Short Sell Tips for Homeowners

Here is an informative article about the growing challenge of short sales on the real estate market. Short sales are a solution for homeowners who need to sell without equity in their homes. Selling a home as short sale is an alternative to foreclosure. Since short sales are expected to continue to grow, it is helpful to understand the short sale process. Hope this helps!

Short Sale – Buyer & Broker Beware!

by Walt Harvey

Recently, more short sale properties have come on the market. A short sale is
a situation where a property seller needs to sell and the sale proceeds are not sufficient to pay off the existing mortgage. It is an alternative to foreclosure. The term short sale or short pay refers to a process whereby the mortgage company must agree to a reduced payoff in order for the sale to take place. All sale costs must be included and the seller receives nothing, except debt relief and not having a foreclosure on their credit record.If you’re a prospective buyer on such a property, beware! The seller may accept your offer; you may invest $1000 in
an appraisal and a property inspection, but you may not get the property because the mortgage company may not agree to reduce their payoff. The mortgage company is a third entity that is not a party to your contract, yet their decision will affect the outcome of the transaction. The mortgage company will review the short sale proposal and closing the sale will depend on their response.

Many short sales fail because the mortgage company representative is unfamiliar with the local market and responds with an unrealistic proposal. When buying a short sale property, don’t expect a quick answer and don’t expect the mortgage company to respond logically. They will seek any additional assets the homeowner may have. They may demand the seller to sign a personal note to pay back the shortfall. Remember, the mortgage company wants to recover as much of the loan as possible and if the property goes to foreclosure, well that’s another department’s problem.

Additionally, many loans have PMI (Private Mortgage Insurance) that will cover a portion of their loss so the mortgager’s motivation to reach an agreement may be less because they’re covered regardless. You may have to start negotiating with the PMI Company, adding additional time to the sale process. Unless you have considerable experience with short sales, foreclosures and working with lenders’ loss mitigation departments, be very cautious in submitting an offer on a property in a short sale situation.

Buyers, ensure that you have an escape provision if the process takes longer than you want or if a more suitable property becomes available.

Sellers, be realistic. Consult with your accountant and your attorney on the tax and legal ramifications of a short sale. You may have to be willing to undergo an asset evaluation and even be willing to walk away and let the lender have the property.

Brokers, you will have to work two to three times as hard and may never help your seller clients achieve their goals of a sale, and your buyer clients may go through months of negotiation and several fees but not be able to close successfully on the home of their dreams.

Lenders, wake up! Work with the buyers and brokers who can ultimately save you money. History shows that a property that goes through this process nets less money to the lenders.

Walt Harvey, ABR, CIPS, CRB, CRS, GRI, SRES, AHWD, ePRO, QSC, RSPS and TRC, is a real estate Broker who partners with his wife Arla and together they specialize in residential, commercial and investment real estate.

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

 

 

 

LAWS SLOWING FORECLOSURE PROCESS

Foreclosure filings down 12% in September

New state laws slowing foreclosure process

By Inman News

New state laws that require loan servicers to give advance notice before filing a notice of default helped push down foreclosure-related filings by 12 percent nationwide in September, data aggregator RealtyTrac.

California, which accounts for nearly one-third of foreclosure activity, passed legislation that took effect in September requiring lenders to make contact with borrowers 30 days before filing a notice of default. Notices of default in California dropped 51 percent in September, with a corresponding “significant impact” on national numbers, RealtyTrac said.

RealtyTrac said notices of default fell 66 percent in North Carolina, a state that now requires lenders to provide homeowners and the state commissioner of banks 45 days’ advance warning of plans to file a notice of default.

Lenders file notices of default as the first step in the foreclosure process, in most cases after borrowers fail to make two or more payments. A notice of default starts the clock ticking on a forced auction sale or bank repossession of a delinquent borrower’s home.

Foreclosure-related filings include default notices, auction sale notices and bank repossessions. Because many borrowers refinance, get current again on their loans, or negotiate a short sale or loan modification with their lender, not all properties subjected to filings are actually repossessed or sold by lenders.

But in many instances, the new laws governing notice of default filings may only delay lenders from initiating the foreclosure process.

After a new Massachusetts law took effect in May requiring that lenders give homeowners a 90-day right-to-cure notice, initial foreclosure filings were lower than normal for the following three months. But initial foreclosure filings were up 465 percent from August to September, RealtyTrac said, as the first loans subject to the new rule emerged from the 90-day window.

Nationwide, RealtyTrac counted foreclosure related-filings on 265,968 properties in September, down 12 percent from August but up 21 percent from a year ago.

At the state level, Nevada saw foreclosure-related filings jump 11 percent in September. The rate of foreclosure-related filings in Nevada — one for every 82 homes — was the highest in the nation, and more than five times the U.S. average of one filing per 475 homes.

With one filing for every 178 homes, Florida moved from fourth place to second on the list of states with the highest foreclosre rates.

