Tag Archives: Foreclosure

Foreclosure – What You Need To Know

After just closing another short sale transaction in Anaheim a few things came to mind. There are things that we often don’t say enough as real estate experts that are well versed in foreclosure prevention.

Did you know that many lenders are giving sellers thousands of dollars $$$ in relocation assistance at the close of escrow in a short sale transaction?

We have helped many clients successfully navigate away from foreclosure and have provided many options including loan modification, deed in lieu of foreclosure and short sale. Don’t face foreclosure alone! We are here to help and there is NO obligation.

Even if you’re not in foreclosure and are just having trouble making ends meat, reach us today to ask any of your real estate, lending or foreclosure questions.

Dustin and Leah Wise
The Wise Team at Keller Williams Realty
714-875-3667 call/text
Dustin@TheWiseTeamOC.com
BRE # 01520106

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Evictions on Hold for the Holidays

Freddie Mac and Fannie Mae announced a holiday moratorium on all foreclosed single-family homes that the mortgage giants own or guarantee, suspending all evictions between Dec 18 and Jan 3. Processing of the evictions will continue during this period, but families living in foreclosed homes will be able to stay in their homes.

“At this time of year we want to bring some relief to families who confronted financial difficulties and went through foreclosures,” says Chris Bowden, senior vice president of REO at Freddie Mac. “We also want to remind home owners going into the New Year facing financial challenges to reach out for help as soon as they can by calling their mortgage servicer.”

Freddie Mac and Fannie Mae are also issuing a holiday moratorium on foreclosed 2-4 unit properties.

While the mortgage giants will be putting evictions on a two-week holiday hold, they will continue to proceed on other pre- or post-foreclosure activities.

HOMEOWNERS: Foreclosure is not something a homeowner should face alone! We are homeowner advocates and are here to help. There is never any obligation and we have many years of experience with lending, loan modifications and foreclosure prevention. Don’t risk something so important as your house! Our services are FREE…..We’ve helped so many clients and have never charged a dime.

Reach us today for help:

Dustin and Leah Wise

The Wise Team at Keller Williams Realty

(714)875-3667 call/text

Dustin@TheWiseTeamOC.com

Source = RealtorMag

5 Mythbusters for Underwater Homeowners

Home values are going up, and many struggling homeowners are gaining equity in their property. But nearly 14 million U.S. homeowners remain underwater – with mortgages worth more than their homes.  

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More than 27 percent of U.S. homeowners with a mortgage, and nearly 20 percent in Orange County, had negative equity in their homes at the end of 2012, according to a report by Zillow.com.

Many homeowners face foreclosure or are having a difficult time making their payments and are considering options such as a short sale, filing for bankruptcy protection or just handing the bank the house keys and walking away from their debt.

The choices can be confusing.

“There is so much misinformation out there,” said Doug Bickham, a real estate lawyer in Lake Forest. “The law is constantly evolving and even Realtors don’t understand all the fine distinctions in the law.”

The Register asked Bickham, managing attorney at Rasmussen Law Firm, and Bob Hunt, broker at Keller Williams OC Coastal Realty and a longtime member of the California Association of Realtors’ board of directors, to explain the most common misconceptions held by underwater homeowners, or those trying to help them.

Here’s what they said.

Myth: The new California Homeowner Bill of Rights keeps a lender from foreclosing on a home regardless of whether the borrower is pursuing a loan modification or a short sale.

Reality: The Homeowner Bill of Rights, which went into effect in California on Jan. 1, is supposed to restrict lenders from “dual tracking” – that is, repossessing a home while a homeowner is awaiting a decision on a home loan modification application

But a short sale is a different situation, Hunt said. By the time the law kicks in on a short sale, it may be too late.

When a borrower sends in a complete loan modification application, the foreclosure process should instantly stop. If the lender rejects the application, the borrower has a 30-day period to appeal the decision. The home cannot be foreclosed during that time, either.

