Friday, August 29, 2008

Puppy Mills Make Me Cry

I'm not typically one for tears, but the Washington Post's coverage of the bust of a Parkersburg, WV, puppy mill did get me a bit bleary-eyed this morning.

Our pets should always be treated as companions, not as commodities or property. They deserve the loving care and respect that any member of the family would receive.

Many people advocate adopting shelter and rescue dogs exclusively as one way to both thwart puppy mills and to also help give needy pets a loving home. However, don't neglect the role of a good breeder; although some advocates of shelter adoptions completely eschew breeders as either "part of the problem" at worst or not helping the situation at best, I argue that adopting a dog through a reputable breeder is very important and should not be seen as "bad" in any way.

Adopting shelter and rescue dogs gives them a good home, yes; however, puppy mills will continue to pump out the same sorts of dogs which end up in shelters and in need of rescue. Obtaining dogs through reputable breeders helps dry up the demand for puppy mill dogs and simultaneously supports the continued hard work of those breeders who are devoted to the health and good lives of their dogs.

Monday, August 25, 2008

Still Waiting on the Bank

Just a short entry today to update the home buying situation. Mainly, we're still waiting to hear from the bank and get the contract ratified so we can get the real business in gear. Our agent had thought we might hear something this past Friday, and I thought perhaps today, but nothing yet.

We did the home inspection today, something of a risk for us in that we had to fork out $450 on a home we might not end up buying, but still a necessity since our contract had no home inspection contingency associated with it: banks tend not to consider offers contingent on inspections, and regardless won't fix most problems found anyway--so we had to know what we'd be getting into.

The good news is that there weren't any serious faults found: a missing shingle here, a slightly bent vent pipe there (both leading to the potential for water damage, and with evidence of some slight water entry but nothing serious). But the roof was fairly new (4 years old), nothing structurally at fault was found, and only a few safety issues the FHA would require be corrected before backing our loan. Pretty much all the other faults I can fix on my own, or with the assistance of some general contractor relatives.

The inspection also gave us a chance to go through the house again; it was a good refresher as to the layout and let us both get a better idea for what we'd do upon moving in. I took photos, and Beth grabbed measurements of the windows and rooms; we've quite a stock of curtains bought as our local Linens 'N Things went out of business with no real idea as to where they'd go or how many we'd need.

Of course, the listing agent hadn't informed the homeowners. They were out, fortunately, and our agent let the inspector in via the lockbox. Right as we were finishing up, though, the owners came home to the surprise of finding all of us in their home! Nothing new there, I guess; the listing agent hadn't let them know we were coming on either of our previous visits to look the place over. They apologized for the "mess" (if you consider a near-Zen existence "messy") and were understanding, anyway. I feel bad for them losing their home; they're very nice folks... but I'm also going to be selfish enough to realize they're in danger of being foreclosed, so better Beth and I get a chance to buy the home than it go to a bank. Either way the owners will lose the home.

Hopefully, we'll go under contract in the next couple of days. I have to think if the bank wants the place off their books this quarter, they'll have to sign on the dotted line this week to give us any reasonable time to close and the sellers time to move. Then again, with the upcoming holiday weekend, who knows if the decision makers will be available until next week?

Tuesday, August 19, 2008

Progress at Last? (Or: Could Real Estate Not Suck So Much?)

Yesterday evening, I got a call from my agent with an update on the home Beth and I want to buy (recall from a prior post the home is a "short sale," and thus can take a looooong time to even get approval to purchase). Tentatively, I'll chalk this up as "good news."

Gene told us that the listing agent had at last gotten feedback from the bank, and that the bank was likely to accept our offer and want a 30-day closing, and that the listing agent wanted to confirm we were still interested & ready to buy (as if getting weekly calls and needling from our agent didn't confirm that interest, eh?)

The closing date isn't unexpected, either, assuming the bank does approve the sale. Why? It's August 19th now, and the bank will want to complete the sale before the end of the quarter to get it off their books (carrying defaulted or endangered loans hurts the bank's quarterly reports, to make a long story short). Assuming it takes the bank another week to churn through the approval process, that would put closing right at the end of the quarter. And it works well for us, assuming the sale is approved soon, as it could mean we don't even have to extend our apartment lease at all (yay!) and might only have another month and change there.

