The article, quoting Capital Economics, an analytics firm, goes on to say that banks are reducing their Loan-to-Value ratios for borrowers.  Gee, did I read about this causing a little problem a few years ago?  A problem so global that it now stands to take down the entire economy of several sovereign nations?

I can certainly rank on about the factors that contributed to the last world-wide economic meltdown, and the one before that.  What get’s me is that the people who create the policies, underwriting guidelines and programs must have inncreasing short memories. 

I’m an old-time private money equity lender.  I know that people can lie about their income and fudge their credit scores.  However, they two things that are going to the lender are: title to the collateral and EQUITY. 

Concerning Nevada’s response to Robo-signing: I received a copy of a press release from a friend who received same from a Jennifer Lopez of Nevada’s Attorney General office. I presume this is a different Miss Lopez than the one who already seeks attention.

In essence, two persons were indicted by the Nevada Grand Jury of a scheme which alleges that thousands of document were fraudulently notarized and recorded between 2005 and 2008.  Press Release includes two perp photos. 

My original suit sought to reverse a sale whereby the robo-signer (in CA) purported via an SB 1137 Notice, to have affirmatively contacted the deceased trustor of a reverse mortgage which had been called due to what the industry calls a “maturity event.”  That means the borrower died, and they’re calling the loan.  I was Special Admin of that probate case.  As expected, Wells’ council was arrogant and intransigent. 

It was never my intention to start an avalanche of problems for the industry; I merely wished to hold this lender’s feet to the fire long enough for us to resolve the problem, which came to me the 11th hour. In reality, my suit was probably just a sideshow in the big scheme of things.

How do you other investors feel about the pendelum swinging in favor of defaulted homeowners who are yet given still more time?

I have a good excuse (and a note from my Doctor).

This past August (2009) I was awakened to chest pains and a pounding headache and, well, I’m 54 so I thought that it was ambulance time.  Wrong! 

Yes, the that was the time, but when I got a rather contentious, unhelpful 9-1-1 dispacher at 4 AM I was in no mood to debate ANYTHING so I drove myself to the emergency room of a local hospital that I’m very familiar with.  How I made it there, God only knows.

Then the fun really started.  When the E.R. physician determined that this was more than he dare handle, the nurse called the paramedics, who took me to a trauma center in Sana Ana.  After some testing they finally determined the problem to be a dissected Aorta and performed emergency surgery to correct it.

Unfortunately, I also had a massive stroke while on the table which caused some paralysis.  The good news  is that the surgery was a success (and I’m posting here again).  The other news is that the paralysis part is a much slower recovery than I would have ever imagined, so I’m taking more time away from business.

One of the big things that I’ve learned is that there are a lot of caring medical professionals in this world.  Another is that I have a lot more people, friends and family in my life that care about the important things than I could have ever imagined.  Lastly, if you don’t have your affairs together, including a medical directive to be used in the event that you can’t make your own decisions, then get one.  Today, without delay.

I used a particular escrow officer for about 12 years because of her relationship with the person who processed my conventional loans for many years. I’m a slow learner apparently, because anytime I’d ask Judy (not her real name) if she could do something out of the ordinary, she’d say “No!” and say it with a huff.  One day, she got upset with her employer and abruptly quit, leaving her less experienced assistance to take over her files.  It never occurred to me that she might just be saying “no” when she didn’t understand something.  My new escrow officer has the right attitude and anytime I have something different or out of the ordinary, I ask her: “How do we do such-and-such?”  If she doesn’t know or understand, she says so, and then we work out a solution together.  It’s no big deal.

I’m almost embarrassed how long I put up with the bad-attitude escrow officer with the closed mind.

Live and learn.

Many people talk themselves out of entering the real estate arena because they can’t forecast future real estate prices accurately.  Worrying about buying at the very bottom of the market may not be that important. Just look at stock traders, for example. They don’t have to buy at the very bottom because they can chose to wait (perhaps very patiently) while the stock goes up over the long run. Now day traders are a nervous lot, and they are rarely able to call the bottom. All they have to be able to do is to either buy well enough to make consistent profits, regardless of the direction of the market.

You can do that, too, by purchasing options on properties, leveraging your position without obligating yourself should you make a bad call.

If the property that you anticipate acquiring cash flows, then you can afford to wait.

If the only deal that you know how to make is a quick turn deal then you merely need to have researched your target properties well enough to know what’s selling, in what value range, estimated monthly depreciation/appreciation and just figure these in when building your profit margin and business model.

