BACKGROUND

A couple of quick definitions before we proceed.  The definition of a corporation is that of “a group of people authorized by law to act as a legal personality and having its own powers, duties, and liabilities.” A person is defined as “a human being as distinguished from an animal or a thing.”  And the definition of personhood is “the condition of being a person who is an individual with inalienable rights, esp under the 14th Amendment of the Constitution of the United States.”

The 14^th Amendment to the US Constitution was adopted in 1868 with it’s main portions being the Citizenship Clause, Due Process Clause and Equal Protection Clause.  The US Supreme Court, as a matter of interpretation of the word ‘person’ in the 14^th Amendment, have extended certain constitutional protections to corporations.

We’ve been hearing in the political arena, as of late, that corporations are people.  The purpose of this article is not to belabor this point nor get into the politics of such.

What has brought about my writing this is because of a situation that I’m currently dealing with a lender.

THE SITUATION

We were moving along smoothly to closing on a property until it was noted that their was a lawsuit in the community that had to be addressed.  I’m not going to bore you with all the details, but the short version is this.  The lender, Sun Trust, was given all the documents from the public records on a Tuesday evening.  OK, so let’s say they had it on their desks by the latest of Wednesday morning.  Usually, a determination is made within 24 to 48 hours, so we would think that we’d have an answer by Thursday or at latest that Friday.  Yes, that was Good Friday, so many probably took off for a long weekend as it was a holiday for many.  Yet, here we are on Monday, late morning, and yet response.  Even the manager of underwriting has been unable to get a response from the legal department that is to hand down the determination.

So what’s happening now is that we have buyers & sellers full of angst as well as their real estate agents and mortgage broker.  The sellers wish to close on their property so they can move on.  My buyers are stuck in limbo as they are in a situation in which they have to be out of their current home, have to find a place for their possessions and well as someplace for themselves to go in the interim.  The other agent and myself are not concerned as much about the payday, for we believe that will happen eventually, but the fact that our clients are being put through the so-called wringer.

COMPASSION

Compassion is a human quality defined as “a feeling of deep sympathy and sorrow for another who is stricken by misfortune, accompanied by a strong desire to alleviate the suffering.”

I have so much compassion for the buyers and wish there was more I could do to ease their plight.

But let’s go back to corporations, and more specifically For Profit Corporations.  They have a goal and that is obviously profits for their shareholders.  That is fine and they look for ways to maximize these profits.  More profits; more dividends; happier shareholders; and, hopefully higher stock price.  But what we have seen in the recent decades takes this to another level and that is of corporate greed!

We hear about these mega bonuses and payouts specifically in the financial sector from corporations that we have had to bail out.  We all have heard the quote from Gordon Gekko in the late 80’s movie Wall Street in which he intoned that ‘greed it good.’

Another definition is needed.  Greed is the “excessive or rapacious desire, especially for wealth or possessions.”  Where there is greed, there can be no compassion.  I don’t see how the two can exist on the same plane.

SOCIAL GOOD

As of late, we are hearing more and more about corporations that are not only delivering profits, but also social good.  This is a new breed of corporation in which social impact is measured in equal terms to net income.  We are seeing more that want to do ‘well’ by doing ‘good.’

What would be lovely to see is a little humility in the corporate world and a realignment of priorities.  Maybe this is a little pollyannaish, but….

Until next time….Marc It Sold!!

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Unfortunately, with every good program, there are those out there that will try to find scams to enrich themselves at the cost of everyone else. This is true with this program as well and the IRS (Internal Revenue Service) is examining questionable claims. Of course, this adds more expense to the program which is generally thought to cost approximately $1B per month.

Mixed Reviews – the Dow’s been toying with the 10K mark and we’ve seen some steps toward improvement in the real estate industry, yet, unemployment figures and foreclosures are putting a damper on any kind of thought of a quick recovery. We are experiencing the longest recession since the ‘30’s and the worst unemployment rate in 26 years.

Now it could be worse, but how do you tell that to your neighbor who’s out of work and in jeopardy of losing their home? I have a dear friend who’s been out of work for 6 months, but what makes this situation worse is that he has a roommate who is not only out of work but also dealing with chemotherapy. Now he’s in jeopardy of eventually losing his home and doesn’t know what he can do to help the roommate.