In a short sale, however, the foreclosure process is halted only after all the lien holders on a home agree to the short sale and the prospective buyer gets financing. All of that can take months. The bottom line: “A foreclosure could easily occur during the attempt to bring about a short sale,” Hunt said.

That means someone facing foreclosure and considering a short sale should act sooner rather than later.

Myth: A “deed-in-lieu” of foreclosure – in which the lender agrees to take back the keys and lets you walk away – is better than spending the time trying to do a short sale, especially because with a deed-in-lieu, you now potentially can get a few months of free rent.

Reality: Mortgage giants Fannie Mae and Freddie Mac recently came out with new guidelines for a deed-in-lieu of foreclosure. Now homeowners with hardships can turn over the house keys and erase their debt – even if they are still current on their payments. Some struggling borrowers who relinquish their homes can live in them for up to three months without having to make mortgage payments.

But even with the new rules, lenders rarely do deed-in-lieu transactions in California, Bickham said.

A primary reason is that California allows non-judicial foreclosures, meaning the property is foreclosed through a trustee’s sale rather than the relatively lengthy judicial foreclosure process required in other states.

In addition, he said, lenders only approve deed-in-lieu transactions if there is a single loan on the property or multiple loans with the same lender, which also greatly limits their usefulness.

“In the vast majority of cases, it’s usually not the most advantageous foreclosure-prevention option for a homeowner, assuming a lender will even agree to a deed-in-lieu,” Bickham said.

It’s better to do a short sale, he said, especially if there is more than one loan.

That’s because striking a deal with a first, purchase-money lien holder does not automatically get the homeowner off the hook when it comes to second or other junior loans.

By contrast, in a short sale, all lenders must sign off, and California law requires them to forgive any remaining balances after the sale. “They (homeowners) are going to get the legal protections on all of the loans, not just one of the loans,” Bickham said. And, because short sales can typically take three to four months, homeowners will also get a few months of free rent, as well.

Also, in a deed-in-lieu agreement, a lender can require additional cash contributions be made by the homeowner, which are illegal in a short sale.

Myth: A bankruptcy prevents a foreclosure.

Reality: “People always seem to think a bankruptcy is going to solve all their house-debt problems,” Bickham said.

However, a Chapter 7 bankruptcy – the most typical bankruptcy protection filed by individuals – will at best delay, but not prevent, a foreclosure. Banks will typically just wait out the bankruptcy case, then immediately proceed with the foreclosure upon discharge. Or, occasionally, the banks will petition the court to release the property even during the bankruptcy if it has no equity so they can proceed with foreclosure, Bickham said. If the home has enough equity, it will be sold as part of the bankruptcy case, with the proceeds going to creditors.

What a bankruptcy will do is convert all “recourse” loans – where a borrower has personal responsibility for repayment – into “non-recourse” loans, where lenders cannot sue a borrower to get repayment, Bickham said. That’s because a Chapter 7 bankruptcy will discharge the borrower’s personal responsibility for the debt even though it will not release the liens on the property for the loans.

So while the bankruptcy does not eliminate secured home loans and a homeowner can still be foreclosed on, all home loans, including second mortgages and home equity lines of credit, will become non-recourse, and lenders cannot sue the homeowners for any balance owed.

Myth: Doing a short sale will require money from homeowners.

Reality: “There’s literally zero out-of-pocket costs to the homeowner to do a short sale and, in fact, they can often get cash back to help with moving expenses,” Bickham said. “In a short sale, essentially, the seller’s lenders step into the shoes of the seller. Most of the closing costs on the seller’s side are picked up by the seller’s lenders.”

That includes agent commissions, escrow fees, title insurance fees, taxes and even homeowner association transfer fees. They’ll only cover so much, though, and the buyer will have to assume the rest. Many programs are available now where lenders will actually give cash back to homeowners who agree to a short sale, as well.

Short sale buyers should be prepared to kick in an additional 3 percent above the price of the home to cover any costs that the seller’s lender declines to pay, Bickham said. But buyers can typically purchase a short sale property for 5 to 10 percent below full fair market value even with the additional costs, he said.

