Festival of Sail 2011
The Festival of Sail is an annual event with something for everyone. The four day event includes live entertainment from a variety of genres, a petting zoo, cruises on San Diego Bay, cannon battles, sailing on racing yachts, over 150 arts and craft vendors, multitude of food options, interaction with pirates, and more!
Time: Refer to website for schedule
Location: San Diego Bay – Maritime Museum of San Diego, 1492 North Harbor Dr.
For more information visit www.sdmaritime.org
September 2, 9, 16, 23
Leo Carrillo Ranch Historic Park Film Festival
This festival takes place on five consecutive Friday nights beginning August 26. You’ll see rare Hollywood Golden Era films starring Leo Carrillo, outdoors under the stars at the legendary actor’s rancho. Bring your low back chair, warm clothes, flashlight and blanket. No charge for admission.
Time: Movies begin at sunset
Location: Leo Carrillo Ranch Historic Park, 6200 Flying LC Lane, Carlsbad
For more information visit www.carlsbadca.gov
82nd Annual Labor Day Pier Swim and Paddle
The event is a one-mile swim/paddle around the pier.
Registration closing date is Friday, September 2, 2011.
Time: 8:00 am – 12:30 pm
Location: Oceanside Pier, Oceanside
For more information visit www.oceansideswimclub.com
Taste of Downtown
A self-guided tour of some of Downtown’s sumptuous eateries. Over 50 participating restaurants throughout the Gaslamp Quarter, Financial District, East Village and Little Italy. Tickets are $30 in advance/$35 the day of the event. A complimentary shuttle service will be available to take you to and from each neighborhood.
Time: 5:00 pm – 9:00 pm
Location: Various Venues
For more information call 619-233-5008
Surf for the Sea & O’side Firefighters Surf Event
15th Annual Surf for the Sea Memorial Surf. This memorial surf event is in honor of local surfers who have passed away. A benefit for the environment and Surfrider Foundation San Diego Chapter.
Time: 7:00 am – 4:30 pm
Location: North Pier Beach, Oceanside
For more information call 760-439-0863
Grape Day Festival and Parade
First held in 1908, this is Escondido’s oldest and longest running event. Includes a 5K fun run, a whimsical parade, grape stomping, free grapes, entertainment stage, vendor booths, fun zone & more!
Time: 5K: 7:30 am / parade: 9:30 am / festival 9:30 am – 4:00 pm
Location: Grape Day Park, 321 N. Broadway, Escondido
For more information visit www.escondidohistory.org
Jazz 88 Ocean Beach Music & Art Festival
Ocean Beach will be jazzed up with 23 bands on 8 stages performing jazz music at the beach. Bring your friends and family to the beach where you can mix, mingle, and dance.
Time: 10:00 am – 8:00 pm
Location: Ocean Beach Pier parking lot & grassy area – at Newport Ave. & Abbott St.
For more information visit www.obmusicfest.org
33rd Annual Greek Festival
For two days, the church grounds are transformed into a quaint Greek village atmosphere where you can experience fine food, traditional Greek dancing, and the warmth of Greek hospitality.
Time: Sat. 10:00 am – 10:00 pm / Sun. 11:00 am – 9:00 pm
Location: Saints Constantine & Helen Greek Orthodox Church, 3459 Manchester Ave., Cardiff-by-the-Sea
For more information call 760-942-0920
Spirits of Mexico Festival
The 2011 Spirits of Mexico Festival is set to showcase top agave spirits brewed by hundreds of distillers, in the heart of Mexican culture, Old Town San Diego. This celebration has been noted as ‘one of four festivals not to miss’ by ‘O’, the Oprah Magazine.
Time: 2:30 pm – 10:00 pm
Location: Old Town San Diego State Historic Park, 4002 Wallace St.
For more information visit www.polishedpalate.com
46th Annual San Diego BayFair Powerboat Racing
Watch the fastest boats in the world compete to win at this extreme watersport event. Includes mini hydro racing on a pond, motor home camping, displays, and live entertainment.
