rev newsletter head 7-17
June 11, 2010  
Reporter: Rich Shearer     Editor:  Ron Brown/Dominic Porrino          Photographer: Tom Black 
 
 
President: John Fazel, 2009 - 2010          

 
THOUGHT FOR THE DAY

 

Nobody had a thought for the day.  (Not to worry, the Fazel 2 fazel 1-2Administration will get this figured out perhaps even before the curtain officially drops end of the month.) Buddy Burke gazed at his Blackberry, and started to read a canned quotation that apparently ends with: "No, wait, that one is right for this group . . . . " King John saved the day with this pithy thought: "If at first you don't succeed, do the pledge." So we did.

 

VISITING ROTARIANS

 

Leander Hauri - Livermore

 

GUESTS OF OTHER PERSUASIONS

 

2 fazel 1-2Becky Ware - FINALLY HOME!

 

One or two other names may have been mentioned that this reporter did not get because of the ambient noise. That and the fact that he wasn't paying attention.

 

BIRTHDAYS, ANNIVERSARIES, AND OTHER MISCELLANEOUS GOODIES

 

2 fazel 1-2Rick Ashburn celebrated 19 years of wedded bliss with a certain Dana Fillinger at least in part be depositing some money into the collection trough.  Tay Wheeler married off a son and missed the formal salute of our three remaining charter members, of whom he is one. However apportioned, it came to $20.  (Pop quiz: Who are the other two charter members? If you don't know, shame on you. They are Fazel hisself and King George.)

 

A MOMENT WITH AYMERIC

 

School is out save for grad night event tonight.  George 2 fazel 1-2Chaffey took Aymeric flying (in a plane), and both lived to tell about it.  Paul Fillinger, Alex Arnold and Aymeric made a film, which shall have its world premiere at a future meeting. 

 

As a side note, Aymeric's days with us are dwindling down to a precious few, so if you haven't had the chance to spend a day with this charming young man, hurry up and invite him somewhere before he heads off for his planned safari and then back Belgium.  

 

THREE-QUARTER CENTURY CLUB LUNCH COMING UP

 

There are still spots available for volunteers at the Three-Quarter Century Luncheon, reports King John, the Grand Imperial Poobah not only of our august club but of said event.  Rosie the Riveter will speak. Not really true, as the original RR is no longer with us. The one we get to see is an RR impressionist, much as is last year's speaker, the redoubtable Mark Twain (from Lake Tahoe).

 

Lunch will be served to any and all Orindan 75 years and older who elect to come (and many do).  It is this coming Wednesday, June 16, at the Orinda Community Church (a.k.a. "Frank's Church" to the congnescenti).  People are needed from 10:30 to about 2:00, but you don't have to be there for the whole thing.  Contact John if you can help and have not signed up.  This is a truly fun "feel good" event, so go if you can.

 

DID YOU KNOW THAT "BOCCE BALL" IS REDUNDANT?

 

Three teams from Lamorinda Sunrise showed up last Saturday for the Something Or Other To Do With Rotary Bocce Tournament, held this past Saturday at Waterfront Park in Martinez.  The good news is that all three of our teams advanced to the second round, kicking booty and taking names.  The bad news is that none of our three teams made it to the third round.  The almost good but slightly comical bad news is that the only injury was to Bob Heinen, our fearless bocce team captain.  All bones and tendons came through just fine, but he did manage to set his hand on fire with one of the Sterno cans under the warming trays in the chow line. A full recovery seems imminent. Get-well cards not necessary. Just shake his hand. Oh, no, don't do THAT!

 

No injuries engaging in the actual activity, but we had an injury in the chow line.  Somehow, that just screams "Lamorinda Sunrise Rotary" to this reporter.

 

Oh, in case anyone cares about the final results, Bob did not announce who the winner was, but we do know that the Walnut Creek Club had three teams in the Final Four.  In 2 fazel 1-2addition to Bob's charred hand, I smell ringers . . . .

 

Oh, and Bob Riegg did a spectacular job of spectating.  He watched with the very best of them.

 

THE ORANGE HAS GONE OUT OF OUR MEETINGS

 

Because the Republican voters in the 10th Congressional District made a huge mistake last Tuesday, Buddy Burke is no longer a candidate for Congress and thus is no longer decked out in orange. The Dutch feel safe again, but, as King John said, the 10th District's loss is our gain.  And you know, Buddy, that we will never reject you. Taunt and ridicule you? You betcha.  But reject you? Never. Unless the price is right.

 

MOTORAMA IS APPROACHING

 

2 fazel 1-2We were all put to work today putting labels on postcards designed to let people know what we already know, Motorama is almost here.  June 20.  Fathers Day.  In the Postino parking lot.  But you knew that. The point was to let other people know that.

 

Also, if you have not signed on for a shift and job at the actual Motorama event, get a hold of Krysten Laine, who will cheerfully tell you where to go.  (Uh, 2 fazel 1-2that didn't quite come out right, but you know what I mean.) 

 

This happens next weekend, folks.  This is where all the hard work pays off.  It's our newly-coined principal fundraiser, so let's bring home the bacon. Funding of next year's community service projects depends on it.

 

A HOLE IN OUR MEETING

 

2 fazel 1-2For a few minutes, King Fazel decided to step outside and let things run themselves.  I'd report on went happened while he was outside, but I think I was blasted with one of those memory-erasing Neuralizer things from the movie "Men In Black," as I have no recollection whatsoever of those few minutes.  However, a little birdie told me that Pat Flaharty does remember, in case you want to know.

 

PROGRAM

 

Joan Grimes grew up with the kids of Ron Brown and Paul Fillinger.  She is a perfectly lovely person.  You never want to have to go see her in her professional capacity.

