HOW TO REDUCE FORECLOSURES & UNEMPLOYMENT

I reposted this blog entry, after being asked to condense it for the Broomfield Enterprise.

Dear President Obama and America’s banking leaders. While the nation's banks are receiving billions of dollars of bailout money with no real accountability, here's an idea that might help reduce foreclosures and the unemployment rate simultaneously.

The problem is that there are too many foreclosures and the process for handling them is too slow. The solution is to utilize talented unemployed people to speed up the process.

According to Realty Trac, there are currently 2.3 million foreclosures in the United States that are devastating our economy. Foreclosures are a cancerous blight that devalue surrounding homes and create a downward spiral for the entire market. So, in order to achieve any real recovery, we need to purge the market of as many foreclosures as possible, and fast. But here’s the problem. It takes approximately 6-12 months (sometimes longer) to push each one of these distressed properties through the banking and legal system. So, how will we ever push 2.3 million of these “toxic assets” through the system fast enough to turn the market around? Why are the banks so slow and how do we speed up the process?

When a home owner becomes delinquent on their mortgage, the bank has to evaluate the situation to determine whether they should proceed with a legal foreclosure or take a loss on the property. The bank has every right to foreclose, but a legal foreclosure is the longer and more costly road for all parties. The banks would be better served to cut their losses quickly and move on to the next case.

But here’s where the banks get stuck. The bank who holds the mortgage is usually not the original lender and is typically located out of state, lacking first hand knowledge of both the owner’s situation and the true market value of the property. The bank passes papers from department to department, all in the name of “loss mitigation”, when in truth, all of these people have very limited knowledge or accountability. This creates enormous inefficiencies and bad decision making.

So let’s get to work. Unemployment is now over 7%. Here is a ready, willing, and seasoned workforce, many with excellent accounting, finance, mortgage, and real estate experience. Using the economic stimulus money, the banks should hire experienced, knowledgeable people to oversee the foreclosure process. But the key is to assign one experienced, knowledgeable individual to each case, who can analyze the situation quickly, negotiate, and make an intelligent decision on behalf of the bank. It seems counter-intuitive that assigning one person per transaction could be more efficient, but a knowledgeable expert, who is accountable to the bank, can make smarter decisions faster, advise the bank about risks and liabilities, and actually push transactions through faster. This would speed up the process tremendously and put lots of people to work.

As Einstein said, ‘you can’t solve a problem by using the same kind of thinking that created it’. Americans are an innovative breed, so let’s innovate a better solution.
Chip Bruss
Colorado Real Estate Broker

How to fix unemployment and foreclosures at the same time

Dear President Elect Obama, America’s banking leaders, and Lou Dobbs. Here's an idea that will put a serious dent into both the unemployment rate and the foreclosure crisis simultaneously.

While the nation's banks are receiving billions of dollars of bailout money with no real accountability, this might be an intelligent way to channel those funds into something that will actually help solve serious problems. As a real estate professional, I can tell you unequivocally, and my 1.3 million Realtor colleagues will corroborate this, the bank foreclosure process is seriously screwed up. The procedures and policies that banks use to process a short sale, foreclosure, or bank owned property sale are completely inefficient, ineffective, antiquated, and are costing the banks (and therefore taxpayers) millions upon millions of dollars. If you’ve ever been victim of a foreclosure or tried to buy or sell a foreclosure property, you know that it will take many agonizing months to process, sometimes up to a year, with little or no communication from the bank, and may or may not result in a positive outcome for the bank, the buyer, the seller, or the nation.

Here's the problem in a nut shell. The bank needs to analyze the value of the subject property and the potential buyer's offer to determine whether they should take a loss on the foreclosed mortgage or how much of a loss is reasonable to take. But the bank and its employees are usually out of state and have little data, connections, or realistic knowledge of the local real estate market in question. The bank passes documents from person to person and department to department, all in the name of risk reduction, when in truth, all of these people have very limited knowledge or accountability for the actual deal. This creates enormous inefficiencies and bad decision making. What a shock! So with a better system, the banks could process foreclosure deals faster, saving millions, and make better decisions, saving even more millions. For example, when a good Realtor handles a transaction for a client, they handle the entire deal from beginning to end, with informed knowledge of all the details and can advise their clients about the best decisions to make along the way.

So here's the solution. Unemployment is over 7% and hundreds of thousands of people with excellent accounting, finance, mortgage, and real estate experience are out of work. Hire these experienced, knowledgeable, and mature people to oversee the foreclosure processes at the banks. But the key is this, assign one experienced, knowledgeable person to each deal, who can analyze and assess the situation quickly, negotiate the deal if necessary, and make an intelligent decision on behalf of the bank. Doesn’t it make more sense to pay one experienced person to follow a deal through successful conclusion and positive outcome, rather than 17 low-paid staffers, who will take more time and accept no responsibility for poor decisions? Everybody wins!!!! The bank, the buyer, the home owner, the unemployment rate goes down, foreclosures reduce faster, and the nation's real estate market will recover faster!

Of course, the devil is in the details, but the current system is inefficient, sloppy, and just plain stupid. If anyone in the white house or a major banking institution would like more details on how this plan can save America, I would be happy to answer questions and provide a strategic plan.

Sincerely,
Chip Bruss

Happy New Year 2009

Well the only thing certain about 2009 is uncertainty! I won’t go into the laundry list of problems we face on economic and global fronts. But hey, it’s a great year to be alive! If you’ve ever listened to Anthony Robbins, the self-help guru from San Diego, he advocates that we need challenges in order to make life rich. We all wish our problems would go away, but in fact, we will always have problems, otherwise known as challenges. And if you took away the challenges of life, it would be boring indeed. If you look back on the greatest accomplishments and happiest moments of your life, they were all preceded by serious challenges and obstacles. It’s the overcoming of those obstacles that creates the exhilaration, whether climbing a mountain, finishing college, or having a baby. So embrace these new challenges of 2009 and let’s make it a great year to remember!

After relocating to Broomfield, Colorado from Columbus, Ohio, I have joined Keller Williams Realty in the Northwest Denver office. It’s a great location to help people buy and sell real estate in Broomfield and Boulder County. I researched and selected this area specifically for the excellent future growth opportunities and positive economic forecast. Please visit my web site, www.chipbruss.com, and my LinkedIn site, www.linkedin.com/in/chipbruss to learn more about my approach to real estate and this exciting region.