preforeclosuredata.net

Ok, full disclaimer, I was tuning in and out of the Super Bowl. I had a low key gathering with friends in the first half, and was largely dialed out from ads, but there was one ad I did see that resonated- a Chrysler ad.

I’ve spoken bumpkins about the difference between benefits and features, and appealing to the emotions of a distressed homeowner. Homeowners don’t care if you are a member of the BBB or you helped 28 homeowners avoid foreclosure this month, or there are more dire credit consequences with a foreclosure versus a short sale. Those are all intellectual features. People buy on emotions – benefits – and come back to features later to justify their decision.

Chrysler gets this in this Super Bowl ad. There were no features about a vehicle. You don’t know how many gallons it gets, or how comfortable the interior is, or how long it takes to accelerate to 60 mph, or how safe it is. The ad was purely emotion – the language of benefits. Check it out:

In my last post, I carved out the main difference between our early, accurate and exclusive pre foreclosure data. Unlike public record lists that everyone has access to, our data is insider information obtained through a soft credit inquiry. Armed with this data, you can be the first – and oftentimes the only one – to reach out to distressed homeowners and advise them on their solutions.

There are a couple other distinctions to make, however, between our data and other sets of data. Perhaps it’s best to make these distinctions by framing it in terms of questions. If you subscribe to pre foreclosure data, here are some questions you should ask yourself, and pose to your list provider, as well.

Do you have modeled data?
There are providers of pre foreclosure data that predict hardship relying on myriad assumptions or algorithms. Perhaps the homeowner took out a loan in a problematic time frame, or otherwise assumed to be sub-prime, or they have ballooning ARMS about to reset, or they missed a car payment or something along those lines.  Based on these assumptions – many of them flawed – the list provider has a crystal ball and identify homeowners that are likely having difficulty. This is guesswork and when you contact those homeowners, you are rolling the dice hoping that the assumptions are correct and that these assumptions translate into a troubled homeowner that wants to get from underneath their home. With our data, we can tell you with a certainty that there is a hardship, because they have recently defaulted on a mortgage payment.

Do you have public record information?
Once the lender has served intent to foreclose on the distressed property, it enters the court house (public record) domain.  Once the NOD/Lis Pendens is served, the homeowner is inundated with solicitations. When they open their mailbox, they have offers spilling out into the street. They don’t know who to trust, they get bad information, and can’t make sense of it all. Unlike RealtyTrac and other public databases, our data puts your message of hope and solutions in front of delinquent homeowners before their hardship reaches any public file.

How aged is the data you get?
While some data providers obtain authentic credit bureau data, some opportunistic list brokers provide stale data that has been sold over and over again to the masses. They will represent the list as being a set of homeowners 60 days late, but what if the data was pulled 90 days ago? In this case obviously, they are not 60 days late. They are 150 days late, and the home can be vacant or worse, have a new owner that purchased the home on the auction block. These list brokers want to make huge profits by paying once for a list and selling it over and over again. Commonly, the initial sale is made to a huge mailing house or loan modification company. Having incurred the initial list expense of obtaining the data, the list broker can repeatedly sell the same list over for a 100% profit as if selling a rock over and over again.

If you are looking for the most current, accurate and exclusive pre foreclosure data, let’s get in touch.

There’s many sources of pre foreclosure data and new sources seem to be sprouting up all the time. This weekend, a subscriber to our data e-mailed forwarded an e-mail he got from a recent competitor that promises to substantially increase listings and closings. This e-mail was the impetus to writing a post on the main difference that separates our data from the rest of the pack.

First of all, the information we provide is not yet public information that everyone else has access to. Instead, the data is obtained through a “soft” credit inquiry when the lender reports a defaulted mortgage payment to the credit reporting agencies. So when Bob misses a mortgage payment, Bank of America or whoever the lender is will report to the credit bureau that Bob has defaulted on a payment. A “soft” credit inquiry is common in employer background checks or when creditors want to send you pre-approved credit applications, or when they want to verify the accuracy of the information a consumer provides. It does not impact the credit score, as would a “hard hit” which is initiated by the consumer when they apply for an auto loan or wireless service, etc. > Read more on the difference between a “hard” pull and “soft” pull.

The main point is, this credit data is not yet in the public domain, so you are not competing with the masses that contact homeowners once their hardship hits any public file when the lender serves the paperwork to foreclose on the property (be it a NOD, Lis Pendens, Notice of Election, etc, depending on your locale). Once the lender commences the foreclosure paperwork, it is court house, public record information and the homeowner is inundated with solicitations by other REALTORS, investors, bankruptcy attorneys, and the like. Once the homeowner opens their mailbox, they have offers practically spilling out into the street. With our early data, you can eliminate the bulk of your peers and be the first to reach out to struggling homeowners at the first indication of hardship. This can be visualized in the following time chart:

In future posts, I’ll explore some other ways our data is different from other sources in a crowded market.

I’ve had some riveting dialog with a client that asked me to build a list of homeowners that are strategically defaulting on their mortgage payment. I knew this was a topic that had to be explored in a blog post.

Early on in our conversation, he cited Brent T. White, a University of Arizona law professor, who views walking away from an underwater home a purely rational business decision. Morality and emotions have no place in one’s decision to “strategically” default on a mortgage, says Professor White, the author of a paper entitled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.”

There is an interesting TIME MONEY blog that is entitled with a provocative question: “Strategic Mortgage Default: The Irresponsible, Amoral, But Best Strategy?” > Read the entire blog here.

Our client says that if you do the simple math, it is better for homeowners to rent and re-enter the home market when prices are more favorable. If a house was mortgaged for 100K and it is now worth 50K, he says, the price has to double, something he doesn’t foresee happing in the course of a lifetime.

Our client wanted to target homeowners in San Diego County that were current on all their debts except their mortgage. We put together some filters to build this list. In addition to selecting his targeted area and selecting homeowners 60 days past due on their mortgage payment, we also zeroed in on defaulting homeowners that had an estimated income of over $100,000, and to further predict a healthy bill of financial health, selected homeowners that were current on bank card debt. He wanted only those homeowners with negative equity, so we selected borrowers with an LTV of 100+.

I certainly am not speaking in favor of a strategic default, but it’s an undeniable force in the real estate market. There are a staggering amount of homeowners that are walking away from their home, no matter what one’s moral views are on the subject. Nationally, an estimated 19 percent of delinquent mortgages involve a homeowner who could afford to pay but is opting to walk away.

Since this dynamic is becoming a larger portion of the distressed home inventory, should real estate professionals approach these strategically defaulting homeowners to advise them on solutions?

I knew this would be a polarizing issue. On Active Rain, one reader says,

Professor White probably has the same opinion about marriages that aren’t working. What’s become of our society?

Doesn’t a commitment mean anything anymore?  The rationale about losing money is just that – and bad rational to boot!

What would be the difference if the mortgage company felt that they could make more off of your home by taking it away from you and reselling it to someone else?

After all, it’s just a business deal.

Yet another reader checks in to say emphatically that agents should get their message out to these homeowners headed for strategic default:

Of course we should. Homeowners are walking because they don’t understand they have options. The best one (in most cases) is a strategic short sale. These homewoners mistakenly think they must have a hardship to do a short sale. That’s just not true any more.

In my market a homeowner that bought in 2005 and placed 20% down could now owe more than 4 times what their property is worth!! This is a fact. To continue paying in to this black hole is foolishness. Take the loss now and get on with your life. This is NOT a moral issue.

Where do you check in?