Buying a House Out of Foreclosure

Just recently my wife Rosemary and I bought a house out of foreclosure. Not just any house, but the house we were living in. Yes, our shady landlord Sharon Mooney (yes, I just put her on blast) hadn’t been using our lease payments to cover her mortgage. Worse yet, she didn’t disclose that she was in Chapter 13 bankruptcy when she leased the house to us. Anyway, that’s not the point of this post, although I will spend some time shredding the woman. I’ll then tell the story of how we bought our house out of foreclosure—and how mind-numbingly difficult it was!

That’s right. Buying this house was one of the most painful processes I’ve ever encountered. Fraught with incompetence, lack of urgency, needless paperwork, proof of EVERYTHING, and suspicion, the players involved were constantly at each other’s throats. We’ll get to that. Let’s just start from the beginning.

August 8, 2008. After dropping our kids off at school and daycare, Rosemary and I returned to see a piece of paper stapled to our front door. Notice of Auction. Our house was due to be auctioned on August 28, 2008 on the steps of the Pomona Courthouse – 11am. WTF??? So Rosemary calls (shady) Sharon who assures us that everything is under control and it’s clearly a mistake. At this point we didn’t know she was in Chapter 13. So I attended the auction on the 28th and the sale was “postponed by the owner.” Apparently Sharon’s lawyer was able to get another month to settle the financial issues.

Now picture this scenario playing out for the next three months: We get a new notice on our door for auction. Sharon says everything is great. Either Rosemary or I attend the auction to see if the house we’re living in is going to be purchased. We would have 30 days to leave under that scenario. I don’t think I have to detail the stress this uncertainty wreaked on my family. In addition, I had dropped almost $50,000.00 in rental payments and deposits over the course of a year—and for nothing.

Luckily, my sister, Kathryn, is a bankruptcy attorney. When November came, we had her look up everything on Shady Sharon’s record. We got it all. Her payment dates, dates missed on her Chapter 13, all of it. Then mid-November, Sharon’s final attempt to keep the house came. Chapter 7 protection. No creditors, no financial institution can repossess assets if approved. Deutsche Bank, the holder of the mortgage immediately filed counter suit to have the Chapter 7 request voided because Sharon didn’t have a snowball’s chance in Texas of making payments. Yes, she lives in Texas. I’d put her address up here, but that’s going too far.

Needless to say, Deutsche Bank won. On December 2, 2008, the house finally went up for auction. Sharon did make sure to add us to her Chapter 7 foreclosure so she wouldn’t have to pay us back our security deposit.

In California, one can’t just go to the auction with a pre-approval letter from a bank. A buyer has to come to the auction with a cashier’s check for the entire amount of the house. In this economy, most real estate investors had been burned and were gun-shy at the prospect of purchasing a house sight-unseen. That we had in our favor. I do fairly well, but I couldn’t come up with $600,000.00 in two weeks to buy the house. We rolled the dice on that one, and won.

Now it’s early December and the house belonged to the bank—and this is where the fun begins. Deutsche Bank immediately sold the mortgage to Wells Fargo because Wells held a position on the mortgage as a security and is based on California. This is precisely where the myth-busting began….

Myth #1: It’s easy to buy a house out of foreclosure.
This couldn’t be further from the truth. When you buy a house out of foreclosure, you’re buying from the bank—but the bank is not in the real estate business. What do they do? They hire an asset management firm to manage the process. Wells Fargo had—and this is not a typo—43,000 foreclosed homes in its possession. Now I was just trying to make it 42,999, but again, I wasn’t working with the bank. The asset management company hires real estate agents to determine next steps with each property. Real estate agents are typically not known for their “thought leadership” (no offense to my real estate friends out there—yall are the exception) and this guy was no exception. He made it his business to tell us when the eviction process would begin and how long we’d have to move out. Mind you, we told him we wanted to buy the house. Which brings us to myth #2.

Myth #2: Banks are salivating when they get buyers.
You would think that with a backlog of homes, banks would be willing to wheel and deal to get them off their books. Not exactly. When the real estate agent (Michael) heard that we were willing to buy, he seemed genuinely upset. Rather than greasing the wheels through the process, he kept telling us how many hoops we’d have to go through to get the house and how hard it would be for us to get a loan. He didn’t even know who we were or what our household income was.

