Archives For Brent Pittman

my headshotThis is an interview conducted via email with California Realtor Lauri Trapp (License #01265988) regarding short sales. No compensation was exchanged for the purpose of this interview. 

1. Briefly describe how you became a professional Realtor and your experience dealing with short sales. 

I became a licensed Realtor in 1999. When the market began adjusting in 2008 I starting working with a broker that dealt primarily in the short sale market. I worked for this broker for about a year and learned how to advise distressed homeowners in their options and negotiate with their banks to obtain short sale approvals.

2. In your opinion, who should consider a short sale? 

I would say that anyone struggling to keep up on their mortgage payments or unable to make ends meet due to high payments should consider a short sale. In addition, it can be a great option for anyone who is significantly upside down on his or her home value.

I (Brent) would not advocate a short sale based solely on being underwater on your home, nor would I suggest a strategic walk away if you can make the payments. I believe a short sale should be used as a last resort to a foreclosure or in a case of extreme financial hardship.

3. Can you briefly describe how the short sale process works? 

In the short sale process the transaction is basically the same as a standard sale, except we must get lender approval to close the sale. Once a buyer is secured it is necessary to request approval from the lender to forgive the difference between the sales price and the amount owed on the loan.

Generally speaking the bank may request your last 2 months bank statements, 2 recent pay stubs, 2 years tax returns, a financial worksheet and hardship letter. The short sale is not contingent on any one of these items but is taken into consideration. The lender will evaluate the value of the home and If the offer is in line with the lenders value, the short sale should be approved.

The time frame for this process varies from lender to lender but can take anywhere from 2 to 4 months from the time the offer is submitted to the lender to close of escrow. Additionally the seller will not be required to pay any fees or closing costs and could qualify for a relocation fee of about $3000 or more from their lender to be paid at closing.

4. What are the major obstacles with a short sale? 

Since I began closing short sales over four years ago, I have seen a huge improvement in the process. In the past lenders were overwhelmed and understaffed and were unable to keep up with the request for short sales.

The process has become more streamlined and standard. Since we are waiting for lender approval, patience is required on everyone’s part. During the approval period there is a constant need to stay in communication with the lender in order to assure the process goes smoothly.

5. What advice do you have for someone considering a short sale? 

There’s no need to go through a foreclosure when your lender is willing to work with you to sale your property.

Be in communication with your lender so you know all of your options. If you feel you have exhausted all your options for keeping your property then start the process of the short sale. Hire a Realtor that has a proven record of bank negotiations and short sale approvals. They should take care of the entire sales process and help you to have a positive experience.

There’s no need to go through a foreclosure when your lender is willing to work with you to sale your property. If you are in a position where you are constantly struggling to stay afloat and make your mortgage payments and there is no equity in your home, a short sale is a great option.

Having little to no equity (being underwater) in your home is scary, yet irrelevant if you don’t have plans to move.

6. What is the role of a Realtor during a short sale?

The role of the Realtor is to bring the buyer and seller together just as in a standard sale. The added layer is negotiating with the lender for their approval. Some Realtors do their own negotiating with the lenders and others hire negotiators to work with lenders. I do all my own bank negotiations because I like to stay connected and involved directly with the lender throughout the process.

7. What else do you want to tell the readers about short sales?

If you are at a point that you cannot make your payments and it’s a constant struggle or if your house is significantly upside down, then you are no longer reaping the benefits of homeownership. Homeownership should not be a struggle or a stressful situation.

To contact California Realtor Lauri Trapp (License #01265988) about short sale questions or for help in a short sale in the Los Angeles area, email her at lauritrapp at gmail dot com.

Debtors Prison Historical Marker

Debtor’s Prison in Virginia. Credit jimmywayne

Debtors’ prisons still exist. What if you defaulted on your credit card payment and didn’t have the money to pay since you lost your job? This is a common occurrence in the west, but could you go to jail?

In, the U.S debtors’ prison no longer exists, but did you know that people around the world still go to prison for their debts? I found this shockingly true as I dug into the research for this article.

Debtors’ prison sounds like a tale out of an British Victorian era novel, yet it is a modern day reality. Debt both physically and virtually still holds millions in bondage.

Debtors’ Prison in the West

In England debtors prison was abolished with the Bankruptcy Act of 1896 and by the U.S. federal government in 1933. The states soon followed suite.

Before debtors’ prison was outlawed, debtors outnumbered violent criminals 5-1 with an estimated 50,000 debtors in jail in 1829 in the U.S. according to the Prison Discipline Society (source).

Recently there have been reported cases in the U.S. of a return of debtors’ prison, yet those people were arrested for a contempt of court or ignoring legal orders—NOT because of debt. You must respond to legal and court orders including child support, but you won’t be jailed (legally) for debt.

