Please fill out this short form

An Ode To Gruntled Citizens

I’m sitting in my backyard as I write this. I have a terrific backyard, by the way. It has a fair amount of green grass, some roses that will be outrageous in another month or so, a few oak trees that shade my patios and a little stream that draws a variety of wildlife like coyotes, hawks, varmints of one sort or another and at least a million mating frogs, maybe more. It’s not a huge yard by most standards, no acreage or anything, but it fits my family and me about right. I can’t complain. Yesterday afternoon I was out showing land to some folks in the Wine Country. They seemed like very nice folks, (I’ll withhold my final judgment to see if they actually buy something from me or not [just kidding]. I’d just sold some parcels in the vicinity to some friends of theirs and there will soon be a couple more families building their dream homes amidst the grape vines. A piece of the American Dream coming true right here in our Valley for good people, the kind you would be proud to call neighbors. It was a glorious day, clear and warm, slight breeze. The kind of day we take for granted here in the Valley but that looks like paradise to someone from the Midwest or even other nearby areas of California. As I sit here this afternoon, there isn’t a cloud to be seen, recent rains have caused our hillsides and meadows and vineyards to sprout that iridescent green that looks almost too vivid to be real, especially against the flawless blue sky, accented by the snow capped ranges framing the Valley. I had a few stops to make after our appointment. Stopped by Costco, The Promenade, the Rancon office, Wal-Mart, Pic n’Save and Stater Brothers. It was Saturday afternoon in downtown Temecula and Murrieta yet the traffic was quite pleasant everywhere, no back-ups, no rudeness, no problems that I could see. Everybody I met, friends I bumped into, folks in the next car or the next check-out aisle seemed pleasant and friendly and there were no complaints. I attended a charity event the other night. It is one of many that happen here with some regularity. Every week, sometimes several times a week, there are events going on here. Some of the events raise money for little boys who almost drown, or little girls who have cancer or women who have breast cancer or just folks down on their luck. Other events raise money for scholarships, others build homes for deserving people, some help small businesses through the Chamber’s of Commerce, plus a plethora of other worthwhile and deserving causes. It’s a privilege to be able to attend these, to volunteer to help put them together and to be able to contribute either time or money to help our community. Nobody complains. Yet in the midst of this idyllic reverie, there is a group of individuals on whom all this beauty is apparently wasted, who persist in seeing only the clouds surrounding the silver lining, who focus on only their own wants and needs (and demanding that the rest of join them) and who never seem to raise their eyes to the hills, never allow their spirits to soar, never become a part of the bigger picture. Whilst I was out showing folks the wonder of our Valley, these folks were sitting home plotting ways to prevent the owner of the land from selling it or developing it, and to keep these new folks from joining our community now that they have come here. It’s too bad, really. They are the ones whose diatribes grace the daily pages of other publications, the whiners and naysayers and complainers. Those folks whose only avocation seems to be getting disgruntled about everything going on in our community. They don’t contribute anything positive, never offer solutions, never volunteer or even show up at a community event, and make no time to pitch in when there’s work to be done. Their only contributions are negative – NO, not in my back yard, not now, not necessary, not to help my neighbors, never, can’t and won’t. I don’t remember those people being here years ago. When this community was younger the citizens seemed imbued with a can-do spirit. Yes we can! We can build sports parks for our kids, we can have a recreation center, we will, we should, let us help. If we don’t agree with you, we can still be civil, we may call you a jacqueasse but we will stand shoulder to shoulder with you working to better the neighborhood, to help the schools, to light the parks, to be a friend – whatever needs to be done. What happened to all those people? Did they all sell out and move away? Naw, they’re still here. Working together to keep improving our community. They just prefer to pitch in and work on solutions rather than continually writing snidely letters impressed with our own verbosity, they don’t attack every elected official who doesn’t happen to see things their way, they don’t piss and moan about every other resident who’s trying to accomplish something and the only wining they do is when they visit Vinnie Cilurzo or Phil Bailey. There’s a bunch of them here, more than ever I think. If there is a disgruntled minority, then the rest of us must be the gruntled majority. We go about the business of supporting this community through our daily actions, not tearing it apart with hollow words. We support a diversity of candidates, not just those we like; we make an effort to address the needs of our less fortunate neighbors, not just our own self centered desires; we appreciate not only what has been accomplished in our neighborhoods, but we also have great optimism for what is yet to be done here and for the limitless opportunity for good that our community offers. To you gruntled folks, my hat is off. Keep up the good work. Illegitimi non carborundum! As always, the opinions expressed here are the opinions of this writer. And while they should be the opinion of everybody else ,they may not necessarily reflect the sentiments of this publication or Rancon Real Estate. If you are one of the perpetually disgruntled, please contact me at GENEWUNDERLICH.COM and I will happily help sell your home for 0% commission to myself if you promise to take your vituperations anywhere but here. Thank you.