In California, the dramatic decline in notices of default contributed to a 32 percent decrease in foreclosure-related filings. Still, one in 189 homes was subjected to a filing, the third-highest rate in the nation.

Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado rounded out the list of the 10 states with the highest foreclosure rates.

For the third quarter, RealtyTrac counted foreclosure filings on 765,558 homes, up about 3 percent from the second quarter and 71 percent from a year ago.

Six states — California, Florida, Arizona, Ohio, Michigan and Nevada — accounted for more than 60 percent of foreclosure-related filings.

The 10 cities with the highest foreclosure rates among the nation’s 100 largest metropolitan areas in the third quarter were located in California, Florida, Arizona and Nevada.

They were Stockton, Calif.; Las Vegas, Nev.; Riverside-San Bernardino, Calif.; Bakersfield, Calif.; Fort Lauderdale, Fla.; Phoeniz, Ariz.; Sacramento, Calif.; Orlando, Fla.; Fresno, Calif.; and Oakland, Calif.

Search Bank Owned Homes at CentralValleyHomes.com 

Carol Perdew
Prudential California Realty
(209) 239-7979

 

Is There Help For Homeowners Who Are Paying Their Mortgage?

Must a Borrower Stop Paying in Order to Get Help?

by Jack M. Guttentag
Inman News

“Is it true that mortgage servicers will not help borrowers who are in trouble until they stop making their payments? I am a home retention counselor, and I keep hearing from people referred to me that they have received no response from their servicer because they have not yet missed a payment. I would hate to advise people that they have to stop paying if they expect to get any help if it is not true.”

There is certainly much truth to this because I have heard the same story from numerous people I have counseled, whose stories I have no reason to doubt. The most common thing I hear is that they were told by the servicer to come back when they were two payments behind.

There are understandable reasons why borrowers who are delinquent on their payments receive more prompt consideration than those who are current. To the degree that servicers are faced with more requests for help than they can handle at one time, they have to set priorities. The number of borrowers in trouble has ballooned over the past year, outstripping the efforts of servicers to expand their capacity to deal with them.

Setting Priorities

A plausible way to set priorities is in terms of the degree of urgency of the problem. A borrower 60 days behind in his payment is closer to foreclosure, and if he is going to be saved, he needs faster action than a borrower who is current. So borrowers who are current get placed at the bottom of the list of borrowers requiring special treatment, if they are even placed on the list at all.

This tendency is reinforced by the fear of free-riders. All borrowers would like to get a better deal on their mortgages, whether they have trouble making their current payments or not. If loans are being modified to help borrowers, some borrowers who are not in financial distress will try to take advantage of the situation by pretending that they are. But potential free-riders may not be willing to become delinquent because that would hurt their credit. By only considering modifications for borrowers who are already delinquent, the servicer reduces the number of potential free-riders.

In addition, the practice of dealing only with borrowers who are delinquent keeps loans in good standing for longer periods. Consider the borrower who loses her job but has savings sufficient to cover the payments for some months. Investors would prefer that the borrower make the payment out of savings for as long as possible, since she might find another job during this period, avoiding the need for any modification of the mortgage.

Moving Up on the List

If I were a borrower with reduced income but with good prospects of recovery, I would make the payment out of savings, avoiding the hit to my credit. If I considered the prospects of recovery to be poor, however, I would stop paying and husband my savings. This would move me up on the servicer’s priority list for special treatment. While it also moves up the hit to my credit, that is something that would happen anyway as soon as my savings were exhausted.

If I did not have a problem making the current payment but would have a problem dealing with an anticipated payment increase, I would handle it differently.

First, I would determine exactly how large the payment increase would be. If the increase stemmed from an interest-only loan reaching the end of the interest-only period, the new payment could be found using any monthly payment calculator (including calculator 7a on my Web site) inputting a term equal to the remaining life of the loan. If the increase stemmed from an ARM (adjustable-rate mortgage) adjustment, the new payment wouldn’t be known exactly until a month or two before the adjustment, but an estimate based on the current value of the rate index would provide a good estimate.

A Detailed Budget

Step two is to develop a detailed budget which documents the point that the expected payment is not affordable. Use the form provided by Genworth to show your income, expenses, and assets.

Submit your document to the servicer well in advance of the anticipated payment increase. There is no guarantee that it will lead to a contract modification before the payment increase materializes. However, it gives you a good shot to move up in the servicer’s queue by providing the concrete detailed information that servicers require. It also keeps you out of the hands of the modification hustlers who want to be paid upfront for doing what you can do yourself.

CAROL PERDEW
Prudential California Realty
(209) 239-7979
wwwCentralValleyHomes.com

First Northern California Bass Pro Shop Opening

The first Northern California Bass Pro Shop will be opening on Wednesday in Manteca.  Based on other store openings, more than 10,000 people are expected to attend Wednesday’s pre-grand opening celebration. Bass Pro Shop is expecting to draw guests from up to 250 miles away for the five-day event. Read the following to find out more about the extraordinary Bass Pro showroom and grand opening events.

