San Bernardino, CA, Harrisburg, PA, Mammoth Lakes, CA, Stockton, CA and Central Falls RI are a few cities that have voted for bankruptcy to help them bridge budget gaps. Since 1937, when Congress enacted a bankruptcy option for communities, only 640 have sought such relief or about 8 municipalities per year for the last 75 years. In 2012 the trend is escalating and concerning, as that annual number has been reached in the first six months. In the Associated Press’ article, “Another California City Opts for Bankruptcy,” (July 11, 2012) Michael Sweet, bankruptcy attorney, suggests that cities where there was a heavy reliance on property tax revenue will face serious budget issues and have the potential of bankruptcy as the revenue stream that they had planned on for decades to come has evaporated.

Peter Prudenzano, a Florida Senior Distressed Property Realtor, explains how a major southeastern city in Florida purchased commercial properties with traditional loans. The city is now overleveraged by debt with the buildings being underutilized due to staff cuts resulting from falling budgets. Mr. Prudenzano states that the city officials are frustrated and unable to make fiscal planning decisions, as many of them were not in office when these choices were made but now the face difficult decisions of raise taxes on an already stressed tax base, continue to pay on properties that have no commercial value or business use, or worse yet default.

What does that mean for residents? Immediately there are diminished city services, further depreciation of property values and vacant buildings creating blight in their suburban neighborhood. In the years to come, the lack of civil planning creates an environment for more mortgage delinquencies and foreclosures forcing the community where they bought their dream home to transform before their eyes into a nightmare.

The New York Times article “California County Considers a Rescue Plan for Struggling Homeowners” states, San Bernardino, CA, it just declared bankruptcy, is considering working with venture capitalists using eminent domain to seize mortgages, as a way to get the stagnate housing market moving again. With the Supreme Court’s decision in Kelo v. New London (2005) there seems to be some legal support for this approach; however, what will it due to the lending environment, once this stagnate market passes, for the future residents wanting to buy in that community? Undoubtedly, the lenders will challenge the taking of mortgages and threaten increased lending fees, passed on to new buyers, creating further resistance to an already struggling market; but more concerning, where is a city already strapped for cash going to find the funding for the increased legal costs and payments for executing eminent domain? The banks by law have to be compensated if the city takes their mortgages. Plus, the public at large, in the Kelo case, was against the use of government powers for the benefit of a private capital group. In 2012, such tactics will face scrutiny, since many homeowners still blame private equity firms’ greed for the current market downturn.

I suggest this is a cycle of city bankruptcies, eminent domain takings and at worst, cities neglecting budget issues created from years of overspending and miscalculation of future revenue, is the beginning of slums in the suburbs. The very reason for urban spall, to escape the typical issues in city life, has now been transported to the very place that was to be insulated from such deterioration. Instead of creating more barriers to foreclosure or use of laws to support the unpopular strong arm tactics of government, communities should implement methods similar municipalities have instituted across the United States to weather the market downturn. National League of Cities “Resilience in the Face of Foreclosures” highlights six case studies where cities across the US used laws and tools already in practice to not only survive the downturn but build a plan for the future. Municipalities used Neighborhood Stabilization Grants, partnerships with lenders, nonprofits and community based groups to purchase properties for restoration and rent, restoration and resale or demolition as part of an orchestrated plan to accept the city tax base had shifted and with it the city resources need to shift, as well.

Another good example is Riverside, CA voting in emergency ordinance Number 881. It used its existing building codes, with increased fines, to force lenders to maintain the properties that are creating blight or they will foreclosure the code liens and in turn, demolish the homes for green space. The short term benefits of crime reduction, reduced squatters, less city maintenance and property value stabilization for the rest of the community outweighed the intangible future property tax income on these removed homes.

Similarly, Cleveland, OH used a portion of it $335 million dollar settlement with the lenders to remove vacant blight to give communities a chance to rebuild on a grass roots basis and interestingly, North Las Vegas, NV is using its budget woes to lobby the state legislature to pass a law restructuring cities’ budgets so they are less dependent on property taxes and not susceptible to market swings.

States rightly protected residents at the beginning of the economic meltdown by requiring more arduous foreclosure procedures thus delaying the process but this has created artificial real estate markets in many areas across the country. The rising housing prices are not solely due to supply and demand but the legislature’s limitations. The delinquent loans are still there. The overleveraged homeowners will still lose the properties to foreclosure due to non-payment and in the meantime, delinquent county taxes, vacant properties requiring more city services and the other ancillary costs of managing exceptionally high court filings, tax the city and county systems. The answer is not delaying the inevitable but educating homeowners on how to start again.

