It’s a great act of love for your family

I understand first-hand the importance of getting these documents done.  My mom died when I was 21, and my sister and I were the beneficiaries of her estate (for which I am deeply grateful) but were also the beneficiaries (victims?) of some pretty poor choices in her estate plan because she got lousy advice.  My grandfather died and made me the executor of his estate, but then I watched my aunt usurp that planning because a trust was not put into place.  My cousin died and made me his sole heir and I had to probate his estate in Georgia.  Then, a very close personal friend of mine dropped dead of a heart attack at 43, and he was 10 days away from signing his trust documentation.  Took me three years to probate that estate.  As you can see, I come from a long line of dead people.  Let me tell you:  No matter how much you think your family loves you and loves each other, there is no worse combination than death, family and money.  I’ve seen very few exceptions. Death has an uncanny ability to bring out the worst in everyone.

The best thing you can do for your loved ones is get your estate planning done.  It will save them the headache and heartache of wondering what it is your wishes would have been for you when you died, not only what to do with your corpse but what to do with your kids, your pets, and your assets.   It will save them a ton of money and pain of the probate court system.  We live in a very wealthy part of the world where it will be easy to accumulate $1 million or more over 30 years.  You need to have your estate planning in order.  Yes, the laws are in flux right now. But that does not excuse you from making sure that you’ve done your estate planning.  Hire a good lawyer.  Pay the fee.  Get it done right.  Get your assets titled into your living trust.  Do it today.

Mortgage Brokers Are an Asset to Lenders

What you need to understand is that mortgage brokering was the first outsourcing of mortgage services 30 years ago.  Lenders thought that if they could get a cheap sales force to send them loans that would be more profitable.  Think about it:  If a lender doesn’t have to pay to keep floor space, lights, a computer, toilet paper, coffee and benefits for a mortgage salesperson, it can make more on each loan.  So it outsourced everything but underwriting and document drawing to someone who would find the consumer, teach the consumer, hand-hold the consumer, and close the consumer and never pay that person unless the loan arrived at the bank.  It’s coming back into fashion.  Why?

     * Cheap sales force, easy to roll out new products.

     * Brokers build stronger relationships.

     * Brokers are more dependable, educated, and knowledgeable.

My favorite part of the article?  An author singing to the choir. This is what I have been saying for a year now:  “Plus, the brokering industry is curing itself naturally of its worst faults. During the real estate boom, all kinds of people flocked into the mortgage business, many of whom received little training and had no real industry knowledge. Those folks are gone, leaving the grizzled veterans who understand the business model and will do the right thing for the customer because they understand the value of long-term relationships.”

Have you called your friendly neighborhood mortgage broker lately?

What to consider

     There was a great article in the New York Times not a month ago about this very topic (“Just Walk Away” by Roger Lowenstein).  If you’d like a copy, send me an email, and I’ll pass it along to you.  The author’s main point was this:  Big companies don’t hold onto bad assets, feel no shame about unloading them, and don’t worry about their credit ratings.  These companies practice “strategic default.”  Case-in-point, I just recently received an email from a company from which I buy products informing me that it was filing for bankruptcy.  It explains, “As numerous companies have demonstrated during this difficult economic cycle, using this type of legal process can be an effective way of achieving a fast and efficient debt restructuring with minimal disruption to the business.”

     So why should individuals act differently?  Why does the Obama administration ask homeowners to continue paying on their debt on homes in which the debt exceeds the value by 2-to-1?  Because it’s good for the banks, which are selling off their mortgage portfolio to the Fed because it’s a good business decision to unload as many bad assets as possible?  I don’t get it.

     If you decide to walk away from a piece of property and your mortgage obligation, you still have to live with yourself.  If walking away from the debt takes off years of your life in guilt and stress, it’s not worth it.  But if unloading the asset in a time in which banks are prepared to deal with it, why not take advantage of opportunity to put yourself in a better place financially?  Yes, your credit will suffer.  Temporarily. Yes, you will have reneged on a promise.  To this point, I thought the article put it brilliantly:  You did promise to pay, but the contract outlined specific penalties for non-payment.  “The borrower is not escaping the consequences; he’s suffering them.”  I also agree with the author that a flood of “strategic defaults” by homeowners might lead to more loan modifications by banks, which is what’s supposed to be happening.  It might “un-stick” the system, which would be good for all of us.  Consider walking away.  Talk to your accountant, your financial planner, your bank.  Get the facts and then decide.