Don’t Be Ashamed. . . Seems like everyone’s doing it

Lack of jobs, divorce, injury and death of a loved one often forces hard working folks into default on their home loans.  Without help, foreclosure looms.  Don’t be ashamed to save your home and the opportunities for homeownership in the future.   There is hope. 

Three options that a homeowner in or nearing default has are 1) Deed in lieu of foreclosure, 2) Loan Modification, and 3) Short Sale.  From experience, the first two options have had a low success rate with the third having the highest.  It’s a mystery as to why this is the case yet feel the banks are a step behind and lack the work force to service those in need within a timely manner. 

You will need the services of an experienced short sale specialist upon deciding that a short sale is needed.  I specialize helping homeowners in need of alternatives to foreclosure.  Call me for no obligation consultation at anytime—869-3469.

1)  A Deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.

The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure. Another benefit to the borrower is that it hurts their credit less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy.

Neither the borrower nor the lender is obliged to proceeed with the deed in lieu of foreclosure until a final agreement is reached. 

2)  Loan or Mortgage modification is a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower (i.e mortgagor and mortgagee). In general, any loan can be modified.

In the normal progression of a mortgage, payments of interest and principal are made until the mortgage is paid in full (or paid-off). Typically, until the mortgage is paid, the lender holds a lien on the property and if the borrower sells the property before the mortgage is paid-off, the unpaid balance of the mortgage is remitted to the lender to release the lien. Generally speaking, any change to the mortgage terms is a modification, but as the term is used it refers to a change in terms based upon either the specific inability of the borrower to remain current on payments as stated in the mortgage, or more generally government mandate to lenders

Mortgages are modified to the benefit of the borrower in one or more of the following ways:   1)Reduction in interest rate, or a change from a floating to a fixed rate, or in how the floating rate is computed, 2)  Reduction in principal, 3)  Reduction in late fees or other penalties, 4)  Lengthening of the loan term, 5)  Capping the monthly payment to a percentage of household income./

The borrower can be current, late, in default, in bankruptcy, or in foreclosure at the time the application for modification is made. The programs available will vary accordingly.

3) A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency. 

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is “doing the other a favor;” a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than foreclosure or continued non-payment would entail. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion (abbreviated BPO or BOV).

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the 2009 foreclosure crisis, they are now more willing to accept short sales than ever before. This presents an opportunity for “under-water” borrowers who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure as a result.

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Keeping Your Home Safe from Water Damage

Pay attention to your bill: Major fluctuations in water usage from one month to the next could mean that you have a problem. Taking just a few minutes to look at your bill each month could make a big difference in your wallet!

Inspect appliances: While much of your home’s plumbing can be hidden behind walls and cabinets, most of your appliances that use water can be easily inspected for potential leaks. Each month, take the time to inspect areas around your water heater, dishwasher, refrigerator, washing machine, sinks, and toilets. If any hoses or seals appear old or damaged, replace them.

Also, inspect and repair obvious caulking and tile grout damage. It’s a small price to pay for what could be expensive repairs later.

Inspect the sewer line: Clear away build-up and roots from around your sewer line. Obstructions in this area could create major plumbing problems in the future.

Check your water pressure annually: This is easier than it sounds. Simply purchase a pressure gauge and attach it to the hose faucet. Normal results should range from 45 to 65 pounds per square inch (psi). A reading above 65 psi is considered high and could lead to problems down the line.

Find and fix leaks quickly: Make a habit of checking the main fixtures regularly so that when something out of the ordinary occurs you will notice it and take action immediately. Sometimes, however, slow water leaks aren’t very obvious. A great way to discover hidden leaks is to look for stains in areas where water is often used. For example, if you see even small stains on the cabinet floors beneath the sink in the kitchen or bathrooms, you could have a problem. Warm spots in the floor or tiles could also be an indication of hidden water damage.

Paramount sells 51 new homes in 2009

Boise-based developer Brighton Corp. is declaring 2009 a successful year for Paramount, its master-planned community in Meridian.

Fifty-one new homes sold in the community last year, and three new commercial tenants moved in – Walgreens, Edward Jones and Idaho Health Care Association/Idaho Center for Assisted Living.

