The U.S. economy falls to #2

China’s economy will surpass the U.S. in 2016

This article is taken from an article by Brett Arends, MarketWatch

The “Age of America” is over. page 1The “Age of America”is over. page 2

As reported in MarketWatch, in a recent report, the International Monetary Fund has given analysis which shows that soon China’s economy will . . .

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The U.S. economy falls to #2

China’s economy will surpass the U.S. in 2016

This article is taken from an article by Brett Arends, MarketWatch

The “Age of America” is over. page 1The “Age of America”is over. page 2

As reported in MarketWatch, in a recent report, the International Monetary Fund has given analysis which shows that soon China’s economy will be the dominant economy in the world.  This news has gone virtually unnoticed in the US press.

For the first time, the IMF has concluded a date when the “Age of America” will end and the US economy will fall into second place. According to IMF calculations, China will top the US in real terms in 2016, in a mere five years.  Don’t forget to mark your calendar.

China’s ascension is worrisome for the US dollar and the US Treasury market, both of which have been propped up for many decades as the dollar has been used as the world’s currency. When a country pays its liabilities with US dollars, it cedes that the US is the world’s hegemonic power, granting the US much status, influence and power, as well as a monetary lift.

Most economic and political experts are not prepared for China to accede to the pinnacle of world power this quickly; they will tell you China’s ascension is decades away.  Sadly, politicians and financial experts are only comparing the gross domestic products of the two countries using current exchange rates.  This is largely a meaningless comparison in real terms.

Politicians want their populations to think that leaders know what they are doing so they use whatever economic measures put them in the best light.  However, comparing economies using exchange rates raises several questions.  Currency markets can fluctuate wildly, just like the stock market.  Do you really believe that the gross domestic product of the US falls two per cent each day just because the stock market has recently been in rampant descent?  Exchange rates do not represent real output, but rather international money flows and speculation.  Do you recall the talk of how speculation in oil futures was driving the price of oil up?  The U.S. dollar fell nearly 10% against the euro in the first quarter of 2011; but it is silly to think that, over the same period, the US economy shrunk by 10% as compared to Europe.

The IMF also used analysis to look to the true, real-term picture of the two economies using purchasing power parities, PPP. This compares what people earn and spend in real terms in their domestic economies.

The Chinese aggressively pursue a policy of deeply undervaluing their currency, the renminbi, by purchasing massive amounts of dollars, which actively suppresses the renminbi in the foreign-exchange markets.  When your currency is cheap, others can purchase your goods at a lower price. More customers’ means your factories flourish, your people have jobs and your relative standard of living rises as against others whose factories are idle and whose people have no jobs nor prospects.

Purchasing power parity is not a perfect measure of an economy but it does measure the output of economies in terms of real goods and services, not just paper money. That’s why this measure is widely used to compare economies.

By comparing purchasing power parities, it is estimated the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. In the same period, it is estimated the size of the U.S. economy will rise from $15.2 trillion to only $18.8 trillion. A mere ten years ago, the U.S. economy was three times the size of China’s.

Naturally, all forecasts are fallible. Unforeseen events and policy changes can happen to make any forecast problematic. The actual date when China surpasses the US might be earlier or somewhat later, depending on conditions, but most agree, the outcome is scarcely in doubt.  The Indian economy is also moving ahead quickly and it too could surpass the US one day.

When China succeeds the US, it will signal the end of the “Age of America.”  A primary casualty will be the end of America’s economic hegemony and with it a good deal of the awe that people feel for America.  Compare being the hegemonic power to a policeman.  Fifty per cent of a policeman’s job is done by the uniform and badge.  People automatically give it respect and deference.

Britain ruled the world for a significant time.  “The sun never sets on the British empire,” was a familiar refrain.  America came into its ascendancy at the end of the 19^th century and cemented her role as the world’s premier economic power after WWII.

America began as the child of Britain, and both live under a similar set of rules for government, respect for civil liberties, and a certain level of respect for the rights of property. China’s governing philosophy respects none of these. The “Age of China” will feel very different than the “Age of America.”

Already China’s neighbors in Asia are apprehensive of the dangers of a raging dragon. Southeast Asia is looking to the US as a counterweight to China and wonders why America is not pursuing its self-interest?  American hegemony over the last half-century is seen as having been fairly benign.  China’s rise is fearful to its neighbors because as a military and economic power, China’s history shows that it is can be predatory, just ask the Dali Lama and the people of Tibet.  Asia does not see that China will be a benign hegemony.  But nations have interests and they will align with whoever will protect those interests.

The relative decline of America and the rise of China is the 2nd biggest story of our time. Its implications can be seen everywhere, from closed factories in the Midwest and foreclosed communities in California, which are juxtapositioned against China’s bulging factories, burgeoning middle class, and its building boom which has caused the soaring costs of oil and other commodities.  To paraphrase Ross Peroit, “That giant sucking sound you hear is China sucking up all the jobs, the energy and the accompanying influence.”

For decades China has pursued economic policies aimed at expanding their power. During this same period the US has pursued a policy of economic appeasement via very unfair free trade.  The US is fair, having low or no tariffs, and China has been granted Most Favored Nation status.  But China and other nations are not fair because they are protective of their native industries and business interests.  The unfair free trade policies have been allowed by both political parties.

It is commonly stated that China has a state-guided form of capitalism, and that the US has a much freer form of capitalism.  The two systems are in a collision course.  US policy has allowed a massive shift in capacity from the US to China.  We have traded jobs for profit.  Corporations have moved the jobs to China in order to get the benefit of greater profits.  This is a very destructive policy.  The result is a US that is quickly becoming polarized between a small, very rich class and an eroding middle class and an ever expanding underclass. The people who get the profits are very different from the people who lost the wages.

History shows that a nation cannot stay on top if its economy doesn’t work. Just ask the Romans, the Spanish, the British, etc.  The US is now spending gigantic sums trying to maintain both domestic programs and our hegemonic status overseas.  It just doesn’t work for long.

Investors are craving the dividends made from rising profits by exporting our factories and jobs to China – but there are consequences.  Early in the last century the US and Germany both surpassed Great Britain as the world’s dominant economic powers. When Britain lost its ability to run the world by itself, it didn’t take long for WW1 to break out.  Domestic pressures percolate and politicians/demagogues respond.

China has just launched its first aircraft carrier and has developed a significant array of submarines and ship to ship and land based missiles, all stationed across the Taiwan Strait.  The Chinese people are highly nationalistic; her leaders are aggressive, not fearful of taking millions of casualties, and they recently showed disdain toward America when, early in President GW Bush’s first term, a Chinese fighter plane collided with and downed a US military plane.  The Chinese interrogated our US crew of 24 for days, at all hours, incommunicado, not allowing US inspection or representation, and then returned our airplane in pieces.