Time: 7:00 am – 6:00 pm
Location: Mission Bay – Vacation Island / Fiesta Island / Fiesta Bay / Ski Beach /
Crown Point Shores /Stony Point / Hydro Pond
For more information visit www.sandiegobayfair.org
September 16 – October 2
Fleet Week San Diego
Thank our Sailors, Marines and Coast Guardsmen for their services to our country by participating in 2011 Fleet Week San Diego events.
Time: Refer to website
Location: Refer to website
For more information visit www.fleetweeksandiego.org/events.html
Annual Rendezvous in Poway
This rendezvous is “history comes to life” as you walk back
in time to the 1820-1890’s. See life as it once was and be interactive with historical encampments, meet Mountain Men, Cowboys, Buckaroos, and more. There will be the arts & crafts market, you can visit the Nelson House and Museum, pan for gold, or ride a steam locomotive for a nominal fee.
Time: 10:00 am – 4:00 pm
Location: Old Poway Park, 14134 Midland Rd., Poway
For more information visit www.poway.org
Annual Brazilian Day Festival & Parade
The largest Brazilian festival on the west coast showcasing the culture of Brazil and South America. Family-oriented, non-alcoholic. 40 performances and carnival parade.
Time: 11:00 am – 7:00 pm
Location: Pacific Beach, Garnet Ave. between Bayard St. & Everts St.
For more information visit www.braziliandaysandiego.com
Santee Bluegrass Festival
This festival will feature wine & beer tasting, food sampling, a silent auction and a variety of Bluegrass music.
Time: 5:00 pm – 9:30 pm
Location: Town Center Community Park, Riverwalk & Park Center Drives, Santee
For more information call 619-258-4100
Wild West Bonitafest
The parade is back after 3 years! This event features food, crafts, games, an entertainment stage, a parade, a kid’s fun zone in the shopping center, and much more. Free admission.
Time: 9:00 am – 5:00 pm
Location: Bonnie Brae Shopping Center, 5080 Bonita Rd. at Central Ave.
For more information visit www.bonitacalifornia.org/bonitafest.html
Oceanside Harbor Days
This event will include vendor booths, arts & craft exhibits, and food. An outstanding opportunity for residents and neighbors to experience fun activities including the new Beach are stage, Nail “n” Sail Competition, Military, Police & Fire display.
Time: Sat. 9:00 am – 6:00 pm / Sun. 9:00 am – 5:00 pm
Location: Oceanside Harbor
For more information visit www.oceansideharbordays.com
Annual Pacific Islander Festival
Features continuous entertainment throughout the day and presents the food, crafts, and customs of Melanesia, Micronesia, and Polynesia. Free admission.
Time: Sat. 9:00 am – 4:30 pm / Sun. 8:00 am – 4:00 pm
Location: Ski Beach, East Mission Bay
For more information visit www.pifasandiego.com
Adams Avenue Street Fair
A music festival that features more than 70 musical acts on
six outdoor stages, hundreds of food and arts & craft vendors, three beer gardens, carnival rides and children’s activities.
Time: Sat. 10:00 am – 10:00 pm / Sun. 10:00 am – 6:00 pm
Location: Adams Avenue, between 35th St. & Bancroft St., Normal Heights
For more information visit www.adamsavenuebusiness.com
September 30 – October 2
Marine Corps Air Station Miramar Air Show
Aviation expo with performances by the world’s best military and civilian pilots.
Time: Gates open at 8:00 am
Location: MCAS Miramar
For more information visit www.miramarairshow.com
Archive for August, 2011
LaMar Real Estate is proud to offer for sale this beautiful home located at 1452 Sapphire Drive. Situated in coastal Carlsbad in the gated ocean view hilltop community of Mar Brisa, this home has been impeccably cared for by the original owner. With 4 bedrooms, a loft, 2 and a half bathrooms and 2570 square feet, this popular “Venice” model offers the largest floorplan in the community. The seller will entertain offers between $699,000 and $719,000.
