As Wall Street's manic mood persists and cash-strapped families struggle to keep their homes, Matt Battiata realizes his role in the real estate industry is heading in a new direction.
In addition to performing the duties as Realtor, broker-in-charge and CEO of Battiata Real Estate Group, a Carlsbad-based firm founded in 1999 that employs 15 staff members and serves San Diego and south Riverside counties, Battiata has started dispensing free advice to distressed homeowners affected by the mortgage crisis.
"My job has really changed. ... I'm helping people avoid going into foreclosure," Battiata, 40, said during a recent interview. "When the market was really red-hot, it was all about how much money people could make. ... Now, everyone knows the market is obviously not good. They need the best agent they can find, and they're in trouble. So I look at my job now as being more of a counselor."
Considering that RealtyTrac reported 56,954 properties throughout California received foreclosure filings in October, guidance may be exactly what anxious homeowners need. This is one reason why Battiata recently launched the San Diego Mortgage Help Line. The free service counters all the misinformation on the Web, and counselors -- not sales reps -- provide the public with neutral recommendations about how to prevent foreclosures from occurring.
"You can go on the Internet and read conflicting information," he said. "You don't know what's right and wrong. People have no idea what their options are. In the face of paralysis by analysis, they end up tossing their keys on the counter, and that's why homes go into foreclosure. I'm out there saying, 'Look, you have options.'"
The response to the hotline, according to Battiata, has been "at times overwhelming."
"The number of calls we're getting is even more than I thought we'd get," he said. "People say, 'Thank God. At least I know what I can do.' ... If people knew their options, there would not be another foreclosure."
Loan mods and short sales
One alternative to the dreaded "f" word includes a loan modification, a.k.a. loan mod. The help line's Web site defines this process as an agreement in which the lender will cut the loan's interest rate for an extended period so borrowers can make their monthly house payments. Securing a loan modification, however, is tricky, and once processed, the home holds zero equity for at least seven to eight years.
"There are companies out there, many of which are law firms, that have jumped on the bandwagon," Battiata warned. "These companies say, 'Hey, pay me and I can modify your loan and get a short balance dropped to a current appraised value. It's a complete scam."
For homeowners who want to ditch their digs as soon as possible, Battiata suggests they do a short sale.
"A lot of agents don't want to touch (short sales)," he said. "They're a lot of work and rarely close escrow. In fact, less than 20 percent close escrow because agents don't know how to do them. We close 100 percent of them."
A short sale is an agreement in which the lender will reconcile the mortgage debt owned on the property for less than the full balance. As a result, homes retain their market value and sellers avoid going into debt, thereby saving their credit.
"A lot of people in this situation don't want the house," Battiata said. "They wonder, 'Why are we killing ourselves to make a payment on a house that we're $300,000 upside down on?' That's why a short sale is way better. I'm beating the drum trying to get people to understand that it's a win-win for everyone."
Battiata began doing short sales about three years ago when the market showed signs that it had reached its peak. Although he encountered resistance from banks early on and his company took a hit financially, diligence eventually paid off. He declined to provide revenue or income figures, but the group has managed to turn a profit even as the industry sputters, and a new office is slated to open in Las Vegas next year.
"(Short sales) were very difficult," Battiata admitted. "Banks were in denial. They believed the market wasn't dropping. ... I thought that eventually these banks were going to have to do short sales because they were going to get overwhelmed by foreclosures."
Beleaguered may be an understatement.
Last month, the MDA DataQuick research firm indicated 1,144 foreclosures marred San Diego County's real estate market -- a number that potentially could increase depending on how lenders, Congress and the new administration react to the lingering economic crisis later down the road. Furthermore, there is a glut of homes for sale in the county -- nearly 24,000 by Battiata's estimations.
"As you can imagine, we're a little gun-shy about over-lending," he said. "Foreclosures are what's killing our local market. I talk to people in this situation every day. Their credit is destroyed; they can't buy another home for five to seven years; their FICO scores go down 400 points; and they still may have a lender going after them for deficiency. For a family having to go through foreclosure, it's a nightmare."
Yet at some point, the nightmare on Main Street must end.
"We are definitely not at the bottom; however, it's all relative," Battiata said. "The market's going to keep continuing to drop. ... I think 2011 is the bottom of the market. The reason I call it the bottom is that's when it will start to recover."
And once it does, the aspiring vintner and former tall ship captain can make a few toasts to his crew with his award-winning homemade wines.
Iatarola is a San Diego-based freelance writer.