El Dorado Hills Lotus Blossom

The Lotus blossom is one of the most ephemeral of all flowers.  The Lotus plant blossoms once a year if you are lucky. When the blossom opens it lasts for two or three days at best.  This is a photo that I took in my courtyard in El Dorado Hills at about 8:00 AM this morning.  By noon the blossom had closed, somwhat the worse for wear as a result of that effort.  It might blossom again tomorrow, God only knows.

Enjoy!

National Mortgage Delinquency Numbers for Q1 2009

The Certified Distressed Property Institute has just released the National Mortgage Delinquency Numbers for the first quarter of 2009.  These are statistics compiled by ethe Mortgage Broker’s Association and reflect a significant increase in the number of homeowners in trouble with their mortgage.

The Certified Distressed Property Institute trains real estate agents to better help distressed homeowners avoid foreclosure.  Their web site is a wealth of informations on the subject and worth a visit.  Check it out at:

http://www.CDPE.com There are over 500,000 licensed real estate agents in California.  There are only a little over 8000 certified CDPE agents in the country.  I recommend that distressed home owners consult a CDPE agent for assistance.

Distressed homeowners can find help in Sacramento, El Dorado and Placer counties by contacting Mike West, Realtor, CDPE, e-PRO & Sr. Loan Consultant.  (916) 337-0658

LOAN MODIFICATION FRAUD EXPOSED BY CALIFORNIA DRE

CONSUMER ALERT!

 California Department of Real Estate issues a fraud warning for Home Owners in Financial Distress!

FINALLY, the California Department of Real Estate has issued a fraud warning to financially distressed California home owners, warning about loan modification scams rampant in the market place today.  Last July, the DRE had fewer than 10 complaints involving loan modification companies; today the department has 750 pending investigations.  In addition, just since last October the DRE has filed more than 200 Desist and Refrain Orders!  

Obviously, the hucksters and con artists have found easy pickings with their loan modification scams. Unfortunately, not enough of these people will end up in jail.

A list of the companies that the DRE has filed an action against can be viewed at http://www.dre.ca.gov/cons_drs.asp . If you have been considering using a loan modification company, or are presently involved with one, check the list to ensure that they are not included.

The DRE does mention that “not all firms who collect advance fees for loan modification services do so illegally.”  However, if you are considering employing the services of a company that does charge fees up front they warrant very close scrutiny.  Real Estate brokers participating in this practice must have their advance fee agreement reviewed by the DRE legal staff prior to its use.  Those not licensed by the DRE do not have to submit to this scrutiny.

The California Association of Realtors reports that there is a new loan modification scam by hucksters using legislative bill number 3648 to make them look like a government entity, complete with a seal closely resembling a government seal.  They are not affiliated with the government.

A copy of the complete DRE consumer alert is available on request.  Simply e-mail your request to Mike@SellYourVilla.com or call 916 337-0658.

LOAN MODIFICATION PART II

LOAN MODIFICATION

Part II

This is a continuation of yesterday’s post on Loan Modification.

The Market  In recent years investors were clamoring for ever increasing returns on their investments.  Financial markets developed more risky loan products to meet that demand, knowing full well that in order to increase the reward there had to be an increase in risk.  These products allowed buyers to qualify for purchases that they could not otherwise afford and, they met the investor’s need for a higher return in investment.  Real estate related financing was riding high.

Home buyers were seduced into accepting loans that provided initially low monthly payments because those products allowed a buyer to purchase a larger and nicer home. Some even accepted negative amortization loans (a loan with an allowable minimum payment that did not cover the interest cost of servicing the outstanding balance.  Each month the shortfall between the minimum acceptable monthly payment and the actual cost to cover the outstanding principal was added to that outstanding principal!).  Many buyers found themselves an additional $ 10,000 in debt after having a neg-am loan for only six months!

Then the bubble burst.  Values stopped appreciating and immediately went into free fall.  Buyers disappeared and the exit strategy for many financially stretched homeowners evaporated.  They could not just sell and walk away with a clean financial record as they originally planned.  By the time they realized what had happened they were upside down on the largest investment most of us will ever make: our home.

Facing foreclosure is not a pleasant prospect.  Foreclosure and bankruptcy are stigmas that remain on a borrower’s credit report for seven years, making it difficult or even impossible to make any kind of a purchase on credit for those seven years.  Merchants who will extend credit will exact excruciatingly high interest rates. 