If properties are depreciating at an estimated 1% per month, and fixup and resale time requires four months, then make certain that you provide this extra expense into your overall holding costs and only take deals that allow for this extra expense.

Basically, if anybody tells you that the market’s going to drop another 25%, unless they own every deal in the community, it’s only an educated opinion (or W.A.G.). Even some gal or guy with 100 rental houses can only speak from the experience of prior markets.

If you’re paying attention to the trend, the market bottom will only matter if you recognize it and run out of capital to take advantage of the long-term upswing. And, you’d be too busy making money to really worry about it that much.

What I’m also saying is that an awful lot of people will use their lack of ability to forecast a bottom as a reason or excuse to stay OUT of the market. It just doesn’t have to be that way, of course.

The “trend is your friend” and “the dip is your ship” (I just made up the latter and, while I don’t know exactly what it means, it has a nice ring to it)

Consequently, California’s title insurance industry has re-established vital customer services for which the real estate and mortgage lending community has largely become dependent on.

However, there’s another side to this. I witnessed outraged real estate people, some active and some wannabies, not only cry foul of the temporary shutdown period, but acted as if the document services that they were accustomed to receiving for free were entitlements that they deserved. A few even rattled about the “Freedom of Information Act.”

This is lunacy. Nowhere is it written that title insurance companies, which are private, for-profit enterprises, are required to give out this information, let alone do so for free.  That they have done so in the past is only a matter of tradition and due to competititive forces as some title companies use such data access to their advantage.

For starters, recorded documents are available for viewing to the public at each County recorder’s office, and online for some Counties.  When I started in the business fax machines were not widely available nor where PC’s invented, so if I wanted to see a recorded image of a Grant Deed or Deed of Trust or other lien, I either had to visit the County recorder’s office directly, or persuade my title company to produce a photocopy and mail it to me.

Initially, when online documents became more widely available, but for a cost to the user, only a few could afford or justify the expense.  Then title companies, desperate to attract or at least maintain business, began offering access to these services for free or nearly free, at least for established customers.

The other side of this is that by not offering these services so freely, real estate investors and industry people could create a de facto barrier to entry to others wishing to enter the investing or real estate services arena.  For established companies, this is a real advantage, and perhaps there are other advantages that can be explored from the perspective of benefits to consumers. 

But my primary satisfaction would come from seeing the elimination of people who demand these services from the title companies and then casually and abusively take more and more resources from the customer service portion of these vendors, for which the expense is surely passed along to the ultimate customer.

So, there’s two sides to this controversy, for which you might see an advantage to you directly should this area yet again be revisited.

As fewer services are made available for free, this creates a much larger hurdle for existing investors and would-be investors.

In effect, the lack of free services will weed out casual info requests and up the ante for people who might have done a few deals during the market frenzy or are contemplating a deal or two now. Hence, no more toe-in-the-pool to test the water temperature. It’s going to be a more ‘are you in or not?’ for better or worse.

Of course, investors who already have a ‘research machine’ in place will largely be unaffected.

I’m not in favor of scaring people off from real estate investing, especially when it’s due to limiting access to information.

However, there are a few arguments that support this:

One is that the information is still available for free at the county recorder’s office(s). People can still make arrangements to do their research at the real and true data repository. This is the metheod that Ward’s training is all about and it hasn’t changed much in a long time. It’s only been the last few years when online data was made available, for free, that many of us got lazy and used the title company in lieu of performing our own research.

Another argument in favor of this restriction is that it requires would-be investors to make something more of a commitment to investing. If you are going to do this business, you’d do well to learn how to do the research and be less dependent upon the (free) services of others.

Here’s how smaller investors and newbies can work around this change:

1. Make a decision. Are you serious about investing in real estate? If so, you’ll need to make a commitment, probably monetary, time and better training.

2. Learn how to do your own research. Once you’ve learned how to chain out title and make the habit of actually reading key documents, you won’t want to go back because you’ll profit from this knowledge.

3. Consider working with more experienced investors who have their research machine in place. Most experienced investors do not view newbies and casual investors as adding anything to their enterprise and, in fact, may view newbies as taking away valuable time, energy and potentially a few deals. So, before approaching the pro’s, best have a plan in place as to how you’re going to add to their operation. Hint: It better be pretty darn tangible.

4. It may be possible for someone to establish a working relationship with a title company in another state outside CA and pull nationwide data. That would get you back in to CA info. However, if you’re only getting data infrequently, it may be easier just to pay for it.

