What a Do It Yourselfer Needs to Know about Purchasing
Purchasing for your next Do It Yourself Project.
What you need to know to purchase like a remodeler or builder.

by Jerry R. Spumberg,
- The DIY Coach NJ

It may be a kitchen with new cabinets, a bathroom renovation, finishing a basement, family room or sun room addition, expanding the house or garage, or building a deck, but it all starts off with a good plan and buying right.

Do It Yourselfers are at a considerable disadvantage purchasing goods and services when compared to a General Contractor or Builder. This article is to demystify the How and to negate some of the disadvantage that DIYers have.

The first advantage a builder or remodeler has is the experience of being the purchasing agent for many projects over years. This allows him (or her) to select products and services that relate to the price point and market characteristics of the project. The builders and remodelers then develop plans (if needed), written specifications for each item, as well as alternatives before seeking prices from several venders in each category.

Manufactures and distributors (thru trade shows, industry publications, and direct contact) continually update the builder on new products and methods for building. Suppliers update him on prices. To be successful in the industry, builders continue their education thru seminars to keep up with the changing products. They research independent product testing and rating companies to select the best products for the price. Successful professionals make sure that they have greater knowledge and are exposed to more products than their competition. This is a must if they want to stay ahead of their competition and win more construction projects by offering a higher value project at a lower price. Simply put, they need to be at the cutting edge.

The second advantage is the builder’s reputation in the industry and his rolodex of wholesale distributors and trades people. This rolodex, which often represents personal relationships, has more then one vendor in each category. In addition, if his reputation is established and exceptional, there are new companies that are looking to win the builder’s business. Those who have established business relationships with him in the past compete against each other as well as those looking to establish him as a new customer. This competition between competent contractors and suppliers drive overall project costs down.

The third advantage builders have over Do It Yourselfers is the use of specifications to solicit competitive proposals. Builders create specifications with plans when needed as part of a request for a proposal. This requires all bidders to price the same things. A bidder may offer an alternate but equal product, but must specify it as such. Builders, when hiring trades or doing business with vendors, use their own contracts to supercede the vendor’s attached proposal. This override of the vendor’s proposal is to protect the builder’s and client’s interests. It insures that the agreement between parties meet all of the builder’s performance requirements of the vender or trade.

The fourth advantage builders have is that they spend the time in the details that include checking references and holding parties accountable in the trade contract. The supplier or trade contractor gives professional builders better prices because they expect the project to be managed properly and efficiently. This means coordinating trades that can be in conflict with others, thus resolving things before they become issues. Issues that are not resolved quickly can cost time and money for everyone. The project manager makes sure that everything is ready for the trades and suppliers as scheduled, updates them as the job progresses, and confirms with each their delivery or start dates. Builders and Remodelers that meet or exceed their financial obligation to their trades and suppliers usually get the best prices and the most cooperation from those they do business with.

The Do It Yourselfers Cost Advantage When Remodeling or Building

Your advantage as a Do It Yourselfer is that you can eliminate the overhead and profit that general contractors charge (see what those costs can be in other areas of our web site) by handling the administrative aspects of your project with some good advice. You can research products and select them based on performance and value. You can package together materials to create bulk orders so that the bidder will offer quantity discounts. You will need to learn where you can buy best and when it pays or doesn’t pay to spend the time shopping. Being a good payer, while protecting yourself, can be leveraged for better prices. It is important to understanding that the lowest price may sometimes be more costly, when quality and service are factored in. This is a painful lesson that a lot of Do It Yourselfers learn the hard way and can be avoided.

You should avoid paying 100% up front (for products such as kitchen cabinets as required by big box stores and retailers) until the product is delivered. For your information, in most cases, builders rarely pay anything up front. When they do, it’s as little as possible for products that require special ordering and have a lead time (not readily available or in stock). In most cases, they pay upon invoicing or on delivery. Trade Contractors should never be paid a substantial payment upon the execution of a contract. They may be paid for material delivered to the site that becomes the property of the owner and progress payments based on contractual requirements. You should use your contract to protect your interests.

Don’t be taken in by the hype of buying clubs that you might see on television. A non profit independent consumer magazine’s news letter of September 2007 wrote about one and I quote, “The lack of price transparency makes it hard to evaluate whether you’ll save by joining…”. Make sure you understand all of the add-on costs before you join a club. Ask yourself how much would you have to buy before you covered the joining cost and ask them what is their return policy. In many cases, you can buy from the same wholesale distributors as they do, without the cost of joining plus service charges and receive better service, delivery and return terms.