China is getting ready to assume the mantle of leadership.  The language and tone of their official organs shows muscle, pride, arrogance and a calculated disrespect for America.   While American leaders are seeking dialogue, the Chinese seek power.  If American leaders are silly enough to give our leadership position away, the Chinese are smart enough to take it.  I would love to see the blueprint as to how American leaders will stop China from doing something injurious to American interests.  Sadly, American corporations cannot call for protective tariffs against Chinese imports because it is the very products our companies make in China which would be punished and stockholders would not be happy with lowered dividends.   We have certainly put ourselves into a box.

The string holding the double edged Sword of Damocles is frayed.  On one edge we have corporations denuding our domestic industrial base and the other edge has government monetary policy depleting our assets by issuing fiat monies so that we can continue our wars and be able to “give” 70% of the US population some level of government benefit.

However, government spending does not improve an economy.  Regulation does not make products more profitable, government interference stifels hiring and investment, nor does government oversight improve the commercial environment, quite the opposite.  US government spending today is about 45% of GDP, where 100 years ago it was under 10%.  If our prosperity is really a function of government spending, then we should be half way to utopia; and utopia will exist when government spending is 100% of GDP.

In an interview I heard recently, Donald Trump said that in his business conversations with the Chinese, they say that they don’t understand why the US is letting them win so easily.  They don’t want to import American products.  They want America to build factories in China and in order to get permission to do so, the corporation must make all intellectual property available to China.  This was unheard of.  It’s almost as if we have put a sign on ourselves, “Kick Me.”  The Arab oil cartel certainly does.  They are draining every drop they can from US.

Our leaders, all 556 of them, have put US into this grievous position.  To think that our policies just happen is silliness. There are 435 congresspersons, 100 Senators, 9 Supreme Court justices, the president and vice-president.  These 556 citizens make our policies.  Nothing happens unless they choose for it to happen.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details on how to safeguard you and your family.

Wake up Americans.

Part 4 of 4

Federal Bureau of Investigation

2010 Mortgage Fraud Report

Read the entire 52 page report: FBI: licensed brokers/bankers/lawyers do lots of mortgage fraud

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during 2010.

FBI . . .

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Part 4 of 4

Federal Bureau of Investigation

2010 Mortgage Fraud Report

Read the entire 52 page report: FBI: licensed brokers/bankers/lawyers do lots of mortgage fraud

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during 2010.

FBI Response

The FBI continues to foster relationships with representatives of the mortgage industry to promote mortgage fraud awareness and share intelligence. FBI personnel routinely participate in various mortgage industry conferences and seminars, including those sponsored by the MBA. Collaborative educational efforts are ongoing to raise public awareness of mortgage fraud schemes through the publication of the annual Mortgage Fraud Report and the Financial Crimes Report to the Public, and through the dissemination of information jointly or between various industry and consumer organizations. Analytic products are routinely distributed to a wide audience, including public and private sector industry partners, the intelligence community, and other federal, state, and local law enforcement partners.

The FBI employs sophisticated investigative techniques, such as undercover operations and wiretaps, which result in the collection of valuable evidence and provide an opportunity to apprehend criminals in the commission of their crimes. This ultimately reduces the losses to individuals and financial institutions. The FBI has also instituted several intelligence initiatives to support mortgage fraud investigations and has improved law enforcement and industry relationships. The FBI has established methodology to proactively identify potential mortgage fraud targets using tactical analysis coupled with advanced statistical correlations and computer technologies.

Coach Mitch

These last two paragraphs are a good example of government double-speak disguised as agenda setting marketing. What it does not say but is doing: the FBI is the instrument of the Power in this country. The FBI will root out regular citizens trying to make a living and it will misdiagnose their actions so as to mislabel them as villains in order to not go after the real villains, their bosses – the Power.

The FBI has purposefully not gone after those who make the decisions within the banking industry, the bosses. Not a single loan closes without the bosses express approval, and the bosses only approve loans that they want to close. For every government regulation there is a banking work around. Each regulatory effort to make loans safe comes up against the desire to make a bonus. I doubt that a banking regulation goes into effect without the banker knowing how he will legally work around that regulation. It is the job of the bank to take information and check it. But checking reduces income. And why check if the taxpayer will pay the penalty? That is the problem. Sadly, a once great institution has allowed itself to be turned into an instrument of state policy to defraud US.  The FBI is a functioning part of the Miscreant Class.

Coach Mitch

Government Overreach

The FBI, as an agent of The Power, knowingly does not examine the most important question, why banks did not and are not currently checking the information that applicants give.  This glaring omission brands the FBI as culpable in the effort to enslave US.

Requiring a license, restricting commerce, eliminating property rights, and creating scapegoats; these are the hallmarks of Gotcha Government.  The Dodd/Frank SAFE Act enshrines these principles.

“The right to sell is one of the rights of property.” –Thomas Jefferson to Handsome Lake, 1802. ME 16:395

The ability to sell is inherent within the right to sell.  The terms of the sale are inherent within the ability to sell.

Government has allowed/created a financial climate whereby banks are not giving mortgages to most potential borrowers.  For the foreseeable future, owner financing is virtually the only way a buyer will be able to purchase your property.  You must be the bank.

By requiring a seller to have a mortgage license in order to create a mortgage on his own property, the government is placing an unreasonable burden on the seller, and has therefore severely reduced his ability to sell.

The government further stacks the deck by only allowing an owner financed mortgage to be created that has terms identical to a bank mortgage.  In addition, a balloon or quick payoff is not allowed so a retired person cannot sell his property and expect to get monthly payments for a short period, five years, and then get the rest of the balance.  The retired person must wait 30 years to be paid in full, a requirement that is not practical.  Both of these requirements do not allow for the terms of a sale to be created by the buyer and seller.  This is gross interference by the government into the rightful affairs of a free citizen.

The Constitution has stipulated that a “taking” of property by government requires “just compensation.”  Congress has severely reduced the ability to sell our property and has thus “taken” the profit that could have been gained and therefore owes US “just compensation.”  That this infamous legislation passed indicates the path of our destruction and a culpable Congress.  Forces inimical to freedom are controlling our ability to sell our property.  Control of the means of production, property, is called Fascism.

As outlined in the Federalist, the proper role of government is the defense of our rights to life, liberty and property, against any incursion, especially from government.  A violation must have occurred and only then should the government get involved to punish the violator.   This is referred to as Negative Government.  Positive Government is the aggressive use of law to prevent something from happening.  “Protection” is the term used by government to confuse uneducated citizens.  Government creates law to protect US from a potential negative act and we become less free because we are all required to act in a certain manner.  We are all presumed to be violators, eliminating our constitutionally mandated presumption of innocence.  Power is thus granted to government to restrict our actions in any way it sees fit.

With the SAFE Act, the government says it “protects” US from a future mortgage crisis by restricting those who can do mortgages and limiting the terms of the mortgage.  Rather, government should be defending US by aggressively prosecuting those specific individuals who created the mortgage crises and any bad mortgages.  You can be sure that there would never again be a mortgage crises if the CEO’s and Boards of Directors of the Too Large To Fail Banks were now rotting in jail alongside the CEO of Goldman Sacks, et al.