So, how can one remain in their home and avoid foreclosure? 

Unfortunately, many distressed homeowners will not be able to do so. However, there are options that will work for many. 

The first step is to attempt to get a loan modification.   

 

How do I qualify for a loan modification?  In order to start the process you must ask.    Prior to contacting your lien holder you can quickly complete an eligibility test at http://www.MakingHomeAffordable.gov.  This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP)

Find a list of mortgage lenders and servicers at http://www.HomeNow.org.

Once you have completed this test it is time to call your lien holder.  Do Not Delay.  Have the information listed in yesterday’s post ready so that you are fully prepared to discuss your situation with them. Approach this call as a problem solving exercise, without emotion or placing blame.  The old adage that you can catch more flies with honey than you can with vinegar applies in spades. Different lenders have different names for the department that you should talk to. Common names may be loss mitigation, mortgage modification or H.O.P.E.

Loan Modification Experts  A word of caution at this point.  In the last year or so we have seen a proliferation of loan modification experts entering the market place.  Many collect fees up front: a RED FLAG.  Unfortunately, the business is rife with hucksters and con-artists who prey on distressed homeowners.  The doctrine of caveat emptor (let the buyer beware) applies.  Check references before you open your wallet.

What is a Home Affordable Refinance?   If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance.  This program will allow qualified borrowers to refinance their home and often lower payments.

A borrower can find out if their mortgage applies by entering their property information in each of the following web sites.

How do I know if my loan is owned by Freddie Mac?

Website:   ww3.freddiemac.com/corporate

How do I Know if my loan is owned by Fannie Mae?

Website:  lookup.fanniemae.com/loanlookup

What are the qualifications for a Home Affordable Refinance?  According to the resources provided by the government, the following is a list of qualifications:

The owner must occupy the property of a one – four unit property

The loan on the property is owned or securitized by Fannie Mae or Freddie Mac (see links above)

At the time you apply you are current on your mortgage payments (you have been more than 30 days late on your mortgage payments in the last 12 months, or you have had your loan for less than 12 months and you have never missed a payment)

You believe that the amount you owe on your first mortgage is about the same or less than the current market value of your home

You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

What if I don’t qualify, can’t afford my home, and owe more than it’s worth?   You are not alone and foreclosure is not your only option.  Some loan servicers are under contract with the investors which prohibit loan modification.  Others may not be willing to work with you for reasons that they will not disclose.

In these instances, you may wish to consider a short sale.  A short sale allows you to sell your home for less than you owe and avoid foreclosure.  We have clients who completed a short sale two years ago and are presently out shopping for another home.

Agents with the Certified Distressed Property Expert Designation have undergone extensive training in how to process and negotiate short sales.  Speak to your market expert to see if you may qualify.

Feel free to contact us.  We are always prepared to answer questions and help wherever we can.

Mike West

Certified Distressed Property Expert

(916) 337-0658

 

 

Loan Modification, What’s It All About

LOAN MODIFICATION

It is an unfortunate fact that far too many homeowners are in financial distress right now and are having trouble making their mortgage payment, or have stopped paying all together.  Many did not understand all of the ramifications of the commitment that they made when they signed their mortgage papers during escrow.  Others understood the possible changes that could be made at some time in the distant future but were sure that the worst case scenario would not happen to them.

Irrespective of the causes of this phenomenon, it has had a major impact on our economy, not to mention the families involved.  Many homeowners are struggling to meet their commitments even if they have not incurred financial hardship.  Some have decided not to continue to pay for a mortgage with a balance that far exceeds the current market value of their home.  Others have incurred a serious financial hardship that makes it impossible for them to continue to make their payments.

So what does a homeowner who is mired mortgage hell suppose to do?

Although most homeowners want to keep their home, the unfortunate truth is that many will not.  The individual homeowner’s circumstances and their mind set in dealing with their situation is the key to success.

The first step in trying to save one’s home is through loan modification.

What is a loan modification? A loan modification is a process through which your lien holder changes one or all of the following:

• Your interest rate
• Your principal balance through a reduction
• Your loan terms (examples: from adjustable to fixed rate, extend term of loan from 30 to 40 years, payment reduction for a specific period)

This process can allow borrowers to stay in their property when they can no longer afford their current payments.  Homeowner must provide documented proof of any hardship.