Measuring the IQ of Smart Growth

It’s a funny thing about the economy. Almost without fail when the economy sputters, as it did here between 1992 and 1997, you seldom hear cries from residents for growth restrictions. But when the economy takes off again, all these concerns re-emerge under the guise of ‘slow-growth’ or ‘no-growth’.

The latest incarnation of this is being referred to as ‘smart growth’ by proponents, and that is a ‘smart move’. Because who in their right mind is going to step up and argue against ‘smart growth’. Duhhhhh – count me out. The trick here is that nobody – and I mean NOBODY, can tell you what smart growth is. The definition depends on whom you are talking to and therein lies the problem. Because like anything carried to extremes, there are potentially harmful consequences to even the most well-intentioned concept.

 At it’s most benign, smart growth simply means the clustering of homes more tightly on smaller lots around neighborhood shopping hubs, to reduce traffic, and in proximity to transportation corridors, to facilitate travel outside the area. I’ve heard Bob Buster and others taken to task for this commonly accepted definition by local ‘no-growthers’ who have their own definition of smart growth which definitely doesn’t include smaller lot sizes or neighborhood clusters. They want larger lots and more green space – and that’s good too, isn’t it? Except that it inevitably leads to a more sprawling growth and greater reliance on our friend, the automobile to get around our community. So to counteract that, these folks propose strict urban growth boundaries or limiting growth altogether.

But everybody realizes that while shutting off growth might be a wonderful idea in theory, the reality is somewhat different. After all, we live in the Golden State and in a very golden area of that state to boot. You rarely find people dreaming about moving to Alabama or Nebraska or Oklahoma, as fine as those places are. No, people dream of moving to California – there’s even songs about it, and they will continue to do so regardless of who’s on the city council in Temecula (sorry boys).

But I started out talking about the economy and that’s what will ultimately control our growth, whether good or bad. It’s called housing affordability. That’s what’s fueling the growth in our area right now and will continue to for some time to come. Our housing affordability index for Riverside County stands at about 48%. That means that almost half of the people who work in this area can also afford a median price home here. That’s good. Compare that to our neighbors in Los Angeles with an AI of 36%, or Orange County at 28% or San Diego where less than 25% of the people can afford to buy. When these folks need housing where do they look? And it’s more than a little presumptive to think that you can control the housing markets in those areas by what you do here. It just doesn’t work that way. Growth is inevitable – so deal with it!

But there’s a dark side to the no-growth issue. Right now our communities are growing and the value of property is appreciating. Everybody seems to like that just fine. Much better than 4 or 5 years ago when there was minimal growth and our housing values were dropping like Midwesterners on a hot day. Wanna go back to those days? I think not. Now the no-growthers will tell you, and it’s the truth, that if you close the door behind us now and there are no more homes built that the values of the existing homes will skyrocket – and that’s good too, right? That would certainly be smart growth, wouldn’t it? We could devote a few hundred thousand more acres to butterflies, rats and toads, keep all the fields green (or brown depending on the season) and our average 2,000 SqFt home would be worth $400,000, like it is in Laguna, or $600,000 like in Monterey.

Here’s the dark side – for every percentage of affordability you lose, you also lose part of the heart and soul of your community. The people who are first to be impacted are the people who make our city run, our police, teachers and firefighters. If you don’t believe me, check with the cities in Northern California who are trying to find ways to subsidize housing for these folks. Trust me, in an area like Contra Costa, with an AI of 10%, the 90% who can’t afford a home include not just local teachers and police but shop keepers, ministers, hourly workers, city and county employees, most Realtors, attorneys and politicians. The only upside is that the no-growth advocates can’t afford to live there either. So before you climb on any bandwagons and start bandying around slogans that sound intelligent and catchy, figure out what it really means and look at the long-range consequences of an action. Too many decisions are made based on momentary sound bites that provide no real sustenance for the long haul. We are saddled today with onerous regulations and costly programs that sounded good at first and turned around to bite us on the derriere. Check out utility deregulation, term limits or the reduced threshold for DUI convictions – all sounded good on paper, were hard to argue against without sounding like an extremist, but all have some powerful and deleterious downsides that we are saddled with after the snowjob that blew these programs in.