This is just one situation, yet there are many, many like this and these are our neighbors and friends.

OK, so now with all that doom & gloom said, the National Association of Business Economics (NABE) released a report last week in which more than 80% of economists surveyed believe that the recession is over & we are starting a period of expansion. Granted, the unemployment rate and federal deficit are expected to remain somewhat high through 2010.

Additionally, they expect overall housing prices to increase by 2% and that 2010 will be the first year since ’05 that the housing industry will contribute to the nation’s overall growth.

Many economists believe that we’ve exited the recession during the last quarter and that we are entering the recovery period. The situation that we currently find ourselves in did not occur overnight. It took years to create and will take more than just a few quarters of growth to repair it.

Till next time….Marc It Sold!

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This could be a long convoluted series of articles, but I’ll try to summarize what’s occurring in the appraisal industry.

Yes, we all know of the fallout with subprime loans & homes being grossly overvalued.

Short history… Lenders used to work very closely with certain appraisers. As everything was going crazy they told their appraisers to appraise a property for the value that the lender wanted otherwise they would use someone else. This was the appraisers’ lifeline, so they had to do such. And therefore, values went up and up and in many cases at astronomical rates.

We know what happened with most of those loans and are seeing the fallout of such. Unfortunately, in their efforts to correct a wrong, those in charge are going too far and after the incorrect parties. Andrew Cuomo, Attorney General of New York, helped push us to HVCC (Home Valuation Code of Conduct) which went into effect May 1.

Update… Now lenders have to go through a management company who in turn mete out appraisals. The problem here is that this company takes a portion (40% or more) of the cost of the appraisal. You have to understand that the management company is profit oriented, so you can only gather that they choose the lowest bidder. Now seriously, think of this. How do you expect to get quality work for minimum bid? I’m not saying it can’t happen, but …

Many of these appraisals are being performed by appraisers who are outside of the market. Therefore, they are most likely not as well informed on those current market conditions and nuances that affect each individual market.

To further complicate matters, I cannot talk to the appraiser, nor can the lender or anyone else who’s considered ‘an interested party’ in the transaction. So if I want the appraiser to take into consideration other comparables, I would have to contact the management company with this information.

Now, there is a way around this, go VA or FHA. You see, HVCC only applies to loans of 1 – 4 family residential units that are sold by Fannie Mae & Freddie Mac.

The use of HVCC is affecting all of us, not only the lender, appraisers and Realtors, but also YOU – the buyers, sellers and homeowners.

The market has been correcting itself. Sales have risen, the inventory is dropping and median and average sales prices are in many cases progressing in an upward trend. With the use of HVCC we are seeing many homes being undervalued and therefore the ensuing loss of value to the community and in many instances prospective sales that are not coming to fruition.

There is a move about for an 18-month moratorium to HVCC. This is necessary for the market to continue to correct itself. This is also necessary for HVCC to be corrected itself. Our legislators need to do the right thing to help us protect our home values.

Till next time….Marc It Sold!

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One of the main issues that we, The Florida Association of Realtors® and the Orlando Regional Realtor® Association, are following & supporting is SunRail, the proposed 61 mile commuter rail stretching from Deland to Poinciana formerly known as the Central Florida Commuter Rail. Before we go into the he said/she said and some of the motivation behind some of these half-truths, etc. about SunRail, let’s look into the economic impact of such.

The Florida DOT hired an outside company to perform an economic impact analysis of the proposed SunRail. What their findings showed was that it would almost immediately create 13,000 more construction and operations jobs with an impact of more than $350M in household income.

Additionally, it was noted that within a one-half mile radius of the station stops it would further create an additional 113,000 construction jobs; $4.6B in construction dollar earnings over the next 20 years; an increase of almost 9 times the value of property; and a further economic impact of $2.5B from workers living and spending in that area.

This is a phenomenal impact in this day age and does not even take into consideration the benefits that this will allow others a reasonable form of transportation. And let’s not forget the health benefits. Without SunRail and additional two more lanes would have to be added to I-4. Instead, we should be seeing a reduction in this traffic and its associated pollution.

OK, so let’s now look at another aspect of why SunRail is needed and why it has to be now! Several years ago, the Federal Government earmarked monies to Florida for a similar purpose. Unfortunately, we could not get the measure passed and the monies went to Charlotte, NC, which is running what I understand to be a profitable system. If Florida does not pass this legislation, I do not see the Federal Government ever offering us these funds again for commuter rail. Why should they? This isn’t baseball where you get three strikes!