Myth: A foreclosure absolves a homeowner of delinquent homeowner association dues.

Reality: “People often think that if a property is foreclosed or it was given back to the lender as a deed-in-lieu, the homeowner will be absolved of all back dues they owe the association. But HOA dues are actually a homeowner’s personal obligation,” Bickham said. “Even after a bank forecloses on a home, the HOA can still sue the homeowner to collect on any unpaid back dues.”

In a short sale, however, the delinquent HOA dues will often be fully paid off or settled as part of the short sale negotiations, he said, since all lien holders, including the HOA, must agree to release their liens for the short sale to successfully close.

Source = Orange County Register

Lack of Inventory Despite 1.2 Million Foreclosure Starts in 2012

DS News took some time to chat with Daren Blomquist, VP of RealtyTrac, to get a reading on the current state of the foreclosure market and what is expected to come.

Although foreclosures served to strip homes of their value during the housing crisis, Blomquist says foreclosures will be seen as a welcome sign this year and act as a stimulus.

While this may seem counterintuitive, Blomquist said, “because of the severe lack of inventory available for sale, foreclosures could actually fill that inventory and provide more fuel to the fire that’s been slowly building over the past year as more sales occur.”

Though, he added, “this is assuming foreclosures are being done properly,” meaning according to regulation and legislation that’s been passed to protect homeowners.

Currently, Blomquist says there are still a lot of foreclosures that need to be dealt with, but the good news is that foreclosure rates are much lower for newer loans.

RealtyTrac data shows the foreclosure rate for loans originated in 2009 is drastically lower than the rate on loans originated between 2004 and 2008.

For loans originated in 2009 and beyond, the rate is less than 1 percent, while loans between 2004 and 2008 have a foreclosure rate that sits anywhere between 2-5 percent, Blomquist explained.

Even though banks may have a buildup of foreclosures that are yet to hit the market, Blomquist waived off theories that banks are holding onto the properties deliberately and the release of the properties will cause home values to plummet.

“[Banks] are not intentionally holding back. It’s because they’re being so cautious about making sure they’re dotting all their i’s and cross their t’s,” he said.

This, he added, has slowed the process down to a complete halt in some cases and a crawl in others.

As for fears the release of foreclosures will bring down prices, Blomquist isn’t worried this will happen to the market.

“This so called shadow inventory never hit full force, so now I think we’re at a point where the pendulum has swung completely the other way and the housing market needs more inventory, so 2013 would be a serendipitous time for banks to release that inventory,” he said.

Looking ahead, Blomquist says RealtyTrac is still expecting to see around 600,000 REOs in 2013 based on the number of foreclosure starts in 2012, which hit about 1.2 million. Blomquist explained the roll rate is for about 50 percent of foreclosure starts to end up as REOs.

He also says completed short sales are expected to exceed the 2012 number, which will likely be around 1 million.

The foreclosure situation in 2013 also won’t be uniform across the country, but will be on a state-by-state basis, with judicial states dominating much of foreclosure activity in the first half of the year, according to Blomquist.

Then, in the second half of the year, and perhaps into 2014, the spotlight will be on non-judicial states.

Blomquist says this will be because new legislation as seen in California, as well as Oregon, Washington, and Nevada is starting to slow down the foreclosure flow in those areas, which he thinks will result in a backlash of foreclosure activity near the end of this year and into 2014.

 

Source = DS News

Why some homeowners are turning down free money

American homeowners are in the midst of a hot and heavy love affair with low interest rates. But not every courtship has a happy ending.

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As the final days of 2012 slipped away, Lisa Price made her client an offer she thought he couldn’t refuse. Her client — we’ll call him John Doe — was paying a rate of 6.616% on his $435,000 mortgage, with 25 years left to go. Price, a mortgage banker for Quicken Loans, offered to refinance his loan at 4.125%, keeping the 25-year payout time. The deal would have knocked his monthly payments down to $3,383, a savings of $630 a month. Closing costs were minimal and would have been recouped through the savings within four months of signing. And with the streamlined process she proposed, it would have required very little paperwork and wasn’t contingent on any appraisal valuation. It seemed like a no-brainer. But John Doe said no thanks.