Wells Fargo didn’t make it any easier either. In order to buy one of the 43,000 homes in foreclosure from Wells Fargo, they require you to be pre-qualified through them. That’s right. You can’t be pre-qualified through Chase, BofA or any other of the banks still standing. You have to go to Wells Fargo and go through their entire process. And lengthy it was. I had to go through every bank deposit I’ve had for the last two years. Even my expense checks! Why? Because they had to make sure that the extra checks I was receiving each month from my expenses weren’t from drugs. Yes, I’m serious. Banks trying to help? Not so much.

Anyway, after Michael told us for the third time that we would be evicted if we didn’t leave the house by January 17, we stopped talking to him. We did the unthinkable…we got our own agent.

Myth #3: You’re guaranteed to get a GREAT deal buying a foreclosed home.
Are you serious? We finally put an offer in on the house on January 16, 2009, the day before eviction proceedings were to begin. Michael called us to say that because we had submitted an offer, they were postponing our eviction for a month. Thanks. He also said that he would have to get three separate appraisals for the home and that he wouldn’t submit our offer to the bank until those appraisals came back. There were two reasons that three appraisals were needed: 1) to assure that the appraisals were for market value (people in California have been paying the appraisers of foreclosed homes to keep the appraisals low and paying them a commission on the difference), and 2) because they want to sell the house for as HIGH a price as possible. Of course they want to minimize their loss. But for someone who’s looking to buy a house in this economic climate, the hassle was enormous. Banks don’t want to give you a good deal on a foreclosed home. They want to minimize their loss. Which brings us to #4.

Myth #4: Buying a foreclosed home is faster than buying a home normally.
How long do you think it took to get those appraisals? Try a MONTH. So we had to wait a month—the time we had before eviction proceedings, for the agent to find three appraisers to come in and put a price on our house. The excuse was that the backlog of home was so high and that there weren’t appraisers available. Hmmm….Nobody’s BUYING right now!! So what were those appraisers doing? I shudder to ask…The point is that this process was MUCH slower than buying a house under normal conditions and banks aren’t pushing the process along.

So What Happened?
To finish the story, the eviction was pushed back another month into March. Our offer was submitted, but we didn’t hear back within the 72 hours we were supposed to. We began to get nervous because our agent hadn’t heard from Michael either. The rumor was that these agents would go out and find their own buyers (usually investor buddies) who would pay more for the house than the offers they had in order to increase their commissions. Not good for us, right?

We finally heard back in mid-March that the bank wanted to negotiate pricing. Here we go. All the while, we kept going back to our loan officer at Wells Fargo to check our interest rate. During this time, interest rates were falling off a cliff, so our pre-qual rate seemed sky high at this point. That proved to be a good strategy as we were able to reduce our interest rate from 5.4% to 4.8% on our 30-year fixed. Had we not asked, it’s likely we wouldn’t have received the lower rate.

Back and forth we go with the bank. Sure we low-balled, but that’s what you do in a buyer’s market. Their initial counter-offer was unreasonable and Michael knew it. We then came back with a slightly higher offer. Finally Wells entered the realm of reality and got to a somewhat reasonable price. We counter-offered one more time and the deal was done. How long did the negotiation take? Two weeks! It was now early April. Time for escrow.

After all that, we had a 30 day (ish) escrow. All the while we had to keep pushing back the eviction proceedings. Finally on April 30 we closed. Almost nine full months had elapsed since the day we received our first auction notification. Can’t say how happy we are that this process is over. We enjoy our home and feel like the deal we got was squarely in our favor. It was definitely harder than expected to get the good deal, though.

So if you’re looking to buy a house out of foreclosure, be prepared for the drama. Sure it was compounded by the fact that we lived in the house we were buying and were scared of eviction, but the process took five months from when Wells Fargo took possession to close. That’s an eternity and shouldn’t be the case in this market.

Good luck!

Getting a Job in a Down Economy

When you start looking for jobs, what’s the most natural thing to do? Look in your industry. Industry experience matters to employers so when you’re in job search mode, you go for low-hanging fruit. We definitely recommend you do that as part of your search—but what if you’re in one of the industries like finance or real estate? There might not be an option in that industry. Don’t despair. I’m going to hook you up with secrets to manage that situation.

The Secret: Think Functionally

What does that mean? Every job is categorized by both industry and function. For example, an industry is pharmaceuticals, but the function is sales. Your potential to get an interview is based not only on the industry experience, but also on your functional experience. And guess what? Functions go across industries! That’s right. You have gained transferable functional skills that apply not only to your industry, but to others as well. Things should start coming into focus for you now….

