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Home owners experiencing mortgage stress should be wary of a new breed of online entrepreneurs who are offering quick money for homes.

For instance, Express Homebuyers, advertises on its website for houses where owners are behind in repayments, facing repossession, or need debt relief. It offers online quotes and promises owners the sales take “days, not months”. The proceeds, it says, are “free” of the selling fees normally paid to real-estate agents.

But the federal Government is concerned the new trend could lead to sharks exploiting vulnerable homeowners who are under pressure, resulting in sales at below market value.

Clearly, such organizations are targeting the most vulnerable – people struggling to make ends meet. Their website targets people behind in their repayments, people who have lost jobs and people getting a divorce.

Express Homebuyers even go one step further offering $1000 for tip-offs on potential sales.

Marquette Turner advise anyone who is struggling to first contact their mortgage provider or speak with not-for-profit advisory organizations.

Express Homebuyers carries the same name as a US company that operates a similar scheme and has profited from the meltdown in the American housing market resulting from the sub-prime mortgage crisis.

It says it acts on behalf of a network of private investors and is seeking homes in the Sydney region, the Blue Mountains and Central Coast.

“The Express Homebuyers way is to give you a fast house sale with no hassles so that you can move on with your life,” the company says. It offers a post office box in St Ives as its address

Home repossessions in Sydney have more than doubled in the past three years to more than 3500 a year, according to Supreme Court figures.

Simon Turner

As recently reported by the ABC following an imaging study, stress from high house prices and sporting failures is shrinking Sydneysiders’ brains, compared to those of their counterparts in Melbourne.

The study, published in the journal Australasian Psychiatry, is the first scientific study into the long-standing rivalry between Australia’s most populous cities.

A team of neuropsychiatrists at the Royal Melbourne Hospital, scanned the brains of 20 Sydneysiders and 20 Melburnians to look for differences in brain structure.

In their study, the team leader Dr Velakoulis and his team used magnetic resonance imaging, or MRI, to study the thickness of grey matter, or ‘cortical thickness’, of the anterior cingulate cortex.

Brains This is a part of the brain that helps control decision-making and moods.

Without knowing which city’s residents they were imaging at the time, the researchers found that residents of Melbourne had a statistically thicker layer of grey matter.

The researchers corrected for age, as the older you get the thinner your grey matter is likely to be. Additionally the researchers also controlled for intracranial volume, since the taller someone is the bigger their overall brain will be,yet still the thickness was still thicker in Melbourne than in Sydney,” says Velakoulis.

FACT: Stress shrinks brains

The researchers wanted to test the theory that the differences between Sydney and Melbourne brains were from stress, which evidence suggests can cause a thinning of the grey matter in the anterior cingulate cortex.

They first looked at the influence of financial stress by calculating the median house prices in each city and correlating this with cortical thickness. The median property price in Melbourne in 2005 was A$347,000. But it was A$517,000 in Sydney.

The team concluded that the greater the median house price the less the cortical thickness.

Correlations: Sporting and academic success

The researchers also looked at how sporting and academic success differed between Sydney and Melbourne.

They found that since 1960, Melbourne has had 37 Australian Football League (AFL) premierships whereas Sydney only had one, in 2005.

This was when the Sydney Swans defeated the West Coast Eagles, says Velakoulis, who declares a possible conflict of interest as a Sydney Swans supporter.

Melbourne also has had more National Health and Medical Research Council (NHMRC) grants awarded to its researchers than Sydney, the researchers found.

The higher house prices and relatively poor sporting and academic performance all adds up to stress that is likely to be responsible for the thinning grey matter in Sydney brains, they say.

Competing hypotheses

The Marquette Turner team, however, query such conclusions, particularly given the only sporting focus being on AFL – there are not only many other football codes such as League and Union (both which would give negative support to Melbourne), there are numerous other team sports. Additionally, what of the individual sports such as Tennis, Horse Racing, Golf etc.

We suggest analysis could go one step further and look at those Melbourne and Sydney siders that are both academics AND sports players.

We could also look at this analysis from a different angle and suggest that as the brain matures it gets rid of unnecessary connections and becomes more efficient. It could be that Sydneysiders are much more mature and refined and, as one member of the team suggests (a Sydney-sider no less!) they have gotten rid of unnecessary brain connections but therefore have a thinner but more efficient cortex.

What happens next?
The team are hoping to further test this hypothesis with money from the AFL.

Marquette Turner question whether not only this continued focus on AFL may scew further results, but we also wonder whether the fact that Melbourne house prices are catching up to Sydney’s could in fact be leading to a shrinkage in Melburnian brains.

And finally, Marquette Turner are quietly breathing a sigh of relief given that our team covers both Sydney and Melbourne. 🙂

Simon Turner

PS. For those sceptical amongst you, the team consistsed of 6 Melburnians and a single Sydneysider.