Purchasing (sometime called the buy out) makes the bidding process an important part of developing the budget. Cost can also be dependent on planning, scheduling, and day to day management. All of the above makes building and remodeling a profession that requires very specific technical knowledge, business expertise, and dedication. If you don’t have these, you will need to develop them with an expert and experienced teacher. Reading about these are helpful, but there is no substitute for experience. By doing this, you will have a project that is successful in meeting your needs and could add more value to your home then you spend on the project.

Real Estate investors and Professional building companies assign a highly experienced project manager from the beginning to the end of a project. His responsibility is to manage and oversee everything that is required to run and complete a successful project, including quality. His first and most important responsibility to his client or employer takes place when the first round of bids are obtained. He then works with the client to accomplish several goals. Analyze the cost verse value ratio when that’s an objective; is the return at sale greater then what is spent?

If cost reduction is required because the project is greater than what the client wishes to spend, the employer or client with the project manager will need to trim the budget. The strategy to reduce cost should consider other products that could be substituted, items that if eliminated would make a minimum impact, and areas that may require some redesign. The underlining goal of the strategy is to maintain or increase the cost to value ratio while meeting the budget. The project is then re-bided in all categories from several companies as well as the original bidders. The alternatives are priced as separate costs. The final bidding takes place even if the first round is in budget, Vendors are selected, and the final budget is developed. Except in rare instances, it is important to have as much of the costs obtained as possible before beginning a project. With a little guidance, you can handle the administrative side of any project. The rewarding part is not that you will know what things cost because of the transparency your involvement, but that you will be able to control them to meet your goals.

The difference between a Master Builder and a project manager is the depth of knowledge in the business of construction, the How To as well as the hands on experience. If you have a trusted friend or relative in the construction industry, they can help. They will need the proper experience and be willing to volunteer the substantial time needed from beginning to end. By using the above information you can take on the administrative roll and buy right.

I have used these methods throughout New Jersey during my four decade career as my father did before me. I still use them today coaching clients in Southern Middlesex County, Monmouth County, and Ocean County, New Jersey. With a little effort, you can too. We wish you good luck on your next project.

Our next article will discuss how budgets, contingences, and the schedule of activities are interconnected. If you wish more information, please visit our web site TheDIYcoachNJ.com.

For Immediate Release

GENERATION MORTGAGE COMPANY BECOMES BETTER BUSINESS BUREAU ACCREDITED, EARNS A+ RATING

ATLANTA, Dec. 15, 2009-Generation Mortgage Company™, America’s largest privately owned reverse mortgage retailer and wholesaler, recently became a national Better Business Bureau Accredited Business. In addition, the business has earned an A+ Rating from the BBB.

“While those of us who work for Generation Mortgage know that we offer top quality service to our business partners and our boomer and senior homeowners nationwide, the rigorous Better Business Bureau accreditation process is one more way to prove that treating our clients fairly and honestly is the primary goal of our organization,” said President and CEO Scott Peters, Generation Mortgage Company. “We’re incredibly proud to have achieved the highest rating possible upon accreditation.”

Better Business Bureau ratings are determined by a proprietary formula. The organization grades from A to F with pluses and minuses. A+ is the highest grade and F is the lowest. The grade represents the Better Business Bureau’s degree of confidence that the business is operating in a trustworthy manner and will make a good faith effort to resolve any customer concerns. Details as to any issues identified by the Better Business Bureau are contained in each organization’s Reliability Report.

Businesses that apply for Better Business Bureau accreditation undergo a detailed review and commit to abide by a set of ethical standards for marketplace conduct. After accreditation, each business is monitored for continued adherence to BBB standards.

Licensed in nearly 50 states, Generation Mortgage offers FHA-insured HECM (Home Equity Conversion Mortgage) loans. The company is an Equal Housing Lender and a member of the National Reverse Mortgage Association.

About Generation Mortgage
Generation Mortgage Company is one of the nation’s leaders in reverse mortgage lending, and a member of NRMLA (National Reverse Mortgage Lenders Association). With its sole focus on reverse mortgages, Generation Mortgage Company offers seniors “A New Generation in Reverse Mortgages™” and pledges to deliver outstanding customer service, as exemplified by its loan Servicing – Generation services all its reverse mortgage loans and does not outsource them. For more information, visit www.generationmortgage.com.