“It didn’t make any sense,” says a stunned Price, reflecting on the rejection. “Usually when I call someone with a deal like that they’re really excited.”

It’s typically pretty easy for mortgage brokers to give away money, and indeed, refinancing activity has skyrocketed as interest rates plummeted in recent years. The one group of homeowners who didn’t participate in the refi boom — those whose home prices tanked, leaving them without enough equity in their home to qualify for refinancing — are now eligible to restructure their loans thanks to a new government program. But as Quicken Loans and other mortgage originators have learned, it can be surprisingly difficult to persuade some of these people to take sweet deals like the one above, even when the government is greasing the skids.

The first government assistance programs after the housing bubble burst offered to help homeowners only after they stopped paying their mortgages. But a later program — the Home Affordable Refinance Program (HARP) — was designed specifically to help out those underwater homeowners still paying their mortgages on time by giving them access to the low rates so many others are enjoying. HARP has been refined several times since its inception in 2010, and every version of the plan has made it easier for homeowners to qualify. But getting the word out hasn’t been easy.

Quicken and other mortgage originators have aggressively tried to let homeowners who qualify know about the program. “We get their home number, the business number, their e-mail, we express-mail packages to their house so it looks serious,” says Dan Gilbert, founder and chairman of Quicken. “We leave messages; we tell them, ‘Go look up HARP on Google and you’ll see it’s real.’ We don’t quit.” And yet almost half of these homeowners don’t respond. “If you would have told me all the facts about how this works before, I would have predicted we’d get 80% to 85%,” Gilbert marvels.t

Ultimately, Quicken says, only about 25% of the homeowners who qualify for HARP actually end up refinancing. And that’s the shame of it all. HARP is a smart program. It rewards good behavior — those who have continued to pay their mortgages — while lending a helping hand to those who could really use it. And it attempts to even the playing field by giving more Americans fair access to the low interest rates enjoyed by big businesses and the wealthy. This program is also good for the economy, as consumers spend much of the money they save on their mortgage payments.

So how do the government and mortgage originators convince the public to take advantage of a program that can truly help many who need it? It’s the classic lesson of once bitten, twice shy. Wounds from all those no-money-down loans and balloon payments have yet to heal for the homeowners bitten when the housing bubble burst. Others still feel the sting of paying hundreds for appraisals in an attempt to refinance, only to be spurned when their homes were valued at less than they owed on the mortgage. It may be hard for those consumers to trust again anytime soon. But for those with the courage to give it another go, love might actually be better the second time around.

Source = CNN Money

Buying A Home After A Short Sale or Foreclosure

Andreea Stucker thought she made a good investment when she bought a Huntington Beach condo with her boyfriend in December 2005.

But then she and her boyfriend split up. He moved out just as the housing market crashed, leaving Stucker broken hearted and broke.

Article Tab: new-dog-previously-gus
Andreea Stucker with her dog, Gus, and her new home in Huntington Beach. She previously lived in a condo that she sold as a short sale.Here’s a breakdown of waiting periods for boomerang buyers who lost their homes due to a foreclosure or a related event:

Foreclosure:

  • Seven years for a government-backed Fannie Mae or Freddie Mac loan.
  • Three years for a Federal Housing Administration (FHA) loan.
  • One to two years for a FHA loan if there were extenuating circumstances (such as illness or death of a wage earner).

Short sale:

  • Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
  • Four years for Fannie Mae or Freddie Mac with 10 percent down.
  • Two years for Fannie Mae or Freddie Mac with 20 percent down.
  • Three years for an FHA loan.

Deed in lieu of foreclosure:

  • Seven years for Fannie Mae or Freddie Mac with less than 10 percent down.
  • Four years for Fannie Mae or Freddie Mac with 10 percent down.
  • Two years for Fannie Mae or Freddie Mac with 20 percent down.
  • Three years for FHA.
  • One to two years for FHA loan with extenuating circumstances.

