M. Nack’s Blog

My brilliant, adult son loaned me this book recently A Random Walk Down Wall Street by Burton Malkiel. I’ve been dutifully plowing through it (though truth be told, I find it fascinating). I haven’t reached the part that tells you what you SHOULD do to invest intelligently in the stock market. So far, all I’ve read is how everything I’ve learned about technical trading and fundamental analysis these past 3 years is utterly meaningless. (Thank you very much!) The first part of the book describes the Dot Bomb phenomenon. Note that I said “describes”, not ”explains how to avoid getting caught in that trap again!” I’m only about 2/3  of the way through the book (page 250 of a 400 page book). Hopefully, by the time I’m done, the author will reward me with new found wisdom and clarity. (“News at 11.”)

Actually, I can’t help but wonder as to why my son would loan me this book. I suppose growing up with a mother that has a motto  “All Things With Exuberance” has caused him to rebel against his upbringing and be somewhat conservative in his approach to life . As a conservative young fellow, he may have some serious concern about his old mom. Like the Dot Bomb disaster, perhaps he fears that I suffer from Irrational Exuberance. Being the brilliant young man that he is, may be he’s right. Perhaps he is hoping against hope that (at least when it comes to investing in the stock market) I will learn to rein in my natural exuberance.

I am at a point in the book where the author (good ole buddy Burt) discusses a new science called “Behavioral Finance”. Apparently, a couple of psychologists got together and did some experimentation to prove that not only are people irrational in how they make financial decisions, they deviate in a systematic manner from rational behavior! Now this I can relate to. It sounds exactly like what I’ve experienced in the real estate market over the past 25 or so years. For instance, it never fails that when interest rates are falling, buyers will sit on the fence waiting to see how low they go before jumping in to buy. But when do they jump into buy? When interest rates start rising! I know when interest rates tick up, the phones will start ringing and I’m going to have a busy week. “Who turned on the faucet?! Did interest rates go up again?”

Another example is like the market we’re enjoying right now - a buyer’s market. Any rational buyer would realize that this is the best time to buy that we’ve had in over 5 years! Prices are soft, sellers are motivated and there is a glut of inventory on the market - meaning that buyers have more and better choices then ever. But what are buyers doing? Are they buying? Nope - they’re sitting on the proverbial fence wondering how much lower prices will drop - just like the interest rates! And if they DO make an offer, a great buy isn’t good enough. Nope. They have to pommel the seller so hard that the seller refuses to deal with them anymore. I had one seller say to me recently, “I would rather burn the house down then sell it to these people!” Whaddya gonna do?

But then, this is out of the mouth of one that just may suffer from terminal exuberance.

“All Things With Exuberance!”
mary!

It amazes me how criminals and con artists will prey on people when they are at their most vulnerable. It is like kicking your dog. But then, why should that surprise me? 

Once a lender wins their lawsuit to foreclose on your home, it becomes a matter of public record. This is information the con artist is waiting for to target you as his next victim. Their ploy is to prey upon your panic and desperation. They come in as a trusted advisor that will solve all your problems. In exchange, you must agree to deal only with them - not your lender, not your attorney or anyone else - just them. This should be your first red flag!

Their scam is to get you to sign a bunch of documents and keep you in the dark about what you are signing. They tell you that they are documents authorizing them to negotiate on your behalf with the lender so there is no need for you to talk further with the lender or your attorney. They tell you that there is no need for anyone else to see the documents - especially your lawyer! - because, after all, we’re all friends here, right? You will not receive a copy of anything you signed - so later on, you will have no record of what has happened.

What you have just done is signed the deed to your property over to them - in effect, you have just given them your house. Then they tell you that they will deal with your lender - that there is no further need for you to do so. You are instructed to send all of your payments directly to them, not to your lender. They take the deed to your property, sell the property or re-finance it, run with the money and are gone. Worse, you no longer own your home - which means that you no longer have the ability to work out a settlement with the lender - and you are out whatever money you have given them.

To avoid being the victim of a con:
*Never sign anything that your attorney hasn’t first reviewed.
*Never let any of your orginal documents - your deed, your mortgage documents, etc, leave your possession.
*Never send your mortgage payment to anyone other than your lender. If there is a change as to where you should send your payment, you will receive written notice of that from your lender.
*Beware of anyone that discourages you from talking to your attorney or your lender directly.
*Beware of anyone that charges you some sort of a “good faith deposit” to help you resolve your problems. There are legitimate governmental agencies that will counsel you for free. A legitimate investor looking to purchase your home does not need or want any money up front from you. In fact, a legitimate investor will give YOU the good faith deposit, not the other way around!