When you walk into the front door you are surrounded by natural light, cathedral ceilings custom paint throughout, and stunning travertine floors with custom inlays downstairs and on the stairs. The large living room and formal dining room look out to the beautiful backyard and views beyond. The family room has a stone fireplace and plenty of room, and the bright, spacious kitchen is fabulous for the chef and entertaining.
The large master suite has more views – out to the canyon, The Carlsbad Crossings golf resort, mountain ranges and rolling hills. With a sunken tub and big walk-in closet, the master bathroom fills all of your needs.
The upstairs loft – an optional 5th bedroom – provides a great space for a den, playroom, office or gym, and includes a peek view of the ocean. The upstairs laundry room provides convenience and a built in sink. Other features include an expoxy floor three car garage, ceiling fans, upgraded neutral carpeting upstairs, and custom drapery.
Aside from the many exquisite interior features of this home, the beautiful backyard is definitely something to brag about. Situated on a lot of over 8000 square feet, this is one of the larger lots in the neighborhood. The sellers created a large patio area for dining al fresco, and a path that circles the center lawn area (great for strolling or for small bikers). Mature landscape and flowers provide plenty of privacy. The views extend to the rolling hills and mountains, and out to the San Bernardino mountain ranges, plus golf course and canyon views. It truly is a personal oasis.
The Mar Brisa community features a resort like community pool and two spas, barbeques and tot lot, plus an exercise lot. HOA fees are very low and there are no mello roos taxes. Carlsbad schools too! 1452 Sapphire Drive is move-in ready and waiting for a buyer. To see more pictures and get more information on this home please visit http://www.1452SapphireDrive.2seeit.com. Please contact Rachel LaMar if you have any questions, or to schedule a showing, at 760-310-9466.
There has been a lot of real estate news this month, so here is the latest:
New Refinance program to help millions of troubled homeowners. The Obama administration is pushing a new program to help millions of homeowners who are unable to make mortgage payments on underwater homes. The new program would allow borrowers with Fannie Mae and Freddie Mac backed loans to refinance at low interest rates – EVEN with negative equity or poor credit scores. “Wow,” you may have just muttered…wow is right. The Federal Housing Finance Agency (FHFA) and private bond investors have to approve the programs, which is a big hurdle, since (as you can imagine) they have some concerns (I bet). The government says it is weighing alternatives to help homeowners save over $85 billion a year. We shall see.
Short sales jump in second quarter. Short sales went up 19% in the last quarter, nation-wide. The good news is that they are taking less time to close than before, with an average of 245 days from notice of foreclosure to close of escrow. In San Diego, over 4100 short sale listings have sold since the first of the year, with over 1100 currently pending (in escrow) and over 2400 active. More lenders seem to be working with short sales now than ever before, and they are usually priced well, comparatively speaking. Hopefully the long time constraints typically associated with them will continue to decrease and move toward more normal closing times.
More news on short sales. The California Association of Realtors (CAR) has been busy fighting lenders on short sales, in an attempt to get them to focus more attention on getting these sales to close quicker. CAR delivered a public lashing to the big lenders this past week, accusing them of failure to respond to short sales in appropriate time frames, dragging their heels on file processing, and other faults. CAR outlined specific plans for the lenders to follow…we shall see what transpires.
HAFA policies amended to help short sale sellers. HAFA (Home Affordable Foreclosure Alternatives Program), the government program that helps short sale sellers by giving them money to move and (supposedly) quicker approval of short sales, among other benefits, is to be amended once again. Some of the changes include: giving the borrower more time to respond to HAFA participation offers from the lenders, allowing primary lien holders to offer increased funds to secondary lien holders (which feasibly will help gain short sale approval from other lien holders – one of the biggest obstacles in short sales), and implementing stricter procedures to evaluate BPO’s (broker price opinions – like an appraisal). These are just some of the changes, but basically they will make short sale approval easier.
Median home prices revert to years past. Median home prices are reminiscent of the earlier part of the 2000’s. Some markets are mirroring 2006 prices. Areas like San Diego have fared better than others, due to a stronger employment base, lower distressed property levels, and other factors (location, location, location). Cities like Las Vegas, Phoenix and Oakland have median prices reminiscent of those more than a decade old, before the housing boom. Zillow estimates a 4.3% decline in home prices in June, year over year.
