is very different and always has been. ... Thus I see us as more cooperative professionals."
How much does all this matter to the consumer? That depends on the consumer and the price range of the house. Top producers tend to be more experienced, and they have a proven track record of closing the deal.
On the one hand, there are oodles of highly professional, experienced agents who aren't "top producers" but who will spend more time and attention on you because, well, your patronage is important to them. If top producers are too busy and delegate too much work to their assistants, no matter how successful they are, you may feel like you're just another a cog in their golden wheel.
On the other hand, if you're Larry Ellison and shopping for a 10,000-square-foot pied-à-terre in San Francisco, then using a top-producing agent probably makes sense: Because ultra-luxury agents sell expensive houses, they tend to join the ranks of the top producers. But if you aren't Larry Ellison, you would do well to look beyond the production numbers and break them down a bit. Is it simply that the agent sold a few high-end houses in the past year? Or have they consistently completed many sales in your price range and area? What part of their work do they do themselves, and what part is done by assistants?
In the end, the "top producer" idea may raise more questions than answers, and so some recommend you turn to a real person for advice. "The best way to find an agent is to call the office manager and tell them who you are and what you're interested in selling or buying," said Moore. "They have an interest in making you happy, and they will try to match you with the right person."
Roommates can draw up their own agreements
Q: Is there some standard form of legal document that can be signed between prospective roommates that would be a binding lease just like the contract that is signed between the tenants and landlord?
Tenant attorney Steven Kellman replies: Roommate situations can be difficult because you are sharing common facilities and depending on each other to pay the full rent. These situations invariably will require some kind of understanding or agreement as to each roommate's respective rights and obligations during the tenancy.
While most landlords will require all roommates to sign one lease (as co-tenants), it would be wise to have another agreement among the roommates.
There are many lease forms available for landlord-tenant contracts, but roommate agreement forms are a bit rarer -- especially because these situations are more difficult to put in a standard form.
If such a form is not available, roommates can simply draw up their own agreement to cover areas of concern, including paying rent, sharing of common areas, guest rules, handling of the deposit and what happens when one roommate wants to move out. The landlord does not have to agree to or be a party to this roommate contract.
Q: My husband and I rent a two-bedroom apartment that is probably $300 less than the market rate. Soon after moving in, it became very clear why you get what you pay for.
We have to deal with the manager's four cats that relieve themselves under our windows and outside our front door.
In addition, the grounds are unkempt, the trees are overgrown, and the apartment manager's apartment is running over with trash.
Also, some tenants are suspected of drug dealing. The police have been called and one arrest was already made. The manager threatens to evict these people, but as soon as they wave a little cash under his nose, he lets them stay until they fall behind again.
What are our rights as responsible tenants, who are good, clean people with children? We are afraid of the manager, so if we file complaints with the authorities, we are worried that we can we be evicted in retaliation?
Property Manager Robert Griswold replies: You sure present strong evidence that your landlord and on-site manager is failing to properly maintain the property and does not value your tenancy. Clearly, you should not have to live with these conditions.
The most obvious answer is that your landlord is beyond hope and you should leave to protect your family. Cheap rent should never justify risking your safety and well-being. If you cannot get a response from the landlord to written complaints, then you should exercise your rights by contacting code enforcement or the local building inspection department.
The landlord cannot evict you for making a valid health and safety complaint, but that doesn't mean the landlord won't do something to "get even."
If you are insisting on staying because of the affordable rent, then you are more of a gambler than I would be.
Send questions to Rental Roundtable, 5703 Oberlin Drive, Suite 300, San Diego, CA 92121-1743, or by e-mail to firstname.lastname@example.org.
This article appeared on page K - 3 of the San Francisco Chronicle
Which is better: Keeping mortgage or paying it off?
Financial advisers disagree on benefits of wiping out debt
As many homeowners dip into their equity, a small but growing number are doing the opposite -- paying off their mortgages quicker than lenders require.
But is ending a mortgage sooner than necessary a wise move? There's no simple answer. Financial advisers disagree sharply about whether, and when, such an approach makes sense.
"I talk with clients about this every day, probably five, six times a day," said Jonathan Satovsky, an investment adviser in Manhattan with Ameriprise Financial, a financial management company based in Minneapolis. Satovsky generally warns his clients against prepaying.
First, he said, assuming that the homeowner has a 6.25 percent fixed-rate mortgage and is in the 20 percent income-tax bracket, the net interest rate -- after mortgage interest is deducted on tax returns -- is about 4 percent. Although homeowners would save that 4 percent by paying off their mortgages, he said, they would earn more than 4 percent interest if they invested the money instead.
"There might be periods where the markets go backward, and you think it's a mistake," he said. "But over 10, 15 years, they'll earn a lot more by not prepaying."
In addition, he said, because mortgage interest is front-loaded, the interest deduction drops sharply in the later years of the mortgage.
Andrew Schweitzer, the chief executive of the Gulfstream Financial Corp., an advisory service in Sunrise, Fla., disagrees. "The goal should be to free up earned income so you can accumulate it for retirement," he said. "If I'm paying $24,000 a year on a mortgage, I may have saved $8,000 a year in taxes. But if I didn't have a mortgage, I would have saved $24,000 in overall expenses. It's not rocket science."
By clearing the debt earlier, you pay much less overall in interest over the life of the loan, and free that money for investment.
Schweitzer's company sells a service that essentially uses clients' money to pay bills on their behalf, choosing debts with the highest interest rates first. Typical clients, he said, have about $120,000 in annual household income and carry about $120,000 in debt, from cars, mortgages, home-equity credit lines and credit cards.
With the service, Schweitzer said, assuming the clients spend the same amount but stop using credit cards, their total debt, including mortgages, is typically paid off within eight years. The average client, he said, saves about $200,000 in interest by paying off the debt in less than the full period allowed and pays Gulfstream $1,500 for the service.
Clients can save and invest their money for retirement, he said, and achieve financial independence more quickly than they would have while carrying debt.
(There is an important caveat -- some mortgages carry prepayment penalties, which can total thousands of dollars, so borrowers should check with their lenders for details.)
Other services offering guidance, like PlasticEconomy.com's Track Cards, help homeowners choose which debts to pay off first but do not manage the clients' money directly and typically do not include mortgage payments.
Should homeowners choose to prepay their mortgages, Satovsky of Ameriprise suggests they take out a home-equity line of credit before they begin. "Prepaying is dangerous," he said, if the homeowners' equity is completely locked into the value of the house and they are not disciplined savers.
"You could have $2 million in equity in the home and say you're ready to retire," he said. "I say: 'Great! What will you live on? Social Security? You spend $20,000 a month.' "
If the homeowners then become disabled or unemployed, they may not qualify for home-equity loans when they need money, Satovsky said.
This article appeared on page K - 10 of the San Francisco Chronicle
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