Folsom’s Inventory Status
October 23rd, 2009 categories: Folsom CA, Foreclosures, Home Auctions, Short Sales
Current Statistics for Oct 2009
As Halloween approaches it appears that some of the homes on the block will have the porch light out for reasons other than avoiding tricker treaters.
Inventory is down in Folsom CA and short sales and foreclosures currently represent just under one half of all residential home sales. The spookiest information I found was the amount of bank owned homes (REO’s) in Folsom which currently stands at 896! According to Realist there are currently 232 pre-foreclosures in Folsom which means that the homeowners are behind in their mortgage payments and a Notice of Default (NOD) has been filed. Their are also 192 homes that are set to go to auction. I usually see most of these homes go back to the bank because buyers are leery of purchasing a home without full disclosures available on the condition of title.
The latest numbers for Sept. 2009 show that there were 64 homes sold in Folsom CA, of which 14 were bank owned. Short sales accounted for 12 homes sold which is encouraging because most likely those homes were still occupied and maintained up to the sale. The rest of the properties were fair market sales which include investors selling previous bank foreclosures.
There is some positive news on the horizon which includes a possible extension of the $8000 tax credit for buyers. The discussion includes allowing all buyers to participate so that could help those move up buyers re-examine their options. One other piece of good news are the current interest rates which are still hovering at the 4 3/4% to 5 1/2 % range. These are not the frightening rates that were available when I purchased my first home…they were around 11%…now that’s scary!
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Lenders Wise to Short Sale Flippers
September 1st, 2009 categories: Finances, Real Estate, Short Sales
Don’t Fall for this Scam
Short sales are here to stay and many agents who previously wouldn’t touch them are realizing they now ARE the current market. For those of you who do not know what a short sale is I’ll briefly explain: When a lender agrees to take less than the amount owed on the loan or “short” from the buyer. The seller does not receive any money, is not liable for the difference and the buyer gets the house free of any liens. My blog today is focusing on the lenders and their perspective when it comes to approving a short sale and transferring the title to the new buyer.
There are a number of “investors” who are purchasing short sales but never intend to hold on to the property. There are also a number of desperate real estate agents who are not making it and have agreed to work with these investors. Let me explain how they set up these fraudulent transactions.
Real estate agent A lists a home for sale advertising it as a short sale. Investor Joe submits a low-ball offer with the listing agent to the bank. The agent continues to advertise the property for sale with the intent of finding a buyer who is willing to pay more than the investor. The investor gets an approval from the bank, sells the property to the new buyer and makes a tidy sum on the difference. The only problem with this scenario is that it’s fraud. Don’t forget the seller signed a contract to pay back the loan therefore any money made from the sale of the home is rightfully due to the bank until the loan is paid in full.
The interesting part is that the banks are finally getting hip to what is going on and including language on the approval letters against this practice. I just received one such approval for a short sale and the lender clearly outlines how the transfer of title is to be conducted and prohibits any third parties from receiving any funds. This implies that if a seller is aware of any such transaction that they can be held liable for fraud. That’s a nasty little word and in all honesty I don’t ever want to be involved in any litigation that includes that word.
So how do you beware of unscrupulous agents? The first rule of thumb is to check out the agents license with the Dept. of Real Estate (DRE) and see if there are any previous disciplinary actions against him. You can also go to the local real estate board and check for complaints against the agent. If the agent is not a member of the local board then you have no recourse should he do something unethical.
Remember that a short sale is STILL A SALE and you are hiring someone to represent you in this real estate transaction. Your agent should be able to tell you what to expect and explain the process clearly. If they seem a bit fuzzy then you know they are not experienced. If they tell you they have an investor they are working with, ask them to explain the process to you, and if it sounds like what I just outlined then beware of fraud. You are hiring the agent to represent you so cover yourself and hire someone with integrity to represent your interests. The old adage is true: You can delegate responsibility but you can’t give it away.
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Distressed Property Solutions for Folsom Lake Homes
June 11th, 2009 categories: Folsom Lake Homes, Foreclosures, Loan Modifications, Short Sales
Seven Myths of Short Sales Exposed
Having just completed my designation for the Certified Distressed Property Expert (CDPE) I wanted to share more about short sales and expose some myths that you might have heard. The Distressed Property Institute recognized the need to train real estate agents to handle the current crisis and has received overwhelming approval by the National Association of Realtors in endorsing this certification. The president of Remax currently sits on their board and encourages all agents to obtain this designation.
Myth #1 -Foreclosing is easier than a Short Sale
The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure. There are three pre-requisites needed to qualify for a short sale:
- 1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
- 2. Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
- 3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
Myth #2 – You Need to Miss Payments to Negotiate a Short Sale
This was the way it used to be but today lenders are looking for a verifiable hardship. If you have a monthly cash flow shortfall, a pending shortfall and show you are insolvent you meet these three requirements. If you believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options.