Why would a lender modify a loan? It is all about their bottom line!  They have realized that in some cases it is better for them to work out a solution with current borrowers to lower payments or possibly improve loan terms in order to keep homeowners in their homes.  The average foreclosure can cost a lender from 35 – 60% of the current value of a property, so keeping borrowers in their homes is frequently a cost effective business decision for the lender.

What do I need to qualify for a loan modification? According to the Making Home Affordable web site (http://www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:

• Information about your mortgage – such as a copy of your monthly statement
• Information about any second mortgage or home equity line of credit on the home
• Account balances and minimum payments on all other debts such as student loans, credit cards, installment loans
• Your most recent Federal income tax return
• Information and statements for all assets and asset accounts
• Information about your monthly gross income (before taxes) for your household, including recent pay stubs and documentation covering all other income

It is also advisable to include a letter describing any circumstances that caused your income reduction and/or the increase in other expenses (job loss, divorce, death in family, major illness, etc.).

More on loan modification to follow.

Mike West

Certified Distressed Property Expert

Always willing to answer questions and help when and where I can.

Short Sales 101 Part 1

Short Sales

 What is a short sale?   A short sale is transaction in which the seller is attempting to sell their property for less than they owe the lien holder or lien holders.  In almost all cases something has happened that prevents the homeowner from being able to make their mortgage payments.  

The difficult part of this process is getting the lien holder or lien holders to accept the short pay.  Short sale properties are available everywhere and offer the potential of being a GREAT BUY.  However, they usually take a long time to complete and, because many lien holders can not or will not accept a short pay, many attempts at a short sales fail.  Also, many buyers give up in frustration and move on to another property because they get tired of waiting for lien holder’s approval.

Do I qualify for a Short Sale?  Qualifications for a short sale include any or all of the following:

• Financial Hardship – an acceptable reason (as determined by the lien holder) causing the homeowner to have trouble affording their mortgage payment.  Some acceptable reasons include; death in the family, serious injury impacting a wage earner’s income, loss of job, major reduction in income… to name just a few.
• Monthly Income Shortfall – You have more month than money.
• Insolvency

In all cased the homeowner must document the reason they can not make their payments.  Tax returns, pay checks, documentation from employers are part of the paperwork required.

The fact that the value of your home has declined and your mortgage payment is too high given the current market value is not an acceptable reason.

More on Short sales will be posted soon.

California 90 Day Moratorium On Foreclosures. Is It Viable?

New Foreclosure Prevention Act For California Now Law

California’s new Foreclosure Prevention Act went into effect on May 22, 2009.  The object of the exercise is to delay the foreclosure process an additional 90 days, extending the period to a total of 180 days for those who qualify.  The object is to provide more time for lenders to work with borrowers to provide loan modifications, turning “non performing assets” into productive loans and keeping borrowers in their homes.

The question is, will it really help or is it just politics as usual?  As with so many of these statutes, in order for them to survive the political process little viable substance remains.  The end product is narrowly defined and the number of distressed home owners that will benefit is limited.

The 90 day moratorium applies ONLY if:

• The loan in default is in first position (a first, not a second)

• The loan was recorded between January 1, 2003 and January 1, 2008

• The borrower occupied the home as their principal residence at the time the loan became delinquent

• The loan servicer has not implemented a “comprehensive loan modification program

• The loan is not make, purchased or serviced by a California state

• or local public housing agency authority and he loan is not collateral for securities purchased by any such agency

• Imposing such a moratorium will not require the loan servicer to violate contractual agreements for investor-owned loans

• The borrower has not surrendered the property, as evidenced by a letter confirming surrender of the delivery of the keys to the lender

• The borrower is not currently in bankruptcy

• The borrower has not contracted with an organization, person or entity whose primary business is advising people who have decided to leave their homes regarding how to extend the foreclosure process and avoid their contractual obligations to mortgages or beneficiaries

It will be next to impossible to find a lender who does not claim to have a “comprehensive loan modification in place.”  Of course, the lender’s definition of a “comprehensive” program may differ slightly from the borrower’s definition.

Although contracts between loan servicers and investors are confidential, we assume that a substantial number prohibit the loan servicer from modifying loans.