Don’t let that happen to our community. Let’s work together. Let’s make ‘smart growth’ make sense for our Valley. Let’s keep our housing values strong, our community vibrant and our citizens involved in the process. It takes cooperation, not confrontation. Let’s all be smart.

Gene Wunderlich is a Realtor and past president of the Southwest Riverside County Association of Realtors. As always, the opinions expressed here are the opinions of this writer, and while they should be the opinion of everybody else ,they may not necessarily reflect the sentiments of this publication. You can contact the writer at GeneWunderlich.com with comments or suggestions.. Thank you.

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Click the link to view more photos

Gene Wunderlich is a featured real estate columnist in the Valley Business Journal. Over the years, Gene's column has become a must-read for his insightful commentary on city, state and federal government, mortgage fraud, market trends and housing affordabilty. As a Director of  Southwest Riverside County (SRCAR), California (CAR) and National Associations of Real Estate (NAR), his legislative updates and advocacy positions make for educational reading with more than a little entertainment value thrown in.

Realtors to the Rescue

As I post this article from Washington D.C., we have just concluded the National Association of Realtors Mid-Year Legislative Policy and Regulatory Meetings. In addition to economic updates on the general state of the housing market (better than you’re led to believe in the media), we held very successful meetings with all our Legislators (excepting that empty suit, Darryl Issa).

Our agenda this year focused on four primary policy issues:

First, the need to enhance housing opportunities and affordability. We are encouraging passage of H.R. 1852 which would reform FHA mortgage insurance programs and increase FHA loan limits. As recently as five years ago there were over 170,000 FHA loans written annually in California. Last year there were less than 5,000.

Higher down payment requirements coupled with a maximum loan amount well below that needed to purchase a median price home in California have made this loan product irrelevant in our state and has reduced it’s effectiveness throughout many regions of the country. It’s also the main reasons so many people turned to ‘exotic’ and sub-prime loans during the past two years.

Needed reforms would allow the FHA to provide flexible pricing and charge risk-based premiums to borrowers, reinvigorate and sustain the relevance of the FHA fund in the mortgage marketplace and p-reserve the housing mission of Fannie Mae and Freddie Mac to equalize housing opportunities for families in higher-cost areas like California.

Second, we need to finally pass H.R. 111, the Community Choice in Real Estate Act. I’ve written about this bill (sponsored by our own Rep. Ken Calvert), many times during the past six years. Banks have been trying to get into the real estate business by doing an end-run around the Gramm-Leach-Bliley Act of 1999, which specifically prohibited it. In spite of enjoying majority support in both the House and Senate, the bill was prevented from ever making it to a floor vote by banking interests in the House Finance Committee. This year that impediment has been removed and we are confident of our success.

Interestingly, last year when Wal-Mart and other retailers wanted to get into the banking business the banks cried foul and fell back on our argument that commerce and banks don’t mix. The same banking regulators who neglected to protect consumers from unscrupulous sub-prime lenders appear to be up their own butts in alligators this year and are suffering from a significant lack of credibility. Hopefully this year we can make sure the consumer’s interests are protected.

Third, we need to pass H.R. 1876, the Mortgage Cancellation Tax Relief Act. Today if you sell your home as a married couple, you can defer up to $500,000 in capital gains from income tax. However, if you are forced to short-sell your home or you are foreclosed and you LOSE $50,000, you are taxed on that as regular income. That’s right. All you people who are short-selling your homes now or are losing your homes to foreclosure will have insult added to injury by being taxed on the ‘forgiven debt’ money you never made.

And since there is no ‘National Association of People Who Have Lost Their Homes’, the National Association of Realtors is sponsoring your cause by encouraging the passage of this and similar legislation aimed at reducing the burden on homeowners caught in the squeeze. Of course if you just refi-ed to buy a boat, take a vacation or other non-housing related items, you’re not off the hook. If you treated your house like an ATM the past few years and now the piper has come calling, you’re on your own.

Finally, there are several more issues we are working on including comprehensive disaster-relief legislation and other consumer protection bills, but this year again we will be fighting for Small Business Health Coverage. Small businesses need good workers, workers need good health insurance. Today more than 46 million Americans do not have health care, including many small businesses and self-employed individuals like Realtors. Nationwide nearly 30% of Realtors have no health coverage due to their inability to find affordable individual insurance coverage. Allowing market-based, small business pooling arrangements can help reduce costs and expand access thereby improving the overall quality of healthcare. Local Chambers and other business advocacy groups joined us last year and were narrowly defeated. This year we are confident of a more positive outcome for consumers and small business owners across the country.