 

That's because she is a real estate and (take a deep breath) bankruptcy attorney.  Her talk today was all about telling us a few things that everyone should know before buying and financing homes, but nobody ever gets told. 

 

Most of this stuff doesn't matter to the vast majority of home buyers in good times.  These aren't good times.  For example, Chase Bank opens what it calls "trauma centers" to deal with areas facing large numbers of foreclosures.  It recently opened such a center for the I-680 corridor. The nastiness is in our back yards, folks. And we need to have some idea of how to deal with it.

 

The first and foremost thing one has to understand is the difference between secured and unsecured debt. Both have a promise to pay.  If that promise is a signed writing, that writing is called a "note." Unsecured debt is that bare promise to pay and nothing more. If the debt is not paid, the lender has to sue in court to get their money.

 

Secured debt also has a note, but it also has another element: security. (This discussion is causing me to have nightmares about my Commercial Transactions class in law school, the single worst academic experience in my life, bar none.) "Security" is, for the most part, another word for "collateral." In the case of a house, where you almost certainly have to borrow money to make the purchase, you will sign a note that says how much you owe and to whom. You will also sign a deed of trust (called a "mortgage" in some states). What that does is allow the lender to foreclose on the house - basically take it back and sell it to cover the unpaid loan amount - in case you fail to make the payments as promised.  That is happening a lot these days, in case you have been living under a rock for the past two or three years.

 

Secured debt is further divided into two categories: non-recourse debt and recourse debt.  The distinction has important consequences.

 

Non-recourse debt means that the lender can foreclose on the house (in this case), sell it, and try to recoup its money that way. But if the sale doesn't garner enough to satisfy the underlying loan, too bad for the lender. By law, they can do no more against you.

 

Recourse debt, on the other hand, allows the lender to go through the same foreclosure steps, take your house and sell it to try to recoup the debt. If the foreclosure sale comes up short, however, and unlike non-recourse debt, you are not off the hook. The lender can continue to come after you and your other assets until the full amount of the outstanding debt is paid off. The official legal term for this is: Ouch (this is not an acronym, by the way).

 

Now comes the kicker, one that no one ever tells us but everyone needs to know. Purchase money loans are, by law, non-recourse debt. This means that when you buy your house, the most the lender can do is take your house back and sell it if you default on the loan. The rest of your assets are safe. Joan referred to this purchase money non-recourse status as your "Golden Ticket."

 

That is not true of second mortgages or refinancing the first mortgage. Those are recourse loans. That means that, in order to pull equity out of your house, you lose your Golden Ticket, at least to the extent that you replace your initial mortgage. Put simply, if it isn't an initial loan to purchase your home, it is recourse debt. (By the way: seller carryback financing is likewise recourse debt.)

 

Why does this matter? Because the entire industry, from the lenders to the buyers, has gotten away from writing loans that people can actually pay off. The rule of thumb is, and has always been, that you can reasonably expect to be able to pay off your home loan if the price of the home is 2 to 2 1/2 times the annual salary(ies) of the person/people buying it. Suffice to say, that is a rule that pretty much nobody has paid any attention to in the past umpty-ump years. And that is causing a great deal of strife now.

 

Now, assuming a friend or family member is getting sideways with their mortgage (because that doesn't apply to anyone here, of course, he said nervously), there are three sets of impacts that have to be considered when deciding how to address the situation: (1) how an action will affect one's credit rating; (2) personal liability for the debt; and (3) the one nobody thinks about, tax consequences.

 

Many people choose short sales over permitting the house to go into foreclosure, assuming this is the better option. Not so fast, warns Ms. Grimes. There are many situations in which a foreclosure makes more sense. For example, there is no tax liability from a foreclosure sale. But a short sale involving a property in which there has been a second mortgage or a

refinance of a first mortgage can impose capital gains tax liability. This is especially true if you have multiple properties. There can also be advantages in how long a foreclosure stays on your credit report as compared to a short sale. 

 

Joan took us through a few scenarios that I could not completely follow and certainly could  not reproduce (gawd, this really is sounding like the class I teach in Commercial Transactions). Suffice to say, if you or someone you know is the position of being behind on house payments with an adjustable rate that is through the roof or a balloon payment coming up soon, and you think foreclosure, a short sale, or even bankruptcy may be in your future, for goodness sakes, go see Joan or someone who plies the same trade. 

 

No two situations are exactly alike, and there are advantages and disadvantages to all approaches. The decisions made now can set you free (or at least make the situation bearable) or can leave you in dire straits for years to come. And the odds are that you have no idea what traps are there for the unsuspecting and uninitiated. 

 

Thank you, Ms. Grimes, for letting us know about legal, financial and practical aspects of home financing gone bad that everyone ought to know about ... going in.  And thanks for letting us know that, even in a bleak situation, competent professional counsel is available.

 

CALENDAR

     
6/18/10: James Bouquin, mystery man from Buddy Burke
 
6/18/10: SECRET, EARLY TIGITLFOTM FOR YOU KNOW WHO 
 

6/20/10: Motorama, 5:00 a.m. to midnight?

 

6/25/10:  Aymeric van den Hove, what a year.

 

7/2/10:  Becky Ware, how cool is Argentina?

Lamorinda Sunrise Rotary Links

Lamorinda Sunrise Web Site

Lamorindan Archives


ADDITIONAL PHOTOS OF THIS AND OTHER LSR EVENTS MAY BE FOUND AT WWW.LSR.SMUGMUG.COM. SHOULD BE YOU SMITTEN BY A PARTICULAR IMAGE, PRINTS MAY BE ORDERED FROM THIS WEBSITE. (THE QUALITY IS EXCELLENT.).
Contact Us

Rotary Club of Lamorinda Sunrise
PO Box 1491
Lafayette, California 94549
www.lamorindasunrise.org
E-Mail Us