State legislators are setting up a web site through which lenders can apply for exemption from the moratorium.  We expect that site to be busy once it becomes active.

A more extensive review of the statute can be found here:

http://www.cdpe.com/images/fbfiles/files/California_New_Foreclosure_Law.doc

Loan Modification: Is there a light at the end of the tunnel?

Is t Modificationhere a light at the end of the tunnel? 

Feedback indicates that the Federal Making Home Affordable program is having an impact.  Unlike the Hope for Homeowners program that was stifled by eligibility requirements and received less than 100 applications nation wide, the Treasury Department reports that over 120,000 homeowners have actually completed loan modifications with the Making Home affordable program.

It is good to hear that a Federal program is actually working.  Not just another marketing scam so prevalent in the market place today!

For the complete RISMEDIA story select this link:

http://rismedia.com/2009-06-11/federal-homeowner-program-may-be-making-a-dent-in-foreclosures/

 

 

Here is the link directly to the Making Home Affordable program:

www.makinghomeaffordable.gov

As always, let me know if I can be of any assistance in helping you with a distressed property situation.  I will be pleased to help.

 

 

Mike West

Realtor, Sr. Loan Consultant, e-PRO, Certified Distressed Property Expert

 

(916) 337-0658

SENIORS BEWARE: Not all reverse mortgages are created equal!

SENIORS BEWARE!

Not all reverse mortgages are created equal.

Federal banking regulators are concerned about reverse mortgages and related consumer protection issues.

Reverse mortgages are loans for borrowers over 62 years of age who can live off the equity they have in their homes as they get older.  There are no monthly payments for the borrower.  They are borrowing their equity.  After they die the home becomes the property of the bank.

Most reverse mortgages are insured by the Federal Housing Administration.  However, there are new products on the market that are “proprietary.”  These products offer the consumer less protection.

Concerned that the “proprietary” reverse mortgages have the earmarks of the subprime mortgages that were a major cause of the mortgage “melt down”, they are working to develop regulations to eliminate misleading marketing.

If you are considering a reverse mortgage make sure that the product you select is federally insured.

For more information select this link:

http://www.money.cnn.com/2009/06/08/real_estate/reverse_mortgages.reut/index?postversion=2009060813

AVOIDING FORECLOSURE

Homeowners in our area who may be having trouble making their mortgage payments or who have not made one or more payments.  They may be in a situation where they do not know their options.  The current financial market is confusing for many home owners and the onslaught of organizations wanting to prey on homeowners for a quick profit has grown alarmingly.  Page three of this letter provides you some contacts that you might find of use.

 Your options if you are facing FORECLOSURE

1.  Do Nothing – If a homeowner does nothing, they most likely will lose their home to foreclosure.  Loan applications always ask if you have been foreclosed upon.  Credit reports also disclose any foreclosures for a minimum of seven years. This will negatively affect an individual’s ability to obtain financing during those seven years.  This is NOT THE BEST OPTION.

2. Payoff/Refinance – Pay off the entire loan balance plus any default amount and all fees charges by the lender.  Usually, this is accomplished through a refinance of the debt.  The new debt is frequently at a higher interest rate.  There can also be hidden snags like prepayment penalties because of your recent default.  In order to accomplish this option you must have sufficient income and equity in your home to qualify.

 3. Reinstatement – Pay the entire default amount, plus interest, attorney fees, late fees, overdue taxes and various bank fees.  These charges add up quickly.

 4. Loan Modification – Work with your existing mortgage company to modify the terms of your present loan.  This may allow the homeowner to catch up on their loan commitment at a more affordable level.  To qualify, you must prove to the lender that you have fixed the problem that caused the default.  You must have sufficient income to satisfy the lender. In some cases they will allow you to change the term of the loan from 30 to 40 years, reducing the monthly payment.

 5. Forbearance – The lender may be able to arrange a repayment plan based on the homeowner’s financial situation.  The lender may even be able to provide a temporary payment reduction or a suspension of payments.  Documentation will be required by the lender to show that you will be able to meet the new payment plan requirements.

 6. Partial Claim – Obtain a loan from another lender for a second loan to pay back payments, interest and fees on the delinquent balance.  You must have the income and equity in the home to qualify.