The Solution

The only way to fight evil is to overcome it. Fight fire with a conflagration of your own. Fight the banks and government by earning your own money and becoming independent. In this manner, we will win the day, but only if you are a good example to fellow citizens.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Gird your loins – the battles ensue.

Part 3 of 4

Federal Bureau of Investigation

2010 Mortgage Fraud Report

Read the entire 52 page report: FBI: licensed brokers/bankers/lawyers do lots of mortgage fraud

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens . . .

Read More: FBI: Licensed Brokers/Bankers/Lawyers doing mortgage fraud. Part 3 Post 179]]> Coach Mitch’s REFLECTIONS™

Part 3 of 4

Federal Bureau of Investigation

2010 Mortgage Fraud Report

Read the entire 52 page report: FBI: licensed brokers/bankers/lawyers do lots of mortgage fraud

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during 2010.

Foreclosure Rescue

Foreclosure rescue schemes are often used in association with advance fee/loan modification program schemes. The perpetrators convince homeowners that they can save their homes from foreclosure through deed transfers and the payment of up-front fees. This “foreclosure rescue” often involves a manipulated deed process that results in the preparation of forged deeds. In extreme instances, perpetrators may sell the home or secure a second loan without the homeowners’ knowledge, stripping the property’s equity for personal enrichment. For example, the perpetrator transfers the property to his name via quit claim deed and promises to make mortgage payments while allowing the former home owner to remain in the home paying rent. The perpetrator profits from the scheme by re-mortgaging the property or pocketing fees paid by desperate homeowners. Often, the original mortgage is not paid off by the perpetrator and foreclosure is only delayed.

According to FBI case analysis, mortgage fraud foreclosure rescue investigations comprised 2 percent of all mortgage fraud cases opened in FY 2010.

Coach Mitch

I have never seen a foreclosure rescue scheme, nor have I heard of anyone doing it in my area; however a loan officer recently told me he knew of many situations where fraudulent foreclosure rescue occurred.  In NY a law was passed that makes it so onerous to do foreclosure investing that it dried up. More government misapplied overkill. The government should have come down hard on any perpetrators of fraud. Instead, the government eliminated any hope a person in foreclosure has of selling to an investor, usually their only potential buyer. Now the banks get all the properties. I am told that the banks are not in the real estate business – more nonsense.

I found out about this law a bit too late. I had arranged an interview with the chief assistant to the gubernatorial candidate of the NYS Republican party along with another prominent investor, expressing misgivings about this potential law. The other investor said that the main witness for the law, who had testified before the state legislative committee, had been a client of his and the testimony was a complete fabrication and he could prove it. The chief assistant called to get a status report on the law and said that the law had been passed on the last day of the session along with hundreds of other laws and the governor had signed it into law just a few days previous.

In the future, I will write a complete analysis of this law, which is being copied in other states.  I believe the law is totally unconstitutional.

Builder Bailout Schemes

Builders are employing builder bailout schemes to offset losses and circumvent excessive debt and potential bankruptcy as home sales suffer from escalating foreclosures, rising inventory, and declining demand. Builder bailout schemes are common in any distressed real estate market and typically consist of builders offering excessive incentives to buyers, which are not disclosed on the mortgage loan documents. In a common scenario, the builder has difficulty selling the property and offers an incentive of a mortgage with no down payment. For example, a builder wishes to sell a property for $200,000. He inflates the value of the property to $240,000 and finds a buyer. The lender funds a mortgage loan of $200,000 believing that $40,000 was paid to the builder, thus creating home equity. However, the lender is actually funding 100 percent of the home’s value. The builder acquires $200,000 from the sale of the home, pays off his building costs, forgives the buyer’s $40,000 down payment, and keeps any profits.

Coach Mitch

The bank underwriting [checking] is at fault, again. The bank merely needs to insist upon the actual verification of funds from the buyer. However, if the bank did this, then very few loans would close, so they just wink. But the FBI chases the builder instead of going after the bank.  The FBI also is not going after the appraiser who must over appraise the property by the $40,000.

Debt Elimination/Reduction Schemes

FBI reporting indicates a continued effort by sovereign citizen domestic extremists throughout the United States to perpetrate and train others in the use of debt elimination schemes. Victims pay advance fees to perpetrators espousing themselves as “sovereign citizens” or “tax deniers” who promise to train them in methods to reduce or eliminate their debts. While they also target credit card debt, they are primarily targeting mortgages and commercial loans, unsecured debts, and automobile loans. They are involved in coaching people on how to file fraudulent liens, proof of claim, entitlement orders, and other documents to prevent foreclosure and forfeiture of property.

Coach Mitch

There is a legitimate line of philosophic thought surrounding the idea of the citizen as a “sovereign.” Learn about this issue yourself. The FBI labels these sovereign citizens “extremists.” See what you think about how our vaunted FBI mislabels citizens, the very people they are sworn to defend.

Legislative Issues

Dodd-Frank Act

The Dodd Frank Act (DFA) was created to address various issues that occurred during the financial crisis. According to MBA, the DFA will establish the Consumer Financial Protection Bureau (CFPB) and set strict standards and regulations for processing mortgage loans. To protect consumers from fraud, the CFPB will: (1) regulate strict guidelines for appraisers and licensing to appraisal management companies; (2) oversee and have total responsibility for consumer financial protection laws; (3) add more layers to disclosures, licensing, and process regulation with loan originators, reverse mortgages, mortgage companies, and advertising practices; and (4) harmonize the TILA and RESPA disclosure.

The new act will prohibit the use of BPOs as the primary benchmark for the value of a property being purchased. Additionally, the CFPB will oversee consumer protection laws, including TILA and RESPA. The DFA will require lenders to be accountable for the cost it provides to borrowers during the loan application process. The legislation will modernize the real estate appraisal regulation by enforcing actions against states and appraisers that do not abide by the new regulation. Also, there will be a new appraisal standard board and appraisers should follow the new regulations. The DFA is set to better regulate consumer protection laws and help reform Fannie Mae and Freddie Mac.

Coach Mitch

The answer of government is always and in all ways to expand its own power and reach. Government does this by making up more regulations. The newest iteration is the Consumer Financial Protection Board, CFPB.

Government creates mortgage regulation, for our “protection.” Bankers create ways to go around the rules so that they can do business. The result is a government created financial crises which is then “fixed” by the creation of a new super agency to make more rules.

BTW, the result of new regulation is always a business contraction and consolidation of an industry. In this case, already in New York State, fully one third of the mortgage brokers have gone out of business because of the new rules; see SAFE Act below.

Federal Trade Commission’s (FTC) Mortgage Assistance Relief Services (MARS) Rule

The FTC rule on MARS prohibits charging advance fees for loan modification services, but states that attorneys are the exception [because lawyers are known to have the highest of ethical standards ed.] to the rule and are therefore permitted to charge an advance fee provided some stipulations are met.

