Short Sales

This is not going to be easy. The essence is easy, but there are many facets, many ramifications, that complicate matters. At base, a short sale takes place when the mortgagor, the lender, agrees to let the mortgagee, the borrower, transfer title to someone for an amount less than the balance owing on the mortgage. The only certainty in the transaction is that the buyer is guaranteed clear title as to the mortgage in question. Nothing else is certain. The short sale agreement, from the lender perspective, is granted because it presents the least loss scenario, or the best of a bad situation. Faced with the certainty of foreclosing and unable to identify any means of collecting on the note, the lender offers some agreement to the borrower. No one other than legal counsel is in a position to advise the borrower that the proffered agreement is in their best interest. There are significant tax and legal consequences and financial considerations that can only be identified by a professional in real estate law as they relate to an individual borrower. All agreements are not the same. All borrower circumstances are not the same.
Because real estate agents live to secure listings to sell property, and because the market has tightened up considerably, a cottage industry has sprung up, holding seminars for real estate agents for a fee of course, teaching them how to cash in on the booming foreclosure market. One of the ways is to advertise as short sale experts, promising some extra knowledge that will make their service more valuable. Keep in mind that a short sale listing is just another listing. A little more work once an offer to purchase comes in, but still just another listing, and it is deceptive to suggest that there is some special training or skill that will serve your interests. Only you can negotiate with your lender for the terms of your agreement, or your lawyer if you will only hire one as I suggest. Get legal help. If a short sale agreement is determined to be what you need, negotiate it, then shop for a real estate agent you think will work hardest for the least cost. Compare services and fees, just as with a regular listing for sale. From a buyer perspective, there is no necessary advantage in looking at short sale listings in search of a bargain. All lenders are different and will have differing flexibility in their view of fair market value. Keep in mind that your negotiation to purchase will require satisfying the underlying agreement for the short sale, and the lender is in firm control of that. For practical purposes you should simply find the home you like, decide how much it's worth to you, and negotiate within that limit, regardless of the type of offering.
One other thought. As mortgage brokers, as well as real estate brokers, we're held to some pretty high standards for our conduct. Since we know that a great number of the impending foreclosures, or defaults, are related to contracts that were entered into by deceptive means; misrepresenting income, occupancy, bank balances, employment, source of down payment, etc., if we are asked to represent a client in a short sale we will ask questions to determine if these events took place. If we determine that fraud was involved we will refuse to participate. Lenders are entitled to protect themselves and as licensed professionals we are obliged to protect them. If the contract involved fraudulent representations the lender is not obliged to enter into any agreement, and can in fact move rather swiftly in both civil and criminal proceedings to find relief.
For a final bunch of thoughts. If default is imminent, call your lender. All lenders have loss mitigation departments. Keep in mind that the loss they want to mitigate is theirs, but if it can be worked to your advantage, listen to them. Seek professional help immediately. This could be a mortgage broker you trust since there are some programs that might help you. Do not seek the advice of sales people until you have determined from legal counsel that your best interests are served by that decision. The web is filled with foreclosure sites. All promise for a fee to avoid foreclosure. Not likely. You or your attorney need to talk to your lender. Get information about the timeline for default/foreclosure actions. From our site you can access title companies that will provide you the information. Lacking that, call us. We'll get something to you. Here are some FHA sites with info about about a temporary program for helping people in some special circumstances. If you think you qualify, you must have your application in by Dec. 31. We can do that for you if it works for you. http://www.fha.gov/about/fhascusqa.cfm http://www.fha.gov/about/fhasfact.cfm
We're trying to locate a foreclosure consumer advocate with free legal help in our market area. So far no luck. If you know of one please call and let us know and we'll publish for all to share.