Equal Housing Lender. NMLS #1319; Arizona Mortgage Banker License #0909296; Georgia Residential Mortgage Licensee #22292; 3 Piedmont Ctr, 3565 Piedmont Road NE, Ste 300, Atlanta, GA 30305; Licensed by the Department of Corporations under the California Residential Mortgage Lending Act; In CT, licensed and DBA as Generation Reverse Mortgage, Inc.; Illinois Residential Mortgage Licensee # MB.6760368; Kansas Licensed Mortgage Company License #MC.0001660; Massachusetts Mortgage Lender-ML3240; ME License #SLM9169; Licensed by the Mississippi Department of Banking & Consumer Finance; Licensed by the New Hampshire Banking Department as Generation Mortgage Company d/b/a Generation Mortgage Company, Inc; Licensed at 51 JFK Parkway, Suite 114, First Floor West, Short Hills, NJ 07078, Phone # 973-218-2418 by the New Jersey Department of Banking and Insurance; NV – 800 N Rainbow BLVD, Ste 170, Room 164, Las Vegas, NV 89107, Phone #702-948-5031; Licensed by the Pennsylvania Department of Banking; Rhode Island Licensed Lender; TX SML License #68405, 27030 Masters Pkwy, Spicewood, TX 78669; Licensed by the Virginia State Corporation Commission #MC-4832; Also conducts business in AL, AR, CO, DC, DE, FL, HI, IA, LA, MD, MI, MN, MO, MT, NC, ND, NE, NM, OH, OK, OR, SC, SD, TN, UT, VT, WI, WV, WY. Not all products and options are available in all states. Terms subject to change without notice. ©2009 Generation Mortgage Company. All Rights Reserved.

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The kids sit near the side door and watch the construction.

As you may know Saide and I decided to put a second floor on our home.  We have bank accounts with Chase/Wamu so when it came time to get a home loan my first thought was to use them.  We went to the WAMU located on 312 Forest Ave, Paramus, NJ to apply for a home loan in July 2009.  We are fortunate that we are in a good place financially.  We paid off the mortgage about a year ago so we own our property, we have a dual income household, and no debt.  Perfect home loan candidate, right?Well we started working with Angelo Bartolomeo (201-519-9675) in July.  My husband spoke to him at the end of August and was told that the loan was in underwriting but things were moving along nicely.  On September 11th, I called to follow-up and I was told Angelo was on vacation and would be back after 9/17.  The person who answered said they would follow-up regarding my loan and get back to me.  I then called back again on 9/21 after a full week of not hearing from anyone.  Rosa answered and again I was told that Angelo was on vacation.  When I challenged this because I was told he would be back by 9/17, Rosa promised someone would call me right back.  An hour later, she called back and told me Angelo  Barolomeo had left the company.  She told me to contact Sallie Cusano at 845-242-2090.  I then called Sallie on 9/21, 9/22, 9/23, and 9/24.  On 9/22 I called the local branch back and told them that Sallie was not returning my phone calls.  Rosa told me to contact Ryan Gallagher (201-934-1436) because he worked for Sallie.  I then called Ryan on 9/22, 9/23, and 9/24.  Finally, I called the branch and Rosa answers (dear Rosa).  I asked to speak to a manager.  I was told Fiorella was busy with someone else but that they promised someone would call me back about my loan.  That day I received two voicemails.  The first was from Ryan at 11:57am saying he had gotten my messages and that he was looking into the status of my loan.  He said he did not have access to Angelo’s files and he had to go the long way to get any information.   He said he would ”reach back” to me.  The second from Sallie at 12:05pm saying she was returning my phone.  So after hearing that Ryan is looking into it, I wait.  On Monday, September 28th (three days later) I call them back to find out the status.  Again no one returns my phone calls.  So on 9/29, I try to call again and this time I leave a message asking if I should be speaking to another bank because I’m obviously not a valued Chase/Wamu customer since no one returns my phone calls.  I finally get Sallie on the phone and she tells me that the loan was denied in August and I should have received a denial letter.  I told her we never received a denial letter and she said a copy would be re-sent.  She also said we would receive a partial application fee refund.  After speaking to Sallie, Ryan calls me back and basically told me I should try working with one of the smaller banks and there’s nothing that Chase can do for me.  I tell him that I never received our denial letter and to please make sure that we are sent a copy. 