Modern Debtors’ Prisons Around the World

There are a few countries around the world that still imprison debtors.The most documented is that of the United Arab Emirates and Dubai in particular. Saudi Arabia also allows for jail for personal or corporate debt according to the British Embassy (see #8).

Hong Kong as recently as 1983 incarcerated 430 debtors, though I didn’t find information if this is still an ongoing policy. Rumors of debtors prison exist on China’s mainland, but again I wasn’t able to find reliable sources.

I am sure other countries exists that practice debtors’ prison, but this has been ignored by the western media or concealed by local governments.

A Virtual Debtors’ Prison

The United States doesn’t dole out jail time for debtors, yet millions are still held in the bondage of debt in a virtual debtors’ prison.

Debt is a virtual prison.

  • It limits and restricts how you can spend your time and energy.
  • It forces your money to be applied to areas you wouldn’t normally choose.
  • Mortgage debt has trapped many in their homes from relocating since they are owe more than they have equity (underwater).
  • Debt forces spouses to work, when they feel called to stay at home with their children.
  • It traps people in jobs they hate in order to keep a reliable wage.
  • Debt causes emotional, relational, and physical stress.
  • Being in debt restricts your freedom.

It is time for a jail break–to break free from the bondage of debt. It is possible! If you’d like to begin your great escape start by reading my series How to Pay Off Debt or hire me as your personal finance coach.

Railroad switch

Sometimes a different path is needed. Credit Mark Fischer

It is always a good idea to evaluate your investments every so often. I’m no fanatic and I invest for the long term, 5 or more years, but I do examine at few areas: earnings, fees, and the rate of return compared to the market.

Generally I only look at my quarterly statements, so I don’t freak out on days when I’m up or down thousands of dollars.

After a recent examination of my mutual fund portfolio I decided to make a change. I’m not alone; in fact million of Americans have switched mutual fund companies in the last few years. [This is not a recommendation to shift your investments, this is simply my story]

Why I Switched My Mutual Fund Company

1. I hate paying fees. I especially hate paying fees when a service looses money vs. their peers. I was paying yearly maintenance fees and also a hefty sales charge with each dollar invested (front load). As our portfolio grew the fees dropped, but it was still high.

2. Bad Performance vs. S&P 500- The markets have had a tough few years and I realize this. Yet, my old mutual fund family was lagging behind the S&P 500 and its peers. Apparently my managed funds as a whole haven’t had a good run, while index funds fared better.

3. My NonExistent Broker- For the last few years, my wife and have been fortunate to max out our Roth IRAs. Our broker earned commission on our ROTH IRA + Rollover 401K to IRA yet he was nonexistent.

Our broker didn’t call, email, send a newsletter, or follow up to see if we were going to max out again like the past few years. I’m sure he has bigger fish to fry, but a quick email or an ounce of client attention would have gone a long way.

My New Mutual Fund Company

1. I don’t pay yearly fees if I opt in for online statements. My sales fees are now some of the lowest in the industry. Over the lifetime of the investment, this will translate to thousands in cost cutting savings.

2. The majority of my mutual funds are now in index funds that will ensure I keep pace with the market. I won’t beat the market, but then I won’t dip below either. I’m OK with this.

3. Now there isn’t a broker getting fat of my regular investing. I only have myself to blame for improper allocation of funds.

That is why I use tools such as the Morning Star Instant X-Ray to break down my choices. I also plan on paying an fee based independent broker for a portfolio assessment when I hit a predetermined dollar amount.

Have you made any changes to your investments in recent years? Have you examined your mutual fund family to determine if it is still the best fit for you? 

Senior Citizen Parachuting

What does a radical retirement look like? Photo Credit Woody H1

This is our third installment about work and retirement. Why did we combine the topics of work and retirement? Our beliefs about working inform our view of retirement.

In part 1 we began to unpack our baggage about work. In part 2, we looked at the deeper underlying beliefs and origins of work. We now turn our eyes towards connecting this thing we called work with the American view of retirement.

Our View of Work Informs our View of Retirement

I believe it is impossible to explore our view of retirement, without fist examining what we believe about work (including careers). Work is a good thing and has roots in the beginning of time.

Working grounds us in our humanity and aligns us with the divine.

If work is good intended as an original component of creation, why then does America flee work and look longingly toward retirement?

American View of Retirement

The recent American view of retirement is to work hard in a career, quit working on a magical day, and then begin engaging in what you really want to do. That could be spending time with family, gardening, volunteering, or playing golf all day.

In the American view of retirement a life of work turns into a life of play, until you you die.

How will this retirement be funded? Savings, 401k, IRAs, pensions, and Social Security of couse. Americans aren’t doing a good job at this goal either with 49% of us not saving for retirement. Add on top of this a failing Social Security system and longer life expectancies and Houston we’ve got a problem.