Source: Fannie Mae, Department of Housing and Urban Development

 
 
 

With her own income down at least 60 percent, the real estate agent was unable to make the $4,400-a-month mortgage payments on her own, even after taking in room-mates.

“I begged the bank for over seven months to grant me a loan modification to reduce my payments, because I was rapidly going through my savings,” Stucker, 34, recalled. “I ended up completing a short sale on my home, and my credit took a huge hit.”

Three years later, Stucker has mended both her heart and her credit score. She has a new husband and, “miraculously,” a new house.

Stucker is among the emerging ranks of boomerang buyers — people who bounce back from foreclosures or short sales to become homeowners again.

Generally, buyers must wait at least three years after a foreclosure or short sale to qualify for a government-backed Federal Housing Administration mortgage. It can take seven years to get a conventional loan backed by Fannie Mae or Freddie Mac.

It’s been 4 1/2 years since the foreclosure crisis peaked, and real estate industry observers say they have seen boomerang buyers gradually returning to the Orange County market for at least a year.

“I think over three-fourths of these folks will take a stab at the comeback trail,” said Paul Scheper, division manager for Greenlight Financial in Irvine. “Even though some are coming off a bitter experience, most will be looking to regain the American Dream.”

Three to five people who went through a foreclosure or short sale show up each month at homeownership courses offered in Santa Ana and Irvine by the Consumer Credit Counseling Service of Orange Countyor up to 20 percent of the attendees, said Sahara Garcia, the agency’s director of education. She first noticed the boomerangers in late 2011.

“They’re out there,” Garcia said.

 

After 3 ½ years, Stucker still cries at the memory of losing her Huntington Beach condo.

She and her ex-boyfriend paid $613,000 with no money down for a two-level condo with cathedral ceilings and skylights, two bedrooms, two bathrooms and a spacious loft less than two miles from the beach.

They spent $40,000 more installing granite countertops, hardwood and travertine floors, new bathroom vanities recessed lighting and other upgrades.

But it turns out that the real estate game isn’t just about location, location, location. It’s also about timing.

By December 2005, Orange County home sales had just headed into a three-year nose dive. Home prices soon would follow.

Stucker’s income as a real estate agent dropped. Her boyfriend moved out after five months. Eventually, she depleted $29,000 in savings, then quit making house payments.

Unable to get a loan modification she could live with, Stucker sold the condo in May 2009 for $425,000 — $188,000 less than what she owed on two mortgages.

Her credit score went from 798 in December 2005 to the low 500s by May 2009.

“It was probably nine months that I fought for that home,” Stucker said. “I loved my house, and I wanted to stay.”

In hindsight, she says she should have cut her losses before dipping into her savings. But she kept thinking the market would turn around, and she’d be able to afford the home again.

“It’s like getting kicked when you’re down,” Stucker recalled. “You’re going through this awful breakup with this person you thought you had a future with, (and) your income is crap even though you’re working full time. … It was tough.”

Road to redemption

More than 33,000 Orange County households now potentially could qualify for an FHA loan because it’s been three years since their short sale or foreclosure. In the nation as a whole, more than 3.4 million households have completed the minimum waiting period.

But many people still do not have the money or sufficient credit to get a loan.

Natalie Lohrenz, the Credit Counseling Service’s director of development and counseling, said there are two types of foreclosed homeowners.

Those who had a bad loan they couldn’t afford. And those whose finances got nuked.

The first type couldn’t make their house payments, but still had enough income to stay on top of their other bills.

The second – because they went through a divorce, illness, job loss or business reversal – basically ended up with nothing, and trashed their credit across the board.

Stucker fits the first category, and her story serves as an example of how people can recover from a housing market wipe out.

She followed this approach: She paid her homeowner association dues. She paid her bills. She kept credit cards and car payments current.

When Stucker went from homeowner to renter, she could show the landlord everything apart from the mortgage was paid on time.

From then on, she kept her nose to the grindstone and kept paying her bills.