Myth #3 – There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure
This probably hurts homeowners the most. Many people do not realize that foreclosure is a process, and that there is time to make decisions. The foreclosing party-in most cases a lender-can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract.
Myth #4 – Listing a Short Sale is Embarrassing
Recent estimates show one out of five homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution. In our area we are seeing up to 70% of all listings on the MLS in a short sale status.
Myth #5 – Short Sales Never Get Approved
This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process. Professionals who have the CDPE Designation are fully trainied in methods to help homeowners in distress and process short sales.
Myth #6 – Banks are Waiting on a Bailout and Not Approving Short Sales
The reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. Denying a short sale in the hope that some future legislation would pass and pay them for losses is preposterous. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of “eliminating distressed assets through modification or short sale.”
Myth #7 – Buyers Agents Are Not Showing Short Sale Properties
This is a myth that potential sellers hear all the time. Smart agents are getting calls from buyers who say they only want to look at foreclosure and short sales. For buyers, short sales and foreclosures have become synonymous with “good deals.” Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.
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Related articles:
http://folsomlakehomes.com/2009/05/06/foreclosures-fixer-scams/
http://folsomlakehomes.com/2009/04/28/short-sales-impact-on-credit-scores/
http://folsomlakehomes.com/2009/04/14/california-prevention-act/
http://folsomlakehomes.com/2009/02/16/loan-modifications-vs-short-sales/
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Deal of The Week
June 1st, 2009 categories: Folsom CA, Investors, Real Estate, Short Sales
3bed/2bath in Folsom CA
Whenever I tell someone I’m a broker the first comment is usually something like “I wish I had money to buy a house in this market” and I agree the rates are exceptional, the prices in our area are down and the selection is pretty good from a buyer’s perspective. The next question is usually something along the lines of: “Do you have any good deals?” And that’s when I realized that offering a deal of the week might not be such a bad idea…so here goes!
For you investors or first time buyers I do have a deal and it’s currently the 3rd lowest priced single family home in Folsom CA. Located at 205 Fargo Way in Folsom CA the gross living area is 1316sf and the lot size is .176 acres. The kitchen is original but there is an addition that opens into the expanded family room. The backyard has mature landscaping and there is a 2 car attached garage. The hall bath has been redone and there is pergo flooring in the main areas.All of the work required to close escrow is in place and although this is a short sale the approvals are in the file and this is ready to cross the finish line.
My goal is to offer a deal of the week in our geographic area so that investors and first time buyers can have a heads up on finding a great home before it goes pending sale. There are others in the towns surrounding the lake and if you’re looking to find something specific you can enroll to receive properties emailed directly to you the minute they go live on the MLS. Given the low interest rates and additional tax incentives it’s a hard combination to find so now is the time to take advantage. One more thing…no one is going to ring a bell to let everyone know we’re at the bottom…it only happens in hindsight.
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FREE Mortgage Rights Workshop
May 11th, 2009 categories: Elk Grove, Loan Modifications, REO, Real Estate, Short Sales, Special Events
Legal Forum for Homeowners in Crisis
This Tuesday, May 12th at the Elk Grove Community Library there will be a seminar hosted by two local attorney’s who specialize in real estate mortgage matters. The most impressive part is that it’s FREE and one of the speakers, Davie Pereira is a “court qualified expert in mortgage finance.”
The reason I am promoting this seminar is because as a real estate broker I am not afraid to ask the tough questions and to defer to the experts when I don’t know what I don’t know. I’ve met with Mr. Pereira and I believe his knowledge of real estate mortgage law is impressive and his willingness to share his expertise with the public is refreshing.
According to the flyer there are no commercials for his or his companies products and there will be a question and answer session after the presentation. Additionally he has told me that he does offer a free consult so if you have further questions or don’t want to discuss your situation in a public setting that is an alternative solution.
You must pre-register at 916-275-0907as seating is limited and if you have any questions concerning mortgages, credit, foreclosures, bankruptcy or other financial questions I would advise you write them out and bring them with. Opportunities for the public to ask relevant questions of mortgage professionals are rare and given his knowledge of contracts any insight he might offer is well worth the time spent.
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Related articles:
http://folsomlakehomes.com/2009/05/06/foreclosures-fixer-scams/
http://folsomlakehomes.com/2009/04/28/short-sales-impact-on-credit-scores/
http://folsomlakehomes.com/2009/04/14/california-prevention-act/
http://folsomlakehomes.com/2009/02/16/loan-modifications-vs-short-sales/
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Foreclosures Fixer Scams
May 6th, 2009 categories: Foreclosures, Real Estate, Short Sales
FTC Cracks Down On Rescue Scams
A bit late but better than never. Peggy Twohig, the Associate Director (Division of Financial Practices) for the FTC, spoke today before the House and introduced their plan to curb the schemes of fraudulent companies taking advantage of homeowners.