5. Be prepared to ante-up and pay for the service(s) that you need. You’ve had a great free ride an there’s no rule to say that title companies owe us this service. When I was new, I had to practically beg for a copy of a recorded document and they required me to pay up front to order a prelim.

6. Consider paying for shared-access by putting together little groups. This will still require you to pay, however you might keep your costs low and in control.

Some county recorders make real estate records available online; some free and some pay as you go. Los Angeles county isn’t one of them. If you don’t want to make the drive to Norwalk, try Courthousedirect.com. which offers limited access for LA county and you can pay for documents that you require.

You can also subscribe to any number of other services offered by companies like First American or Fidelity, as well as the big database repositories like Accurint, Titlepoint, etc.

Personally, I think that title companies are not the bad guys. If I was in their shoes I’d be pretty tired of providing free services (which most certainly cost them something to obtain, maintain, and dispense) to people who may, or may not, provide much or any business in return for the service. There are a lot of time wasters out there!

Ward says it best: “What’s bad is good!”

If you are serious about making money in this business and have made the commitment, you’ll do whatever is necessary to get what you need to do profitable deals. And, those who do the work will receive the benefits.

I walked away from a little deal earlier this week.  A woman contacted us by submitting an heir advance request form. 

The basic facts are that her Husband’s parents had both died a few years ago leaving a small house in a tough part of the Inland Empire, along with a vacant parcel several blocks away.  The Mother’s estate, the last to die, had never been probated and she left no Will (hence “intestate”).

Although the house doesn’t have a mortgage on it, there are about $3K in back property taxes plus a variety of City liens.  As is often thecase, this is where this family’s story goes downhill.

The Husband was in jail for what was probably not the first time and expected that a longer commitment was awaiting his future.  The Wife has no income and, unable to pay the water bill for several months, the City turned it off then ultimately “Red Tagged” the house and pulled the certificate of occupancy, forcing out the wife and teenage children.  The City promptly boarded up the house to protect the copper, I guess.

The Wife, being resourceful (but dirt broke) had to borrow $1.00 from her friend in order to fax a copy of the Mother’s death certificate to us.  Very sad situation. 

We discussed choices and agreed that an heir advance was not available because there was no open probate, let alone an exit plan to repay the advance.

An administrator loan was out of the question because there was no way that either the incarcerated Husband or displaced Wife could make payments, nor did the property value support the loan-to-value protective equity that we require, and we were back to the issue that the family had no means to open probate.  Also, the alleged heir, the logical first choice of administrator, was hardly bondable as probate bond companies aren’t rushing to do business with people in jail or prison.

After some wrangling, Wife agreed to convince Husband, the heir, to sell and assign his interests in the estate to us for $15,000, on short terms.  We promptly arranged for Husband to sign documents in jail with my own notary super-signer, Ernie, and got thru that hassle.

Monday morning, Wife calls to ask to “cancel the loan.” She knew this was a sale, not a loan. This kind of claim of ignorance drives me nuts although by this time, I was ready to throw my hands up anyway.  You see, the previous day I did a little more due diligence and discovered that:

1. House was in a part of town that I’d never visit during daylight hours, let alone night
2. The cost of rehabbing the house would never be finalized as we would be constantly replenishing the stolen copper (wiring and pipes)
3. Across the street was a fleet card gas station, a car body repair shop and several warehouses that backed up to the (convenient for them) railroad tracks.
4. Probability of additional liens from Department of Health Services looked higher than estimated
5. After-repaired property value was looking like $60K subject to further decline, and fix-up would likely top $40K

This deal now reminded me of the joke cartoon that was past around many years ago for a missing dog: small brown, three-legged terrier, left ear chewed up, right ear missing, not fond of strangers, recently castrated.  Answers to the name “Lucky.” 

So, I was happy to unwind this inheritance purchase deal and assured this Woman that we’d destroy our documents and would not pursue it any more.  Also, we’d promptly return her ‘original’ documents consisting of copies of the decedent’s orignal 1968 deeds and lots of Code Enforcement notices. 

Frankly, I couldn’t have been any happier or quicker to get out of this mess.

My friend Will, Cousin Randy and I left LA mid-morning Thursday 5/28 and drove the Cayenne Turbo up I-5, cut thru Gilroy and up the 101 to the City.  An easy drive and we missed most of the traffic, too. 

