Archive for December, 2009

Carlsbad Christmas Tree Recycling

Monday, December 28th, 2009

dreamstime_11869614Many cities have opened recycling centers for trees, and Carlsbad is no exception. To find out where you can get your tree environmentally recycled, or whether and how to recycle at the curb through January 18, 2010, go to:

http://www.carlsbadca.gov/about/news/Pages/christmas-tree-recycling.aspx


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Are you a Bad Person if you Walk Away from Your Mortgage?

Friday, December 18th, 2009

If you “walk away” from your mortgage are you a bad person? The answer is “no,” as long as you have examined all possible options and know the consequences of doing so beforehand.

The idea behind walking away is to file paperwork with the lender for the property, turn in the keys and then vacate the property, leaving it to the lender.dreamstime_8339256

The problem with walking away is that it involves an INTENTIONAL FORECLOSURE. As people in desperate situations tend to take desperate measures, at the start of this phenomenon many homeowners did not realize the consequences of their actions. For many, there could have been other options available that would not damage their credit to the extent that walking away does. (As one of the advocates of using the walk away as a last resort, I wrote a book called Mortgage Walkaway Options in 2008. It is available for purchase through Lulu or Amazon, or you may email me for a free download).

With all the programs available to help homeowners now, the fact remains that many lenders are still falling behind on negotiating loan modifications or approving short sales. Frustrated and desperate, walking away remains a popular choice.

One of the biggest factors involved in walking away is the emotional factor. Many feel that they are neglecting their duties–the commitment they made to pay their mortgage–and they feel badly. But walking away can be a viable option for some. Here are my suggestions if you are considering doing so:

dreamstime_25634631. Contact your lender. Ask for the Loss Mitigation Department. Try to find out if you are eligible for a loan modification. Ask questions, take notes, and have all your paperwork handy (loan documents, bank accounts, employment information).

2. Call a counselor. HopeNow, the national housing crisis hotline, is a great service and it is free. They can be found at (888)995-HOPE or http://HopeNow.com. Talk to them about your options.

3. Look into the loan help programs instituted by the government. Go to http://makinghomeaffordable.gov/ . See if you qualify under any of these programs.

4. Contact an attorney in your area who specializes in getting loan modifications. If you live in California there is a great site (run by an attorney who devotes his career to helping homeowners battle the Goliath lenders). You can visit his site at http://www.keepingthekeys.com/. Even if you do not live in California you can get advice and ideas from visiting the site.

5. See if you qualify for a Short Sale–this will allow you to sell your home for less than the amount owing on the loan, with the lender’s approval, and will not be as detrimental to your credit as would a foreclosure. Make sure you find a Realtor who understands how to handle a short sale, as there is a lot of work involved in dealing with the lender in order to get the sale closed. New short sale laws will take effect in April 2010 that will make short sales easier. Here is a great article on the contents of the new program: http://www.latimes.com/classified/realestate/news/la-fi-harney13-2009dec13,0,4531315.story.dreamstime_3153901

6. If none of the above options provide you with assistance you may want to consider walking away. BE CAREFUL whom you choose to help you. If you can go through an attorney that is great. If not, make sure the company you use is legitimate and speak to others who have used their services. Make sure you understand ALL the consequence before signing anything–I would recommend having a lawyer look over any paperwork provided by these agencies.

If you decide to walk away from your home and mortgage after investigating other options you should not feel badly. You are amongst a large group of homeowners who have followed the same path, and it will allow you to move on. These are tough times and sometimes you have to take make tough decisions. Knowledge is power. Good luck.

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Road Update: Palomar Airport Road Bridge to Carlsbad Blvd.

Wednesday, December 16th, 2009

documentIf you have been wondering when the bridge on Palomar Airport Road just east of the ocean is going to open up, here is the latest scoop.

The City closed down the bridge over a month ago to make repairs to the bridge. They replaced all the railings fixed cracks, and repaved. The work was supposed to have been completed a while ago but rain delays held it over. The estimated opening is on or by December 23.

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Happy Holidays From Rachel!

Friday, December 11th, 2009

I wish all of my clients, friends and associates a wonderful holiday season. May you have lots of happiness, good health, love and success in the coming year.

