One person's take on how to do a job interview

Here is a great article about one young man's change of approach to the intitial job interview that got him a call back then an interview with the head of the organization and ultimately the job in Information Technology (IT), a very competitive field. I Asserted Myself and Got the Job By MARAT GAZIEV

I have to remind myself as I speak to people in financial trouble that it is anything but easy being where they are, and I really do not know how well I would do in their situation. Nevertheless, in these times, when I read something positive and uplifting that I think is valid I like to pass it on to my friends... I like what this author has to say. I enjoyed reading his article and passed it on to my kids. I think what he has learned has value for all of us.

Think it is bad being in financial trouble here? Try somewhere else!

With all the financial distress, falling real estate prices and mortgage defaults, we forget the advantages individual borrowers have under our system of laws. In Spain, people who default on their mortgage debt can never escape. Read the story of a man who, after losing his home and business, still faces huge unpaid debts not only for the mortgage but also 77000 euros in bank legal fees.
In Spain, homes are taken but debt stays (N.Y. Times 10-28-10)

Is the wave of bankruptcy and financial distress due to income inequality?

I just read a fascinating and thought provoking article in the Sunday NY Times that suggests that rising levels of income inequality may have contributed to the wave of financial mania that led to current high levels of foreclosures and bankruptcies. Here is the link:

Income Inequality: Too Big to Ignore? (NY Times 10-17-10)

The point is that as the rich become wealthier and spend more, they raise the bar of expectation for the middle class below them, leading to over-spending and over borrowing in  that group. Equally as important, this documented and rising level of inequality, as the top 5% of earners make more while everyone else makes less, is bad for all of us.

Something to think about.

The Foreclosure Mess- opportunities for all and a time for some new thinking

The news lately has been full of stories about how many mortgage lenders were playing fast and loose with the rules, committing perjury in the interest of expediency and profits, to push through foreclosures. This creates new risks for those who consider buying foreclosed properties. My point in this article is that while close attention needs to be paid to this, people who have the right counsel and an appetite for calculated risk may do quite well. And on the other side, for lenders and everyone else it is time for some innovative approaches involving reasonable business decision-making instead of the limited and failed foreclosure process

The New York Times reporting on this has been excellent
See for example the story of the poor woman whose case and the actions of her courageous volunteer lawyer started the furor when he fought GMAC who was trying to foreclose on her home:  http://www.nytimes.com/2010/10/15/business/15maine.html

On the risks created by lenders misbehavior, see "Avoid Foreclosure Market Until the Dust Settles" (NY Times).

So what does it all mean?
If you are a potential buyer of a foreclosed or distressed sale property, it's "buyer be careful". I would not go into one of these sales without an experienced attorney who knows the foreclosure process and the title issues, or an experienced broker or some other source who knows the market. I would demand a "Certificate of Regularity" or spend the money up front to do an examination of the court records and the title. If the deal doesn't pan out, consider it money well spent as it saves you from worse troubles. (Check the procedures in your state and get advice of local counsel)

If you are the one whose property is being foreclosed, it is time to evaluate all the options and alternatives with independent experienced advisers, who are professionals in their field and are not offering quick or easy solutions.

Time for Lenders to Think Outside the Box
If anything, the current brouhaha puts a lot of pressure on lenders to do what they should have been doing all along, namely to consider options besides foreclosure. In New Jersey, it is taking up to 20 months just to get to a sheriff's sale, with a lot of stumbles and delays along the way. If we look at the parties' interests, in some cases, there are better choices for everyone than foreclosure.

First, why not help the borrowers sell the property themselves?  If lenders made short sales  quick and easy to arrange, without a lot of bureaucratic red tape and reasonable and fair incentives to owners, brokers and attorneys. In even the recent past, those trying to do short sales faced illprepared and overworked lender personnel with little discretion to make business decisions, and lots of time and effort needed to so something that made good sense. Whether that has changed or will change is anyone's guess.

Ironically, a bankruptcy is a way to help this process, where there are multiple mortgages and liens that need to be cleared to deliver good title. Chapter 13 provides tools that may make it easier for cooperating lenders and borrowers to get a sale through. More on that in a later post or article.

Fair and open leaseback arrangements are another option that lenders should support. I have heard that lenders who have gotten foreclosed properties back are not putting them on the market. Indeed, there have been credible reports that there is a huge "shadow inventory" of such properties waiting to come on the market. Logically, flooding the market with such properties only depresses the market more. It makes sense for a lender to consider renting rather than selling in this market. At the same time, the borrower needs a place to live. If the borrower can afford a reasonable rent, why not lease the property they used to own? Why not even include a simple, fair and realistic purchase option for the future?

The answer may be that the lender does not want to have to evict the tenant later to sell the property. IMHO this is part of the business decision that has to be made, but the benefit may outweigh the risk. And an agreement with the borrower-now-tenant for financial incentives to move out if and when the time comes, ie "cash for keys" makes sense.

All these are innovative and out-of-the-playbook solutions. But in these times, all the parties to the foreclosure mess have to start thinking outside the box. The "bankers playbook" that I suspect lenders and the trustees who hold securitized portfolios of mortgages have imposed on themselves has to change. If this happens, we will all be the better for it.