One of the main opponents to SunRail is Sen. Paula Dockery. She states her main concern is because the freight trains will divide the downtown of Lakeland & she’s been also been touting the liability issues. We’ll discuss those in a moment, but it must be understood that she also has a personal background and I think this goes much deeper. You have to understand that her husband lost millions upon millions of dollars when the high-speed rail amendment did not pass several years ago. Think she has a bad taste in her mouth and might just be a tad retaliatory? I do, but then again that’s just my opinion.

Firstly, the State of Florida is buying CSX’s tracks and this figure is not overstated and in fact falls between two independent appraisals of such. Secondly, she states that the no-fault liability unfairly benefits CSX. The liability provisions are basically the same as those of South Florida’s Tri-Rail system. What’s even funnier is that Sen. Dockery voted in favor of that back then.  Hmm…do we see a contradiction here?

The are other arguments on both sides that are unfounded and the fact is that the citizens of the State of Florida will not be on the lam to pay for SunRail if the federal funds are not received.

Sen. Gary Siplin, another opponent who is not fully cognizant of the whole situation, was under the impression that the monies should be used elsewhere, such as for education. That’s all well and good, but there is a problem in that the funds we are talking about here can only be used for transportation projects. When this was explained to Sen. Siplin, it appeared that a light bulb went off in his head.

The benefits of SunRail to Central Florida are great. But if we do not go ahead with this project, we will not see any more federal dollars coming through for other rail projects in Florida and that will be a tragedy of greater proportions.

Call your Legislator today! The State of Florida Needs SunRail and so do you!

Till next time…Marc It Sold!

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Next week, I’m heading to Tallahassee with the Orlando Regional Realtor Association for the Great American Realtor Days with the Florida Association of Realtors.  It should be interesting.  Last year there was a legislator that was so rude to us that I was ready to walk out of their office, but didn’t out of respect for the other Realtors with me.  This person was more interested in opening their mail than talking to us, yet they wanted out support – go figure!!

Anyway, look forward to new posts coming soon!

Til then…Marc It Sold!

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On March 10, 2009, Marc Grossman, GRI opened Marc It Sold!, a real estate services firm serving the Greater Orlando Central Florida area.

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…or at least that’s what he’d like people to think. Guess that’s why he’s named himself that on his website. But Florida Governor Charlie Crist is anything but. He is just a political animal looking for his next appointment. He can’t even get through one term in office and he’s already been vying for one job and is now looking forward towards another possibility.

My reason for writing this post came about after a Government Affairs Committee meeting for the Orlando Regional Realtors Association last week while talking with a couple of colleagues. We were discussing the upcoming Legislative Days in Tallahassee and I made a disparaging remark about our Governor. One of the woman asked me why and my response was that Charlie Crist surely can’t like his job as Governor of this state. Additionally, there is a great editorial by Mike Thomas in yesterday’s Orlando Sentinel, As rendezvous with harsh realty nears, Crist may consider Senate bid.

Since he’s been in office he’s been trying to get other positions. He couldn’t have been further up Senator John McCain’s derriere following him around the country seeking to be his running mate for the Vice Presidential nomination. Now, that is gone he wants to run for the U. S. Senate. Sorry, but maybe you should take some time and take care of things at home before moving on.

You never know what will come from Charlie Crist. He hasn’t accomplished one of his campaign’s goals and on top of that has reversed his stance several times. To make himself more appealing to the McCain ticket he thought it would be good to change his opinion on Offshore Drilling. The heck with the environment and the people of Florida.

I can understand wanting to get ahead and being politically motivated, but….doesn’t there have to be a limit? It’s understood that Charlie is looking towards the White House and the thought of that really scares me. He can’t take care of his present position, how the heck can he take care of this nation.

Crist is very charismatic and we’ve all got sucked into his speeches, but when you look at them, they’re all rhetoric. He speaks about being bipartisan and reaching across the aisle, but he is only interested in one goal….and that is promoting Charlie Crist at whoevers expense that may be. His approval rating is unfathomable for such a poor Governor.