Luxury home market taking a hit. The luxury home market is taking a hit. Builders are facing more cancellations on newer homes, and buyers are feeling more hesitant to purchase these pricier properties.
A buyer client of mine recently commented, “I know listing agents don’t do much.” Normally the one to speak up, I had to hold my tongue and pondered this one. In doing so, I realized that this comment is likely a commonly held view – many people simply do not understand what exactly listing agents do, and why they get paid “so much,” as I have heard others lament. So I thought I would explain what I do as a listing agent, just to put it out there for information-gathering purposes.
It is important to first point out that my client’s comment was partially true – there are some agents who abide by the old rule: get the contract signed, place the property on the MLS with some pictures, and pray (for an offer). I personally know agents who work this way, and some are even successful. There are also agents who work very hard at selling homes – some have systems and plug in their listings to the system (allowing them to take many listings at a time), which works for them.
My philosophy is a bit different from the “big” listing agencies who have numerous listings, and that’s ok, because I am confident in my abilities to help my sellers. I choose to look at each listing as a separate project, needing individualized attention. Every property has different features that need to be highlighted. All in all I believe it is the attention to details that makes a listing, and a listing agent, stand out. So how do I help home sellers? Here are some of the things I think are important:
Complete home evaluation. When I list a property the very first thing I do is walk through the home with the seller. I evaluate every room – is there too much furniture, clutter, is the natural light being hindered in some way? Does the room look appealing with the furniture as is, or do we need to move some pieces around or remove them entirely? Walls should not be inundated with pictures/art, and family photos should be removed. Each home and each evaluation is different, but the goal is to have the home in the best showing shape possible.
Professional photography and virtual tour. Many agents these days take their own photos to save money, and some are quite good at it. But I feel that it is imperative to have a professional photographer do so. Special lenses and lighting really make your home look it’s best. Virtual tours, which these days are left out of many listings, are also important. Over 90% of all IP traffic will be video by 2013, and many people do not want to read a wall of words. They want to see the home, they want to FEEL it. The expense of hiring a professional property photographer (which I pay for) is well worth it, in my opinion.
Broker caravan. A broker caravan, where area brokers and agents are invited to come view the home, is a great way to not only get broker feedback on how the home shows, but also to alert the agents that your home looks great! After the work we do getting it to show it’s best, and the beautiful photos we take, this is the time to show it off to as many area agents as possible. I usually include food as well (either lunch or brunch), to get the agents into the home. I take advice gathered at the broker open house very seriously, sharing it with my sellers.
Open houses. These are also a great way to get feedback on the home, although I leave this entirely up to the seller. I like to have at least one open house, where I invite the entire neighborhood to come visit. People tend to have pride in their neighborhoods, and may know a friend who would like to live there. This is another great way to get feedback, and from those who live close by.
Marketing. Some agents use the same marketing plan for every listing. I don’t. To me, it really depends on the home and it’s features. Whether it is the view, the appealing yard, home office space or proximity to various venues, that is important in marketing. I use a variety of techniques – internet (my main focus), print, video, mailers, personal house websites, flyers, etc. – to get the home seen by as many buyers as possible. The plan is customized according to the property and the desires of the seller, as well as what I think is important in drawing the most buyers to the home.
Price. This is the number one factor in selling a home, and I have blogged about it often. I believe that a home has to be priced well, from the beginning. This is not the time to price a property high and then reduce it later. Today, a home needs to be priced according to comparable solds (of course, adjusting for special features/upgrades, quality and condition). This can be hard for some sellers, as prices have come down in this market due to many factors, including distressed inventory. I feel that the first two weeks are critical. You want to get the buyers IN to see the property – you want them to want to come look. If the home is priced well there is a good chance you will get multiple offers, and in these days of difficulty with qualifying buyers that is the best possible scenario.