Bass Pro may lure 50,000 to Manteca in five days

Dennis Wyatt
Managing Editor
Manteca Bulletin

The biggest party Manteca has ever seen starts Wednesday at 8 a.m.

That’s when Bass Pro Shops opens its first Northern California store as the anchor in the Promenade Shop at Orchard Valley at the lifestyle center being built at Union Road and the Highway 120 Bypass.

Store representatives are projecting in excess of 50,000 guests in a five-day period go through the 120,000-square-foot store to celebrate the store’s opening.

Based on other store openings, more than 10,000 people will attend Wednesday’s pre-grand opening celebration.

It is such a huge crowd – many people spend four to six hours in the store – that the original opening time of 3 p.m. Wednesday worried Caltrans so much about the potential for a massive grid-lock on the Highway 120 Bypass just as the afternoon commute gets underway that Bass Pro Shops agreed to open the doors Wednesday at 8 a.m.

Official ribbon cutting activities are at 5 p.m. and the big draw – the “Evening of Conservation” to raise funds for area conservation groups – starts at 6 p.m.

To put the store’s draw in perspective, the implosion of the four 15-story Spreckels Sugar silos 12 years ago drew just over 9,000 spectators to watch what was a 15-second event. Concerns about dust – which never materialized – prompted the CHP to temporarily close the Highway 120 Bypass.

The biggest events in Manteca – the Crossroads Street Fair in April and the Pumpkin Fair in October – have had record turnout for the two-day events that came to just under 35,000 people. Most people spend a couple of hours at the street fairs. By comparison, Bass Pro Shop’s average visitors spend between four and six hours.

Bass Pro Shop is expecting to draw guests from up to 250 miles away for the five-day event.

Bass Pro representatives noted the store is a tribute to the grandeur of Yosemite National Park, and the history and culture of California’s Central Valley and its people complete with 3,500 area artifacts, antiques, pictures, mounts and memorabilia.

Hand-painted murals depict scenes of California ’s picturesque countryside from Emerald Bay to Muir Wood, to Gray Lodge State Wildlife Refuge and Sutter Buttes, to the California coast and Sierra range. The décor includes Spectacular waterfalls, lush forests, pristine mountain lakes and beaches.

Massive log and rock work frame the Grand Entrance. Inside, rustic wood floors, antique pine wall finishes, and vaulted post and beam construction ceiling make up the front lobby. A fire crackles in the 18- by 15-foot moss rock double-sided fireplace and a 65-foot replica of the world’s largest tree (in volume), The General Sherman in Sequoia National Park, greets visitors.

Giant outdoor themed chandeliers, made by Bass Pro Shops’ own artisans, hang throughout the store. Elk, deer, raccoon, rabbit, turkey, bobcat and bear tracks are imprinted in the concrete floor. Bear, deer, sheep and other wildlife in natural and action settings are set amidst boulders on top of the 24,000-gallon fresh water aquarium.

Massive rockwork soaring up to 30 feet high above the aquarium replicates Yosemite ’s Half Dome and allows visitors to walk under the waterfall as it cascades into the fresh water aquarium

The main aquarium will be stocked with more than 120 fish native to the area including largemouth bass, striped bass, sturgeon, brook trout, rainbow trout, blue catfish, white crappie and bluegill. The trout pond will feature 20 native rainbow, brook, cut throat, golden and brown trout. Two elevators rise up behind the trout pond offering riders a bird’s-eye view of the store and all the wildlife dioramas. An antique pedestrian trestle walkway spans the second floor between the hunting and camping department.

Special displays in the store include a pictorial and memorial tribute to John Muir and the 26th United States President, Theodore Roosevelt. An avid outdoorsman, President Roosevelt promoted the conservation movement and efficient use and maintenance of natural resources. Muir, an early advocate of conservation, was instrumental in saving the Yosemite Valley, the Sequoia National Park and various other wilderness areas.

The store also features a General Store and a Fudge Shop.

There is a laser arcade themed as a remembrance to one of California ’s most significant events-the Gold Rush. Remnants of an old gold mining community have been taken over by a bevy of wild ‘critters.’ The arcade features 56 animated laser targets and each laser rifle costs 50 cents for 20 shots.

The Bass Pro Shops Outdoor World in Manteca will also include a Conservation Room celebrating local conservation groups. The room will accommodate 120 people for various civic, educational or conservation functions.

FAST FACTS

• WHAT: Bass Pro Shops • WHERE: Union Road at the Highway 120 Bypass • WHEN: Wednesday, Oct. 15. Doors open at 8 a.m., ribbon cutting at 5 p.m., “Evening of Conservation” starts at 6 p.m. • TIPS: Don’t take Union Road to reach Bass Pro Shops either Wednesday or the following four days. Take Main Street or Airport Way to Woodward Avenue and approach the south side of the mall from roads off Woodward Avenue.

Carol Perdew
(209) 239-7979
www.CentralValleyHomes.com