“Eventually, enough time passed, and I didn’t have any 60- or 90- or 180-days late on my credit,” she said. “Right before the two-year mark, I checked my credit for something else. … It had gone up more than 100 points.”

By October, after Stucker married, she and her new husband had saved enough to get an FHA loan on a four-bedroom, 2,500-square-foot house in south Huntington Beach. They paid $625,000 with 3 ½ percent down.

Her credit score is back up to 720.

Her new home needs work. She and her husband repainted the home inside and out, removed 11 trees and fixed a leaky pool. They did much of the work themselves.

Because of the experience, Stucker thinks she’s a better real estate agent.

Clients going through their own short sales worry they’ll never be able to buy a home again. She knows what they’re going through, emotionally and financially, and shares her experience.

“In retrospect, it was a mistake to buy a house with no money down at the height of the market. But who knew it was the height of the market?” Stucker said. “(But) no matter how far you’ve fallen, there’s always up. There’s always the possibility that you can own again.”

 

Source = http://www.ocregister.com/articles/years-496154-stucker-loan.html

Home Buying Seminar

Home Buying Seminar

Thinking about buying a home but don’t know where to start? We feel that education is power and you will definitely walk away from this seminar feeling empowered. 

What will you learn? 

  •  How To Buy Government Owned Homes
  •  Purchasing Foreclosures/Bank Owned and Short Sale Homes
  •  What Is A “Regular Sale”
  •  Understand The Escrow Process
  •  Buying With $0 Down
  •  How To Get Qualified For A Mortgage
  •  First Time Home Buyer Programs
  •  Veteran “VA” Loan Programs
  •  Tax Benefits of Owning Vs Renting

Contact us today to reserve your seat. Come for the FREE soda and pizza, stay for the education. 

 

The Wise Team

(714)698-9473 call or text

Dustin@TheWiseTeamOC.com

Avoiding Loan-Modification Hoaxes

Avoiding Loan-Modification Hoaxes

According to the California Association of Realtors Homeowners wary of being taken in by bogus “loan modification specialists” should not assume that a law office is the most reliable way to work with their lender.  Consumer advocates say a growing number of fraudulent modification services involve lawyers, or people who say they are lawyers.

There are free alternatives for homeowners in need of assistance. As always please feel free to reach out to us for help! 

The Wise Team

Dustin@TheWiseTeamOC.com

(714)698-WISE call or text

California Broker Explains Short Sale Lease Back Program

California Broker Explains Short Sale Lease Back Program

By now we’ve all heard of a short sale. What about a short sale with an option to Lease Back and Buy Back? This article highlights the intricacies of this program and why it’s IMPERATIVE that you use a professional Realtor that is actively providing foreclosure alternatives to the community. The Wise Team is one of the few Realtors certified to offer the Short Sale Lease Back program. We are always available for questions and appreciate your kind referrals!

The Wise Team

(714)698-WISE Call or Text

Dustin@TheWiseTeamOC.com

Mortgage Debt Relief is Extended

Mortgage Debt Relief is Extended

Troubled homeowners can breathe a slight sigh of relief as the Mortgage Debt Relief Act of 2007 (or HR 3648 as it was originally introduced) was extended through 12/31/13. 

 

Although HR 3648 isn’t a blank check for anyone needing tax relief after a lender has forgiven debt through foreclosure, short sale, loan mod, deed in lieu of foreclosure, etc. it does play an important part in aiding homeowners to exclude such debt and often prevents adding insult to injury. 

It’s important to note that HR 3648 is NOT the only remedy for excluding tax liability due to mortgage debt forgiveness. So even if you don’t qualify for this exclusion there could be other options. The earlier you get help the better.

We are not tax or legal experts and are not giving tax or legal advice. If you know someone considering a loan modification, short sale, deed in lieu, short sale or foreclosure they should consult with a knowledgeable tax preparer. As in any industry not all tax specialists are equal. 

If you, or someone you know need assistance, have questions about foreclosure prevention and tax implications please reach us directly. 

The Wise Team

(714)698-WISE

Dustin@TheWiseTeamOC.com