Unfortunately, due to other offers having been made on the home, we had to include an escalation clause in our offer (a bidding war in a "buyer's market"--go figure, huh?), and the listing agent said he thought the bank was going to accept exactly the top figure of our escalation clause. Again, not really a surprise; I'm just hoping the bank doesn't say, "Well, they were willing to offer $10k more in escalation over their offered price; maybe they'll be willing to go a bit higher still?" and counter us, because we don't have time to get involved in extensive negotiations with them at this point--particularly if it meant going into the next quarter, as the bank might then take their time well into late November or early December waffling and waiting for more offers.

Our agent has suggested we go ahead with a home inspection even without the bank's ratification of the contract--a slight risk, as we could be out the $400 or so is the bank declines the sale. I agree with him, though; we had to remove the inspection contingency from our offer previously because banks tend not to allow them (after all, the bank is already losing money on the sale; they don't want to spend more money fixing problems found in an inspection). So if there are any problems to be found, now is the time to do so, before the bank agrees to the sale. (Technically, any bad problems would cause our loan to be declined by the FHA underwriters, so we'd be "safe" even without the contingency provisions, but we'd have to go through the whole loan process to get there first.)

Looks like things could be looking up for us, and that Didi and Chance may finally get a Chateau Papillon! I'll be cautiously optimistic for now...

Monday, August 18, 2008

Adieu, Vienna

It was a great three years living in Vienna, Virginia, but the weekend saw the end of our time on Tapawingo Road. We'll certainly miss the neighborhood and the yard, though we're also looking forward to buying a home and finding a place we can really make our own.

Our time in Vienna was somewhat bittersweet, though, seeing the passing of all three of Beth's "dingoes": long-haired Dachshunds Agi, Ziggy, and Geronimo; along with our cat Moon, and several "bappies," or baby birds, which the cockatiels had tried to hatch and raise. And though I don't believe in the supernatural, I will say something seemed a bit "off" at the house at times, something not unlike I'd expect a haunted home to feel.

Malevolent presence walking the nighttime halls? Unquiet spirits reaching out for the living? Coincidence and over-active imagination, most likely, but still something which has inspired my creative side with several horror story ideas.

Haunted or not, though, we'll miss the home in Vienna and the times we spent there. Wish us luck and speed in finding a new home!

Wednesday, August 13, 2008

Waiting Out a Short Sale (Or, Why Real Estate Sucks, Part 3)

Previously, I blogged about our initial frustrations buying a home, which largely were due to the delays brought on by my townhome's buyer (who missed his contracted closing date by nearly two months). The good news is that my wife and I found another home to buy, one we actually liked better than the ones we'd missed out on due to my negligent buyer. The bad news is that the home is offered as a short sale.

A lot of people got into the real estate market during the bubble years. Lenders began issuing mortgages with 100% financing and no PMI (private mortgage insurance--the buyer pays to insure the bank, not the buyer, against a loss on the loan), coupled with low teaser-rates on adjustable-rate mortgages (ARMs). Many banks apparently felt unconcerned with the risks this raised; in part, they planned to (and usually did) sell the mortgages quickly, leaving themselves untouched should the buyer default and go into foreclosure. And, with skyrocketing home values, what problem for the bank would a foreclosure be, anyway? They could take the home and sell it at a profit that satisfied the mortgage balance... until, that is, the mortgage bubble burst.

Even worse, many banks allowed loans on a "stated income and assets" basis, meaning buyers didn't even have to prove their income levels. Appraisers were fudging property values, too. And because many of these loans were to people with either poor credit or were otherwise considered risky, the banks had to charge higher interest to be able to sell the loans to investors (because investors rightfully want a higher return, reflected by the higher interest rate, to account for the added risk). A general economic slowdown combined with resetting ARMs going to higher rates--often over 10%!--meant a good many people suddenly found themselves unable to pay their mortgages, and the real estate slowdown meant their homes were losing value, making them very difficult to sell since many people now owed more than the homes were worth. Finally, some banks came up with a totally dreadful idea: allowing borrowers to pay less than the interest accrued each month, backloading the difference onto the back of the loan (meaning the balance owed actually grew over time!)