2009’s residential total was up from 2008, when 43 homes were sold in Paramount. Seventy were sold in 2007 and 108 in 2006, according to numbers Brighton pulled from the Multiple Listing Service.

“We’re very happy with ‘09, and we hope the momentum will continue,” Brighton Marketing Coordinator Angie Dilmore said.

A total of over 400 homes have been sold in the development, where 1,200 homes are planned. It is bounded by Chinden Boulevard and Linder, McMillan and Meridian roads.

*IBR

Good news, eh? Foreigners return to real estate

For several weeks now, I’ve been preaching about the real estate industry saying if you got the money, patience and time, now is a great time buy.

Now, in a one-day conference in Alberta’s Edmonton, Canadians are being told to fly south, and flock to areas like Montana, Idaho, Utah, Nevada and Arizona.

Terry Ritchie, a financial adviser who has co-authored, “The Canadian Snowbird in America: Professional Tax and Financial Insights into a Temporary Lifestyle in the U.S.” writes that there are incredible buys in the U.S. because of the strong dollar, combined with low U.S. home prices.

“There’s a lot of misinformation about how a property (in the U.S.) should be titled and owned,” Ritchie told the Edmonton Journal. “I have a checklist that I will raise at the conference that people need to answer because one size does not fit all.”

Meanwhile, Trish Gannon, owner and publisher of The River Journal, writes that North Idaho is open for (real estate) business, and extols the secrets that are to be found in economy near the Canadian border. North Idaho and western Montana didn’t contribute much to the issues that created problems nationally, she writes.

Tom Renk, owner/broker of CM Brewster Real Estate in downtown Sandpoint, is quoted as saying there are 3,000 active listings in the Multiple Listing Service in North Idaho region.

“For example, there’s a property on ten acres with a 3,200 sq ft home and a shop, selling for $219,000. That’s an incredible price. You can’t build a 3,200 sq ft house for that.”

From January 1 to March 15, average sales price on a residential property in 2008 was $315,590 compared to this 2009’s price of $259,659. 

For several weeks now, I’ve been preaching about the real estate industry saying if you got the money, patience and time, now is a great time buy.

Now, in a one-day conference in Alberta’s Edmonton, Canadians are being told to fly south, and flock to areas like Montana, Idaho, Utah, Nevada and Arizona.

Terry Ritchie, a financial adviser who has co-authored, “The Canadian Snowbird in America: Professional Tax and Financial Insights into a Temporary Lifestyle in the U.S.” writes that there are incredible buys in the U.S. because of the strong dollar, combined with low U.S. home prices.

“There’s a lot of misinformation about how a property (in the U.S.) should be titled and owned,” Ritchie told the Edmonton Journal. “I have a checklist that I will raise at the conference that people need to answer because one size does not fit all.”

Meanwhile, Trish Gannon, owner and publisher of The River Journal, writes that North Idaho is open for (real estate) business, and extols the secrets that are to be found in economy near the Canadian border. North Idaho and western Montana didn’t contribute much to the issues that created problems nationally, she writes.

Tom Renk, owner/broker of CM Brewster Real Estate in downtown Sandpoint, is quoted as saying there are 3,000 active listings in the Multiple Listing Service in North Idaho region.

“For example, there’s a property on ten acres with a 3,200 sq ft home and a shop, selling for $219,000. That’s an incredible price. You can’t build a 3,200 sq ft house for that.”

From January 1 to March 15, average sales price on a residential property in 2008 was $315,590 compared to this 2009’s price of $259,659.

 

 

 

IBR Real Estate

Another Perspective on the Market Turn-Around . . .

Dani Grigg with IBR wrote a blog which I wanted to pass along.  It discusses alternate perspectives which are interesting:

If you walk down any given street in the U.S., odds are that one in every four homes you pass is worth less than what the owner owes on his or her mortgage.

In Idaho it’s almost as bad, with one in five homes under water, according to data from First American Core Logic, a real estate information company based in California.

I don’t know the numbers for the whole state, but median home prices in Ada County have been falling pretty steadily since mid-2006. This autumn they were down 37 percent since the peak in July 2006.

It’s a dangerous situation for homeowners who have to sell.

And it’s a headache for real estate agents, who have to deal with the long process and scanty payback of getting a bank to accept an offer that is less than what the owner owes.

