Woodland Hills, CA (PRWEB) February 23, 2009
Eli Tene, CEO of I Short Sale, Inc., has issued the following open letter to officials of the new government. In it, he notes the failure of current methods to solve the real estate crisis and explains why short sales would minimize losses and help preserve home prices. The text of his letter follows, an official list of recipients of letter available upon request:
An Open Letter to the New Government: Distressed Homeowners Seek an Immediate Change
In the battle against the financial meltdown, the government gives a blank check to banks while being misinformed about what is really going on in this battlefield. Being on the front line as CEO of I Short Sale, Inc., one of the largest private loss-mitigation advisory firms, I can testify that the situation is deteriorating rapidly.
Most banks' modification programs simply dig a deeper hole for the real-estate industry. The homeowner who had interest-only payments ends up paying interest and principal on the existing balance, so his payment just goes higher. Without a balance reduction, the loan modification of today is clearly the foreclosure of tomorrow.
The Short-Sale Solution
The best solution to today's crisis is in short sales, or selling a property for less than the mortgage balance. The advantages:
1. Protecting the homeowner's dignity by avoiding the degrading eviction process.
2. Allowing for a fresh new start at an affordable cost to the homeowner.
3. Minimizing the damage to the homeowner's FICO score, thus allowing for some breathing space in the current credit crisis.
4. Creating tax revenue at the municipal and state levels.
5. Getting the real estate industry moving, thereby providing work to millions of people dependent on this industry.
6. Maximizing recovery for the lender, getting rid of bad paper and minimizing the losses incurred during the expensive foreclosure process.
7. Significantly slowing down the rapid decline in home prices by stopping foreclosures.
I first approached the banks to short sell properties 19 years ago. At that time, they were not aware of the great potential of this tool. There have been hundreds of thousands of short-sale negotiations since then but still loss-mitigation departments don't see their potential.
I propose the following:
1. Force banks to start modifying balances (very few do, and, if they do, it is just for non-performing negative ARM loans). This should apply to all loans, including negative amortization loans, fixed-rate loans and investment properties.
2. Allow interest-only payments in modifications.
3. Allow tax forgiveness, including property owners that don't fall under the owner-occupied category.
For short sales:
1. Provide tax credits to homeowners and investors who buy short sales.
2. Create incentives to lenders who will encourage homeowners and investors in default to short sell properties.
3. Develop a campaign to educate homeowners regarding their options.
4. As with modifications, allow tax forgiveness, including property owners who don't qualify in the owner-occupied category.
I sincerely believe that the government's first priority is to the American people. In order to make a significant impact, however, the government must choose a more direct and more effective method than pouring taxpayer dollars into financial institutions.
As we all know, this matter is urgent and every day that goes by, the situation is getting worse. This is a request to meet with you as soon as possible to present to you these tools in greater depth. Since I assume that you will be in Washington DC, I will be willing to fly to Washington DC to meet with you there. I wholeheartedly believe that this will have a dramatic effect in helping the housing crisis.
CEO, I Short Sale, Inc.
Woodland Hills, California
eli (at) ishortsale (dot) com
I Short Sale, Inc. (http://www.ishortsale.com) is a leading nationwide short sale, modification and loss-mitigation advisory firm. Since 1991, it has assisted, through its principals, thousands of homeowners to avoid foreclosure.
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