Today, June 30, 2008 Wachovia has announced that they are eliminating their Pick-A-Pay Program from their loan offerings. Wachovia Pick-A-Pay Program was one of their biggest attractions during the housing boom throughout the Unites States market. People could have paid their loan whenever they wanted it each month. The program allowed borrowers to pay several times each month towards their mortgage. Sounds like a great program, doesn’t it?
Well, not when the default rates on the loans have been higher than they expected them to be. Wachovia is estimating $1.1 billion in losses for their Pick-A-Pay program in 2008. In the first quarter alone, Pick-A-Pay program represented $121 million of their total consumer loan portfolio. Woow! That’s huge.
Now, Wachovia is allowing people to escape their prepayment fees. Why would they do that? They are eliminating prepayment fees so people can refinance and get into a more sustainable mortgage.
That’s very interesting, isn’t it? But let me ask you this Wachovia. How is a homeowner going to refinance their loan when their house is worth much less than their current loan amount? Home prices have been falling around the country. They’ll need a one hell of an appraiser to get their house appraised so they can refinance their house for a ‘normal mortgage.’
And how are these people, who few years ago, have jumped into the sub-prime mortgage to purchase a house they couldn’t afford in the first place? How are they going to pay for a fixed-rate mortgage? Unless I’m missing something here, I don’t see that happening. It makes me wonder when I hear all the mortgage lender crisis news; What is going on inside the mortgage industry?
What I’m about to say is probably not going to go over very well with some mortgage lenders. Correct me if I’m wrong but it looks like most of these companies are just trying to save their own butt. After making these exotic loan offerings few years ago, they are finally seeing the light and figuring out that these loans were probably not a very good idea.
Now, they’re eliminating different loans, cutting programs, asking government for help and so on. Don’t give me wrong, these lending companies are in business to make money so loosing billion dollars is not something they want to do. But still, are they really looking out for their customers’ best interest or are they looking out for their own interest?
But here’s what I think is the missing piece to the mortgage crisis puzzle for these mortgage companies and the government. Real Estate Investors! That’s right. Real Estate investors are working hard to help distressed homeowners get their life back. They are helping people in foreclosure with their problems. In today’s times where homeowners are worried about their homes, wondering if they’ll be able to make their next payment, real estate investors are helping them eliminate that headache and bring the economy back on its feet.
Message to All Real Estate Mortgage Lenders & Government
So, I have a message to all of the real estate mortgage companies, Fannie Mae and the U.S. Government:
“Work with real estate investors. Help them help you and people around the country. Instead of creating new rules and restrictions on creative financing and investing guidelines, STOP for one second and think about how we can all work together to get local real estate markets back on their feet. I know there are some bad people out there who try to take advantage of unsuspecting homeowners. I know you need to protect people from those scammers. I know your job is not easy. But, don’t forget those investors who are helping people each and every day. Without them, this country would be in a much deeper hole.”
And to you, yeah you, the one reading this message. I ask you to help everyone involved in this business. Help me spread this message. My only hope is this message will get noticed by someone with an authority in the real estate industry. Someone who is able to make just one small change which can hopefully lead us in the right direction.
I strongly believe that if we all take just one small action, we can all make a big difference. So I ask you: Take this one small action today. All I ask of you is this:
1. Hit the “digg this” button below this post to digg it. I believe that digg.com is THE place to get this message out.
2. Post your comments below. If everyone takes action on item #1, your comment will be viewed by thousands of people. Tell us, what do you think about real estate in this country? Do you think that government and the mortgage companies are doing everything in their power to help the struggling real estate markets? Share your opinions below. I think we can make a difference.
That’s it! That is all you need to do. It will take about 3 minutes of your time.
To Your Success,
Peter K.
Founder of RealEstateBlackBook.com
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Interesting Peter. What if I told you there is a company that IS doing something about the Mortgage Lender Crisis as well as the American debt Crisis. It’s called United First Financial. http://www.uffmarketing.com/Mar/product.asp
Just this past weekend they were awarded the Ernst & Young Award for their Entrepreneurial Effort in saving American’s over $58 million dollars of debt. Thousands of home owners have been able to save their homes, their marriages and their financial future because of it. I do not believe that the government will be able to bring us out of debt very soon, and the banks are still struggling to figure it out, so it is up to the American people to decide their own financial future. Pull together investors…..pull America right side up again and not upside down. I challenge you to take a look at what they’re doing. http://www.uffmarketing.com/Mar/product.asp to see if you can help this crisis by getting on board. I’m not against banks, or our government, but I am all about finding resolutions!
Peter,
I dig
what you are doing. Getting that message out that can do some good and we all appreciate it.
Thanks,
Brian
What you just wrote confirmed my own feelings & thoughts with this whole mortgage mess! I have been in the mortgage business for 26 years through the highs and lows! I definitely agree with you that the goverment and banks should work with real estate investors to help stop foreclosures(it it makes sense).
Keep up the good work and as a private loan loss mitigator I am trying my best to help families keep their homes.
100% right
Look I have been in the prop pres business for 18 yrs,Why is anyone looking to the government for help?They don’t even know why there are foreclosures.The program in place to take care of the foreclosures is in a big mess,they know but don’t know how to fix it.