I encourage cities to utilize the the ground breaking 2007 Mortgage Debt Relief Act, HAFA (Home Affordable Alternatives) and recently, the 25 billion dollar settlement with attorney generals around the country freeing up approximately 17 billion in loan forgiveness funds to campaign homeowner education on a local level through churches, clubs, and civic organizations. Five years after the housing market started to slide so many homeowners in need know little about the short sale programs to help them resolve their debt. Communities benefit, as much as, any other party when a home short sales. Taxes are paid quickly. City services are not needed as the property goes from end user to end user, avoiding vacancies and maintenance; plus, short sales typically sell for a higher price than foreclosures supporting neighborhood property values. All these benefits are at no cost to the community.

Remember, allowing homeowners to stay in a home where the mortgage is in default is a temporary solution. They will have to move. With planning, a short sale provides an opportunity for the homeowner to decide how to proceed with her future and she sells to a new resident who takes over paying the county taxes and city service fees.  Also, with a short sale, homeowners are eligible for a new home loan in as little as two years; therefore energizing the community’s stagnant market. This is a long term solution versus bankruptcy, eminent domain takings or politicians retaining hope that an economy which no longer exists, will return to balance the city’s budget.

Renee Marie Smith is a Real Estate Attorney, Author, and National speaker educating homeowners and realtors on the benefits of short sale over foreclosure. www.smithtitleservices.com

Yes there is lots of social thrill and distractions on the Eve. Parties, dresses, cocktails and lighted balls dropping from the sky but in the solitary calm of the next morning, when the world drearily opens its eyes to a date ending with a brand new digit, I sit with a fresh slate of a year to write out my life aspirations. This freedom cannot be equaled to any other day of the year. All the possibilities and none of the limitations exist. I have “a full year” awaiting me. I make a guilt-free list of lofty goals that beckon me. My rational mind is on mute as I list proverbial mountains to scale and oceans to be swam in my life over the coming months. No thoughts about cost limits, time constraints, experience level or just plain common sense are allowed in the discussion. Actually they are barred from the room during my treasured hour, as I lay the road of dreams for my next year. This is my personal oasis of opportunity that every year renews my soul.

Join me in this feeling, the blank slate of life allowing you a limitless dream. Enter social media. More specifically allow social media into your business branding with this feeling in mind. Carry this feeling of a new found ocean of calm to launch your business brand into the media and advertising storm of existence where we live. Frankly even in restaurant bathrooms, advertising awaits us. Where do we professionals have the quiet of mind to push our business brand to the next level? When do we get our “New Year’s Day” to map our business brand wherever our dreams could take it and place it where it can be seen? Social Media.

Ah, some of you naysayers out there have already said it’s not for me. True many of the social media outlets don’t feel right for me either. For example, someone posted on my business Facebook page a picture of me playing high school volleyball. Seriously? I don’t know about you but 80’s volleyball shorts didn’t help any girl’s self-image let alone in 2013 when I am looking to attract legal clients. That’s when the Facebook social media option closed for me professionally, as I still participate with family and friends.

But that’s the good thing about social media, a new option or “flavor” of business venue is available to fit each business brand’s needs. Don’t give up, like Father-time giving me a new year, every year to make a new yearly dreams; new social media options appear to meet each business brand’s needs. The entertainment industry has embraced this medium in full force to push their “personal” brands. In the International Herald Tribune’s article, “Fusing celebrity and social media” by Brooks Barnes it’s argued that Rihanna was cast in the Battleship movie over more seasoned actresses due to her 26 million Twitter followers, as that marketing base could be utilized by the movie producers to brand the film.

I personally have “nested” in LinkedIn. I joined groups who have shared business advice that guided me in articles, contacts that directed me to more cost effective ways of using marketing dollars on traditional outlets and opened networks of people that my brand would not have reached without it. It’s a pressure free networking environment to help me grow my brand outside my known business environment. I am able to see bigger options and global needs for my brand or to use my opening metaphors, higher mountains to be scaled and wider oceans to be swam in my business.

