Short sales are very common in San Diego California and becoming increasingly common in Sarasota and Bradenton Florida. However, I have been contacted by multiple homeower's concerned that the bank is going to seek a deficiency against them (after a short sale). How can that be when so many real estate professionals have been trained to believe the short sale means settlement in full. Many people homeowners are under the same impression that that a short sale will automatically release them from deficiency liability so they just go ahead with the process.
I can understand the confusion. Lots of short sale advisors on the internet say the owner sells the property in exchange for a settlement in full. What these advisor can not say is that they must negotiate the deals and review the legal documents. Why don't they say it? If you have been reading my blog, you know.
Some banks state expressly in in their documents that the short sale is a release of deedonly and then state in the instructions to the closing agent that the homeowner is responsible for note. It is my understanding they make the borrower sign this document at the closing table.
At least in some instances Countrywide tells the closing agent it will not seek a deficiency under certain circumstances. However, if Countrywide were to go into a reorganization is that document binding as to the borrower.
My advice to homeowners: do not agree to a short sale unless your are satisfied that you will not be responsible for a deficiency and/or tax liability.
My other advice to homeowners - do not go to the short sale closing table unless you are with an attorney licensed in your state.
Friday, September 21, 2007
Tuesday, September 11, 2007
Fed Banks taking over? Conspiriacy proven?
Bloomberg.com: Worldwide
If you are homeowner contemplating selling your upside down or almost upside down property, is this good news or bad. Countrywide is probably illiquid and who knows how far from being upside down themselves. The question is what are these banks going to get for their cash infusions.
I am know conspiracy theorist but those anti federal reserve bank guys said this was going to happpen. I was wondering how, now we know, they buy the biggest most broke home lender out there. Will they foreclose or will they agree to pre-foreclosure workouts. With one choice we will all be toast. The other probably mean two to three years of short sales and foreclosure before we see a supply demand balance at lower prices.
If you are homeowner contemplating selling your upside down or almost upside down property, is this good news or bad. Countrywide is probably illiquid and who knows how far from being upside down themselves. The question is what are these banks going to get for their cash infusions.
I am know conspiracy theorist but those anti federal reserve bank guys said this was going to happpen. I was wondering how, now we know, they buy the biggest most broke home lender out there. Will they foreclose or will they agree to pre-foreclosure workouts. With one choice we will all be toast. The other probably mean two to three years of short sales and foreclosure before we see a supply demand balance at lower prices.
Wednesday, September 5, 2007
California Association of Realtors pushing for larger loan limits
Gmail - C.A.R. Newsline: "C.A.R. URGES SWIFT PASSAGE OF GSE AND CONFORMING LOAN LIMIT REFORM BILL C.A.R. is pushing for swift passage of a bill in the Senate calling for increases in loan limits to match median home prices in California and other high-cost areas and the creation of a new regulator to oversee Government Sponsored Enterprises (GSEs), such as Fannie Mae and Freddie Mac. Vigorous support helped push the measure, HR 1427, through the House in May, but it has since stalled in the Senate. The bill would raise the current maximum size of a conforming mortgage loan from $417,000 to a capped amount at 150 percent of the national limit or $625,500, allowing low- and moderate-income home buyers in high-cost areas better access to low-cost, low-rate fixed mortgages. C.A.R. President Colleen Badagliacco was recently quoted in a 'San Jose Mercury News' story on the issue, saying that a loan of $417,000 'may buy a mansion in Des Moines but it doesn't buy anything in San Jose.'"
Larger loan limits should help increase demand in markets in San Diego like Carlsbad and San Marcos.
Larger loan limits should help increase demand in markets in San Diego like Carlsbad and San Marcos.
Saturday, September 1, 2007
san diego refinance foreclosure info
Should a San Diego or California homeowner refinance their loan in this market.
Questions
Is the loan you will retire a purchase money loan?
