by Roberta Murphy

If I could be  President Obama’s Mortgage Czar for just one week, the first thing I would mandate is that all existing mortgages become assumable.

When starting my real estate career in Houston, Texas during the last century, it was not uncommon for buyers to assume or take over  existing  financing. In fact, it was a perfect way for the self-employed or those with dinged credit to buy a home.  And because there were no loan origination fees or points,  buyers were often willing to pay a slight premium for homes with assumable loans.

To implement this today would create an immediately available financing alternative for the real estate market–and might even be a way for banks to deal with some of those famously-toxic assets. As Mortgage Czar, I would create two tiers for Assumable Loans:

1. Non-Distressed Loans. Owners of these home have equity and would likely need concessions from neither the lender nor the government, other than permission for the mortgage(s) to be assumed. For example, Seller Smith has an outstanding mortgage of $200,000 and is selling his home for $250,000. Buyer Jones would pay $50,000 plus minimal closing fees and would assume esisting financing. All future payments would now be made by Buyer Jones.  It is a simple transfer of title and mortgagor with no change in terms.

2. Distressed Sales. Sellers of these homes have no equity; in fact, they generally owe more than the home is worth.  Using a blend of short sale and loan modification procedures, loan balances and interest rates on these homes would be adjusted to current market value and rates.  Because buyers would no longer be “buying equity” and would have no equity stake in the properties, lenders could now require that prospective buyers deposit at least three months’ payments with the lender as insurance against potential future default.The Buyer would also be responsible for applicable closing fees.

Implementation of this mandate would allow both the existing borrower and the lender to avoid the costs and damages of the foreclosure process–and would help protect neighborhoods from further decay and decline.

By allowing mortgages to become assumable, we would also be offering a second chance to many whose credit ratings have been demolished by short sales and foreclosures.

Under this plan, lenders would fare much better vis-à-vis short sales and foreclosures–and more homeowners would be able to save their credit and exit their situations with dignity.  Most lenders now force homeowners to be in default with their mortgage before they will even consider a short sale or modification of terms.

It just makes sense to get the mortgage debt seamlessly transferred before it ever goes default.

And with strangled liquidity in financial markets, it makes more sense than ever for this Mortgage Czar to transfer debt rather than forcing buyers to secure new financing–which may or may not be available.

by Roberta Murphy

This video really has nothing to do with luxury, luxury homes or anything of the sort. But, it has a lot to do with a big, big heart, quick action and enormous courage–and the compelling story of how one dog bravely saves the life of another.

by Roberta Murphy

Not all clients took my conservative mortgage advice over the years, and some ended up with home loans that have turned downright nasty.

In one case, a client and dear friend was persuaded to take out a Negative Amortizing Adjustable Rate Mortgage (Neg Am) along with a HELOC (Home Equity Line of Credit) a few weeks after the purchase of her $1.8 million Carsbad home.

I just heard that in a couple of months, her mortgage will reset to an intolerable level and she is seeking a way to manage payments and keep her dream home.

Late last night, I discovered that fellow real estate blogger Ryan Rockwood had written an ebook on How To Get A Loan Modification that is packed with information for struggling borrowers–and chock full of insider tips.

For example, I know that many borrowers agonize because either they or their mortgage broker overstated income levels when applying for mortgage loans during the real estate bubble years.  At the same time, attorneys have discovered that many lenders may have violated provisions in the Truth in Lending Act and/or the Real Estate Settlement Procedures Act (RESPA). Rockwood states that there is plenty of blame to go around, and lenders as a rule aren’t pursuing earlier income exaggerations.

That information alone might spur some to pursue loan modifications for their mortgages.

If you are having difficulty with your mortgage, I encourage you to visit the 60 Minute Loan Modification site, where you will soon be able (if not already) to purchase one of the best books I have seen about how to get a loan modification.

by Roberta Murphy

Dear friends returned with big smiles and fat packages after a trip to Las Vegas prior to Christmas. Ulf and Andrea walked into the Saks Fifth Avenue store on Las Vegas Boulevard–and encountered rack after rack of clothing discounted up to 80 percent off.

These were sales never seen in the weeks before Christmas, and they happily bagged up their luxury bargains and returned to Southern California.

They are also Realtors, and it’s some comfort that the luxury home market is suffering a far less precipitous decline compared to luxury retailers, but that’s probably because people stay in their homes far longer than they do a $500 pair of jeans or Jimmy Choo heels.

And as today’s San Diego Union Tribune reports, Neiman Marcus saw its December same-store sales fall 27.5 percent, while sales at Nordstrom, Saks and Abercrombie & Fitch also dropped into the double digits. Even Chanel at rue Cambon is shedding 200 jobs, or almost 10 percent of its work force in a move that should send shudders down the backs of luxury retailers and other haute couture houses.

The Luxury Consumption Index shows a chilly decline of 41.7 percent year-over-year in a December survey of 1200 consumers earning an average of $200,000 per year. Some of the drop is attributable to investment and income declines, but much also comes from a drastic attitude shift from conspicuous consumption to one of fear and conservative saving.

Buying attitudes may be shifting toward hiding money under the proverbial mattress, but I am inclined to sharpen the pencil and consider once again Baron Rothschild’s advice to “buy when blood is running in the streets.

Blue chip luxury real estate and securities are soooo attractive covered in red–at least for buyers.

by Roberta Murphy

I am still chuckling over the wit and common sense of Wanda Sykes as she rants at Jay Leno over a Government bailout plan that has most eyebrows raised:

by Eve Sieminski

I can’t begin to tell you how many years I have had a prejudice against Chilean wines. Each time I tried one, I was unimpressed–or worse, ended up with a raging headache.

Living in California, we are positively spoiled when it comes to wine. We have a never ending selection of fine wines, so it never occurred to me to search out fine wines from Chile.

At least not until I started connecting with wine folk on Twitter. There, I ran into Robert Bralow, who works for the country of Chile. And to my surprise and delight, send me a wonderful sample pack of 6 different wines (one white and the balance luscious reds).

The first one we opened up was a 2006 Santa Carolina Reserva Carmenere. My husband got to it first and said, “You will never believe how good this is.”
And was he ever right!

This was unlike any Chilean wine we had ever had: Very earthy, smooth and oh so drinkable!
The next night we opened the 2006 Caliterra Tributo Single Vineyard Carmenere. This wine was unbelievable! It resembled a very full bodied Pinot with intense fruit and flavor that just exploded with each sip.
The remaining 4 bottles went down just as smoothly and not a headache to be had!
This article is my mea culpa to the winemakers of Chile. Their price point is very affordable (all the ones we tasted were under $20), and with the great assortment out there to choose from, I am confident you and I will easily find wines that capture our tastes.

Wine Tip: Searching for a specific bottle of wine and can’t seem to find it? Check out www.wine-searcher.com. I found that Caliterra Tributo and ordered 6 bottles!
Na Zdrowia!