Banks can foreclose on defaulting buyers and in millions of cases have; however, foreclosures can be costly and time-consuming for the bank (depending on the state), and the loss of market value virtually guarantees banks will not be able to sell homes they now find themselves owning at anywhere near the amount they (or the bank they bought the loan from) originally loaned the former owners. Banks don't like being homeowners; most have to keep up to several times the home's value on-hand as reserves while they try to sell the home, in addition to spending money on property taxes, maintenance, and so forth--and that's money the banks could be lending out and using to generate revenue.

This is where the short sale comes in. In a short sale, the bank chooses to allow the owners to sell the home for less than what is owed on it, usually dismissing the remaining balance owed as a loss. By doing so, the bank avoids the time and expense of a foreclosure and avoids keeping on-hand potentially millions of dollars per property while they try to sell the home they now own (many of which are damaged by disgruntled owners or by apathy toward maintenance by the stingy banks now owning the property). They still take a loss, but--and this is key--often nowhere near the magnitude of loss they'd eat in foreclosure and subsequent sale of the home.

The chief problem is that the people handling short sale approvals for banks--the loss mitigation departments, their asset managers, and ultimately the portfolio managers overseeing large packages of multiple mortgage-backed securities--are absolutely swamped by the real estate crisis. Some loss mitigation reps get literally thousands of faxes a day.

With all that lengthy preamble out of the way, let me get back to the specific situation my wife and I found ourselves in after the purchase of a new home fell through. We compiled a list of around a dozen properties for our agent to take us to see, and one really caught our eye: a great location (on a cul-de-sac near a county park, not too far from my office), in good shape (several places we viewed needed a ton of work--some to the tune of tens of thousands of dollars!), and within our price range. The downside: it was a short sale, and the listing agent seemed difficult to work with right off the bat.

Beth and I did a lot of research on recently-sold and still-on-the-market comparables in the neighborhood and put together a spreadsheet of comps, finding the property value to be right in-line with the asking price (but around $100k less than the mortgage by county property records). Plus, several of the comparable homes which had been foreclosed upon languished on the market, enduring several price cuts without selling. We put together a good offer and sent it to the listing agent.

Making an already-long story short (the particulars of which I may blog about sometime), Beth and I have had our offer for a short sale purchase in front of the bank for approximately a month now and have not yet gotten word on any approval or counter from the bank. Unfortunately, that's par for the course these days; some of the larger banks and loan servicing companies are taking over a month and a half just to get to a given short sale package, with some taking up to four months to approve or reject a short sale!

That leaves us moving to an apartment given our home lease is up later this week, as apartments seemed the only option for a short-term, renewable lease while we wait (hopefully not for long) to hear back from the bank about our short sale purchase offer. As we're offering above the current market value and within 90% of the tax-assessed value, we think our offer is good enough to win approval, but the wait is killing us, no matter how many "just be patients" we get from the listing agent. If the house weren't perfect for our needs, we'd have moved on and bought another place (likely a foreclosed property, which usually takes only a week or two on which to gain bank approval) already--but this place is worth waiting for, assuming we actually are able to get it.

And assuming mortgage rates don't go up to the point we get priced out of the market--a distinct risk these days with the Fed worrying about inflation and banks tightening lending rules and raising rates left and right to discourage what had once been bread-and-butter purchases.

Well, wish us luck. I'll post more on our home buying (mis)adventure as developments warrant.

Monday, August 11, 2008

Deux Papillons--C'est Tres Adorable!

Having previously shared my "Papillon Gothic" photo of Didi, I wanted to follow-up with a photo of our other Papillon, Chance aka Chançois aka Poop, with a little bit of backstory to explain his scatalogical nickname.

Chance is technically my wife Beth's Papillon (Didi being mine); she adopted her "little bundle of poo" after being won over to the breed by Didi. As to Chance's nickname... well, so far, he's lived up to it while sleeping in my sister's bed, in my wife's shoes, and, worst of all, in the captain's chair on the bridge of the Exerda (yes, he pooped in my office chair!)