Is there a risk your property is upside down or will go upside down
Is there chance you will not be able to make payments
Do you have other assets to protect
Would you worry about a the potential for tax liability for loan forgiveness
Do you have second loan or a heloc as well?
These a just a few of the questions that need to be considered.
Why?
If you have a non recourse loan in California you would be giving up some of your protections against deficiency judgments and protection from tax liability for loan forgiveness. Therefore, you have to do a cost benefit analysis.
I remember a time when my old lender countrywide would call my house and ask us if we wanted to refinance our mortgage. I never remember them advising me I might be losing very vital protections.
If you have refinanced out of a purchase money loan and now you are upside down you might want to speak with an foreclosure attorney before you take any further action.
The more I work with upside down homeowners the more I realize that the predatory lending and the related disputed debt argument must be considered as part of your deed in lieu or short sale negotiations with the lender.
Questions
Is the loan you will retire a purchase money loan?
Is there a risk your property is upside down or will go upside down
Is there chance you will not be able to make payments
Do you have other assets to protect
Would you worry about a the potential for tax liability for loan forgiveness
Do you have second loan or a heloc as well?
These a just a few of the questions that need to be considered.
Why?
If you have a non recourse loan in California you would be giving up some of your protections against deficiency judgments and protection from tax liability for loan forgiveness. Therefore, you have to do a cost benefit analysis.
I remember a time when my old lender countrywide would call my house and ask us if we wanted to refinance our mortgage. I never remember them advising me I might be losing very vital protections.
If you have refinanced out of a purchase money loan and now you are upside down you might want to speak with an foreclosure attorney before you take any further action.
The more I work with upside down homeowners the more I realize that the predatory lending and the related disputed debt argument must be considered as part of your deed in lieu or short sale negotiations with the lender.
Thursday, August 30, 2007
Record decline in Home prices
Real Estate price tracking indices are finally catching up with reality. The case shiller composite which seems a bit sluggish is showing a record annual decline. The true home reality in many markets is if you do not own a home which shows perfectly on a great lot in a very desirable area most likely your home price is down enough to make you wish you had sold. Prices are even more depressed if there are other homes like yours for sale. (I do not say this with glee.)
There are two main reasons causing the news to report information which does not match your purse. One it has been reported that foreclosures are reported as sales. Therefore we are getting a lot a sales at the 2005 and 2006 100% finance price. And two, most of the reports and indices track the median price of a home. Every Realtor knows you do not buy medians you by price per square foot. I know examples where price per square foot is down 20% while the median is down less than 10%. In other words sales prices are staying higher as buyers get more house for the money.
The S&P/Case-Shiller(R) U.S. National Home Price Index Posts a Record Annual Decline in the 2nd Quarter of 2007:
"2007 Q2/ 2007 Q1/ 2007 Q2 2007 Q1 2006 Q4 1-Year Level Change (%) Change (%) Change (%) U.S. National Index 183.89 -0.9% -0.9% -3.2% June 2007 June/May May/April 1-Year Metropolitan Area Level Change (%) Change (%) Change (%) Atlanta 136.12 0.8% 0.6% 1.6% Boston 171.30 0.2% 0.8% -3.7% Charlotte 135.05 1.2% 1.1% 6.8% Chicago 165.96 0.2% -0.1% -0.7% Cleveland 118.54 0.1% 0.8% -3.6% Dallas 126.53 0.8% 0.6% 1.6% Denver 138.09 1.3% 1.1% -1.0% Detroit 109.57 -0.5% -2.4% -11.0% Las Vegas 221.86 -1.3% -0.8% -5.1% Los Angeles 262.12 -0.4% -0.1% -4.1% Miami 264.89 -1.7% -1.5% -4.8% Minneapolis 164.35 0.0% -0.2% -3.8% New York 208.52 -0.8% -0.8% -3.4% Phoenix 212.52 -0.7% -0.5% -6.6% Portland 185.76 0.3% 0.9% 4.5% San Diego 231.37 -0.2% -0.4% -7.3% San Francisco 209.48 -0.7% -0.3% -4.0% Seattle 191.92 0.7% 0.9% 7.9% Tampa 219.37 -1.2% -0.9% -7.7% Washington 233.52 -0.8% -0.3% -7.0% Composite-10 217.07 -0.5% -0.4% -4.1% Composite-20 199.18 -0.4% -0.3% -3.5% Source: Standard & Poor's Data through June 2007"
There are two main reasons causing the news to report information which does not match your purse. One it has been reported that foreclosures are reported as sales. Therefore we are getting a lot a sales at the 2005 and 2006 100% finance price. And two, most of the reports and indices track the median price of a home. Every Realtor knows you do not buy medians you by price per square foot. I know examples where price per square foot is down 20% while the median is down less than 10%. In other words sales prices are staying higher as buyers get more house for the money.