The Secure and Fair Enforcement Act

The Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act—enacted in July 2008— required states to have a licensing and registration system in place for all loan originators by July 31, 2010, to reduce mortgage fraud and enhance consumer protection.

Coach Mitch

This requires that anyone creating a mortgage must be licensed to do so.  According to the new law, a regular citizen must be licensed as a mortgage originator if he wants to carry a mortgage against his own property, making it much harder to sell your own property, especially in a market where credit is tight. When banks won’t lend, virtually the only way selling can be done is if the seller carries the financing. The government has stopped this. The government makes a criminal out of someone trying to sell their home. Now that’s criminal.  I believe that it is also unconstitutional.

Worse; the government puts conditions on creating a private loan such that the only persons who can be given a privately created loan are those who qualify for a regular bank loan.  If the buyer could get a regular loan, then they would not need a seller to create a private loan.  And you can’t create a private loan except with the same terms as a regular bank loan; hardly something you would do. Therefore, the government says you can still create a loan, if licensed, but they eliminate any real ability for you to do it. This bit of chicanery gets the “Miscreant Class” award for today.

The only way to fight evil is to overcome it. Fight fire with a conflagration. Fight the banks and government by making your own money and being independent. In this manner, as a good example to fellow citizens, we will win the day.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Gird your loins – the battles await,

See Part 4 of 4

Part 2 of 4

Federal Bureau of Investigation

2010 Mortgage Fraud Report

Read the entire 52 page report: FBI: licensed brokers/bankers/lawyers do lots of mortgage fraud

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during . . .

Read More: FBI: Licensed Brokers/Bankers/Lawyers doing mortgage fraud. Part 2 Post 178]]> Coach Mitch’s REFLECTIONS™

Part 2 of 4

Federal Bureau of Investigation

2010 Mortgage Fraud Report

Read the entire 52 page report: FBI: licensed brokers/bankers/lawyers do lots of mortgage fraud

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during 2010.

Mortgage Fraud

Mortgage loan origination fraud is divided into two categories: fraud for property/housing and fraud for profit. Fraud for property/housing entails misrepresentations by the applicant for the purpose of purchasing a property for a primary residence.

[A] Backwards Application Scheme fabricates the unqualified borrower’s income and assets to meet the loan’s minimum application requirements.

Coach Mitch:

I only saw this done regularly by one loan officer. However, when a loan program is entitled No Income Check, No Asset Check, the banking system is telling the applicant that it wants to make a loan, no matter the income or the assets of the applicant.

For the banks and the government to feint surprise that people lie to get what they want is the most hypocritical of all positions.

A CPA will maintain to the IRS that he only reports what the client gives in paperwork. The same happens with loan originators. Loan originators ask for financial data and people give what makes them look good. Wouldn’t you? The fall down comes in the underwriting, the checking. This is done by the bank – but in reality, the banks don’t check. If the bank did check for income or assets, the applicants would not be able to show them and because of that the bank wouldn’t do loans, so the bank does not check, and loan originators understand this.

Fraudulent Appraisal schemes and

Title/Escrow/Settlement Fraud/Non-Satisfaction of Mortgage

Coach Mitch

I can’t say this doesn’t happen, but I never saw it. Appraisers know that they won’t get continued business if their appraisals are too low and they will be wary of being in trouble with HUD if the appraisals are running too high. Appraisals that I saw were always within 10% of fair market value.

Real Estate Investment Schemes

In a real estate investment scheme, mortgage fraud perpetrators persuade investors or borrowers to purchase investment properties generally at fraudulently inflated values. Borrowers are persuaded to purchase rental properties or land under the guise of quick appreciation. Victim borrowers pay artificially inflated prices for these investment properties and, as a result, experience a personal financial loss when the true value is later discovered.

Coach Mitch

I have seen some of this. Typically it has been done in ghetto areas. Here also, the government is the villain. The government wants the ghetto inhabitants to own their home, in the hope that home ownership will stabilize the neighborhood. Since these properties usually need substantial work, an investor will pick up the property cheap, often use a government fix-up program to make the property pretty and then find an applicant who can qualify for that government guaranteed loan program. The loan must be government guaranteed because few banks want to loan in a ghetto.  Government always pays the highest prices because that is the cost of implementing policy.

Sadly, ghettos remain ghettos because the inhabitants do not change habits.  A person not used to paying their bills on time will continue to not pay their bills on time – especially after they get a new mortgage, because now there are even more bills that probably won’t be paid on time.  There are government programs to teach applicants how to pay their bills, however old habits are hard to break.

Short Sale Schemes

A real estate short sale is a type of pre-foreclosure sale in which the lender agrees to sell a property for less than the mortgage owed. Short sale fraud consists of false statements made to loan servicers or lenders that take the form of buyer or seller affirmations of no hidden relationships or agreements in place to resell the property, typically for a period of 90 days. One of the most common forms of a short sale scheme occurs when the subject is alleged to be purchasing foreclosed properties via short sale, but not submitting the “best offer” to the lender and subsequently selling the property in a dual closing the same day or within a short time frame for a significant profit. Reverse staging and comparable shopping techniques are currently being used by fraud perpetrators in the commission of short sale frauds. The fraud primarily occurs in areas of the country that are experiencing high rates of foreclosure or homeowner distress.

Industry sources report that in the process of committing short sale fraud, fraudsters are manipulating the Broker Price Opinions (BPOs) and MLS; engaging in non-arms-length transactions; using LLCs to hide their involvement in short sale transactions; failing to record short sale deeds of trust; using back-to-back and multiple real estate agent closings; selling properties to an LLC or trust months before the sale; selling the property to a family member or other party the fraudsters control and deeding the property back to themselves; engaging in escrow thefts, simultaneous double sales to Fannie Mae and Freddie Mac, and failing to pay off the original loan in a refinance transaction; property flipping; bribing brokers and appraisers; refusing to allow the broker or appraiser access to the property unless the fraudster is present; providing their own comparables to the appraiser; taking unflattering photographs of the property and pointing out defects in the property to the appraiser; providing false estimates of repair, rebuttal of appraisal, and selection of poor comparable properties; and facilitating the partnership of attorneys with non-attorneys to split fees acquired during short sale negotiations.

Coach Mitch

Real estate professionals work hard, trying to make a living by selling shorts.  The banks make it almost impossible, and then there is the government, making it even worse. Providing comparable housing figures to an appraiser is part of an investor’s job – but the FBI calls it mortgage fraud.  Ridiculous!  On many occasions I pointed out defects in the property or made sure that a property’s good features were noticed.  That is now called mortgage fraud.  A few times I rebutted the appraisal and asked the appraiser to justify his numbers.  Even that is termed mortgage fraud.  Absolute nonsense!  This is governmental interference in commerce, something they are used too.