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House Flipping is Back in Style

Friday, December 11th, 2009

Back in the boom of the early 2000s house flipping was all the rage. People had to put down little money to purchase homes at low prices, fix them up and sell them for profit. Many investors were born during those times. When the market started to dive investors all but disappeared from the radar screen, but now they are back, and in force. House flipping has become the rage and people are cashing in.housejuggle

The foreclosure crises brought and still brings a lot of bad news. But the good news is that if you play your cards right you can profit in a big way. If you happen to frequent foreclosure auctions you can get a great deal, as the lender would rather YOU buy the property than it go on their books. But be prepared and be careful–you need a lot of cash, local market area knowledge, and a lot of patience.

Lenders have become wiser and know that to create a bidding frenzy and get the best price they have to set the minimum auction bid at low levels. Investors come to the auctions ready to buy. Most of the time they have not had access to the property and therefore have not been entitled to a home inspection. So they have to be ready financially for any potential issues that may arise. ForeclosureRadar.com estimates that 21% of homes sold in November went to investors rather than to the foreclosing lender. This number is up 6% from a year earlier.

eurohouseThere are advantages and disadvantages for the bank in using auctions. The obvious advantage is it does not have to purchase the home and place it on the market, do any maintenance to get it in shape to appeal to buyers, deal with paying commissions and taxes, and they are paid immediately. But the disadvantage is that the home may go for a lot less than the bank may get if placed on the market.

The advantage of the auction for investors (other than getting a great price on a property) is that there is no need to negotiate the sale with a bank that is understaffed and has far too many listings on the market, nor with a seller who is struggling to avoid foreclosure…there is no waiting time.

Many of the new flippers today are able to turn around and sell the acquired properties to foreign purchasers, especially from Canada and the Orient, as they take advantage of the low dollar conversion rates, so you may want to consider advertising abroad.

Remember that there are risks involved in purchasing property at an auction: most of the time you do not know what you are getting. It is not rare to see damage caused by disgruntled homeowners forced out by foreclosure–sometimes it can be costly. That is why you need to do your homework, check tax records for any liens on the property, try to get as much information as you can, and make sure you have cash on hand in case you need to address any problems.

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Qualifying for Loans May Get Harder

Wednesday, December 2nd, 2009

If you are in the market to purchase property and are counting on getting an FHA-insured loan, you may want to act quickly.

First, a quick explanation: the FHA, or Federal Housing Administration, is not a lender, but instead insures loans that are written under its guidelines, thus protecting lenders against losses on those loans. If the borrower defaults on the loan the lender can seek recourse from the agency. A huge benefit of an FHA insured loan is the low down payment, which can be as low as 3%. The agency insures a large percentage of loans written by lenders in the U.S.

The FHA is about to enforce new underwriting guidelines and fee increases in order to combat falling reserves and rising losses that have affected the FHA. There are four categories of changes that are to be implemented:

1. Raising Annual Insurance Premiums for Borrowers. The bottom line is that borrowers will have to pay higher insurance premiums as part of their borrowing costs. An upfront insurance premium payment will be raised, as will the percentage of annual premiums depending on the amount of the down payment.

2. Buyer Credit Score “Floor.” The lower the down payment, the higher the credit score will need to be. Exact amounts are not yet determined. Currently most lenders require a minimum credit score of 620 for FHA borrowers, but this may change if the down payment is low.

3. Increase in Buyer Down Payments. Sellers will be restricted on the amount of money they can put toward the buyer’s closing costs. This number will drop from the currently allowed 6% to just 3% of the home price. Down payment increases are also being considered, which could price many FHA buyers out of the market.

4. Higher Accountability for FHA Lenders. FHA approved lenders will be held to much higher standards for loans they submit to the FHA. There are no details as of yet on this one.

The problem with the above changes is that if the economy continues to worsen it may not actually be beneficial to the FHA. The result could facilitate the necessity to utilize a tax payer bail out of the agency, something that I assume the majority of people will oppose. This won’t likely happen right away but could be a problem in the years ahead. Either way, THE FEDERAL GOVERNMENT NEEDS TO IMPLEMENT MORE DRASTIC MEASURES TO PREVENT THESE PROBLEMS.

This newest real estate fallout could make it much harder for people to obtain loans, especially those with small down payments–what is viewed as an acceptable down payment today may not be in the future.

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