As usual,
Thanks for visiting

Foreclosures

I hope with this blog to provide a little food for thought, not a group of solutions. As much as most of us enjoy watching magicians dazzle us with their dexterity and their skill at misdirection, watching politicians and others of similar persuasion is almost as much fun, but a lot tougher on the audience if you miss how the trick is done. Our governator recently showed up on TV with a group of like minded folk having a meeting to discuss what could be done to protect the consumer from the threat of foreclosure. That's what they said anyway. Keeping in mind that there are two parties to a foreclosure, the lender and the borrower, and the borrower probably owes more than the home is worth. The lender on the other hand has a significant dollar investment, and if foreclosed upon the collateral is going to devalue farther and produce a whopping loss. The borrower is probably not a significant campaign contributor, the lenders probably are. It seems to follow that what was said and what was intended are not the same thing. Countrywide, rapidly becoming notorious, GMAC, and other lenders are apparently offering program modifications to keep payments at current levels rather than resetting to the higher levels contracted for originally. This is characterized as a socially and ethically good thing to do for the benefit of the borrower. Since social and ethical motivation has been absent until now, the reasoning is suspect at least. The lenders are faced with situations which are going to cause them to lose either a lot of money, or a lot more money, and keeping some income stream is preferable to causing a substantial outflow, or asset reduction. Having suggested that these parties are lying in their teeth about the motivation for their actions, there remains the valid argument that the greater social and economic purpose will be served by preventing as many of these foreclosures as possible. The repercussions of foreclosures on other properties in the vicinity, either near as in the same block, or even in the same community, would be great and even potentially devastating, and these repercussions would afflict people who were not in any way culpable in creating the problem. Clearly we have some issues to resolve and some strategies for resolution are urgently called for. Just as clearly, the issues need to be identified for what they are and dealt with reasonably, not with the dexterity of a magician but the thoughtfulness of a statesman. There is blame aplenty to be shared, and the pointing out of errors could make for some good historical reference, but for now, solutions requiring some intelligent thought and action should be the order of the day. This is not Philosophy 101 where we may discover some universal truth susceptible of proof from any direction. We need some expedient resolution, and soon.
For anyone facing the possibility of default on a mortgage I urge you to get educated as to the process and the timeline. There are links on our site to Title companies that can provide you some information in that respect, and possibly some description of short sales and other remedial possibilities. If that doesn't work call our office,and we'll get some information to you.
The next blog is going to talk about short sales and the real estate agents' role as we see it. We encourage you to first consult an attorney. Not a consultant, not a real estate agent, not your uncle Willie who once had a car repossessed, a real estate attorney. One national study predicts 20% of sub-prime loans in Chico will go into foreclosure. That's one in five, and we need to get ahead of that curve if possible.
As usual,
Thanks for visiting.

Thanksgiving

It's that time of year again when real estate slows considerably and thoughts of houses shift to thoughts of "homes", and families, and loved ones. And that's a good thing. We're particularly surrounded this year by bad news; falling dollar, rising oil, now trillion dollar losses in the credit markets, and escalating foreclosure rates. The general economic mood is somber, as well it should be, but we are a resilient lot and will put our emphasis on the values of family and friends, and this time of the year especially reminds us that the warmth of these associations far outweighs the chill of economics.
We hope that you can join with us in an appreciation for who we have rather than what we have, and the notion of thanksgiving that we celebrate is for the support of all of those with whom we share the daily travails; family, friends, co-workers.
Enjoy the holiday, and as usual,
Thanks for visiting.

Tumultuous Times

Almost all of the news relating to real estate and real estate financing has been uniformly bad, so why add more to the pile. Just a capsule view of the latest, and then on to more positive things. I may be the only one in the world amazed by the relaxed view of losses that begin with the letter B. Billions are the unit of measure for investment firms and investment banks, and now along comes GM with a third quarter loss of 39 billion. Those are all figures that exceed the GNP of many countries in the world. Mortgage foreclosures are double the year ago figures, oil prices are about to hit $100, and the value of the dollar is declining. Since we depend on oil so heavily and since we depend on imported products so heavily, the latter two circumstances have a significant potential for pain. Contrary to what the doctor tells you, this may "pinch" more than a little bit.

On the plus side of things, mortgage interest is low, existing home inventory in the Chico market is down about 15%, and while prices are still coming down, it is not precipitous. Buyers are being more cautious, as are mortgage underwriters, so while the money to buy is available it is not being dispensed recklessly.

From our standpoint we are aggressively marketing loan products, both commercial and residential. We are able to deliver sound, safe financing or refinancing on any type of real estate, and at very favorable rates. Turn times for residential mortgages have always been short, but we are able to offer very fast turn times on commercial loans as well.

We're trying something new for us and are using billboard advertising in the Chico area. Because we are so fanatic about the use of the internet for real estate, the most effective tool available, our billboard is designed to direct traffic to our website. If you haven't explored it recently there are some new additions, Cyberhomes has been added for home valuation, we're co-branded with them, so now both they and Zillow are available. Also new is a link to free, confidential credit reports, plus a bunch of other good stuff. Our core purpose as we see it is to provide a trouble-free, worry-free, inexpensive, real estate experience. Most service, least cost. Our site is simply our way of introducing us to you, and providing as much information as possible, about houses, mortgages, and the communities we serve.
As usual
Thanks for visiting