There are serious situations where a group of persons will manipulate the property and the financing to make fraudulent profits.  These should be prosecuted to the fullest extent of the law and I wish they were, we would all be better off.  I was the president of a large real estate investors association for a long time and I did mortgages for a long time; but I only heard of a handful of these types of situations.

The only way to fight evil is to overcome it. Fight fire with a conflagration. Fight the banks by making your own money.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Gird your loins – the battles await,

See Part 3 of 4

Part 1 of 4

Coach Mitch’s Editorial Comment

The sections of the report I comment about are provided in full and within context.  To read the entire 52 page report goto: FBI: licensed brokers/bankers/lawyers/appraisers/loan officers do lots of mortgage fraud

Targeting mortgage fraud

The idea behind the study is excellent: to determine who perpetrated mortgage fraud so as . . .

Read More: FBI: Licensed brokers/bankers/lawyers doing mortgage fraud. Part 1 Post 177]]> Coach Mitch’s REFLECTIONS™

Part 1 of 4

Coach Mitch’s Editorial Comment

The sections of the report I comment about are provided in full and within context.  To read the entire 52 page report goto: FBI: licensed brokers/bankers/lawyers/appraisers/loan officers do lots of mortgage fraud

Targeting mortgage fraud

The idea behind the study is excellent: to determine who perpetrated mortgage fraud so as to prosecute the culprits and stop it from continuing.

Sadly, the fix was in and the finger of blame is fixed on those carrying out policy instead of blaming the makers of the policy. In finance, just as in politics, nothing happens unless the bosses want it to happen. The real culprits of the mortgage crises, the CEO’s of the banks and Wall Street, are entirely ignored. Instead, the finger of blame is pointed at underlings. Such are the perks of power. RHIP. (Rank Has It’s Privileges)

Federal Bureau of Investigation

2010 Mortgage Fraud Report

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during 2010.

Mortgage Fraud

Mortgage fraud is a material misstatement, misrepresentation, or omission relied on by an underwriter or lender to fund, purchase, or insure a loan. This type of fraud is usually defined as loan origination fraud. Mortgage fraud also includes schemes targeting consumers, such as foreclosure rescue, short sale, and loan modification.

Key Findings

* Mortgage fraud continued at elevated levels in 2010,…fraud schemes are particularly resilient, and they readily adapt to changes in lending practices.

* Mortgage fraud perpetrators include licensed/registered and non-licensed/registered mortgage brokers, lenders, appraisers, underwriters, accountants, real estate agents, settlement attorneys, land developers, investors, builders, bank account representatives, and trust account representatives.

Coach Mitch:

Missing from the list of perpetrators are the policy makers. As I read the report I was interested to see that, IMHO, the FBI has some suppositions correct, but they fail to point out the big reasons for the banking crises – bank CEO and Wall Street mortgage fraud.  Why am I not surprised that CEO’s and Wall Street types are not targets of this fraud investigation.

You will see that the above mentioned fraud perpetrators are all licensed professions.  The government’s number one crime prevention tool is to demand that everyone is licensed.

Since it is obvious that licensing does not stop a criminal mind from doing crime, why have licensing?  Licensing is one of government’s main tools to control the workforce, that’s why.

* Prevalent mortgage fraud schemes reported by law enforcement and industry in FY 2010 included loan origination, foreclosure rescue, real estate investment, equity skimming, short sale, illegal property flipping, title/escrow/settlement, commercial loan, and builder bailout schemes. Home equity line of credit (HELOC), reverse mortgage fraud, and fraud involving loan modifications are still a concern for law enforcement and industry.

Coach Mitch:

The above schemes are all approved programs.  When reading the report, even an innocent misstatement is labeled “mortgage fraud.”

For a loan originator to do a loan successfully, significant financial information is needed and often the details are manipulated to show the applicant in the most favorable light.  This is being labeled as mortgage fraud.

There are limits however.  Banks want to know about an applicant’s assets, which can be hyped, but it is not smart to list $100,000 of imaginary stock and then state that money is not available for a down payment.  The bank will be suspect were the applicant to not want to sell some stock to raise the down payment.  Besides, I always got a statement from the brokerage house showing the value of the asset, which also proved that the asset existed.

* A continued decrease in loan originations…high levels of unemployment and housing inventory, lower housing prices, and an increase in defaults and foreclosures dominated the housing market in 2010… 2.9 million foreclosures in 2010, representing a …23 percent increase since 2008.

* Analysis…indicates the top states for…mortgage fraud activity during 2010 were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland, and New Jersey.

Dark states have 50% seriously delinquent ARM's

Estimated fraudulent loans

FBI

FBI mortgage fraud pending investigations totaled 3,129 in FY 2010, a 12 percent increase from FY 2009 and a 90 percent increase from FY 2008. According to FBI data, 71 percent (2,222) of all pending FBI mortgage fraud investigations during FY 2010 (3,129) involved dollar losses totaling more than $1 million.

In FY 2010, HUD-OIG had 765 pending single-family residential loan investigations, a 29% increase from the 591 pending during FY 2009. This also represented a 70% increase from the 451 pending during FY 2008.  Fraud schemes reported by HUD in ongoing investigations include flopping, reverse mortgages, builder bailout schemes, short sales, and robo-signing.

Coach Mitch:

Imagine, there are 2.9 million foreclosures and the FBI touts 765 residential loan investigations, and that is a whopping 29% increase over 2009.  The FBI is really on the job!  [sarcastic] Not only are the major bank CEO’s not being held accountable, the licensed financial professionals are also not being held accountable.  Our government at non-work. [sarcastic]

The only way to beat evil is to overcome it. Fight fire with a conflagration. Fight the banks by making your own money, earning more that is.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Gird your loins – the battles await,

See Part 2 of 4

The following set of 10 emails is a conversation I had with a student. This is a typical conversation that I have with anyone who tries Coach Mitch’s Tax Delinquent Property “Ridiculously Simple System…”™

In this case, Cheryl is using Coach Mitch’s “famous $1 Option.”™

1  From: Cheryl

To: CoachMitch@CoachMitch.com

Subject: . . .

Read More: Coach Mitch’s famous $1 Option does it again! Post 176]]> Coach Mitch’s REFLECTIONS™

The following set of 10 emails is a conversation I had with a student. This is a typical conversation that I have with anyone who tries Coach Mitch’s Tax Delinquent Property “Ridiculously Simple System…”™

In this case, Cheryl is using Coach Mitch’s “famous $1 Option.”™

1  From: Cheryl

To: CoachMitch@CoachMitch.com

Subject: Forms

Mitch,

What I sent you yesterday without looking it over closely before doing so, is a loan servicing agreement. I think the attached may be the forms we needed to look at that serve as the promissory note and sale agreement.

Cheryl

2  From: Mitchell Goldstein [mailto:coachmitch@coachmitch.com]

To: Cheryl

Subject: RE: Forms

Cheryl,

Thanks.  I’ll try to look at the doc this evening.  I’m at a rehab site all day.  I came home last evening too tired to do anything.