  If you think Realtors just sell homes, you haven’t been keeping up with the times. The National Association of Realtors is recognized as the largest and most successful grass roots Political Action Group in the country advocating for private property rights and the maintenance of a strong and vibrant housing market to fuel the U.S. Economy. Make sure your real estate practitioner is a proud member of the National Association of Realtors. There really is a difference.

Gene Wunderlich is Realtor with Coldwell Banker Residential Brokerage and Director-elect of the National Association of Realtors. Share your opinions w/ genewunderlich@earthlink.net

Don’t Lose Your Head OR Your Home!

Back in December I wrote about the increasing phenomenon of ‘short sales’, which occurs when you owe more on your home than it will sell for in the current market. A short sale is usually the last step before the bank steps in and takes the property back to sell it themselves. That’s called foreclosure and if you read the daily newspapers you’ll see column after column of legal filings called ‘notices of default’ notifying people that their homes will be sold at auction on a specific date unless they can bring their mortgage current. That’s one of those times you definitely hate to see your name in the paper.

We’ve already talked about the reasons why so many of our residents are finding themselves in this situation. My column last month on ‘Greed’ summarized the role of  lending institutions, particularly sub-prime lenders, as well as the role of consumers in contributing to the current situation. With foreclosures up more than 42% over last year, the current situation is not good and only stands to get worse – BUT IT DOESN’T HAVE TO GET A LOT WORSE!

Federal lawmakers recognize the gravity of the situation and are evaluating ways to assist homeowners who find themselves in trouble via legislative means, including one radical proposal to place a six month moratorium on foreclosures resulting from high risk loans given to people with shaky credit. In these cases lenders would be mandated to help borrowers refinance their mortgages or the lenders could face lawsuits. Of course some of these sub-prime lenders have already gone out of business themselves so legislative threats lose some of their effect. But it’s a start.

Lenders are also taking some initiative to resolve the problem before it escalates. In one case a well known national lender has even set up a ‘counseling center’ of 50 people to make calls to troubled homeowners to try to work out payment schedules to keep their monthly bills, including their mortgage, current. It’s a start.

Consumers, THAT’S YOU, also have some responsibility. It’s estimated that more than half of homeowners facing foreclosure NEVER TALK TO THEIR LENDER! Holy Schnikees – that’s sad (and more than a little stupid). People, your lender DOES NOT WANT YOUR HOUSE! Honest. They’re in the lending business, not the real estate business. Every time they take a house back in foreclosure they lose money – lots of money. Lenders estimate they lose up to 40% of the loan value in a foreclosure. That includes losses on the value of the loan itself, loss of income stream from your payments, carrying costs while the property is in foreclosure and resold, taxes on the home, repairs, maintenance and selling costs. They don’t want this to happen.

If you are one of the homeowners out there right now who feel things slipping away, ACT NOW! It’s even easier if you aren’t yet delinquent in your payments but you feel the hot breath of deficiency rising from your checkbook. Call your lender and explain the situation to them. Their interest and yours is best served by keeping you in your home and working out a repayment schedule that makes it possible. You’ll find them willing to do that – more so than at any time in recent history. They know that adding your home to their inventory adds to the glut of unsold homes already on the market and only serves to soften prices more – a lose/lose for everybody.

If you are delinquent on your payments – CALL NOW! Your lender already knows you’re having problems. Sticking your head in the sand doesn’t make it go away, it only leaves a very sensitive part of your anatomy exposed. Your lender will explore how you got into trouble to begin with and how, working together, you might get back out. They’ll send along an information request packet asking for much of the same information you needed to apply for the loan, like recent bank statements, paystubs, W-2’s and a ‘hardship letter’ from you detailing your situation. They’ll start sending you letters after your first missed payment – don’t ignore them. Call the person who sent the letter and get to work. Better yet, call before you miss the first payment – but one way or the other CALL. 

If there is no workable relief in sight – resulting from things like job loss, death in the family, relocation, etc., they will probably suggest you consider a short sale. And since the suggestion comes from them, their cooperation is assured. They know your circumstances, they know the market and they know what needs to be done. At that point you contact a professional Realtor who has experience in conducting short sales (not all agents are Realtors and not all Realtors have experience). Your Realtor can take up where the bank left off, work with your lender to keep the process smooth, and work with other Realtors to help alleviate your problem successfully.