Your job is to begin thinking functionally right now. Don’t think about the industries in which you’ve worked, start thinking of the different functions that you have experience with. Here are some functions to get your mind working:


• Marketing
• Sales
• Operations
• Recruiting
• Consulting
• Market Research
• Information Technology (networks, hardware, software, development)
• Strategy
• Research
• Project management

What about skilled trades?

• Truck Driving
• Painting
• Auto Work
• Hotel Room Service
• General Hospitality

Think about the projects that you’ve worked on within your job. Did you lead a team, do budgeting, perform custom analyses, business plan, or mentor others? Do you have a skill or trade that can be used anywhere? It’s extremely important to know what you have done when in job search mode. Cater your resume to your function and you'll be ahead of the competition. Good luck!

Is the United States truly a free market system?

I've had enough! With today's seizure of Fannie Mae and Freddie Mac by the U.S. Government, I have to wonder, "Is the United States truly a free market economy?" In a true free market system, companies are judged by their decisions and prowess at generating extraordinary profits. Companies issue securities to be bought and sold in the open market to value the company and respond in real-time to its decisions.

It seems with the current mortgage crisis, "free market" has become a misnomer. The Bush Administration continues to use language like "protecting global markets" as reasons for bailing out yet another flawed financial services company.

From the Associated Press:

“A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance,” [Treasury Secretary Henry] Paulson said.

But more importantly, “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe,” he added in a televised announcement.

Are Fannie and Freddie different from a Countrywide, IndyMac, or Bear Stearns? Well, yes, they are. Because they own about half of the total housing debt in the country, some believe their collapse would have meant a global financial meltdown possibly leading to rampant inflation and even a global depression.

But that's the doomsday scenario. What if the Government allowed Bear Stearns to fail? What if Fannie and Freddie were accountable to their multiple years of questionable lending and mortgage acquisition practices? Free market economies are supposed to correct themselves. The theory says that when free markets overheat, they correct, sometimes violently. We're seeing that now. The problem is that the government isn't allowing for this natural correction to take place. What about Enron, Arthur Anderson, and Martha Stewart? Where's the accountability in the financial services industry?

We have no idea how deep this crisis can go, but we know the government won't allow it to get there. With a Republican White House, one has to wonder if the party truly is about having smaller government, reduced spending, privatization, and, of course, open and free markets?

Over the last few months, the Bush Administration with Paulson (a former Wall Street executive with formal and informal ties to all of the companies he has bailed out) have flip-flopped on their party's most coveted stance--free markets. From the Associated Press:

Officials defended this approach by saying it underscores the importance of the trillions in mortgage debt that each company either holds or guarantees and the need to make sure that investors in this country and overseas keep buying this debt.

And herein lies the rub. The U.S. economy needs international investors to buy risky debt. That smells like HUGE trouble regardless of any bailout, doesn't it? If investor confidence overseas plummets in the US mortgage market, the dollar will continue to fall precipitously versus all currencies--and that could even happen WITH this bailout.

The real question then is, how much protection are these bailouts really providing? If the governmenet has to seize Freddie and Fannie, then we should expect this housing crisis goes deeper than any of us know. The common man's access to the data used to make these decisions aren't made public so none of us knows exactly what they saw before acting. That's what scares me.

I want to jump into the housing market because there seem to be opportunities. But today's action will keep me on the sideline not for months, but years. I get the feeling we haven't seen ANYTHING yet.

Diversity in 1995 and today...

I was cleaning up my garage this weekend and found an article I had written in 1995, one year after I graduated from University of Pennsylvania. The subject was an incident that had happened to me just a few weeks prior at my job at Information Resources, Inc. that gave me a glimpse of what the business world was like for people of color. I chose to share that story with students still at Penn by submitting an article to The Vision, the African/Caribbean American newspaper published out of the W.E.B. DuBois College House where I had lived for two years during school. I wanted the students to learn from my experience.

**********

When You Get Out
By David S. Williams III
The Vision
University of Pennsylvania
September, 1995