If you suspect that you have been the victim of a con, call the police and report it immediately. To get free counseling and immediate advice, call 888-995-HOPE. Also, this link to the Illinois Association of REALTORS contains several resources that will educate you further:
http://www.yourillinoishome.com/financing/preventmortgagefraud.htm

And, of course, if I can be of any assistance, I am always privileged to serve however I am able.

“All Things With Exuberance!”
mary!

For the past six months, my assistant and I have been learning about foreclosures and delving into helping people that are threatened with losing their homes. She and I attended an event this morning put on by the Illinois Housing Dept Authority (IHDA) to educate people who are in trouble. Allowing your home to be taken back by the bank in an auction is ABSOLUTELY the WORST thing you can do!! The bank is not really the enemy and, surprisingly, the bank’s interests are not that different from yours: you don’t want them to take your home, and they are not interested in owning your home. They want the money you owe them. That’s the business they are in. They are in the home LENDING business, not the home OWNING business So, if you call them to try and work things out, they will almost always work with you.

Let’s say you decide to just abandon the house - thinking that the bank will just take your property and everything will then just go away. After all, they are getting the house. What more can they want from you? So, you go off to Brazil or someplace nice and warm and start all over again. WRONG! WRONG! WRONG! Doing that just makes things worse. If you end up losing your home at auction, and it is sold for less than what you owe (which is what typically happens - particularly if you’ve abandoned the property), you are still on the hook for what the bank is owed. So now, you’ve not only lost your home but now your credit rating is in the toilet (and you won’t be able to buy another home for 7 years or even rent a decent apartment!) and you STILL owe the bank its money! They can (and will!) go after you for the dough and file a judgment against you - which only screws up your credit rating that much more.

By all means, DO NOT! DO NOT! DO NOT! bury your head in the sand thinking it will all just go away. Call the number that is on your payment book and tell them you’re having problems. There are lots of legitimate counseling agencies that will assist you in the process of working out something with your lender.

Finally - BEWARE OF SCAMS! There are plenty of predators out there looking to take advantage of people that have fallen on hard times. Tomorrow, I will go into “Mortgage Rescue Fraud” - the red flags and signs to look for.

“All Things With Exuberance!”
mary!

I was at an event earlier this week where this fellow discussed how we often neglect recovering physical energy. (Along the lines of what Loehr and Schwartz said in The Power of Full Engagement.) Now, I need to put this conversation into context, because the presenter is a tri-athalete and coaches kids in the sport. So, he is a pretty serious athlete - and looked it! He clearly is carrying less than 20% body fat! As part of physical recovery, he discussed how important it is that we eat nutrient-rich foods. He asked the audience which choice should he make if he had a spare 200 calories in his eating plan for that day - the eggplant parmigiana or the asparagus? (Both items were on our lunch menu. Gasp!) My initial reaction was, “Oh, come on! Is he really monitoring his food intake that carefully? 200 calories is nothing for this guy! He probably burned off 1000 calories before breakfast this morning!” As soon as I thought it, I answered, “Yeah! I bet he is!” Because he is as serious as a heart attack about his sport. You just know that he keeps track of every sip of water and morsel of food that crosses his lips. While I sit around and whine like a spoiled brat, “It isn’t fair. Why should I have to do that? Nobody else does.” Boy! That’s coming out of my vocabulary right now!!

A light bulb came on for me: even athletes monitor their food intake! Or maybe instead of saying “even”, I should say “in particular”.  Notice the language: athletes don’t “diet”, they “monitor their food intake”. They will do whatever it takes to maximize energy and performance. And how is that any different than what we “mere mortals” need to do in order to get through OUR day - “with exuberance!”? (Particularly at THIS time of year!) We also need to “maximize energy and performance” Framed that way, doesn’t eating properly sound a whole lot better than “dieting”? (The old joke: what do the first three letters of “diet” spell?) And here’s the thing: so you EAT the cake and cookies and holiday punch, etc. - put on the requisite “Holiday 10″. Just how crappy DO you feel afterwards? Feel like taking that jog around the block now? (Talk about heart attacks!) But of course all of this is important only if you’re serious about accomplishing the things you want in life. As it says in Alice in Wonderland: if you don’t know where you’re going, then it doesn’t matter much which way you go. 

Happy Holidays!

“All Things With Exuberance!”
mary!