How DO I Avoid Foreclosure, A Step-by Step Guide

How Do I Avoid Foreclosure:

A step by step process for distressed homeowners.

Part 1

“O.K., I’m in trouble, real financial trouble.  Due to circumstances beyond my control I can’t pay my bills.  The mortgage is due and I can’t come close to covering the payment.  What can I do”?

Unfortunately this scenario is playing out with thousands of home owners in our country today.  In fact, one in ten mortgages throughout the country are in trouble with even more headed in that direction.

Unemployment is at 10.2% and underemployment is at 20% in California.  Many of the wild west mortgages of the past few years are due to adjust, making the payments impossible to make for an ever growing number of borrowers.

Homeowners need help in the form of information and education.  Unfortunately, this is such an emotionally devastating situation many people shut down and do nothing.  The cold hard truth is that doing nothing is a sure fire formula for losing their home to foreclosure.

And foreclosure is not just a one time event.  Once a foreclosure is on you credit record it stays there for seven to ten years, making it difficult to obtain any kind of financing (home, auto, credit card, store card).  Those in this situation that do obtain credit are looking at interest rates well into the double digits.  People should do EVERYTHING POSSIBLE to avoid foreclosure.

We have to get the word out family, friends and neighbors that there are options available to them to increase their chances of avoiding foreclosure.  The thing is that they have to take action.  

There are many organizations available and willing to help without charging a fee.  Unfortunately, there are also far too many who will take advantage: fraud is rampant. 

The bottom line is that the distressed homeowner has to take action and be careful not to let an individual or organization taken advantage of them.

 

Contacting the lien holder and discussing your situation honestly is absolutely necessary.  However, before doing that there are a few steps to take first.

Take some time to learn what all your options are first.  This information is available in many places. 

Here are a few web sites:

                               http://portal.hud.gov/portal/page/portal/hud/topics/avoiding_foreclosure

 

http://www.ForeclosureStopper.org

 

http://www.CDPE.com

In future posts we will discuss these options to provide the information people need to make an informed decision.  Those posts will be coming soon.

Feel free to contact Mike West, Realtor, CDPE if you have any questions or need help.

(916) 337-0658              e-mail:   Mike@BMikeWest.com  

 

 

El Dorado Hills, CA REO (BANK OWNED) SALES DATA FOR OCTOBER 2009

This is a continuation of my monthly report on Bank Owned home sales for El Dorado Hills, CA.  This report covers REO homes sold in October of 2009, the latest in my study of over two years.

There were 22 REO homes sold in October, up from 14 in September.  The average days-on-market jumped to 43, up from the record low of eleven days in September.  There were three homes that sold in October that had been on the market for 249, 127 and 108 days respectively, which had an effect on this statistic.   Of the REO homes sold, 31.9% were on the market for two weeks or less.     

The 22 homes sold represent 40% of all homes sold in El Dorado Hills.

Bank owned and Short Sales represent a majority of the home sales in today’s market. 

The cost per square foot of REO homes in October decreased to $ 149, down from $ 158 in September.  The cost per square foot of all homes sold in October dropped twelve dollars, to $ 156. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 4.4% savings for REO buyers.  

The overall sales price for REO homes was 101.9% of the final asking price. Only 36.4% of the REO homes that sold did so for less than the asking price. 

At this writing there are 321 homes on the market in El Dorado hills, representing a 5.8 month inventory.  We have edged into a seller’s market.    

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all homes sold:  in October, seven dollars per square foot.  That is a        $ 17,500 savings on a 2500 square foot home, still a tidy sum.  

thE DATA FOLLOWS:

 

REO (BANK OWNED) SALES DATA< FOLSOM, CA October 2009

Folsom, CA REO (BANK OWNED) SALES DATA FOR OCTOBER 2009

This is a continuation two year study of Bank Owned home sales data for Folsom, CA.  This report covers REO homes sold in October of 2009.

There were 19 REO homes sold in October, up from 11 in September.  That is a 72.8% increase.  The days-on-market increased from 20 in October to 27 in September.  The primary reason for the increase is that one home that had been on the market for 156 days sold last month, skewing the average days-on-market figure.  The fact that 52.7% of the REO homes sold in two weeks or less shows that REO homes are still selling quickly. 

The 19 homes sold represent 27.6% of all homes sold in Folsom, within the normal range for this study. 

The overall home inventory in Folsom is presently 250, a 3.6 month inventory, down from 4.7 in August, indicating a continuing strong seller’s market.  At this rate there will be a shortage of available homes very soon.  A neutral market is considered a 6 month inventory.

The cost per square foot of REO homes in October decreased to $ 163, down from $ 170 in August.  The cost per square foot of all homes sold in October decreased to $ 180, down two dollars from September.  Prices are still trending downward but more slowly than in the past few years.

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 9.4% savings for REO buyers.   

The overall sales price for REO homes was 99.5% of the final asking price.  In October only 31.6% of the REO homes that sold did so for less than the asking price!  