So here I am on November 2nd  and I have not received the denial letter or the refund for the application fee.  In fact, I’ve written several letters to Chase customer services and I have yet to receive a reply.  I also left Ryan a voicemail on Tuesday and of course he did not call back.  I also sent him an email and I did receive a nasty reply in which he said I should speak to Sallie about my refund and letter.  No surprise that Sallie has yet to return my phone call.
 
This fiasco has had a severe implications on our family- we were naive and believed that we were ideal loan candidates so we began the construction on 9/14.  Because the home is under construction there isn’t a bank in the country that will give us a loan.  I’m not blaming the bank for my stupidity here.  I admit we were wrong for having started construction without finalizing the loan.  What I am mad about is the complete lack of customer service.

What has happened to the thing called customer service, Chase?  Why did it take almost a month to find out we had been denied?  If someone would have returned our phone calls in early September we could have avoided this situation by seeking additional loan options.  Could they not have had the decency to return my phone calls?At this point Saide and I have found a financial alternative to our situation (although not ideal).  What do I hope to gain from sharing this?  Well I hope I can prevent someone from working with Chase/Wamu Bank since they completely lack professionalism and customer service.  I’d also like to get my money back.

So feel free to share my story or feel free to give Sallie a call (845-242-2090) and ask for my refund

By GRETCHEN MORGENSON
Published: October 24, 2009

FOR decades, when troubled homeowners and banks battled over delinquent mortgages, it wasn’t a contest. Homes went into foreclosure, and lenders took control of the property.

On top of that, courts rubber-stamped the array of foreclosure charges that lenders heaped onto borrowers and took banks at their word when the lenders said they owned the mortgage notes underlying troubled properties.

In other words, with lenders in the driver’s seat, borrowers were run over, more often than not. Of course, errant borrowers hardly deserve sympathy from bankers or anyone else, and banks are well within their rights to try to protect their financial interests.

But if our current financial crisis has taught us anything, it is that many borrowers entered into mortgage agreements without a clear understanding of the debt they were incurring. And banks often lacked a clear understanding of whether all those borrowers could really repay their loans.

Even so, banks and borrowers still do battle over foreclosures on an unlevel playing field that exists in far too many courtrooms. But some judges are starting to scrutinize the rules-don’t-matter methods used by lenders and their lawyers in the recent foreclosure wave. On occasion, lenders are even getting slapped around a bit.

One surprising smackdown occurred on Oct. 9 in federal bankruptcy court in the Southern District of New York. Ruling that a lender, PHH Mortgage, hadn’t proved its claim to a delinquent borrower’s home in White Plains, Judge Robert D. Drain wiped out a $461,263 mortgage debt on the property. That’s right: the mortgage debt disappeared, via a court order.

So the ruling may put a new dynamic in play in the foreclosure mess: If the lender can’t come forward with proof of ownership, and judges don’t look kindly on that, then borrowers may have a stronger hand to play in court and, apparently, may even be able to stay in their homes mortgage-free.

The reason that notes have gone missing is the huge mass of mortgage securitizations that occurred during the housing boom. Securitizations allowed for large pools of bank loans to be bundled and sold to legions of investors, but some of the nuts and bolts of the mortgage game — notes, for example — were never adequately tracked or recorded during the boom. In some cases, that means nobody truly knows who owns what.

To be sure, many legal hurdles mean that the initial outcome of the White Plains case may not be repeated elsewhere. Nevertheless, the ruling — by a federal judge, no less — is bound to bring a smile to anyone who has been subjected to rough treatment by a lender. Methinks a few of those people still exist.

More important, the case is an alert to lenders that dubious proof-of-ownership tactics may no longer be accepted practice. They may even be viewed as a fraud on the court.

The United States Trustee, a division of the Justice Department charged with monitoring the nation’s bankruptcy courts, has also taken an interest in the White Plains case. Its representative has attended hearings in the matter, and it has registered with the court as an interested party.

THE case involves a borrower, who declined to be named, living in a home with her daughter and son-in-law. According to court documents, the borrower bought the house in 2001 with a mortgage from Wells Fargo; four and a half years later she refinanced with Mortgage World Bankers Inc.