But the first step is up to you. Lenders, legislators and Realtors are standing by ready to help you avoid the loss of your home. Take advantage of that assistance today and avoid more headaches tomorrow. It’s good for the market, it’s especially good for you.

And lest you think all the news is bad – while up to 20% of sub-prime mortgages may result in default, that still leaves the other 80% who are now homeowners. Without the availability of creative financing, more than half of these folks would still not know the satisfaction of owning their own home. Sure they might be eating beans and weenies for a couple years – but that’s what our parents referred to as sacrifice and opportunity. It’s not a bad thing and if it don’t kill you, it’ll only make you stronger. We could all use a little more strength right now.

Greed, For Lack of a Better Word

Gordon Gekko, in the movie Wall Street, opines that “Greed captures the essence of the evolutionary spirit.” If word coming out of the banking industry these days is any indication, we’ve been evolving like rabbits lately. At meeting after meeting around the country, bankers and mortgage lenders are gathering to determine what caused the recent miasmal meltdown of the sub-prime loan market. At meeting after meeting they come to the same conclusion – ‘there was just sooo much money to be made.’

As the market for risky mortgages collapses, dragging home values and stock prices in a downward, swirling motion, one of the saddest things is how easily avoidable, how totally unnecessary, this meltdown is. Hell, I was writing articles about avoiding interest only loans and 125% loans and all those ‘exotic’ things three years ago – and I ain’t the sharpest hammer in the bag. Then the Federal Government joined my crusade 15 months ago, another organization not known for it’s nimbleness and prescience, when the Federal Reserve, the Treasury Department  and other agencies urged lenders to:

·         Refrain from giving loans to people who can’t repay them.

·         Educate borrowers on the risks involved with these sub-prime mortgages.

·         Increase their cash reserves to prepare for the possibility of widespread defaults.

REFRAIN FROM GIVING LOANS TO PEOPLE WHO CAN’T REPAY THEM!?

Wouldn’t you learn something like THAT in Banker 101? Do you really require the Federal Government to remind you of THAT? Does anybody remember back to the ‘good old days’ when you got your liar loan from your friendly neighborhood ‘Savings and Loan?’ It hasn’t been that long, has it? What’s a Savings and Loan, Daddy?

Even continuing into the past year, when the housing market was already slowing, banks looked for ever more creative ways to increase their largesse. Nationwide these sub-prime loans accounted for about 20% of loans in 2005 and 2006, about 15% of the total loan market. Of these loans, at least 20% are said to be either in foreclosure or in the process. 2 million homeowners are delinquent on their loans including many defaults on loans funded as recently as 12 – 24 months ago. In California, exotic loans have made up as much as 50% of the market the past couple years. Our foreclosures are up 42%.

A sub-prime market, by the way, is comprised of those loans made to borrowers with ‘poor’ credit ratings. On a FICO range from 300 to 850, if you score about 500 to 680, this is the kind of loan you’ll get. Rates and fees are typically higher for this borrower who may be termed a ‘high risk debtor’.

And why were these increasingly risky loans increasingly marketed to the exact people who needed them least? Because oftentimes, the people who needed them least also needed them most. These are the folks who might not otherwise have become homeowners – and most will remain homeowners, and that’s a good thing. First time homebuyers in droves saw the California Dream slipping further and further away. These are our kids, our teachers & soldiers. Upwards of 40% of these loans were made to Hispanics. The impact will be far reaching as people find themselves buried in debt, an interest rate that has gone from 5% to 11% overnight, credit cards maxed and gas prices skyrocketing.

It’s a time when bad things will be happening to good people, where the bottom line isn’t just a ding on your credit but the loss of your home. That’s the downside, and it’s a riptide if you’re caught in it. BT, DT, got the shirt.

There will be some restructuring of the market. Maybe banks will finally realize they don’t belong in the real estate business until they can take care of their own. Maybe consumers will realize they have some responsibility for the decisions they make about their own financial future. Maybe we’ll realize – if the deal sounds too good to be true maybe we should look twice.

But until that happens, there will some terrific opportunities out there for qualified buyers to obtain their dream home, for those of you with equity to expand your market position and to take advantage of one of the best Buyers markets we’ve seen in years. After all, greed, for lack of a better word, is good. All depends on your perspective.