Lest Didi feel left out, here's a photo of the precious puppy herself, "celebrating" being such a cute Papillon. (Didi will perform said trick on the command "celebrate" or with the appropriate hand signals--a perfect example of adding a signal to a pre-existing behavior.)

Didi's and Chance's photos here won for the "Cutest Bitch" and "Cutest Dog," respectively, in the United Papillon and Phalene Association's online dog show. Chance and Didi may not be eligible to compete in conformance events (aka dog shows), but at least they can be champions of cuteness!

I took the photos in our living room, with a sheet hastily hung on the wall behind them (hence the many folds--I should have dragged out the iron!), atop our dining room table with a soft throw placed atop it. I experimented a lot with the lighting, using a Canon 580 EX II atop my camera with a 420 EX slaved to it from the side (hence the light cast evident to the right in Didi's portrait) and aimed to break up the shadows cast onto the sheet behind them. One of these days, I'll pick up some real studio lights, but I think my setup worked fairly well--don't you?

Frustrations In Buying a Home (Or, Why Real Estate Sucks, Part 2)

In a previous post, I opined on the difficulties of selling a home today--problems in large part not even directly tied to the burst real estate bubble and current market conditions--but, fortunately, I did close on the sale of my townhome, freeing my wife Beth and I up to pursue the next phase in our house hunt: making the purchase of a home in what most would call a "buyer's market." No problem, right?

Unfortunately, wrong!

Recall from my prior ruminations that my buyer missed his contracted closing date by nearly two months. Since Beth and I don't have a huge amount of cash saved up and needed the proceeds from my townhome sale for our down payment, any offers we'd make would require a "Sale of Home Contingency," which for the non-real estate savvy out there means we'd have to wait for my home sale to close, and should my sale have fallen through, would have had an "out" for any place we'd contracted to buy. Needless to say, sellers do not much like contingencies of that sort, even in today's "buyer's market," because of the uncertainty their sale will be completed in a timely manner or at all with a contingent buyer. Keep that point in mind as we go forward.

Beth and I looked at several homes (special thanks to our agent, Gene Davis, for being so patient and showing us so many places!) in our price range. We found one which needed some TLC but which was otherwise perfect, located reasonably close to my office, with a nice yard for the dogs and a good layout inside for our needs... but it was bank-owned, a victim of the rash of foreclosures accompanying the economic woes and subprime mortgage meltdown, and banks simply will not consider contingent offers--thus, my wife and I couldn't even offer on it due to my buyer's slackness, and it soon went under contract to someone else.

The next home we found also needed a bit of work--chiefly, some upgrades to the appliances, new windows, and a fence for the back yard--and as we were getting encouragement from my buyer's agent that his loan was on track to close "soon," we made an offer with the necessary contingency but briefed the listing agent as to the situation. Still, another offer arrived (amazing, given the home had been on the market for several weeks without a nibble!) and was accepted over ours, at a lower price no less, due to our contingency.

Needless to say, I was at that point quite furious with my negligent buyer, and began exercising legal options to pressure him to pick up his pace (for which I was rebuked by him for "getting emotional" in a "business matter"). Luckily, the other offer on the home we wanted fell through... so we were back in business, if only my buyer would close.

Anxious days passed as my buyer and his mortgage broker and ultimate lender delayed (the most frustrating being the lender requiring a second appraisal be done in-house, which they kept promising to schedule--they eventually did a "drive-by" appraisal, far less valid than the in-depth one already on file!). On the eve of closing, the lender raised property tax appraisal questions that so frustrated the buyer's own settlement attorney that the law firm threatened to resign, as the issue had been addressed several times already.

Worst for us was that the seller for the home we were to buy now informed us he had a new contract, "a done deal except for the signatures," to buy the home from someone else. We urged him to reconsider and wait, as the lender had committed my buyer's funds, and we'd be able to remove the Sale of Home Contingency within days (waiting only for the checks to arrive at the settlement firm's offices). Nope--with no, "Hey, we've gotten another offer, can you remove your contingency first?" notice or other heads-up, the seller had gone with another buyer, and we lost out on the home for the second time. Though not required by law, ethically I believe the seller and his listing agent ought to have given us notice that they'd received a non-contingent offer and given us a chance to respond (had the contract been ratified, the kick-out clause the seller rightfully insisted on would have given us 72 hours).