She fell behind in her payments, and David B. Shaev, a consumer bankruptcy lawyer in Manhattan, filed a Chapter 13 bankruptcy plan on her behalf in late February in an effort to save her home from foreclosure.

A proof of claim to the debt was filed in March by PHH, a company based in Mount Laurel, N.J. The $461,263 that PHH said was owed included $33,545 in arrears.

Mr. Shaev said that when he filed the case, he had simply hoped to persuade PHH to modify his client’s loan. But after months of what he described as foot-dragging by PHH and its lawyers, he asked for proof of PHH’s standing in the case.

“If you want to take someone’s house away, you’d better make sure you have the right to do it,” Mr. Shaev said in an interview last week.

In answer, Mr. Shaev received a letter stating that PHH was the servicer of the loan but that the holder of the note was U.S. Bank, as trustee of a securitization pool. But U.S. Bank was not a party to the action.

Mr. Shaev then asked for proof that U.S. Bank was indeed the holder of the note. All that was provided, however, was an affidavit from Tracy Johnson, a vice president at PHH Mortgage, saying that PHH was the servicer and U.S. Bank the holder.

Among the filings supplied to support Ms. Johnson’s assertion was a copy of the assignment of the mortgage. But this, too, was signed by Ms. Johnson, only this time she was identified as an assistant vice president of MERS, the Mortgage Electronic Registration System. This bank-owned registry eliminates the need to record changes in property ownership in local land records.

Another problem was that the document showed the note was assigned on March 26, 2009, well after the bankruptcy had been filed.

Mr. Shaev’s questions about ownership also led to an admission by PHH that, along the way, it had levied an improper $450 foreclosure fee on the borrower and had overcharged interest by an unstated amount.

John DiCaro, a lawyer representing PHH at the hearing, was in the uncomfortable position of having to explain why there was no documentation of an assignment to U.S. Bank. He did not return a phone call seeking comment last week. Ms. Johnson, who couldn’t be reached for comment, did not attend the hearing.

According to a transcript of the Sept. 29 hearing, Mr. DiCaro said: “In the secondary market, there are many cases where assignment of mortgages, assignment of notes, don’t happen at the time they should. It was standard operating procedure for many years.”

Judge Drain rejected that argument, concluding that what had been presented to the court just did not add up. “I think that I have a more than 50 percent doubt that if the debtor paid this claim, it would be paying the wrong person,” he said. “That’s the problem. And that’s because the claimant has not shown an assignment of a mortgage.”

Mr. Shaev said he was shocked when the judge expunged the mortgage debt.

“We are in uncharted territory,” he said. “Right now I am in bankruptcy court with a house that has no discernible debt on it, yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won’t give a clear title on it.”

Among the next steps Mr. Shaev said he would take is to file an amended plan or sue to try to get clear title to the property.

Late last week, PHH appealed the judge’s ruling. But Mr. DiCaro and PHH are in something of a bind. Either they will return to court with a clear claim on the property — including all the transfers and sales that are necessary in the securitization process — or they won’t be able to produce that documentation. If they do produce it, they will then have to explain why they didn’t produce it before.

Oh, what a tangled web these mortgage lenders weave.

According to the Newark, N.J. office of the FBI, David Findel, from Colts Neck, N.J., surrendered himself to the FBI and made his initial appearance before Judge Mark Falk, regarding a complaint that alleges Mr. Findel, obtained more than $11 million from secondary market lenders through this scheme.

David Findel, the president and CEO of Morganville, N.J.-based Worldwide Financial Resources, was released on a $1 million secured bond.  

Findel expanded Worldwide Financial Resources, originally a financial planning company, to include home mortgage origination and banking services. This allowed Worldwide Financial Resources to both originate and fund mortgages for its clients by borrowing money from a warehouse lender. To repay the lender, Findel would resell each mortgage the company originated in the secondary mortgage market.

Early in 2008 Worldwide Financial Resources began experiencing a liquidity crisis.  Findel allegedly conducted a scheme to defraud mortgage banks by reselling the same mortgages to multiple financial institutions. Once Worldwide Financial Resources sold a mortgage, Mr. Findel would allegedly create a second set of fraudulent mortgage documents and resell the same mortgage to a different secondary market lender.

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