I talked to a real estate agent this week who thinks the market doesn’t have to be this way.

If the community’s homebuyers would agree to stop approaching home sales with an eye to hack the price down to a fraction of its original size (I know another agent who calls this “raping” the seller), values would stop falling. Nearby homes would be able to be listed at prices more in tune with what the owner owes and with what the house is worth, according to some.

And he said others have a role to play as well: sellers should try to keep homes off the market, appraisers should give a property credit for every dollar of its worth, banks should start prices higher, and brokers and agents should stop accepting low-ball offers.

He talked about a home in Meridian that was purchased for $300,000 a few years ago, but is now listed at $190,000. He said he knows the listing agent would accept an offer as low as $170,000.

If we want to see an end to the real estate carnage and short-sale fever, that’s got to stop, he said.

I can’t speak for sellers, appraisers, banks or agents, but I think I can speak for buyers. I’m one of them.

It’s short-sighted of me, but getting the market back on track is the least of my worries.

I am thinking about purchasing my first home in time to qualify for the $8,000 tax credit, but my price cap is low. If I can find a house in my price range that is in a safe neighborhood, I’m going to take it. If that house really shouldn’t be in my price range – I’m OK with that. I’m leaving it up to the banks and the sellers’ agents to look out for everyone else’s interests. That’s their job, not mine. My future children will grow up in a neighborhood where they are safe, and that’s my top priority.

I think most buyers have a similar perspective.

And I hope that doesn’t make us “rapists” – hopefully we can just be labeled as we see ourselves: Lucky.

Foreclosures down 13% in the Treasure Valley!

The number of home foreclosures filed in November in Ada and Canyon counties fell 13 percent from October’s totals, but remained high at 690. According to Idaho Data Suppliers, 494 of those foreclosure starts came in Ada County, down 16 percent from last month, and the remaining 275 were in Canyon County, down 7 percent from last month.

The 2009 low came in September with 595 foreclosures filed. The high came in July, when lenders began foreclosures on 819 homes. So far in 2009, Treasure Valley foreclosures are up 72 percent from 2008 and are almost triple 2007’s levels.

Idaho Data President Charlie Nate said he expects foreclosures to drop slightly again in December but then to start rising significantly in January. The dip in November is consistent with historical trends.

The most recent numbers from RealtyTrac, a national foreclosure tracking company, ranked Idaho fifth in the nation for foreclosure rates, with one in every 255 household units in foreclosure.

Call or Email Matthew Le Baron for a free foreclosure list!

Home Selling Quick Tip 3

Make sure to clear out the clutter.  You want your home to shine above and beyond the other homes on the market.  Remember that the average home buyer is going to look at 10-20 homes that meet their criteria before they make a decision.  This is a case of first impressions.  If you don’t make the list of top 2-3 homes on their list, your home will be forgotten and discarded from their search.  You usually only get one chance.  Make it count.

By taking 4-5 hours upfront to fix up your home and stage it a bit can go a long way.  Even $200 – $500 in staging can end up netting you thousands more on your house.  It is so worth it.

Sell Your Home Quick: Tip 2

Come up with a sales strategy, but make sure it’s flexible. What’s your initial asking price? How long will you insist on it before making a reduction? How much of a cut will you accept? What about after that? Having a plan in place will help you react quickly, according to Greenwood, and will move your home that much more quickly.

Buyers want to feel like they are getting a deal these days.  It is important to know your bottom line and not be offended if you don’t get a full price offer.   Roll with the punches and understand that this is business and not to take it personal.  You always have final say when it comes to the actual accepted price.

Sell Your Home Quick: Tip 1

Price it right. The No. 1 thing that will sell a house quickly is price.  Of course you want to make sure that it is out there and people know it is for sale.  But all the marketing in the world won’t sell an overpriced house.

OK, so just how do you play the home-sale version of “The Price is Right”? That crackerjack agent you hired should have a good sense of what price will help sell your home sooner rather than later. As the owner, your objectivity is diminished, so give your agent free rein, within reason, to set the price. The broker will look at the average days a home in your neighborhood is on the market, how your home compares to others in the area and its condition.

Keep in mind too that even if you are able to find a buyer at above market value, an appraiser will have to “approve” the price if the buyer is financing the home.   This can be a deal killer and is becoming more and more prominent.