Where did this view of retirement come from? Should we blame Otto Van Bismark or Francis Townsend?

Along the way we have misunderstood the goal of working. The goal of work isn’t to strive towards a life of leisure where we don’t have to punch the clock.

While I support saving for future goals and for our later years in life– the goal of American Retirement isn’t one that I’m aiming at. I propose a much more radical view of retirement.

A Radical View of Retirement

Retirement is a word that I have come to disdain. It implies a retreat and abdication from life. I wrote about this in my article Retire Retirement.

Based on the canvas of our previous discussion on work, I propose a view of retirement based on the fact that work is good.

Yes, work for pay and a deeper meaning of work–a return to vocation or calling as described by Dan Miller:

“…it’s what you’re doing in life that makes a difference for you, that builds meaning for you, and that you can look back on in your later years to see the impact you’ve made on the world.”

Our jobs and career are an extension of our calling, they give feet to how we’re wired, and guide us to making a difference in the world. We’ll have many jobs and careers–but our vocation and life purpose remain constant.

Live a Radical Life and Retirement

With our vocation and calling guiding us, I propose erasing the invisible lines of retirement. Rid your mind of a date and time when you’ll be able to do what you love after you retire. What are you waiting for?

Since retirement now doesn’t exists, you have permission to live a radical life no matter your age. You no longer have to wait until age 65 to pursue happiness. Go ahead and do work that matters today.

Radical Ideas:

  • Make steps to quit your job (Read Quitter by Jon Acuff)  and transition to a life that aligns with your vocation.
  • Begin a business that allows you to do what you love that meets the needs of others. 8 Lessons I Learned from the $100 Startup  will guide you, like it has me on this journey.
  • Engineer a life that isn’t dependent on living in a certain location. The blog Location 180 gives proof that living anywhere is a viable reality.
  • Create a community that encourages others towards positive and healthy goals like Nerd Fitness.
  • Impact and empower the world by creating organization like Charity Water or Fount of Mercy.

Work Until You Die

It doesn’t matter what our age is, there is work to be done. Vocations and callings to be lived out. This world needs our hands and feet to till up change and spread hope that grows like fertilizer.

Some have said they don’t want to work until they die. If you have a improper view of work–then I agree that is a life to be avoided.

I will work till I die. Living a life of faith. Giving hope. Loving others. Living a radical life. 

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America gothic

Credit Will Merydith.

In Work and Retirement Part 1 we began a conversation about work and retirement inspired from a conversation from my fellow writer John at Married with Debt.

Why are we even examining the topic of work? Simple: The way we view work, informs our opinions about retirement. In order to truly explore the topic of retirement, we have to first understand our bias and beliefs surrounding work.

The Goal of Work is…

My friend John has 10 Rules to Eliminate Debt and they are very helpful, heck I even subscribe and teach several of these rules to my clients.

I cannot agree with his final rule which states, “The goal of work is retirement.” In the context of his rules John pushes people to think about why they are working and fight against consumerism. I can applaud the sentiment, but can’t support the statement.

I believe work is much much more.

In the Beginning was Work

This is where my view of work diverges and takes on a much deeper meaning. In the beginning when God and Adam were hanging out in the garden (pre Eve) work existed. Yes, in this perfect world Adam had a task–a job–work to do.

He was not idly kicking back eating grapes and petting unicorns. There was work to be done. Adam’s main task was to cultivate and maintain the garden (Gen 2:15). Yes, even in paradise before the snake slithered and fruit had bite marks, work existed.

Man also had a special assignment. His special task was to give names to the animals. Adam used his time to create order, joining God in the creative process.

True, work became more difficult once Adam and Eve disturbed the created order; yet in the beginning was work and work was good.

My View of Work

In light of the above example, work is much more than punching a time clock, longing towards a retirement party and period of time where work doesn’t exist.

Work is…

1. Natural- Work is part of the created order of life and thus work is good and not a curse.

2. To be Embraced. Work is not something to be avoided, but rather embraced. As we work–we are at the core embracing our humanity.

3. Holy- God himself created and performed work. As we work, we are reflecting the image of God in us.

We are most alive when we embrace the God given tasks before us and join God in creating order and beauty.

The Goal of Work is:

  • To perform the tasks God has given us. There is work before us to be done on a daily basis. I doubt you’re a farmer, but there are still preverbal gardens to maintain and cultivate.
  • To join God in the creative process of creating order and beauty.

I believe it is time to have a proper view of work. In the beginning was work and work was good. In A Radical View of Retirement: Work and Retirement (Part 3) we will discover how a proper view of work informs our view of retirement.

What is your view of work?