Most people believe that once their choices are limited and their back is up against the wall, the bank holds all the cards when it comes to modifying your mortgage - or facing foreclosure.  Fortunately, there are a number of strategies to fight back against the bank and perhaps convince them to modify the loan instead of foreclosing, thereby keeping your real estate holding(s) intact.  This strategy is deceptively simple.

Over the last several years, as banks have been buying and selling mortgages, or chopping them up into little pieces and selling them as securities, one very important document has often been overlooked: the Note.  This is the legal document that the bank holds in order to prove that they are the lender of record, and the money is, in fact, owed to them.

If you live in a court action state (i.e., by state law the lender must take you to court in order to foreclose), as we do here in Myrtle Beach, and your mortgage has been sold at least once, then you’re a prime candidate for this strategy. Here’s how it works.

Once the bank takes you to court to begin foreclosure proceedings against you, the bank must be able to prove that they are legally entitled to collect on your mortgage.  This evidence comes in the form of the Note you signed when you purchased the home.  This may seem silly, but everyone in the room will assume that the bank has your Note unless you challenge them!

Here’s the fun part. Picture yourself as Cuba Gooding, Jr. in the movie Jerry Maguire.  You must demand that the bank Show You The Note!

Most people will assume that OF COURSE the bank has the Note if they’re standing there in the courtroom.  But remember - your mortgage has been sold and/or securitized, perhaps more than once, and we’ve read reports that suggest that as many as 50% of Notes have been lost or destroyed through the transfer process.

So what happens if, in fact, the bank can’t Show You The Note?

An Ohio court dismissed 14 foreclosure filings brought by DeutcheBank when they were unable to prove that they held the Notes.  This is happening all across the country as judges are demanding that lenders follow the strict letter of the law, and are growing tired of banks and attorneys disregarding the rules.

We agree with this, of course.  If your home is about to be taken away, the very least we can expect is that the paperwork is correct!

This is not a long-term strategy to avoid foreclosure. But it might buy you some time, and it might give you some sorely-needed leverage against the bank, so that they will consider modifying your loan instead of foreclosing first and asking questions later.

President-Elect Obama says that our economy will take “longer than any of us would like — years, not months” to improve.  This statement should not surprise anyone who is familiar with Mr. Obama’s habit of under-promising and over-delivering.

I have a few reasons to believe that, in this case, over-delivering is indeed possible in 2009.

1. Falling oil prices. Remember July, when most of us were paying close to, if not over, $4.00 for a gallon of gas?  Today, the national average is $1.66.  Just this morning, I read an analysis that suggested $1.10 gas is possible in our near future.  To put this into perspective, assume that the average American household drives 15,000 miles a year. At a savings of $2.00 per gallon, that works out to be a significant savings and could boost spending in 2009 as much as a Presidential Stimulus Package.

2. Falling mortgage rates. Treasury is apparently considering a plan to push mortgage rates to 4.5% for new homebuyers and perhaps even current homeowners who want to refinance.  The decrease in housing-payment costs would be equally significant.

3. This is not your grandfather’s Depression. The fed has already pushed short-term rates to near zero, and have made it clear that they will do whatever is necessary to unfreeze the credit markets. This is vastly different from the Great Depression, when the Fed allowed the money supply to collapse.

4. Obama’s Stimulus. Whatever it looks like once passed, the plan will create needed jobs and added spending.

5. USA Still # 1. The World Economic Forum still believes that the United States is the most competitive economy in the world, thanks to our innovation, flexible labor markets and higher education. We’re in better shape than we were during the last prolonged recession in the 1970’s.

6. Here’s the kicker. “Find out what the masses are doing and thinking - and then do the opposite” has almost always been a successful strategy.  With almost everyone in agreement that things are bad, wouldn’t 2009 be the perfect time for the contrarians to be right - again?  Think about it.

This blog post was based on an article written by James Pethokoukis for U.S. News & World Report.

Once you’ve made that important decision to build your home instead of buying an existing home, decision number two is usually, “How do I choose a builder?”

In the Myrtle Beach real estate market, this question is especially challenging. Clearly, you’ll want someone who is established and trustworthy, who can manage a large group of tradespeople and make it seem effortless. And, equally as important, you’ll want someone with whom you’ll get along; someone who understands what you really mean - based on the words you actually say.

So, how do you find that builder?  I have four broad suggestions:

1. Who in your circle of friends has built their own home recently?  Word-of-mouth is almost always the best way to find a fantastic home builder.  You can always widen your search to include family (and their circle) and co-workers (and their circle) to find potential building partners.

2. Find out, either from the builders, or from your local chamber or commerce or BBB, how long the builders have been building homes?  How many homes they’ve built?  References - both positive and negative?

3. Ask the basics, even if you think you’re being picky. What kind of homes have you built?  Will I get a warranty? What will it cover? How long will it last? What happens if… (fill in the blank).  When it comes to contracts, make sure you read everything carefully - or consult with a real estate attorney.

4. Pay attention to how each builder listens to your questions, and how they formulate and express their answers. Sometimes the only difference between two builders is their personalities.  In that case, wouldn’t you rather do business with a friend?

Now, go make your dream home a reality!

Myrtle Beach real estate owners in financial distress will find an unlikely ally in - of all places- the IRS!

Internal Revenue Commissioner Doug Shulman said that taxpayers will be able to ask the IRS to discharge its claim to property if the property were being sold as a short sale or foreclosure, and federal tax liens may be made secondary to liens held by the bank when refinancing or restructuring a loan.

“We need to ensure that we balance our responsibility to enforce the law with the economic realities facing many American citizens today,” Shulman said.  “We don’t want the IRS to be a barrier to people saving or selling their homes.”

It’s not often that we applaud this particular tentacle of the federal government… but our hats are off today.

The Federal Reserve entered uncharted waters yesterday, lowering the interest rate banks charge each other to almost zero, because banks have been so reluctant to loan money - even with each other.  The Fed also announced that it would do whatever was necessary - including printing unlimited amounts of money - to defrost the frozen credit markets.

So how did everyone react?

The stock market was up, the bond market dropped like an anvil, and, in anticipation of a flood of newly-printed greenbacks, the dollar dropped sharply against foreign currencies.

But in the real estate world, we got what we expected, and a piece of what we needed.  Today, buyers can secure a 30-year fixed-rate mortgage for just 4.75%.

NOW who wants to buy Myrtle Beach real estate?