No matter who you hire to list your home, make sure you have a plan in place. Understand how your home is being marketed and what you need to do to help get it in the best shape. Don’t be afraid to discuss this with your agent – it is your best interests that are important! Remember – listing a home is not hard, but the level of service from an agent is what can vary immensely. Make sure you are well cared for.
These days it is more difficult than ever before to qualify for a loan. Lenders have such a tight grip on their money that they practically require you to sign over your firstborn to release it. Many buyers find themselves in tricky situations – first time buyers who might not have enough cash or credit scores that are not practically off the top of the charts, and move-up buyers who may not have enough equity in their homes for downpayments. But there is an option that may make home buying possible: FHA loans.
FHA loans have been popular with first time buyers for some time, as they offer low rates, underwriting standards that are not as strict, and only require very minimum downpayments. Furthermore, these loans allow use of rent history for qualification purposes – a great help for those who have never owned. But more recently repeat buyers have been discovering these types of loans, allowing many to purchase when they do not have the cash reserves available for a traditional 20% downpayment.
There are requirements for FHA loans – the buyer must be purchasing the home as a primary residence, have reasonable credit scores, and be able to afford monthly payments, for starters – and these can vary depending on county or state, so it is imperative to consult with an FHA-approved mortgage lender. If you need referrals please let me know. If you are considering a home purchase you should definitely look into FHA loans.
Like most hardworking Realtors, I look through MLS listings daily, and often I am surprised at what I see Realtors doing. Here are some of the things that really make me wonder whether the seller knows things could be better, that they deserve more, and why the agent is doing business in that way.
Know the facts! If you take a listing, make sure you verify all the facts before publishing it to the MLS. I showed a home last year that had the wrong zip code/city listed. My client had asked about a home in a particular neighborhood, and it was not coming up in local searches of the neighborhood. If your home has a “peek” as opposed to a view, be honest about that. If you don’t know something and cannot find out, state in the listing that the answer is not known. I have seen all kinds of data mistakes over the years, so it is imperative to be careful.
Listing photos: Every agent should use a professional photographer to take photos of a listing. There are a few exceptions, but the majority of properties just show better if a professional photographer takes the shots. Lighting and special lenses make a huge difference. Today I saw a few listings that had pictures that were blurry, dark and just hard to see. This does no justice to the property, and there is evidence that buyers who look online will not click on listings that have bad photos, or only a single photo. The money you spend on a photographer who can also provide a virtual tour (people love videos) will pay off.
Using comments to create a sense of urgency: “This one won’t last” and “hurry” may seem like a good idea to some, but this type of posturing wouldn’t make me want to see the home, especially in a buyer’s markets. Instead, you want to use descriptive language to really highlight the home’s features and make the buyer feel that the home is special. If the home sits for a while with no bites you may want (aside from a possible price reduction) to change your descriptions.
Typos and grammar: Maybe it’s the writer in me, but when I see a listing with grammatical errors and spelling mistakes I cringe. If I were the seller I would NOT be happy if my home were listed in this way. Seriously, if you cannot proofread, or if English is not your first language, please have someone proof your comments for you before you post the listing to the MLS! Not only are you doing your seller an injustice, but you are also making yourself look unprofessional.
Some photos have an expiration date: If you listed a house before Christmas and you have photos of the living room with the Christmas tree and stockings, there comes a time to take new photos. No one should see that tree or snow in the yard in August. Again, it’s not helping your seller or your reputation.
List and pray technique: As the majority of us know, if you have a listing you can’t just put it on the MLS and hope to get offers. Believe it or not there are many agents who do this! This is a blatant failure in client representation, and in my eyes it is a breach of the duties we owe our clients. A client recently told me he “knows that listing agents don’t really do much.” Well, I don’t know about you but if I got paid for the time I put into each listing I would be a happy camper. An agent should be working his/her tail off to sell a listing. It involves not only money but a lot of time, hard work and creativity. Sellers should realize they deserve this – they are paying for it!
There are slackers in every profession, and there are those who are successful but seem not to work too hard. I believe that you are only as good as you feel – if you can truly believe that you worked as hard as you could to help a client, you are doing the right thing. If not, learn from your mistakes and do better next time. There is always something to learn, and always ways to improve.