Mitchell Goldstein – Coach Mitch

3  From: Cheryl

To: ‘Mitchell Goldstein’

Subject: Forms

No really hurry, Mitch.  Anytime by the end of next week would be great.

4  From: Mitchell Goldstein [mailto:coachmitch@coachmitch.com]

To: Cheryl

Subject: Option

Cheryl,

Did you get any movement on your offer?

Mitchell Goldstein – Coach Mitch

5  From: Cheryl

To: ‘Mitchell Goldstein’

Subject: RE: Option

Yes, my option to purchase was accepted and I have the signed/notarized option and memorandum of option back from the seller.  I will record the memorandum of option at the register of deeds office.  My sale price on the 2 acres is $33,000 – I think the property could be worth $40-$45,000.

I drove out today to put up the for sale signs on the property and actually had someone stop to talk with me – he seemed very interested and said he would call me in a couple of days if he was definitely going to buy it.

6  From: Mitchell Goldstein [mailto:coachmitch@coachmitch.com]

To: Cheryl

Subject: RE: Option

Cheryl,

That sounds wonderful. Great job!

Did your seller object to any of the clauses in the option?  If so, what did you say in response?

Mitchell Goldstein – Coach Mitch

7  From: Cheryl

To: ‘Mitchell Goldstein’

Subject: RE: Option

He did not object to anything or even called me.  He just executed it and returned it.

8  From: Mitchell Goldstein [mailto:coachmitch@coachmitch.com]

To: Cheryl

Subject: RE: Option

Cheryl,

Isn’t that great!!?  Are you surprised?

Mitchell Goldstein – Coach Mitch
9  From: Cheryl

To: ‘Mitchell Goldstein’

Subject: RE: Option

Mitch,

I was surprised that he didn’t question anything.  I think in his financial situation he is just hopeful that it sells quickly and he gets something for the land – so he had nothing to lose.

10  From: Mitchell Goldstein [mailto:coachmitch@coachmitch.com]

To: Cheryl

Subject: RE: Option

Cheryl,

Sure.  A lowered price is what he has to lose.  In this market, the seller feels that he has no choice. The reason to concentrate on tax delinquent property is that the sellers are often feeling and thinking in this manner.

It is the only market subset where I have ever consistently found sellers to be highly motivated and also able to give away their equity.  Great job!  Do it again soon.

Mitchell Goldstein – Coach Mitch

Mortgage Interest Deduction Stays – Maybe

Although it is a very popular deduction, many politicians are in favor of eliminating the mortgage interest deduction which allows a citizen to deduct their mortgage interest payments from their taxes. This famous deduction was allowed to go through the latest round of negotiations without change. Lawmakers were working for and had hoped to cut . . .

Read More: Liberals/Fascists want to level society by taking away your benefits. – Post 175]]> Coach Mitch’s REFLECTIONS™

Mortgage Interest Deduction Stays – Maybe

Although it is a very popular deduction, many politicians are in favor of eliminating the mortgage interest deduction which allows a citizen to deduct their mortgage interest payments from their taxes. This famous deduction was allowed to go through the latest round of negotiations without change. Lawmakers were working for and had hoped to cut this deduction as part of the debt ceiling compromise. They had even included language in an early version of the legislation but, political forces eliminated that proposal from the final bill. This latest tax hike (that Obama said he wouldn’t allow) would lower the joint income level of homeowners eligible for the deduction.

If they kept track, I’m sure that most homeowners are relieved the tax deduction is still available. The real estate industry groups are also relieved, but they have expressed concern that the 12-politician super-committee will target the mortgage deduction as part of the effort to finding another $1.5 trillion in cuts over the next decade. The real estate lobbying groups believe that this latest effort to reduce spending will diminish their influence and feel it is likely that the deduction will be altered or even eliminated in the future. With about 35 million homeowners writing off their interest payments, that’s well over 100 million people targeted for a tax hike. What’s the tax bite? The Treasury Department states that in 2012, the mortgage interest deduction will cost the federal government around $100 billion.

You cost the government???

The idea that you “cost” the government anything by taking a mortgage interest tax deduction or any deduction is ludicrous, self-serving and insulting. The only way a tax deduction can be a “cost” to the government is if all money and property belong to the government. In this fantasy world [but only probably 20 years away] the government owns all and condescends to allow you to keep some property or earnings. I loved that young questioner at the Tea Party Presidential Debate who asked, “Out of every dollar that I earn, how much do you think I should be allowed to keep?”

Government lies

The government is lying to US when declaring that a tax break is a “cost” to the government. We are running out of time so we must understand this is government double-speak and in our Brave New World this is akin to “War is Peace.” Understand the fact:  - any tax – is a cost to US. A tax is defined as legalized theft and is a governmental taking of your money/property – under the threat of force or imprisonment.

Most understand that government “is force.” G. Washington. Most realize that the founders understood that “government is the problem.” R. Reagan.  However, there is still a sizable minority of regular citizens who believe that “equality” means having equal amounts of everything versus being able to achieve on an equal footing. These takers will never admit that they take because they are “lazy” F. Bastiat “The Law” Takers know that the only way they will get what they want is if someone else gives it to them.

Government recruits adherents to Fascism

I recently had an in depth private conversation with an Assistant State Attorney General. He denied that the vision of the founders was relevant to “today’s world.” He denied the idea of life, liberty, property being essential for freedom. He sees government as the purveyor of good. While he acknowledges that connected persons can work the system, he feels that the system works just fine. He sees no issue with government types making decisions affecting people’s lives because the decisions require public comment. When I asked, “What are the limits to the police power?” He answered, “Whatever the constitution and statutes allow.” “And if a law is hurting people?” “Then work to get different legislators.” “OK.” I said, “And who is responsible for the harm that is done by the law?” “Government can’t be held responsible.” he said. I responded, “So, effectively, there are no limits to the creation of any law by today’s interpretation.”

What is wrong with them?

Liberals and other Fascists just don’t get it. Since they don’t believe in a G-d Head, and G-d’s laws, therefore they don’t want to have any limitations on man’s activity. If it feels good, do it. That is emotion run amuck; intelligence not needed and the heck with the consequences.

I told the AG that the definition of Fascism is, “the control of the means of production.” This definition is from Webster’s, in an edition as late as 1962, prior to the dictionary becoming politically correct. I said, “The control comes in the form of regulation. You own the property, but the government tells you how to use it. That’s control.” Then I asked, “How does it feel to be a Fascist?”

Let me ask all of you who think big government is really your pal, your big brother, “How does it feel to be a Fascist?” You probably also think that the IRS is your friend.

G-d Bless America

NewsWithViews.com   Dr. Laurie Roth   June 24, 2011

This is a story that has too many twists and turns.  It should be read in the original.

County official colludes with bank to steal property, ruin grandson.