However, the banks are still pricing these homes well and in September there was a seventeen dollar per square foot savings, compared to the cost of all homes sold.  That is still a $ 42,500 savings on a 2500 square foot home, something worth considering when selecting a home.

 

The data follows:

How To Avoid Foreclosure – Deed-for Lease

HOW TO AVOID FORECLOSURE

Fannie Mae Deed-for-Lease Program

 

Fannie Mae has come out with another option to help distressed home owners avoid foreclosure.  Any program that will help is worth looking at. The program guidelines are very specific and not everyone will qualify.

It is a variation of the deed-in-lieu process, through which the homeowner/borrower gives the lien holder the deed to the property in lieu of foreclosure.  The lien holder becomes the owner of the property and the distressed homeowner who meets the guidelines remains in the home as a tenant.

• The borrower must have sufficient income to qualify to pay the market rent for the property.  The cap is 31% of the borrower(s) gross income.  So a family with a $ 2000 per month gross income can only qualify for a $ 620 monthly rent payment.  The borrower must submit proof of income.
• The borrower must continue to occupy the property.  They can not initiate the program, move out and sublet to another party.
• The property must be kept in good condition.

This program was announced on November 5, 2009, and not many loan servicers have embraced it at this writing.  The guidelines will not allow many to qualify, but is an option for those who do.

For more information go to:

http://www.fanniemae.com/newsreleases/2009/4844.jhtml

If you have further questions feel free to contact Mike West:

(916) 337-0658

 

http://www.ForeclosureStopper.ORG

 

EL Dorado Hills, CA BANK OWNED HOME SALES DATA, SEPT. 2009

El Dorado Hills, CA REO (BANK OWNED) SALES DATA FOR SEPTEMBER 2009

This is a continuation of my monthly report on Bank Owned home sales for El Dorado Hills, CA.  This report covers REO homes sold in September of 2009, the latest in my study of over two years.

There were 14 REO homes sold in September, four more than sold in August.  The average days-on-market dropped drastically to eleven, down from 36 days in August.  REO homes are selling like hot cakes.  Of the REO homes sold, 35.8% were on the market for less than two weeks.  The longest one on the market was 23 days.   

The 14 homes sold represent 34.2% of all homes sold in El Dorado Hills, up from 26.4 in August. 

The cost per square foot of REO homes in June increased to $ 158, up from $ 144 in August.  The cost per square foot of all homes sold in September increased seven dollars, to $ 168. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 5.9% savings for REO buyers.  

The overall sales price for REO homes was 102.7% of the final asking price. Worthy of note is the fact that only one of the REO homes sold did so for less than the asking price.   The limited inventory and aggressive pricing result in offers at or above the asking price; the only way for buyers to get their offers accepted over competing buyers.    

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all homes sold:  in September, $10 per square foot.  That is a $ 25,000 savings on a 2500 square foot home, a tidy sum.  

The data follows:

 

REO (BANK OWNED) HOME SALES DATA< FOLSOM, CA SEPT. 2009

Folsom, CA REO (BANK OWNED) SALES DATA FOR SEPTEMBER 2009

This is a continuation two year study of Bank Owned home sales data for Folsom, CA.  This report covers REO homes sold in September of 2009.

There were 11 REO homes sold in September, one more than sold in August.  The number of available REO homes has been drastically reduced.  The days-on-market dropped from 22 in August to 20 in September.  54.6% of the REO homes that sold were on the market less than two weeks.  One home had been on the market for 83 days.

For the second month in a row, none of the REO homes that sold were on the market for more than 90 days.  Most are well priced when they hit the market and they are not lasting long. 

The 11 homes sold represent only 19.3% of all homes sold in Folsom, similar to the August number. 

The overall home inventory in Folsom is presently 265, a 4.7 month inventory, down from 5.3 in August, indicating a continuing seller’s market.  At this rate there will be a shortage of available homes very soon.

 The cost per square foot of REO homes in September decreased to $ 170, down from $ 179 in August.  The cost per square foot of all homes sold in September decreased to $ 182, down five dollars from August and the same as reported in July. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 6.6% savings for REO buyers.  This number has been trending down for several months.  Short sales are having an impact here.  So REO sales are not the savings for buyers that they once were.

The overall sales price for REO homes was 103% of the final asking price.  In September only 27.3% of the REO homes that sold did so for less than the asking price!  The market has changed once again.

However, the banks are still pricing these homes well and in September there was a twelve dollar per square foot savings, compared to the cost of all homes sold.  That is still a $ 30,000 savings on a 2500 square foot home, something worth considering when selecting a home.

The data follows:

 

El Dorado Hills, CA Sold Bank Owned Home Sales Data August 2009

El Dorado Hills, CA REO (BANK OWNED) SALES DATA FOR AUGUST 2009

This is a continuation of my monthly report on Bank Owned home sales data for El Dorado Hills, CA.  This report covers REO homes sold in August of 2009, the latest in my study of more than two years.