Part two of my explanation is inspired by a recent Wall Street Journal article “Luxury brands are thriving, but they need to change track,” by Jeff Gong. It described how luxury brands are expanding into the 1st tier cities throughout China and a mind numbing pace. One hundred stores have been built in sizes up to 2000 square meters between Louis Vuitton, Gucci and Hermes alone. Interestingly, the majority of the Chinese population lives in the 2nd and 3rd cities. The article stated that luxury brands that restrict themselves to the 1st tier cities will lose a major sale opportunity. The large luxury brand marketing model of an enormous single brand retail store is limited as this model is too costly for smaller urban areas. So the luxury brands goal should be to develop sales channels. The Chinese luxury market remains wide open to “buyer shops,” or shops carrying multiple luxury brands, to further penetrate the more lucrative markets of 2nd and 3rd tier size cities. This model for the smaller markets can be done relatively cheaply, keeping profit margins high while maintaining the luxury brand’s image. Thus, luxury brands need to develop networks to reach 2nd and 3rd tier customers in a more cost effective way.

For mid to small businesses this is an important point, social media is our cost effective “branding” network to compete with the larger companies that have spent billions of dollars developing main stream marketing channels of print and TV/Cable to differentiate their products. The majority of businesses don’t have those marketing dollars available but the good news for us is that the bulk of the population is now accessible via internet or specifically social media. We don’t have to develop multi- million dollar print and air campaigns but use the much vaster network of social media to develop our brands and penetrate the “less accessible but more profitable” markets left out by the “big boys.”

As in all good stories, I have saved the best is for last. You don’t have to wait for one day out of a year or dedicate an hour of time to your “social media oasis.” This oasis is free, you can discover it anytime that you decide and if the first venue doesn’t work for your brand take Benjamin Franklin’s advice. Try, try and then quit and find a better way. With all the social media available, there are many “oasis” available for businesses crossing a desert of marketing options trying to locate their specific clients. Don’t get discouraged. Whether its Facebook, Twitter, LinkedIn or one of the many other options, build a new dream and your brand just one key stoke at a time in the social media world.

http://www.palmbeachwoman.com/a-business-branding-oasis/

FDIC to Reserve Oil, Gas & Mineral Rights

The FDIC announced last week that it will implement a program to reserve oil, gas and mineral rights in any land it conveys in its capacity as receiver for a failed bank. Effective April 1, 2013, contracts for the sale of Owned Real Estate (ORE) assets will include these mineral reservations.

The mineral reservation will include the right of entry for properties located in rural areas. The right of entry will not be included for properties located within incorporated cities.

The mineral reservation (with and without right of entry) will be included as an addendum to the typical FDIC sales contract. The FDIC has developed a special warranty deed form that includes the reservation.

The mineral interest reservation will not apply to condominiums and properties valued at $50,000 or less.

If you are closing a transaction where FDIC is the seller, you must review the FDIC contract for sale for any reservations in the estate being conveyed, and you must be sure to include the appropriate reservation language in the deed.

If you have any questions concerning this matter, please contact The Fund’s Underwriting Department at 800-4332-9594 or send an email to underwriting@thefund.com.

1. 57% of the pending closings are short sales,
2. 47% of the current short sales are being processed in Equator,
3. 63% of the pending short sales are on primary residence,
4. 52% are short sales with one loan,
5. 29% of the short sales are being serviced with Bank of America

Local and National Real Estate Experts help Women Develop a Business Strategy to Advance in the tough Market.

$20 advanced registration (includes autograph book) or $25 at the door.

APRIL 5th 2013 – Summerlin, NV

Location: 9121 W. Russell Rd. Suite 210 Las Vegas NV 89148
Doors open 10:30am. First Presenter 11:00am. Lunch at 12:45pm. Final Remarks at 4:00pm
Presentations:
1. Phil Bouchard- National Title Company on how National Title has adjusted their Las Vegas closing business to meet realtors business models post real estate bubble
2. Desiree Patno- NAWRB on how being a member of a national women’s association makes business mentoring & development easier
3. Jim Losell-  imortgage on the changes to lending in Las Vegas post bubble

LUNCH BREAK. Food & beverage included in ticket cost

4. Mark Coats- National Credit Federation on credit repair on how to make a qualified buyer from post foreclosure/short sale clients
5. Brandon Roberts: Las Vegas WCR representative on Vegas market trends
6. Renee Marie Smith - Guru Publishing on how to integrate the last 5 years of hard market lessons into a thriving real estate business.

contact renee@smithtitleservices.com to learn more

Renee Marie Smith Recognized by Worldwide Who’s Who