When you leave Penn, there are a few things that you can expect: 1) you wont be paid what you’re worth, 2) you wont be evaluated fairly and 3) there won’t be many African Americans around you. The third constant above reveals the discrimination inherent in hiring practices throughout the business world. Executives are often afraid of hiring minorities because they’re worried about being labeled “reverse” discriminators.
During a recent group meeting the Executive Vice President of my company asked if there was a perception of a “glass ceiling” in the company for women and minorities. In a room willed with 80 people, over half of whom were women, silence ruled. The EVP sounded genuinely surprised by the lack of responses, but it seemed no one would dare raise a voice on such a controversial topic. Up went my hand. “Well I can’t speak on a glass ceiling since I’ve only been here a short time, but I think the larger issue is recruiting.” Then slowly rising to my feet, “…because I can look all around this room, and I don’t see one person who looks like me.” A tense silence prevailed as my fellow employees kept their eyes fixed forward.
Since the EVP refrained from addressing the issue, one woman did try to lend some support. Her voice trembled. Although it was a valiant effort on her part, she might have been more helpful by remaining silent. “Interesting…” pondered the EVP, just before, “Let’s discuss our third quarter goals.”
After the meeting, I received all kinds of support from co-workers! I heard, “Hey, I agreed with everything you said!” or “Dave, you’re absolutely right about that. It’s great that you stood up for what’s right!” The feeling of camaraderie with my colleagues swelled inside me like…lava in an active volcano. Where was that support when my head was on the chopping block?
A few days later, the EVP left me a voice mail message inviting me to lunch to discuss the issue “brought up in the meeting.” We set it up for a week later (after one cancellation) to eat at Bennigan’s. After exchanging pleasantries and funny stories, we began discussing the issue. He asked me if it was difficult for me to work in an environment without any other Blacks, and I answered (after taking a very deep breath), that it was very difficult because I had no way of expressing concerns if I’m treated unfairly because of my race either by a colleague or by a client. I told him that the isolation alone makes it a hostile environment. The EVP explained that he had never thought about it that way. Surprise. Being the action oriented executive he is, he asked me for a solution. I suggested that the company begin recruiting at some predominantly African American schools naming three that have excellent reputations. To his credit, the EVP responded favorably, but his following response cut through me like a knife. He explained that his main concern in changing recruiting policies was upsetting the current employees because he would be locking out good potential white candidates because of race. For a moment, I thought I needed the Heimlich Maneuver! I wanted to say “Don’t you realize that we’ve been locked out of positions for 400 years!?,” but somehow, calm took over. The diplomatic answer given was that the caliber of candidates would not be compromised by recruiting from these schools. Lunch tasted awful, even after dessert.
There won’t be many African Americans around you because the EVPs of America perceive two risks in hiring us: 1) That they will upset white people, and 2) that we’re all lazy and won’t work hard to make them more money. Isolation and contempt sprout into a weed within, but just remember that the bills must be paid. As a result of going under the guillotine, I will be heading the recruiting efforts at these three African American Universities for our office.

**********

So what did I learn from this and how has it played out today? I've had successful stops at every point in my career and have overcome more than my fair share of narrow-minded people. I created a similar position for recruiting at Deloitte Consulting during my time there because the same situation occurred.

Today, I still get funny looks when I walk in a room. There aren't that many African or Caribbean Americans with executive positions at startup internet companies (like PatientsLikeMe). I am still proving myself everyday. We still have to be 10 times better to get the same opportunities.

Progress, however, is right in front of us. Barack Obama's candidacy for President has marked a major shift in perceptions of people of color in the United States. Where Colin Powell, Clarence Thomas, and Condoleeza Rice failed to connect with people who look like them, Obama has done so in a principled manner while still appealing to the majority. Good for him, good for us.

In that vain, I'm proud of the successful peers of color I have leading many industries, starting great companies, and contributing to academia. Let's keep it up, and pave the road for those who come after us.

From First Class to Last Class: Delta Airlines

I know it has been a while, but with good reason. In the last two months I've been criss-crossing the country. Boston, New York, Philadelphia, New Jersey (north, south, and central), San Francisco, Seattle, San Diego, and then back to Los Angeles.

Those of you who find me on Facebook have noticed recent multiple status updates on my first class upgrades (or lack thereof). I have a ton of miles on Delta Airlines, so I frequently get free upgrades. However, recently they have lowered capacity, and thus, I'm competing on high travel routes with other Platinum Elite flyers.

The way the free upgrade works is that if first class doesn't sell out, then the highest level frequently flyers (Platinum Elite in this case) get the open seats. The issue is, however, that there are often more PEs than there are seats. What's the next tie-breaker? Total miles flown. My measly 300,000 doesn't often cut it.

So after about a year of non-stop first class flights, I've had to fly coach for the last two months. This happens to coincide with my heaviest travel schedule, hence the frustration. In fact, on a flight from Boston to Seattle last week, I was in what I unaffectionately call "last class"--the last row of the plane where there's no recline.

So perhaps I'm a bit spoiled. I'll give you that. But flying first class without paying anymore will do that to a person. Just got the email confirming my latest itinerary, too. Got first class, both directions. Aaahh...return to normalcy.