None of his Real Estate initiatives, whether it be taxes, insurance or promoting increased sales and production has had any success, whatsoever.  In fact, they’ve all been abominable including his much touted Amendment 1.

Seriously, why do you think Charlie got married? Because it would help his political career. He needed it to supposedly dispel the rumors that he’s gay or bi or whatever the heck he is. Who cares, but again it’s just political motivation. It’s been shown that as Attorney General he knew of the Mark Foley scandal a long time before it became public, but just pushed it under the carpet.

I really don’t care what he is, but I do care that he’s possibly a hypocrite. There is no room for Charlie Crist in the State of Florida and surely he won’t be much help to the people in other offices as well.

Mike Thomas wrote, that “his poll numbers have an inverse relationship with reality. There is little more to be gained, and lots to be lost, by staying in Tallahassee.” Please move on Mr. Crist and preferably out of politics. Then you would be doing us a favor and we’ll call you a – Man of the People!

Till next time…Marc It Sold!

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The bill is not a freebie, but would force lenders to renegotiate loans of owner-occupied properties that have been devalued. The way it would work is that homeowner and lender would renegotiate the loan at the property’s present value with the difference from the original loan to the new loan being tacked on at the end of the loan. Basically, we’re talking about a 30-year fixed rate loan with a balloon payment.

To get to this point the lender and homeowner would be forced to mediate. This unfortunately, would further burden a legal system that is already overburdened.

This would allow many to be able to stay in their homes and afford them, especially during our current economic situation. Of course, the homeowner would have to qualify for the new loan, otherwise it would be for naught and just an even more costly mess.

According to Rep. Soto, “What we are trying to do is stabilize the market, we want these people to stay in there homes.”

If this legislation passes both the House & Senate, it would take effect on July 1, 2009.  It’ll be interesting to see how our legislators react to the bill.

Until next time….Marc It Sold!

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I love dealing with numbers and part of what may have brought this to a head is my dealing with financial investment calculations and pro forma income statements while studying for my Broker’s exam.

The only reason that someone will skew the numbers is to sway someone else over to their side. What other reason could there be? What other use could there be? The sad part is that someone is being deluded & I take issue with that.

Part of the reason this post came about is because of David Lereah, the former NAR (National Association of Realtors®) Economist’s revelation that he put a ‘positive spin’ on the numbers during his tenure. I’ve felt the same with Lawrence Yun, the present NAR Economist. Like Lereah stated, he was working for the association and therefore it was his job to do so.

So, therefore, he’s spouting what is basically bs, but because of his position many will take it at face value and believe it. This happens all the time, whether it be in business, politics, etc. Again, I have a major issue here. You may wish to call it a spin or whatever, but the long and short of it is that it’s still blatantly a lie! I don’t care how you want to color it or what name you wish to put on it – it is what it is – a LIE!!

Another reason that brought this to the forefront was a paper that I read yesterday issued by Morgan Stanley entitled, Interest Rate Strategy: Implications of a 4.5% Mortgage Rate. While again the paper is very interesting & there are some hard facts there, I also think that there are some intrinsic items that are missing and cannot be denoted with numbers.

This also brings me to the Comparative Market Analysis (CMA) which you hear about so much. All it is an ‘opinion’ of value and should surely not be construed with an appraisal. I stopped performing CMA’s many years ago because it is just so easy for anyone to skew those numbers. Now, don’t get me wrong, I’m sure most Realtors® are very realistic in their analyses. But at the same time I’m fairly sure that there are many that will skew those numbers just to get the listing. That does not help anyone in the long run & surely hurts you the consumer. And furthermore, does not help this industry, just as what the NAR economists have done.

This is a gross injustice to the many that work so hard at building our good reputations.

I use numbers and statistics quite a bit myself. Every month I produce 14 market statistics posts for cities and counties in which I work. When I use these numbers I try to make them black & white. If I skewed the numbers, all I’m doing is creating misinformation. I don’t see the use of that for it would only come back to haunt me.

This was not meant to be a rant, but hopefully just an eye opening awakening. Many of us are naïve in so many ways. It’s not that we are Pollyannas. It’s basically that we just wouldn’t expect such. I personally try to take things that I encounter at face value until proven otherwise. I think that treating things differently might make us a little jaded. So may be I am somewhat Pollyannish, but I moreso consider myself a realistic optimist.

With that said…until next time…Marc It Sold!

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