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Coach Mitch’s REFLECTIONS™

This is a story of hubris gone wild.

We think for the . . .

Read More: If you still think we live in a free country – read this. Post 174]]> COUNTY STEALS PROPERTY FROM STUNNED GRANDSON

NewsWithViews.com   Dr. Laurie Roth   June 24, 2011

This is a story that has too many twists and turns.  It should be read in the original.

County official colludes with bank to steal property, ruin grandson.

********************

Coach Mitch’s REFLECTIONS™

This is a story of hubris gone wild.

We think for the government to collude with a bank to steal someone’s property is the sort of thing that only happens in Banana Republics or in Russia.  Think again.

It can’t happen here, not here.

If you don’t want to read the entire sordid story, here are the highlights:

• A loving grandmother dies and leaves her home to her grandson.

• The grandson inherits the house and puts all his hopes, his energy, and his available funds into its restoration, so he can rent it out for income – like his grandmother wanted.

• With all funds going into rehabilitation, the grandson arranges with the county to pay the property taxes late.  The county assures that all is OK; there is much time available to pay the taxes.

• The county sells a tax lien against the property, well ahead of the schedule told to the grandson. (the county can hold any property from auction…editor)

• A well connected bank buys the TLC, tax lien certificate.

• The grandson struggles, but pays the taxes.

• The grandson complains that the county did not live up to the tax payment agreement they had made and asks for an official investigation of the events.

• The Director of Budget and Finance sends the taxes back to the grandson.

• The TLC holder, the bank, sues to take the property.

• The man seeks help from the authorities -  to no avail.

• The grandson resubmits the tax payment but the Director of Budget and Finance refuses to accept the tax payment a second time.

• The man seeks help from other authorities – still, to no good effect.

• The Director of Budget and Finance returns the tax payment a third time.

• The TLC holder, the bank, continues to seek ownership of the property.

• The TLC holder, the bank, has successfully taken peoples homes 8500 times via TLC foreclosures in the last two years and currently owns 84 properties in this county where the taxes are delinquent with no action by the county.

• The man’s Congressman hasn’t done anything. The Attorney General of the state said he will investigate. The man’s Councilman has done nothing. The Commissioner of Financial Regulation said she can’t do anything.

Still think we live in the land of freedom?  This is what is meant when we say, “The Fix is in.”  “When the foxes run the hen house, it is just a matter of time until you are eaten.” Coach Mitch 2011

These are the kinds of situations that often plague taxpayers.  This is a difficult situation.  I would not seek to invest in this property.  I would be careful about investing in any property that this TLC holding bank is involved with.  The bank obviously has connections inside the government.

Words to remember

“A government big enough to give you everything you want, is strong enough to take everything you have.” Thomas Jefferson  The government can do anything it wants – and it often does.

Save yourself and US

This country is your home.  It is home to your children and your neighbors children.  When we are behind the barbed wire, what are you going to say when your grandchild asks, “Grandpa, why is the government doing this?  What did you do to stop it?” There is no difference between the solider fighting in Iraq for our security and every American citizen-solider, who should be fighting to make US free.

Money and Power is at the core

If you can be financially secure, then you can more easily help in the political struggle.  A poor people is ripe for violence.  A satiated people is resigned with their lot.  As an invigorated people, we want more for ourselves, but especially we want more for our posterity.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Make your grandchild Proud,

Bryan Ellis Real Estate Letter by Carole VanSickle July 27th 2011

Based on the Global Real Estate Investment Outlook and Market Perspective 2011, growth in the Asia-Pacific region is not only expected to exceed that in the U.S. and Europe over the next five years, but it is expected to “provide the best total returns for global real estate investors” as . . .

Read More: Invest in American real estate – overseas. Post 173]]> Asia-Pacific Real Estate Expected to Provide Best Total Returns in Coming Years

Bryan Ellis Real Estate Letter by Carole VanSickle July 27th 2011

Based on the Global Real Estate Investment Outlook and Market Perspective 2011, growth in the Asia-Pacific region is not only expected to exceed that in the U.S. and Europe over the next five years, but it is expected to “provide the best total returns for global real estate investors” as far in the future as 2015[1]. In fact, some analysts are predicting 10 percent annual regional total return in the area. U.S. annual regional returns are predicted to log in around nine percent and Europe around 8.

Do you think that now is the time to invest abroad? Where are you putting your real estate investment dollars?

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Coach Mitch’s REFLECTIONS™

The “grass is greener” syndrome

Do you think marketing doesn’t work? See the numbers of people who watch the travel channel and the vacation real estate shows. Have you seen the enormous price tags for property in Costa Rica, Nicaragua, Bermuda, Bahamas, even Eastern European countries?  Especially in Eastern Europe, many of the rural properties do not enjoy indoor plumbing.

Everything is different

It’s not just language and culture that are different – it’s the customs. Excepting most of Western Europe and Israel, in the rest of the world, bribery is the way that things get done. Baksheesh (Turkish) or bribe, is not just common, it is expected, and officials and professionals have no qualms about putting out a number that they expect to receive.

Everyone looks the other way

Bribery is so common – that it is the culture. Bribery is the way goods and services move through the economy.

The police ignore the bribery laws because they are some of the worst participants. An American tourist is stopped, given a ticket, and told, “I’ll take your passport. You can’t leave without taking care of this. I’m sorry but the Judge can’t see you for three weeks. But, I know of a way to help. My cousin knows the clerk in the court and he may be able to put your case in the front – he just needs some incentive. Sometimes the paperwork is lost, but that requires more incentive.” And so it goes.

Get real

Investing overseas is like leasing a car or buying a timeshare, it is mostly glitz and dreams. Why pay some overpriced amount when you can use those monies to go on elaborate vacations. Ask any of those who gave into their emotion and purchased a timeshare; see if they would not love to be out of the “investment?” Even if you rent out the property, the day will come when some tenant will trash the property and your overseas legal costs will be more than the rehab.

Do due diligence with yourself

Below was my comment to the blog.

Investing overseas may seem attractive until you ask yourself some very obvious questions:

1. Do I know the language?
2. Do I know the customs?
3. Am I comfortable with the legal system?
4. How is construction/maintenance work going to be done?
5. Who/how will the property be managed?
6. Who/how will my everyday interests be managed?
7. Are all those professionals that I pay to keep me safe, trustworthy?
8. After the glitz of owning overseas wears off, what then?
9. What is my end game? How will I extricate myself, with a profit?
10. Are there any real estate investments in the US that I can now get at a big discount which overwhelms any idea of going overseas to earn a profit?

Answer: #10 YES, of course there are great US investments, especially now.

http://www.CoachMitch.com

I deal in tax delinquent property and teach others how to do it well.

If you like visiting foreign cultures, go to Miami or East LA. Right now, condos in southern Florida are very well priced.

Tax Delinquent Property investing overseas

If you insist on going overseas, consider as your first choices the US Virgin Islands or Puerto Rico or any of the other US protectorates.You can also consider some former British colonies.