Update: But now I'll have to pay to redeem my miles for any free tickets. This is getting ridiculous....

23andMe and my wife

My wife got her 23andMe personal genetics profile information yesterday. Wow, you never really know a person until you see her genome, huh? Just kidding, Rosemary. The results raised her eyebrows and mine after we dug a little into the information.

First, the good: The amount of information that is elegantly packaged into one service module is amazing. Learning not only about geographic origins and eye color, 23andMe makes it easy to find out who your genome resembles most. No matter how simple some of the charts look, building software to produce that output is extremely difficult.

Now, the challenges: With so much data, it was hard to find the same information twice. Once Rosemary viewed her profile and a few pages, she found it hard to locate the same information again when trying to share it with me. Navigation could be improved. Lastly, a couple of the charts weren't so easy to understand (and I have a pretty good feel for data visualizations). There were instructions on how to read these charts, however, which shows insight among the 23andMe team that their visualizations may be new ways for people to view data.

Although this isn't supposed to be a review, 23andMe is quite a service. The information is thorough and relatively easy to digest. Rosemary and I now have a few private jokes based on the results of her data that will last quite a long time. She now wants me to send in my kit. I think I'll milk this just a little longer. Like I said, you never know someone.....

AIDS.gov Interview

Today I was quoted as part of a series on health social networks by AIDS.gov. The post has views from myself of PatientsLikeMe, as well as one of our community members. It's certainly worth the read, especially if you're considering joining a social network centered on a health issue.

As preparation for that piece, I was asked to answer a few questions--the answers to which I think add to the consideration for anyone looking to join a health social network. The focus is on people with HIV, but applies to people with any condition.

As always, comments or feedback welcome.

______________________

1. What do you see as the value of niche social network sites as opposed to larger social networking sites, like MySpace and Facebook?

"Niche" social networks, like PatientsLikeMe, focus on people's particular health needs. We are not concerned with "links", "friends", or "feeds" as much as we're focused on gathering, structuring, and reflecting information that will improve the quality of life of people with life-changing conditions.

2. Do you prefer the word "niche" social networks or "communities of interest"?

Well, neither of those terms best describes what we do. Perhaps “collaborative network” would be most accurate for us. Yes we are a “social network” and we do create “communities of interest”, but we’re different. Patients share information (such as CD4 counts and viral loads) in order to learn from each other in a spirit of collaboration—to help themselves while helping others.

What separates us from typical social networks is that status or prestige is not measured by how many “friends” one has, or how many “hugs” one gives. Status on PatientsLikeMe is conferred to each patient by how much data one shares with the rest of the community. For example, a three-star patient shares a diagnosis date, is current with outcome, treatment and symptom information, and has provided a certain amount of historical outcomes data. This deep data sharing provides credibility to the patient for all interactions on the site. In essence, sharing data gives patients our version of “street cred”.

3. What was the impetus for starting the HIV community at PatientsLikeMe? How were patients involved?

Clearly there is a need for people with HIV to learn what works for patients like them. With virus mutations, numerous medication choices and combinations, and different stages of the disease, people need a place to learn from the collective experience of others. We target those types of disease communities in order to advance knowledge when conventional methods are either too slow or unavailable.

We opened the HIV community to charter members last fall in order to learn from patients how we could improve. We now have more than 600 charter members, many of whom have influenced new functionality and streamlined data visualizations to be more user-friendly.

4. What advice would you give to AIDS service organizations wanting to get involved with niche social networking sites? How can they get involved with PatientsLikeMe?

Our communities are free to join and open to all patients, researchers, doctors and nurses, and other industry professionals and organizations. For organizational partnerships, we can set up a page for you in our Partners section that list your website, contact information and more. The organizational page will also include profiles for any members of your organization participating in the community. We encourage any AIDS service organizations interested in this type of partnership to reach out to our marketing team.

5. What do you see as some of the benefits/challenges of social networking sites? PatientsLikeMe?

The challenge for people joining many health-related social networking sites is being open about their own health. On PatientsLikeMe, that issue can be confounded since patients share their in-depth health information that would traditionally be kept private. Some people don’t feel comfortable sharing that level of information in an open community, and we respect that.

The benefits, however, are astounding. Imagine knowing what everyone is taking for HIV and their outcomes over time. Each patient can then have a more productive dialog with his or her health care team in order to craft a customized treatment program based not only on clinical trial evidence, but also on the real-world experience of thousands. Doctors would have access to the range of dosages for every medication in real time, thus keeping on the cutting edge of prescribing practices. For many, the benefits clearly outweigh the risks.