So, my buyer's delays had now cost us three home purchases. More than a bit depressed, Beth and I came up with a list of around a dozen places to go and see that weekend, with the hopes of finding another home that met our needs. And we did find one that was a better fit than any we'd looked at before. The problem: it was a short-sale property, the drawbacks of which I'll discuss in a future post.

Thursday, August 7, 2008

Papillon Gothic

Darth Deedlit the Devious, aka Didi, is going to be incredibly displeased by our impending move back into an apartment while we work out a proper home purchase (more to come on this soon)--largely because she absolutely loves the back yard.

For some reason, this photo of Didi calls to mind for me the iconic Grant Wood painting, American Gothic, and thus I've titled it "Papillon Gothic." I guess there's something of Munch's The Scream to the image, too, though only in passing--and besides, that's a much less-pleasant comparison for a little Papillon.

It's certainly one of my favorite portraits of Didi (and believe me, there are quite a few from which to choose), and though far from unbiased, my wife Beth calls it her "favorite photograph, ever!"

I'll be sharing more photos--particularly of Didi and her half-brother Chançois, aka "Poop"--in the days to come.

Anyway, I thought I'd share it as a swan song of sorts, a requiem for the good times we spent at the Vienna home. I know Didi will be quite in mourning for the yard and her romps across it chasing her ball.

Ruminations On Selling a Home (Or, Why Real Estate Sucks, Part 1)

Since moving to Northern Virginia in 2004, my wife and I have been renters. We were lucky enough to ditch apartment life and find a great home whose owners have spent the last three years overseas, but like all good things, our time in Vienna is coming to an end as the owners return to the States. Coupled with the real estate market collapse and the ensuing "buyer's market," this seemed an ideal time for us to buy a home.

But first, I had to sell my townhouse back in Blacksburg, which I'd rented out the past four years. In my favor, Blacksburg's market is somewhat insulated from the overall burst real estate bubble by its nature as a college town, though that also means the peak period for sales is springtime, as people want to be able to close and move in before the start of the fall term in mid-August. I contacted the same agent who'd handled the purchase for me when I originally bought (Vicki Powell, a great agent in southwest Virginia), and we put the property up for sale.

Though the first offer was less than my asking price (by about 4%), the prospective buyer wanted to close in early May, which was ideal in that it gave my wife and I plenty of time to locate and buy a home before our lease was up in mid-August. After getting confirmation from the buyer's agent and lender that he'd have no problems closing on schedule, I accepted the offer. And thus began a months-long odyssey which has yet to have its final chapter penned!

I'm sure my situation represents an extreme, but it shows just how many things can really go wrong in real estate transactions. Rather than going off on a lengthy rant no one will want to read, let me make several points, or "lessons learned," I took away from the experience:

  • Investors using conventional lenders for their financing (vs. "hard money" lenders) are NOT a good fit for sellers right now! Banks are really tightening their lending guidelines, and are giving investors (buyers who are buying a home they don't intend to live in) a really difficult time. And yes, parents buying a condo for their college students are considered investors.

  • Mortgage brokers suck! (Especially mortgage brokers who also run talent agencies and are credited as Grandmaster Flash's "personal assistant" on his albums; more on that shortly.) I'm sure in better markets, mortgage brokers help their clients find the best available loans, but today, many lenders are shuttering their wholesale lending divisions, meaning there are far less options available to brokers. And as a seller, having a buyer with a mortgage broker means a lot more potential for delays--any requests for clarification or additional information from the actual bank have to pass up to the broker, to the buyer via his agent, then back through the same chain, sometimes adding days to the process for each instance--as well as significantly reducing transparency (meaning as a seller, it's much tougher to find out exactly where my buyer is in the approvals process).

    My buyer's mortgage broker was incredibly unprofessional. They never returned e-mails, faxes, or phone calls from me or my agent, despite the contract specifying the buyer allowed his lender to communicate with me regarding his loan. Worse, when I reminded my buyer of that, his mortgage broker actually called my agent and reamed her out, and stated they had advised the buyer not to provide the written consent I had requested (note: mortgage brokers should not give legal advice; what they had suggested would have put my buyer in material breach of the contract, not a place he wanted to be!)

