Archive for April, 2009

More Relief for Struggling Homeowners

Thursday, April 30th, 2009

Yesterday the Obama administration announced new details to the homeowner assistance programs that may widen the gap to help more people with modifications under the existing plans. The new additions to the Making Home Affordable program center around second liens and incorporating the Hope for Homeowner Program with the Making Home Affordable program.

dreamstime_2528495Currently under the FHA’s Hope for Homeowner Program a borrower can modify their first loan and the lender is required to accept payoff below the current market value of the home. This allows the borrower to refinance into a new FHA-guaranteed loan, which gives the borrower equity in the home and takes them out of the position of being upside-down.

The problem with this program is that it realistically only applied to borrowers with one lien–if you had a second lien on your property it was up to the lenders to detemine whether you would qualify, but many people did not (because the second lien holder ends up losing too much money).

The changes announced yesterday would create a Second Lien Program, which will allow for an automatic reduction on the associated second lien according to a pre-set schedule. Service providers will also have the option to eliminate the second lien by agreeing to take a lump sum payment (under a pre-determined formula) instead. This would mean that the second lien would be completely extinguished, which would give the borrower a stronger chance of getting a modification under the Making Home Affordable program.

dreamstime_6238376This is big news. Also important is that service providers, when evaluating borrowers for a modification under Hope for Homeowners, will be required to offer the Hope for Homeowners option to borrowers when it finds that the borrowers qualify under the plan–thus borrowers will no longer have to keep calling to see if they in fact qualified.

According to the Administration currently over 75 percent of all loans in the United States now fall under the blanket of the Making Home Affordable Program. To find out more about the programs and the new details, go to www.MakingHomeAffordable.gov.

If you are a homeowner and would like to submit a question go to www.MakingHomeAffordable.gov/feedback.html. Answers to selected questions will be posted at www.MakingHomeAffordable.gov/asked-and-answered.html.

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Is It Time to Prepare for More Foreclosures?

Saturday, April 25th, 2009

There has been a lot of information over the last few months about the new homeowner help plans to assist homeowners in lowering mortgage payments by modifications or refinancing. They sound great and pledge to offer help to millions of struggling homeowners, but do they really work? And if not, are we going to see foreclosures hit the market in record numbers?

The foreclosure moratorium that was instituted right before the holiday season at the end of 2008 put many homes about to face foreclosure on the table, so to speak. Most banks agreed to withhold initiating, or stop following through with, foreclosure proceedings at that time. It was to last until the first of the year in 2009, but with the swearing in of a new President right around the corner many banks opted to extend the moratorium to see what the new administration would do to help both the homeowners and the banks.

dreamstime_4057504There were some plans put in place that sound great in theory, and there are some people who have likely been assisted under these plans (if you are one I would LOVE to hear from you and learn of your experience, so please send me an email). The sad fact is that many people have not been helped, and those who are trying to seek help may not be able to qualify for loan modifications if they are no longer employed.

Banks who have been sitting on the loans that were placed under moratorium are now starting to initiate foreclosure proceedings, and although the effect could be devastating to many homeowners it could mean a windfall for buyers and investors.

Currently there are less than 400 foreclosure properties in San Diego County. There are over 4,000 properties in pre-foreclosure. Notices of Default (NOD) have spiked to an all-time high. Many economists predict that in the next 1-5 months these pre-forclosures will become bank owned properties. One statistic predicted 5 MILLION more foreclosures between now and 2011 nationwide.

Another interesting fact is that there are currently bank owned properties in San Diego county that are not on the market. Some experts have speculated that this is because the banks know that they will have to sell them so low and this will effect comparable sales. In turn, many people who are in trouble in those neighborhoods will then have even lower comps and will not want to or be able to make mortgage payments on their homes (because now there will be an even greater discrepancy between the amount owed on the loan and the current market value of the home). This in turn would increase the number of foreclosures and the number of bank owned properties. It is a Catch-22 and a vicious cycle.

dreamstime_8342871Situations where the banks already own the property but the homeowner continues to live there for free (and has not even received notice of eviction) are not rare. I know of one in my own neighborhood‚the bank took the home in February and the owners remain, having received NO NOTICE of eviction or any communication whatsoever from the lender. The bank may feel that it is better than having the property empty and having to pay for upkeep.

RealtyTrac, a reputable national source of real estate statistics , says that there may be as many as 600,000 properties nationwide that have been repossessed by banks but not yet on the market, with California likely representing 80,000 of those homes.

RealtyTrac further estimates that only 30 percent of foreclousres were listed fore sale in Multiple Listing Services (MLS). The rest of the homes are what is known as ‚Äúshadow inventory.‚Äù Some have surmised that the banks are keeping these homes off the market and servicing these mortgages to conceal the extent of their losses. It also keeps housing prices higher by withholding these homes from the MLS’, which could avoid further loss for the lenders.

The news appears grim but if you are a buyer or investor waiting for the ‚Äúbottom,‚Äù you are in a great position. With more foreclosures on the way you will have a lot of inventory to choose from. Get preapproved and be ready, as they are starting to hit MLS’ already. The power of negotiating is in your hands so find an agent who can help you get a great bargain.