Michael Marquette of Marquette Turner writes in his Special Report: The biggest post – war crisis that Australia has faced is almost upon us. We have all heard about the aging population and the need for Superannuation to lessen the burden on taxpayers for pensions and other welfare payments. The terrifying statistic that very few people know is that close to 40% of the Australian workforce will reach retirement age in the next 3-5 years.

Unemployment levels in Australia are already extremely low so where are we going to find the people necessary to fill the positions vacated by our retirees? The Australian birth rate is still not even close to the level required to keep up with the pace that baby boomers will leave the workforce.

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When put into context the ramifications are enormous. From a skills perspective Australia is struggling to keep up with current requirements and we are already looking abroad for those with the skills needed to keep our economy moving. The Sydney real estate market is very reliant on immigration to maintain demand, thus prices – but where does this leave the rest of the country? The fact is that most immigrants to Australia choose to settle in or around Sydney and as more and more skilled workers are required from overseas the general trend toward increased housing demand in Sydney should continue. Two areas of concern when looking at the effect of the massive reduction of the size of the workforce in this country:

1) How much money will be taken out of Managed Funds for Superannuation payments?

2) Have we adequately planned for infrastructure like rail and roads to attract migrants to areas outside of Sydney?

A massive reduction in the amount held in Managed Funds could have an enormous impact on the stock market as money is withdrawn by the institutional investors. This could have an enormous impact on the capacity of companies already struggling with the skills shortage to continue growing domestically. We may find that Australian companies look at basing themselves abroad to take advantage of lower costs, increased market size and increased labour force.

I have mentioned in previous Marquette Turner e-magazines that Regional cities like Newcastle and Wollongong have been largely ignored. Neither have truly International Airports, nor do they have “Bullet Trains” to connect them to Sydney. How attractive will these cities be to skilled migrants or Australian Companies looking to invest? The simple answer to this is that Regional Australia will suffer greatly due to the neglect of successive Governments.

With the credit crunch making it harder for people to obtain credit to purchase property, retirees reducing the amount in managed funds and the total size of the workforce the outlook is extremely worrying for Australia. How to maintain demand for property and thus maintain pricing in Regional areas is just one of the questions yet to answered. Local Government can only do so much – we need a unified strategy from the Federal and State Governments and we need it now before it’s too late.

Michael Marquette

Here are 10 tips to avoid defaulting on your mortgage, and ultimately preventing repossession and foreclosure.

1. Don’t ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your home. If you are behind on your mortgage payments or have received notice that you are behind in payments, you need to contact your lender quickly and ask to speak with a loss mitigator. Typically, your lender will mail you a “loan workout” package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.

2. A smart simultaneous step is to contact a nonprofit counseling agency that may be aware of programs that could help you, may have personal knowledge of your lender’s flexibility in terms of available options, and may know the best person to contact with your lender. Time is of the essence, so don’t let this step slow the process more than a few days.

3. At the same time, find out what your home is worth so you will know how much equity you have (or if it’s worth less than the mortgage balance). If you have sufficient equity, selling the home if necessary may not be the worst idea if home values are dropping: better to sell it than to lose it!

4. Avoid fee-based for-profit mortgage prevention companies or counseling agencies – many are rip-offs that provide few if any meaningful services for distressed homeowners, and you can get quality counseling for free. Also be wary of investors who advertise offers of immediate cash for your home. Many of them are also unethical or outright crooks, seeking to strip home equity through a variety of techniques. If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property. Never sign any legal document without reading and understanding all the terms and getting professional advice. Such scams should be reported to the ACCC.

5. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes involved.

6. Foreclosures are expensive for lenders, so they are usually willing to listen to reasonable ideas that can reduce their potential losses, such as restructuring the loan at lower rates or accepting a “short sale,” which occurs when the lender agrees to let the owner sell the home for less than the mortgage balance, and agrees to forgive the shortfall and not downgrade the homeowner’s credit. Your willingness to cooperate is a negotiating tool if your suggestions are likely to be less expensive than a foreclosure action.

7. Insolvency or Bankruptcy is an option, particularly if your lender is inflexible or your mortgage is on a second home or a rental property.

8. Even if you are current on your mortgage payments but have a fixed loan, thoroughly review your mortgage documents, even if your reset date is many months in the future. Check the reset interest rate or formula for determining the rate and any future rate resets, and see if there are mortgage prepayment penalties.

9. If you think you could have trouble keeping up with the new payments on variable mortgage, consider refinancing into a fixed rate mortgage if possible. Some lenders may be willing to forgive all or part of a prepayment penalty if that payment presents a problem and you qualify for their fixed rate product.

10. Don’t assume that you are immune to a foreclosure in the future. Don’t assume that a mortgage lender’s underwriting process will assure that you’ll not be approved for an unaffordable mortgage in the future. When lenders discovered that they could package and very profitably sell risky loans to investors, they became was less focused on responsible underwriting because they weren’t at risk if they sold the loans. Sound underwriting practices began to deteriorate, eventually causing the current mortgage meltdown. This could happen again.

Simon Turner

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