    Being a good Internet sleuth, I soon discovered his mortgage broker's owner had a MySpace page--disturbing enough in itself; we're talking about the financial world, after all, where tattoos and shirts in colors other than white are frowned upon--and proclaimed only to be interested in people "making millions," as well as her dubious credit being the personal assistant to Grandmaster Flash and her other business as a talent agent for the hip-hop community.

  • People listen to lawyers. The buyer completely ignored reminders his closing date (which he missed by almost two months) was a material consideration in my acceptance of his offer, and as such, he would need to pay a per diem or other compensation to reflect his not making good on his promise... that is, until I got lawyers involved. The only downside to lawyers is that they are like fraternity brothers, willing to be your friends after you pay them first--though I think my lawyer's fees turned out to be money quite well-spent.

I would have found the buyer in default (which I reminded him was the legal position he found himself in, many times), and delivered the required 72-hour notice to yank his contract, had his delays and promises not pushed us into early summer. Remember, in a college town, the market is almost dead during the summer; students already have their fall housing lined up by then, so if I put it up for sale again, I'd have to cut the price further to move it, etc., and still have had no guarantee of finding another buyer in a timely manner.

It's my opinion that my buyer never intended to make good on his contracted early May closing date. I'm not sure how much of a role his agent and his mortgage broker played; they both certainly had their share of unprofessional behavior and were complicit in the assurances the closing could be done on-time. I think he wanted to get the property under contract at a discount.

In the end, we did successfully close--and not a moment too soon, as it turns out! Within days of closing, his ultimate lender, Wachovia, discontinued the loan program he had used to buy the home, the "stated income and assets" pick-a-payment product which many have called the worst idea in the history of mortgages. And within weeks, Wachovia, following the lead of many other major lenders, shuttered their wholesale division entirely, meaning they won't work with mortgage brokers at all any longer.

Still, due to the buyer's and his broker's often inexplicable and always unprofessional delays, my wife and I lost the first home we'd found (twice, actually; more on this later), and I incurred quite a few additional expenses. For example, I paid two months' more mortgage interest, as well as two months' more FHA mortgage insurance (they don't pro-rate, so I actually had to pay for all of July even though we closed June 30th!), storage unit rental (again, more on this later when I blog about the frustrations of buying a home), legal fees, and incalculable stress and frustration.

If I ever sell real estate again, I will definitely do a lot more investigation as to the buyer's funding (though, contractually, buyers can change their funding source at any time so long as it causes no delays or damages to the seller). No small-time mortgage brokers allowed, unless they're willing to state in writing they will provide bridge funding as necessary to close on schedule. Investors vs. buyers looking for a home of their own will get extra scrutiny. And I'll get lawyers involved sooner, as well as having contract addenda explicitly spelling out the per diem and other damages the buyer must pay if he or she is late on closing.

Wednesday, August 6, 2008

Opening Thoughts

I've fought against putting up a real, honest-to-god blog for some time. I'm not sure why--I've plenty to say, anyway, and I don't think it's just that my wife objects to the whole word "blog" for some reason (she always sneers "BLAAAUGH!" when Jack Cafferty on CNN refers viewers to his blog, for example).

I've had Web sites that basically were blogs dating back to the pre-blogging era itself, and I actually worked for a while on blogging technology when it first became the "hot" thing--though I never could quite work out a good use case for blogs in the Intelligence Community; we're talking, after all, about a group of people not exactly inclined to share information. (Though they do seem a bit more excited about social bookmarking, which I've developed for them as part of my day job--but that's another story.)

Given my substantial Web presence otherwise, though, and the need to vent to someone other than my wife, family, and various online persons across forums from frequent traveling to photography, the day has at last come for me to start a blog of my own.

So I'll be posting about things from my daily life--the frustrations of finding the perfect house, incidents from the lives of our fauniferous zoo, my most recent bird photography, writing, and so forth--on at least a somewhat regular basis. I can only hope you, the reader, will find something of interest within my rather verbose ramblings from time to time.