After settling in, we went across the street to Ruth Chris’ steakhouse for what I would describe as an overpriced, tough steak with expensive sideorders, served in a beautiful setting by efficient staff.  I’ve had better experiences with Sizzler, however I’m biased, maybe because I bought the ranch and made my mortgage payments to the guy that started Sizzler, a real gentleman in every way.  But I digress…

When I go to a seminar, especially one where any of these three are speaking, I know that I’m using my time and money wisely.  I always walk away with useful, creative ideas, often an epiphony of the meaning of certain concepts, and overall great experiences.

There are really three events, at least, that I observe:

1) There are the speakers, who are long-time, active, seasoned investors.  They are not teaching something that they just heard six months ago, tried once successfully and now are guru experts.  These guys are the real deal and make their livings investing in real estate.  I doubt what they make from speaking and publishing is a significant part of their income.

2) The listeners- the seasoned, active investor attendees - are as big a part of these events as the speakers! A lot of people don’t consider this, however I believe it to be true.  You have to have good speakers to attract people, but if all you have are eager newbies to an event, the energy is brief.  With Miller, Schaub and Fortunato, they attract investors who are largely highly experienced, high net-worth, and bring much knowledge to the event and contribute greatly to the overall experience.  You won’t find them at loan-mod or short-sale workshop seminars, either.

3) The third event is harder to describe and maybe a bit more personal.  What I’ve found at these, and a small handful of other events, is the seminar that goes on in my head!  This is to say that I hear and see certain things at these events that trigger great ideas for my own business.  Some of the ideas get implemented, many do not, however the effect of the total experience is that of a “muse;” that force or influence that develops overall better, creative ideas and inspires one to act.

It’s also important to meet people and integrate well socially when attending these (all?) events, however I do not like the concept that some people refer to as ‘networking.’  My reasoning is that the people who go to these events wanting to use the events merely for their own business/social benefit without adding to the experience are there to take, not to give.  I find it fairly easy to spot them because they always want something, or are promoting something with little consideration to the listener, or are aggressively trying to get free advise without paying their way.  It’s very obvious and I find that particularly unattractive.

Fortunately, by far the great percentage of people at the SF event were there to have a good time, visit with old and new friends alike, and  take in the experience that only San Francisco has to offer (I’ve never had the opportunity to ride a cable car anywhere else…and Disneyland doesn’t count).

Next stop of the Jack Miller train is Reno, July 11-13, 2009 in Reno.  Will I see you there?

It seems that his idea was that I would feed him deals that he would work and learn the probate investment business by, presumably, applying what he learned along the way on those leads. 

This, of course, is not going to happen.

I tried to make the comparison with two fishermen.  One would never ask the other to find his fish, or would another, perhaps more experienced fisherman, ask the other one to reel in his fish and land it. 

The only exception would be when someone hires an experienced guide.  Fishing guides will sometimes even bait your hook, if that’s the way you want it.  You’ll pay for that service, of course.  And to be clear, I’m not in that business.

Same with hunting or any other game sport.  It’s all about the hunt.  If someone is in this business because it’s just about the money, then I have no idea how to help them get the feeling that results from locating a good prospect, taking the seller through the transaction process, and completing the deal (analygous with pulling the trigger, I guess). 

Also, most every successful real estate investor that I’ve met has some of the same characteristics; they get a thrill out of the hunt.  In fact, for many of us, that’s almost the alpha and omega of dealmaking; acquiring, renovating and managing or reselling a property for profit is only something that’s necessary to receive the monetary benefits. 

Now, you could pay someone to bird-dog your prospects, split tasks with a partner, acquire a property from a wholesaler or even work with a sharp real estate agent who’s dedicated to finding you the kind of deals that you like.  However, your role as sportsman (or woman) is significantly reduced.  Maybe to the point of canned tuna or venison jerky.  Just think about that.

But the hunt, that’s the big thrill in itself! Personally, I think taking that away from someone would not be doing them any favor. 

Several would-be real estate guru’s have tried eliminating that phase from the deal-making process by selling people a turn-key property, complete with tenants and management in place, in faraway places that the new owner/landlords would be unlikely to visit.  I think that there are class-action suits pending on at least one of these promoters.  Consequently, I’d be careful who I’d want to do business with, and that would be a fairly short list.

So, if you really want to exceed in this business (probate) or any other real estate market, you’d do well to learn how to bait your own hook and track your own game.  If you’re not willing to do that, you’d better be prepared to find someone who’ll be your guide and bring your checkbook.   

And if all you want is a tuna sandwich, forget the entire adventure and buy a can of Starkissed.