If you are a homeowner afraid of losing your home, I will repeat my mantra: GET EDUCATED. Learn all your options so that you are ready for changes that are certain to come. There may be other options out there you have not considered. There are definitely resources you can use and free counseling services available to you. But DON’T WAIT until it is too late, because then you will not be the one with the power. If you want a great place to learn all about options go to www.MortgageWalkawayOptions.com.

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Torrey Pines State Reserve: One of San Diego’s Treasures

Monday, April 20th, 2009

I was reminded this weekend of another reason I so love living in San Diego county when I walked the trails at Torrey Pines State Reserve with my family. This is one of the most beautiful places in San Diego to walk, hike or jog. The vistas are breathtaking, the torrey pines magnificent, and the ocean air delicious. Right now all the wildflowers are in bloom and there are little animals everywhere.dreamstime_5296472

Torrey Pines Reserve has six designated trails, each with a slightly different feel and some more challenging than others. The Guy Fleming trail is a 2/3 of a mile loop and is a great trail for children or those who cannot make the more challenging trails. It takes you past wildflowers and under canopies of fallen trees, from magnificent ocean views and canyons through forests of pine trees. You will see lizards and squirrels scurrying about or basking in the sun, and many different birds.

Mid-way along this trail is an overlook deck, where you can see far across the ocean. If you are lucky you may even see dolphins frolicking in the surf or if the time of year is right, whales.

The Razor Point Trail, Parry Grove Trail, Beach Trail, High Point Trail and Broken Hill Trail all offer varying levels of challenge and a different feel. The Beach Trail is the longest, 3/4 mile to Flat Rock. There is a stairway at the end that descends 300 feet to the beach below.

dreamstime_17622662The Reserve is located off of Coast Highway in Del Mar, just south of Carmel Valley Road. You can park at the beach down below or you can drive up the hill and park in a dirt lot. Parking is $8. If you are lucky you can park for free along Coast Highway and walk into the reserve. The trails start up the paved road, so if you walk you will get some good exercise getting to them. Keep in mind that no pets or picnics are allowed but you may bring water along.

The park is one of only two places in our country where the torrey pines grow; the other place is Santa Rosa Island, off of the Santa Barbara coast. If you have not yet visited the reserve you are missing out on one of San Diego’s most extraordinary places. So put on your walking shoes and enjoy!

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Great Questions to Ask to Prevent Becoming a Foreclosure Scam Victim

Wednesday, April 8th, 2009

We all know they are out there–people who feed off the desperation of others. The current housing market is no different. In fact, it is a perfect environment for the birth of new schemes to take your money from you, no matter that you are just trying to save your home from reverting to the bank.

In my last post I discussed some of the latest scams that are out there and how to beware of them. The Obama administration has been looking into this and just a few days ago the Treasury Department and Department of Housing and Urban Development (HUD) announced that they will be instituting policies to crack down on people who are perpetrating such scams by attempting to charge victims for foreclosure counseling.dreamstime_2563710

I read a great article that provided some simple questions you can ask any organization or person who is attempting to help you avoid foreclosure by counseling. I think these are great questions to ask and although not foolproof they will hopefully give you a feel for whether the organization is legitimate. Here are the questions:

1. How much does your service cost? Remember, as I pointed out in my last post on foreclosure scams, there is a range of free counseling out there. NEVER pay someone to counsel you, unless it is your attorney or your accountant. HopeNow (1-888-995-HOPE), HUD (www.hud.gov/foreclosure) and Acorn (http://acornhousing.org) are the top three free counseling services in my opinion.

2. How long has your company been in the business of foreclosure prevention counseling? You can use your judgment here. Although length of time in business is not always better it allows time for relationships to be created that can help you (see below).

3. Do your counselors have a “direct pipeline” to the mortgage modification department of your lender or service provider? Some counselors dealing in mortgage modification and other foreclosure prevention counseling have long established relationships with loss mitigation departments of various lenders. These relationships go a long way in helping you, as they provide the counselors a direct line to the right people. This can obviously speed the process along and prevent long periods of waiting to hear back, only to find that you needed to contact someone else.

dreamstime_3307065The article mentions that the firm may tell you that they DO have such a relationship, and advises you to get specific by asking if they have such agreements in writing, and also if they work with a specific person from YOUR lender’s office who has authority to make decisions regarding your account.

4. Does the company have a direct connection with someone who is a decision maker or who can override decisions made by the loss mitigation department? Again, the relationship established between the counselors and the “right” people can make all the difference between getting a work out and getting closer to being kicked out of your home.

5. Will the counselor stay with you throughout the entire process? This is important because the counselor will know your case and all the details that are involved. If you are tossed around to various counselors obviously the benefit is not the same. Having dealt with lenders on short sales as a Realtor I KNOW first-hand how frustrating it can be to have to explain your point every time you call to a different person, oftentimes getting completely different answers (or feeling like you are in the Twilight Zone because you know you went over this before).

Keep in mind that if you are unemployed and will be unable to make payments on a newly modified mortgage, speaking with a counselor may not offer you any consolation. You need to still be able to show that you will be able to afford the new loan. If you are in this position than you need to pick up the phone and get help. Don’t wait until it is too late and your lender sends you a notice of sale.

For more information on options to help avoid foreclosure and links to helpful programs and information, you can read my book, Mortgage Walkaway Options. Visit http://MortgageWalkawayOptions.com.

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