The S&P/Case-Shiller(R) U.S. National Home Price Index Posts a Record Annual Decline in the 2nd Quarter of 2007:
"2007 Q2/ 2007 Q1/ 2007 Q2 2007 Q1 2006 Q4 1-Year Level Change (%) Change (%) Change (%) U.S. National Index 183.89 -0.9% -0.9% -3.2% June 2007 June/May May/April 1-Year Metropolitan Area Level Change (%) Change (%) Change (%) Atlanta 136.12 0.8% 0.6% 1.6% Boston 171.30 0.2% 0.8% -3.7% Charlotte 135.05 1.2% 1.1% 6.8% Chicago 165.96 0.2% -0.1% -0.7% Cleveland 118.54 0.1% 0.8% -3.6% Dallas 126.53 0.8% 0.6% 1.6% Denver 138.09 1.3% 1.1% -1.0% Detroit 109.57 -0.5% -2.4% -11.0% Las Vegas 221.86 -1.3% -0.8% -5.1% Los Angeles 262.12 -0.4% -0.1% -4.1% Miami 264.89 -1.7% -1.5% -4.8% Minneapolis 164.35 0.0% -0.2% -3.8% New York 208.52 -0.8% -0.8% -3.4% Phoenix 212.52 -0.7% -0.5% -6.6% Portland 185.76 0.3% 0.9% 4.5% San Diego 231.37 -0.2% -0.4% -7.3% San Francisco 209.48 -0.7% -0.3% -4.0% Seattle 191.92 0.7% 0.9% 7.9% Tampa 219.37 -1.2% -0.9% -7.7% Washington 233.52 -0.8% -0.3% -7.0% Composite-10 217.07 -0.5% -0.4% -4.1% Composite-20 199.18 -0.4% -0.3% -3.5% Source: Standard & Poor's Data through June 2007"
Saturday, August 25, 2007
Short Sales Effect Credit - Impact of Short Sales on Credit Reports - How Short Sales Affect Credit
Lately I have been getting a lot of questions for California Real Estate owners about how a short sale will effect their credit. I am giving a link to this information because I have found some of this realtors information to be pretty good but not perfect in the past. I have also found many Realtor cite making roughly the same claims about the effect on an upside down homeowners credit. However I rarely see the cite attribute the information to anyone.
Next, I note that this information may be old and getting older. As I have reported elsewhere on this blog it has been reported the Fico people are working to make a short sale and a foreclosure have an equivalent effect on your credit report. It makes sense because a short sale is really no better than a deed in lieu. Finally, I would like to remind people that you really need both a Realtor and an attorney working as a team to create your best solution.
Short Sales Affect Credit - Impact of Short Sales on Credit Reports - How Short Sales Affect Credit
here is a summary of what the realtor resported:
Fico points lost:
* Foreclosure or Deed-in-Lieu of Foreclosure
250 t0 280 points
* Short Sale
80 to 100 points
Waiting Period Before Buying Another Home
* Foreclosure or Deed-in-Lieu of Foreclosure
36 months till you can get a reasonable rate on your loan
* Short Sale
18 months
Please remember to make sure you are crafting your solution to eliminate deficiency judgments and/or tax liablity for loan forgiveness. (something you can do by yourself or with your lawyer) If your Realtor claims to be able to negotiate these agreements for you - it may be a good thing - because imo they will be practicing law without a license. Just make sure they work for a large non indenpendent broker with deep pockets.