At least in areas that were colonized under US and British influence, you have a large segment of the population who speaks English and the legal systems are mostly based on English common law. In these areas it will be a little harder to take advantage of you.

But, best of all, in the US colonized areas, you will find similar property tax systems as part of the US legal system that they copied. These countries all tax property, and auction off tax delinquent property, just like in the US. You can use all the tax delinquent property investing techniques that you learned from Coach Mitch in the US Virgin Islands, the Marshall Islands, etc.  At the least, you have the potential of getting a great deal and having the ability to sell at a profit.  That is a good exit strategy.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Hasta La Vista – baby!

Coach Mitch’s REFLECTIONS™

I recently got a call from someone who wanted to speak about one of my products, Coach Mitch’s “famous $1 Option.”™.

This person had gotten some other guru’s materials, had done what the guru said to do, but had not gotten good results. He was hoping that by using Coach . . .

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Coach Mitch’s REFLECTIONS™

I recently got a call from someone who wanted to speak about one of my products, Coach Mitch’s “famous $1 Option.”™.

This person had gotten some other guru’s materials, had done what the guru said to do, but had not gotten good results. He was hoping that by using Coach Mitch’s “famous $1 Option.”™, he would be able to make lemonade out of lemons. It’s a good thought, but that’s all.

I asked, “What did you do?”

The wanna-be investor described that he had sent out 1000 postcards to out-of-state tax delinquents, had gotten back 50 responses, had spoken to all 50, and did not get a single deal.

I’m not surprised

I understood long ago that simply speaking to a motivated person is not a surety that a transaction will transpire.

Everyone, including those facing the gallows (euphemism for those facing a tax auction) will say, “NO” if they feel that they are being taken advantage of, or feel that they are being mistreated in some way.

Understand that I said, they FEEL that they are being taken advantage of, or they FEEL that they are being mistreated in some way.

I DID NOT say they “THOUGHT” they were not being dealt with well. Feelings are based on emotion, thoughts are intellectually based. Sales negotiations are emotional events.

Wasted monies

This person had sent out 1000 communications. That was a very bad number and I told him so. I counsel sending out small batches of 25 and no more than 100 communications, and for very good reason.

The caller said he had gotten 50 responses; a 5% response rate is a good number by any marketer’s estimation. A few weeks ago a student of mine reported back that he had gotten a 12% return sending out my communication to 100 prospects; that’s 25% of the responses that the other method received but at 1/10th the cost, $400 vs $40 for postcards, and $600 vs $60 for letters.

BTW, one of the 12 properly culled tax delinquent leads (12% returned of 100 marketed) accepted a deal. This student said he flipped the property wholesale and made, “$60000 profit in 3 days.”  WoW!

Wasted leads

I asked if the list had been qualified seeking certain criteria? The caller had NOT properly culled the tax delinquent list, something that the guru should have taught but didn’t.

As a result, too many of the wrong type of leads were communicated with. Only disaster could result.

Marketing to a large number gets a high number of responses but it does not allow the time necessary to investigate each situation thoroughly. How are you going to work your 40 hour J.O.B. (Just Over Broke) and still have time to speak to 50 leads? Unless you deal with a prospect quickly, their excitement fades and so does your credibility.

I counsel that marketing’s should be done in small batches. I know that the marketing will be successful, a 12%-20% return is great. I know that people are waiting for you to call. I know that significant conversations are necessary to pierce the defenses of a tax delinquent and gain a level of comfort and trust. Meetings (on the phone) can often take several hours.

Less is more

It is a misnomer to think that you can manage time effectively when having a large number of leads that must be responded to quickly. You feel that you must get onto the next call, especially if there is no easy and obvious sale in the offing; and that feeling of abruptness is felt by the prospect. You can’t help it. You are human. You have too much of a good thing, you feel power, you abuse it, resulting in another, opposite human reaction.

Only negatives abound

Upon receiving your letter, a prospect visualizes that you will fall in love with their property, just like they did.  They visualize that they have made a sale, and they see themselves spending the monies. Any good feelings thus gained are lost because of the lack of timeliness of your call and because of your abruptness. It is a wasted call. Your time is wasted, your marketing monies are wasted, and the prospect feels cheated, having lost his dream.

What if the worst happens – someone accepts your offer!!

OMG – someone say’s “Yes!” They agree to your offer and want to move quickly. Make believe that it is the first call you made. That leaves you with 49 more leads that are left begging for your time, your attention, and your money. Since you have no more time, attention, nor money to spare – these leads are left dangling, lost to you; wasted.

A good lead is a terrible thing to waste

This is certainly correct, but in this case, the question must be asked, “Were these good leads?”

• Are there hierarchies to tax delinquents?
• Are some prospects liable to be more motivated than others?
• Are some prospects more WILLING to deal than others?
• Are some prospects more ABLE to deal than others?

Prospects must be Willing AND Able

In this case, out of state tax delinquents were solicited; sometimes a good lead. No other qualifying criterion was used. The typical response was that the seller wanted too much money, and no deal was made, with anyone. You see, these were all vacation homes, and each of the tax delinquents had high mortgages that needed to be paid off, necessitating a high price.

The investor called me thinking that Coach Mitch’s “famous $1 Option.”™ would be a solution – which it would be, normally.

I suggested he think hard about calling these leads back and offering to option their property for $1 at their price. He would be responsible to market the property and today, everything costs money, and takes your time, and attention.

Think before doing

The wrong lead set had been used. I encourage students to do a bit of checking prior to sending out marketing. At the least, check if there are mortgages and/or other liens against property before marketing to that property.

If you are only sending out 25 communications, then looking up records on 25 properties does not take much time, perhaps 1 hour online. Once reaching the proper database, all you do is put in the property address and see if a mortgage exists and the date of the mortgage.

If there is no mortgage then you know that a prospect is ABLE to sell cheap – if they choose to. Someone with no mortgage is a good prospect. A tax delinquent with an 80% mortgage is not a very good prospect. They may be WILLING to sell cheap, but they are not ABEL to sell cheap. Why waste your time, energy, and money on that kind of prospect? Why depress the seller any more than they already are?

You must buy right to sell well™

A sales axiom: You create your profit in the negotiation. You bank your profit when you sell.

Your negotiation is easier if the seller is ABLE to sell cheap because their expenses are low, as in no mortgage. Then the only thing you have to do is convince the seller that you are the person that can give them what they want – over everyone else that they have spoken too. Think you don’t have a chance? Well, they haven’t sold to anyone else yet, so the seller is looking for something that is not being offered. Find out what “it” is (the hot button) and give it to them. That’s it. It’s not rocket science – it’s much harder, it’s dealing successfully with human emotion.

Coach Mitch’s “Ridiculously Simple System…”™ and Coaching Program teaches you how to market, how to negotiate, and so much more.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Well – what are you waiting for?