Apparently over the past year there have been eleven cases brought forth against companies who have defrauded uninformed consumers. What this means to you and me is that you now have somewhere to go to find out what questions to askto verify if someone is legitimate or not. Hope Now Alliance is a good place to start to educate yourself about the process and even offers Free counseling.
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Related articles:
http://folsomlakehomes.com/2009/04/28/short-sales-impact-on-credit-scores/
http://folsomlakehomes.com/2009/04/14/california-prevention-act/
http://folsomlakehomes.com/2009/02/16/loan-modifications-vs-short-sales/
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Short Sales Impact on Credit Scores
April 28th, 2009 categories: Foreclosures, Loan Modifications, Real Estate, Short Sales, Taxes
How the credit agencies are reporting short sales
At today’s realtor tour meeting our speaker, a former owner of the Money Store, offered some information about the impact short sales are having on seller’s credit scores. According to his statistics a short sale affects credit by reducing a seller’s FICO score on average 80-100 points. In contrast a foreclosure or bankruptcy impacts the score between 250-280 negatively. It’s obvious from this information why a homeowner should pursue a short sale but I would caution that getting your home on the market at the first sign of distress is a must for a successful short sale.
Another bit of important information is the impact a short sale will have in terms of taxes. The Mortgage Debt Forgiveness Act of 2007 states that non-recourse money (original purchase money) is a non-taxable event for sellers of homes sold from Jan 2007 until Dec 2012. California has not to my knowledge extended this beyond 2009. This is not so with recourse money IE: equity lines or refinances. However, if you took out a loan to put in a pool or landscape and you find yourself in a situation where you have to short sell you might be able to avoid paying taxes on the borrowed money IF you can produce receipts. Of course talking with a CPA is always one of the first things I recommend to my clients.
Talking with a knowledgeable Realtor is your first line of defence and can offer you a dignified exit during a stressful time in your life. If you would like more information or need to speak with me please call and let me explain your options before things snowball and get out of control.
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California Prevention Act
April 14th, 2009 categories: Foreclosures, Loan Modifications, Real Estate, Short Sales
AKA: Extend the moratorium on Notice of Default filings
There’s been a lot of talk about the extension of the Notice of Default (NOD) filings by the senate bill 1137 passed this February and it’s impact on the housing crisis in California. According to the report it extends the filing of the NOD’s (Notice of defaults)by 90 days so it seems that homeowners will gain an additional 3 months before they hear from their banks.
I’ve heard both sides of this argument and frankly don’t know which side I’m inclined to favor. Some folks claim that it will keep a flood of homes from hitting the market all at once. Others say it will prolong this down market and we should just let the market adjust itself without meddling in it. Given the amount of short sale business that I’ve been doing lately I’m in favor the freeze because it allows us Realtors to get in front of the banks with our listings a bit faster. Short sales and REO’s (bank owned) are driving this marketand with the next wave of adjustments on the horizon it makes sense for the banks not to overload their already overworked loss mitigation depts.
Currently short sales are taking an average of 21-30 days for the bank to respond. Some lenders are so impacted that you cannot get them to answer a phone call. Email is not the typical mode of communication so the result is slow processing and little understanding for the plight of the homeowner, let alone buyer. So what is the solution? I counsel all parties involved to be patient…remember what Mom used to say about it being a virtue? The payoff can be very good for those who are willing to go the distance and with the delay in NOD filings you have plenty of time to get through the process without fear of the house being foreclosed on in the middle of the transaction.
If you are looking for good counsel it pays to talk with a Realtor who has been working in the short sale arena. There are attorney’s advertising for loan modifications who also provide short sale assistance but there is a big difference and that is how they get paid. Typically when you hire a Realtor to represent you in your sale or purchase the commission paid to the agent does not occur until the transaction closes. When you hire an attorney to represent you then you pay them a fee…regardless of the outcome. So be wise and understand that you will still be liable to pay the attorney even if you don’t succeed in getting a loan modification and your home needs to be sold short. It doesn’t make sense to go further into debt when your Realtor can guide you through the process. I’ve been successfully closing shorts sales and would gladly help you get through the process.
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Avoiding Foreclosures
March 11th, 2009 categories: REO, Real Estate, Short Sales
Short Sales, loan modifications and other information.