Next, I note that this information may be old and getting older. As I have reported elsewhere on this blog it has been reported the Fico people are working to make a short sale and a foreclosure have an equivalent effect on your credit report. It makes sense because a short sale is really no better than a deed in lieu. Finally, I would like to remind people that you really need both a Realtor and an attorney working as a team to create your best solution.
Short Sales Affect Credit - Impact of Short Sales on Credit Reports - How Short Sales Affect Credit
here is a summary of what the realtor resported:
Fico points lost:
* Foreclosure or Deed-in-Lieu of Foreclosure
250 t0 280 points
* Short Sale
80 to 100 points
Waiting Period Before Buying Another Home
* Foreclosure or Deed-in-Lieu of Foreclosure
36 months till you can get a reasonable rate on your loan
* Short Sale
18 months
Please remember to make sure you are crafting your solution to eliminate deficiency judgments and/or tax liablity for loan forgiveness. (something you can do by yourself or with your lawyer) If your Realtor claims to be able to negotiate these agreements for you - it may be a good thing - because imo they will be practicing law without a license. Just make sure they work for a large non indenpendent broker with deep pockets.
Real Estate Auctions
Interesting article about foreclosures and auctions. Note, each state has different rules for instance California's rules for redemption by foreclosed former owners are different.
Let the Home Auction Bidder Beware: "'Banks have a duty to bid as much as they are owed' on an outstanding mortgage, says Ryan Slack, chief executive of PropertyShark.com, an online real estate research company in New York City. 'But investors don't want to buy a property unless it's [priced] at a discount,' he adds. Indeed, at a July 13 foreclosure auction at the Queens County, N.Y., Supreme Court building, only four of the 18 properties auctioned that day attracted any bids from the public. The rest, observers said, ended up in the hands of their mortgage lender. But the ability to obtain troubled properties doesn't end there: Some time after the lender takes title to foreclosed properties, a new selling phase typically begins. That's when banks try to shed unwanted properties - typically by selling them through a real estate agent or by offering them at a second auction. These post-foreclosure auctions are attractive to lenders, experts say, because they can unload their mounting stocks of properties on a specific date. Thus, 'you're seeing [post-foreclosure auctions] of 20 to 30 properties at a time, held at conference centers or hotels,' says Rick Sharga, marketing vice president at RealtyTrac Inc., a real estate information company in Irvine, Calif. 'In the past, [such lenders] didn't have enough inventory' to hold such events. For"
Let the Home Auction Bidder Beware: "'Banks have a duty to bid as much as they are owed' on an outstanding mortgage, says Ryan Slack, chief executive of PropertyShark.com, an online real estate research company in New York City. 'But investors don't want to buy a property unless it's [priced] at a discount,' he adds. Indeed, at a July 13 foreclosure auction at the Queens County, N.Y., Supreme Court building, only four of the 18 properties auctioned that day attracted any bids from the public. The rest, observers said, ended up in the hands of their mortgage lender. But the ability to obtain troubled properties doesn't end there: Some time after the lender takes title to foreclosed properties, a new selling phase typically begins. That's when banks try to shed unwanted properties - typically by selling them through a real estate agent or by offering them at a second auction. These post-foreclosure auctions are attractive to lenders, experts say, because they can unload their mounting stocks of properties on a specific date. Thus, 'you're seeing [post-foreclosure auctions] of 20 to 30 properties at a time, held at conference centers or hotels,' says Rick Sharga, marketing vice president at RealtyTrac Inc., a real estate information company in Irvine, Calif. 'In the past, [such lenders] didn't have enough inventory' to hold such events. For"
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