There were 10 REO homes sold in August, down from 22 in July.  The average days-on-market increased to 36, up from 33 in July, largely because one sold home was on the market for 169 days and represented 10% of the sales.  However, a full 50% of the REO homes that sold were on the market for less than two weeks.  REO homes are still selling quickly.

The 10 homes sold represent 26.4% of all homes sold in El Dorado Hills, down from 31.5% in July.  There are fewer REO homes on the market.

The overall number of homes sold in El Dorado Hills in August dropped considerably from 70 in July to 38 in August.

The cost per square foot of REO homes in June decreased to $ 144, down one dollar from July.  The cost per square foot of all homes sold in June decreased to $ 161, also down one dollar from July.

The overall sales price for REO homes was 103.2% of the final asking price, and 99.9% of the original asking price.  The banks are pricing these homes well and they are selling fast.  The bargains that were once available no longer exist.

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all home sold:  in August, $10.50 per square foot.  That is a $ 26.250 savings on a 2500 square foot home, not a small sum.

The data follows:

Folsom, CA Sold BANK OWNED Home Data August 2009

Folsom, CA REO (BANK OWNED) SALES DATA FOR AUGUST 2009

This is a continuation of my study of more than two years of Bank Owned home sales data for Folsom, CA.  This report covers REO homes sold in August of 2009.

There were 10 REO homes sold in August, exactly half of the number that sold in July.  This is the smallest number of REO homes sold in Folsom during any month for over a year and a reflection of the fact that there are less REO homes on the market.  The average days-on-market dropped from 32 in July to 22 in August.  A full 70% of the REO homes that sold were on the market less than two weeks.  None of the REO homes that sold in August were on the market for more than 90 days.  Most are well priced when they hit the market and they are not lasting long.

The 10 homes sold represent only 19.6% of all homes sold in Folsom, down considerably from June and July.  The total number of homes that sold in Folsom in August was 51, also down from 65 in July.

The overall home inventory in Folsom is presently 269, a 5.3 month inventory, indicating a seller’s market.

The cost per square foot of REO homes in August increased to $ 179, up from $ 170 in July and $ 159 in June.  The cost per square foot of all homes sold in June decreased to $ 187, up five dollars from July.

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented only a 4.2% savings for REO buyers.  This number has been trending down for several months.  Short sales are having an impact here.  So REO sales are not the savings for buyers that they once were.

The overall sales price for REO homes was 107.4% of the final asking price, and 105.8% of the original asking price.  In August only 20% of the REO homes that sold did so for less than the asking price! The market has changed once again.

However, the banks are still pricing these homes well and in August there was an eight dollar per square foot savings, compared to the cost of all homes sold.  That is still a $ 20,000 savings on a 2500 square foot home.

The data follows:

Folsom, CA REO (Bank Owned) Home Sales Data –July 2009

Folsom, CA REO (BANK OWNED) SALES DATA FOR JULY 2009

This is a continuation of my monthly report on Bank Owned home sales data for Folsom, CA.  This report covers REO homes sold in July of 2009, the latest in my two year long study.

There were 20 REO homes sold in July, six more than sold in June.  The average days-on-market increased to 32, up from 30 in June.  REO homes are still selling quickly.  Of the REO homes sold, 40% were on the market for less than two weeks.  Some of the older inventory has been cleaned out.  Only one of the homes sold was on the market for over 100 days. 

The 20 homes sold represent 30.8% of all homes sold in Folsom, up from 24.6 in June. 

The cost per square foot of REO homes in June increased to $ 170, up from $ 159 in June.  The cost per square foot of all homes sold in June decreased to $ 182, down three dollars from June. 

The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented only a 6.6% savings for REO buyers.  

The overall sales price for REO homes was 99.5% of the final asking price, and 96.3% of the original asking price.  This proves once again that an expectation of buying a Bank Owned home for fifty cents on the dollar is a pipe dream. Unfortunately, some self-proclaimed experts may still be preaching about 50% savings to the uninformed and gullible. 

The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all home sold:  in June, $12 per square foot.  That is a $ 30,000 savings on a 2500 square foot home, not a small sum.  

 

El Dorado Hills, CA SOLD Home Cost Pe Square Foot 2008 – June 2009

El Dorado Hills, Ca SOLD home cost per square foot.

There are many ways to measure property values in the housing market.  One that Realtors frequently use is the sold property cost per square foot.  This is one of the more valid measurements at our disposal.

I have been measuring the sold REO (Bank Owned) property statistics for El Dorado Hills, Ca for two years and post a monthly report of our activity.

I have decided to compare the sold cost per square foot of REO homes and the sold cost per square foot of ALL homes sold.  The chart below reports those numbers for the past year and one half.  Although there are a few blips, the trends are clear.  Housing prices have fallen consistently during the measurement period.

One fact worthy of note is that the sold cost for ALL homes sold has increased in June over May, the first month over month increase in some time.