 7. Deed in Lieu of Foreclosure – Giving the property back to the bank instead of letting the bank foreclose.  Banks usually require that the home be well maintained, all mortgage payments and taxes must be current.  Loan applications also ask if you have relinquished a deed in lieu of foreclosure: impacting your ability to obtain financing in the future . 

 8. Bankruptcy – This can liquidate debt and/or allow you more time.  You should consult an attorney if you are considering this option.

      Chapter 7 – Liquidation – To completely settle personal debt.

      Chapter 13 – Wage earner plan – A payment scheduled is worked out to pay off debts.   

      Chapter 11 – Business Reorganization – A business debt solution.

 

9. Sale – If there is sufficient equity, the homeowner can sell and pay off all debts resulting from the delinquency.  No lender approval is required.

 A Short Sale can be negotiated with your lender by your real estate professional if what is owed is more than the property’s value.  More about this on the next page. 

What Is A Short Sale & Why Should It Be An Option

 A Short Sale is when we list your home at a price that’s reflective of the comparable sales of similar homes in the area.  In doing so we obtain offers at today’s value and submit them to your lender(s) for acceptance as a short pay. 

Will it save my credit?   Nobody knows how it will affect your credit because the final determination is made by the decision maker reviewing your credit in order to approve a purchase.  In general, if you are not behind on payments or at an early stage in your missed payment, the missed payments will have less of an impact on your credit.  Foreclosures and Bankruptcies are the worst items you can have on a credit report.  They will impede or prevent you from borrowing on credit for seven years.^*   Depending on how your lender reports you short pay, “settled for less than owed” or just “settled” may have less impact than foreclosure or Bankruptcy.   WE believe anyone going through a Short Sale of Foreclosure needs to take a Consumer Credit Counseling to learn the steps to re-establish their credit for the future.   

        * Fair Credit Report Act allows the legal action of Foreclosure to remain for seven years of the date of filing.   

 What are some of the benefits?  A sense of pride that you attempted to work our your situation in the best possible way, is a frequent response from our clients.  Less stress from the constant collection calls.  More time in your home to create a better plan for moving.  Your home remains vacant less than it would as a Foreclosure (important for the friends in your neighborhood who would be impacted by your home being vacant).  Possible relocation payment. ^**

                      ** Relocation payment of $ 1500 proposed as part of the Making Home Affordable Program

 What are some of the challenges?  They can take a long time.  Lenders require copious documentation and paperwork.  Lien holders are not required to accept a short pay.  They require a lot more work, so most agents are reluctant to take on the responsibility. 

 Our Solution  Heritage Oak Properties provides Short Sale Representation to Sellers in the sane manner we represent all of our clients every day, with  sensitivity, respect and honest representation.   We tell you up front what we need to complete your Short Sale and provide updates weekly, more often when required.  Your home will be marketed professionally with maximum Internet exposure (leveraging our knowledge as an e-PRO) , color flyers, multiple photos and more.  The home is not marketed to the public as a Short Sale and there are no Pre-Foreclosure signs or riders.  We are required to advise other Realtors of the status, but will only advise serious buyers as part of the required disclosure process.  We will also keep you apprised of new legislation that may assist you during and after the completion of the Short Sale.

We have completed an extensive course covering the sale of distressed properties and hold a CDPE (Certified Distressed Properties Expert) designation.  While the “Expert” may be a bit grandiose, the knowledge is priceless.  It also places us in a community of Relators who hold this designation, providing an inexhaustive resource to difficult and unique situations.

 

CONTACT MIKE WEST TODAY

FOR A CONFIDENTIAL CONSULTATION AND INFORMATION PACKAGE.

 

(916) 337-0658

 

 Directory of References and Help Lines

 

Homeowner’s Assistance Foreclosure Line

Phone:     1-888-995-Hope

Website:  www.995Hope.org

 

 

U.S. Department Of Housing & Urban Development

Phone:     1-202-708-1112

Website:  www.HUD.gov

 

 

Fair Housing Administration

Phone:     1-800-Call-FHA (225-5342)

Website:  www.FHA.gov

 

HUD Approved Housing Counseling Agency

Phone:     1-800-569-4287 9AM – 5PM EST

Website:  www.HUD.gov

Our direct link to Sacramento HUD Approved Agencies: www.HUDApprovedAgencies.com

 

Making Home Affordable Program

Website:  www.makinghomeaffordable.gov