Since the government passed the new stimulus pkg there has been a lot of questions as to how much money will be devoted to helping homeowners save their homes and the reality is that very few will benefit as it stands now. The reason for that is only those loans that are government backed i.e. FHA, Fannie Mae, Freddie Mac qualify for re-structuring because they must meet the criteria outlined as a government sponsored entity(GSE). Those that do not qualify(which is the majority) are anxious to get out from under the payments so what is the best way to approach this situation? Following is an outline of some of the current methods used in California by the real estate community but please keep in mind that every situation is unique so please email me with your questions.
Short sales offer a solution to selling your home if you owe more than what it is currently worth. The way the bank sees the situation is that they stand to lose more if they don’t agree to take less than the loan balance due. The reason for that is because they will have to pay the foreclosure costs in addition to marketing your property. The banks know that the best case scenario is for them to net 85% of the sale price so a short sale profits them.
Loan modifications are few and far between. Sellers who hire an attorney to negotiate their loans are paying for a service they can handle themselves. In fact according to senate bill 1137 the banks are required to call or visit the homeowner with the express purpose of finding a way to help the homeowner keep his home. The real problem is that most homeowners don’t qualify because they don’t earn the income necessary to qualify. Additionally the GSE are for only those loans that the government insured so your first question will be what type of loan do you have? Calling your lender and finding out if you qualify for a loan modification is the best way to determine how to solve your mortgage problem.
Some people are so frustrated that they just want to walk away because they realize they will never catch up. A deed in lieu of foreclosure basically means that you mail the keys back to the lender. This isn’t really a solution and is basically the same as foreclosure but without the black mark on your credit history. Some lenders make this a difficult process and it will negatively impact your credit score so this would be a last resort. If you find yourself not able to make your house payments and don’t know what to do give me a call and let’s go over your situation. It’s never too late to figure out a solution.
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Loan Modifications vs Short Sales
February 16th, 2009 categories: Foreclosures, REO, Real Estate, Short Sales
Does hiring an attorney really help?
The past couple of years have re-introduced to the real estate community the short sale that has helped many people sell their homes and keep some semblance of credit worthiness, and now attorneys have found a niche with loan modifications.
We last saw the short sale in the mid 1990’s when the market had a similar fall due to the overbuilding and investor inflation created by a rising real estate market. In essence, the seller was able to sell his house without having to satisfy the debt he owed to the lender and the new buyer was able to purchase a home with a clear title even though the previous owner owed more than the new buyer paid.
Now attorneys are introducing their services to help homeowners obtain a loan modification. Real estate loans can be obtained from a variety of sources i.e. banks, mortgage brokers, mortgage bankers, credit unions, investment firms, private funding, etc… so is it necessary to hire an attorney to get a toxic loan re-negotiated? That depends on a couple of factors but most importantly it depends on the reason you are seeking relief from your loan obligation.
How much you owe vs. what you can afford to pay for a mortgage is the primary reason most people find themselves in this situation in the first place. There are exceptions for loan fraud and in those cases an attorney would be a good choice however, the majority of people now seeking relief accepted a loan at a teaser rate knowing it would adjust. They were hoping the market would continue to increase and that they could re-finance at a fixed rate after their minimum period expired. Your ability to qualify for a loan modification is the same criteria lenders use to qualify any buyer for a loan.
In a loan modification the goal is to re-negotiate the loan to something that the homeowner can afford. The best case scenario is to get in touch with your lender and begin the discussion of loan modification prior to missing any payments. The labyrinth of departments make this an intimating situation and can seem overwhelming. Attorneys capitalize on these fears and extract more money from the homeowner which exacerbates their financial situation.
I recently had a conversation with one loss mitigator from a bank I was working out a short sale for one of my sellers. He said his bank requires that the attorney, the loss mitigator and the homeowner have a three-way phone conversation explaining to the homeowner that the hiring of an attorney was not necessary to negotiate a loan modification. He then asks the homeowner why he hired an attorney when he could save himself the money and the usual answer was fear. This was the reason most people were willing to go further into debt with no guarantee that they would get their loan modified. Again, the primary factor in obtaining a loan modification is your ability to qualify for the loan in the first place.
Some law firms specializing in loan modifications have “working relationships” with investors who will purchase your home should you not qualify for a loan modification. Essentially, they are structuring a short sale with the law firm doing the paperwork on behalf of the seller. This is where I have a problem because the seller is being charged for services a Realtor would provide FREE. Since the seller did not qualify for the loan modification they are now forced to sell their home or face foreclosure but they now have attorney fees to pay. Talk about fear!
My suggestion to people who are upside down on their mortgages is to first talk with a Realtor who is familiar with loans and short sales. Find out if you qualify for a new loan and what your home value is in this market. If you suspect loan fraud then get a referral from your Realtor for an attorney who specializes in real estate. Paying for the learning curve of those attorneys who are exploiting people’s fears is not going to help your situation.
For more information see these articles: Now Is The Time To Renegotiate With Banks
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