Clearing houses that send out the work to contractors r ripping the contractors off and gettig rich.the houses r not getting fixed,they sell for much less and the government pays your tax dollars for it all.It sickens me toknow an industry that once was good is dying because of our government.I have talked to senators,congressmen,hud officials and so on and most didn’t even know the work i did or that it existed.
U think u have seen red tape i can show u cons rip offs and more in the foreclosure industry because of red tape and need to know.that is YOUR government at work.my email is cleanoutguy32@aol.com write me to get my number and we can talk.fro a really disapointed property preservation contractor.
Hi Mark,
Thanks for your post. I can feel your frustration man. When I wrote the post above, I was writing it with an intention that someone high in the mortgage lending business or the U.S. Government that deals with real estate market will see it.
U.S. Government is not in the business to do real estate. They are in the business to run the country. I don’t know how much they discuss real estate or how often they get together with those who know real estate inside out to make sure that their new regulations actually help the real estate market.
So far, from what I’ve seen, it doesn’t seem like they do that. That’s where my challenge comes in. The Government needs to work with real estate investors because they KNOW the real estate market inside out. They know how to help the homeowners in foreclosure. Instead of putting more regulations that will make it harder for the real estate investor to help the homeowner, the government needs to talk to the investing community to figure out a the right course of action to help the market.
Peter K.
Creator of Real Estate Black Book
I wondered when someone would rise to the challenge of moving some antiquated lender mindsets forward. I experienced many times lenders slamming the door on us investors. Really? Do they know I come in peace? And whats with the phone lines? I know they have hundreds of phone lines to do loans, so why are we all restricted to just that one 800 number the whole world has to call in on? Hellllooooo. They need to add phone lines to their system and more people to man those lines of communication, to open the channels, not clog them and stop them up so business can’t flow.
So if their motivation is to save their own butts, why would they not be trying even harder to sell off those bad property deals and get the inventory off their books? Are they still stuck in denial? How long has that been going on? How many more people have to lose everything before they realize the impact of the pity party? So we are here to give the mortgage industry a healthy wake up call, so they can start shaking themselves out of this modis operende and poise themselves to create a win win for all.
And it really would be a win win for everyone involved. The homeowner wins a better outcome, the investor makes money and gets excited to do it again, and the lender wins in a few different ways. They reduce their losses, they have less contractors to deal with, they have a better chance to stay in business, and what about the lender rebuilding their own reputation in a market place consisting of people that were at one time, their own customers?
That lender would shine in a whole new positive light, on the same side of the playing field with those that at one time believed in them and chose to do business with them. That would be securing their future for new business and continuity. People will remember how that company made them feel, that hey, they were pretty cool in the end and let us save our credit so we had a chance to rebuild. And the investor will be excited to bring the next family in to work with them. And the lender will feel good about a job done better, and I bet they too will be enlightened because I know deep down, they are real people inside. And then the media will take notice, and they will be praised by us investors too for allowing us to play ball. And the investors will say, that wasn’t so hard, yeah I can do more of that. And business flows again in the right direction.
Now there’s a winning channel of new business and positive momentum for a company that will take the focus off themselves to create a better outcome for those impacted by bad loan products. For that the media will reward you with targeted advertising that you do not have to pay for.
Good luck with this campaign. It needs to be shared.
Hi Peter;
There in lies the problem.No one in the government knows who does the fixing for this.In my particular part of the government real estate business the clearing houses set the rules and no one else.Sure they meet with the hud and fannie mae officials but those people depend on the people running the clearing houses to tell them how to fix things.Thus enabling these so called helpers to make a fortune off YOUR tax dollars.Look at thos companies sometime and see how big,how fast they grew and how they operate.It is amazing.
Now i realize that free enteprise is the thing but u are in an industry that for the most part governs itself.Think about that.HARD!!!!!
If you controled something that made u millions of dollars,had no rules except those u makeup as u go an no one to tell you, you can’t do that wouldn’t u do it too or would your concience tell u better.Remember u control all the work, the sales, the contractors and the rules that u can change at will.
I want to make money in the real estate busness and i know how it works but for a while it is going to be tough because if you want the government to fix it or help you u must first teach them.
Thanks for a great comment Mark,
You are right on and that is why I feel that the government needs to listen to the investors and those that are doing real estate day an and day out. Otherwise, its like me doing a brain surgery. I don’t even know how to hold a scalpel.
Peter
“How is a homeowner going to refinance their loan when their house is worth much less than their current loan amount? ”
This is a difficult dilemna , I guess there is no easy answer for these people.
The real cost of commercial mortgages varies in each company, and is decided based on the property location and all things used to establish the mortgage. It is sensible to call commercial mortgage lenders for an estimation. Many lenders give this service online, and also through the customer service departments.
some it is necessary to have an additional amount of money, so at that refinancing is one of the best option.
Nice resource.
Thanks mate for letting us know about these topic:)
[...] I did on June 30th, 2008 when news about Freddie Mac troubles were were starting to appear. In my Mortgage Lender Crisis-Join the Challenge I challenged our leaders to start working with real estate investors to help get this economy back [...]
[...] Peter wrote an interesting post today onMortgage Lender Crisis-Join the Challenge – Real Estate Internet …Here’s a quick excerptToday, June 30, 2008 Wachovia has announced that they are eliminating their Pick-A-Pay Program from their loan offerings. Wachovia Pick-A-Pay Program was one. [...]