Buyers often ask me what they can do to assure their short sale offers are accepted. While for the most part we are at the mercy of the lenders when it comes to short sales, there actually are ways to increase the likelihood of getting that priceless lender approval letter.
The simple answer is to make your offer as clean as possible. Here are some tips:
1. Do not ask for a home warranty. Most lenders will not pay for this. I always offer to buy a one year home warranty for my buyers, and this makes for one less expense to put on the HUD statement – the document by which lenders decide whether or not to approve a short sale.
2. If you have to ask the seller to pay closing costs, get creative. In short sale cases most sellers do not have the money to pay for the buyer’s closing costs (they usually can’t pay their own, thus the reason for the short sale), and most short sale lenders will not pay closing costs. Some buyers do not have the money to pay their own closing costs, so they may need to find creative ways to include this – such as writing the offer for slightly over asking price, and then asking for the closing cost credit through escrow. Make sure to discuss any alternatives with your agent and mortgage professional to find the right solution for you, as you need to be aware of any effects this may have on your mortgage, taxes, etc.
3. Offer a higher initial deposit to show you are serious. If possible, make your initial deposit appealing. Of course this depends on your budget and the price of the home you are trying to purchase, but 2% of the purchase price is usually decent. If you are purchasing a home in a higher price range you may consider 3%. Again, discuss this with your agent.
4. Find out about termite standing before writing your offer. Many lenders will not pay for termite work, and will only provide a report. But there are lenders who will offer some money toward wood destroying pest repairs. If possible, have your agent discuss with the listing agent whether he or she included termite work estimates in the estimated HUD that was delivered to the lender (if there was one), or discuss whether the agent knows if the lender will cover any of these costs. If the lender has made clear it will not cover this you may consider asking for a report only. Be careful here – I have had lenders pay for termite work, so don’t just write this one off; see what information your agent can discover.
5. Make sure your agent is constantly communicating with the listing agent. Often buyer’s agents write the offer and sit on the sidelines waiting to hear from the listing agents. I think it is important to contact the listing agent once a week to see if there has been any news on my clients’ offers. I like to do this at the end of each week, so the agent has had the work week to check on progress with the lender(s), but usually do so on Thursday or Friday morning, in case my contact reminds the agent to check for updates.
Short sales can be hard for several reasons, but from the buyer’s perspective the most common and difficult is waiting. Making your offer as clean as possible, and having your agent stay on top of progress, will hopefully make the approval period a little less painful, and make the wait well worth your while.
Art in the Village: This Sunday, August 14, the city of Carlsbad hosts the 13th annual Art in the Village in beautiful downtown Carlsbad Village, from 9:00 a.m. to 5:00 p.m. If you haven’t been to one of these fantastic events, I encourage you to drop by and have some fun.
The event includes artists, painters, mixed media artists, jewelry artists, sculptors, glass blowers and others. There will be food and live music, plus art demonstrations. The festival is held at State Street and Grand Avenue. There will be plenty of fun for the whole family. For more information visit the website at www.shopcarlsbadvillage.org or call 760-434-2553.
Snores and S’mores Family Campout: This weekend, August 13-14 this fun annual family campout takes place at Aviara Community Park, starting at 5:00 p.m. A great night of fun, food and adventures, sponsored by some of Carlsbad’s terrific family-friendly restaurants. You need to register for this event, so get your tents and sleeping bags ready and find all the details here: http://tinyurl.com/3ka64gz
Leo Carrillo Film Festival: If you are looking for something fun to do, something out of the ordinary and outdoors, this is the perfect suggestion. The annual film festival runs August through September, for five consecutive Fridays. Bring a picnic dinner, your lawn chairs, blankets and some warm clothes and watch a movie outdoors. Admission is free and tours of the historic ranch are offered before sunset as well. If you have never visited this Carlsbad gem I highly recommend it, as it is a wonderful piece of Carlsbad’s history. For more information on the film festival visit the website: http://tinyurl.com/3lahul7
I read a story today about a short sale listing agent, beyond frustrated with the bank’s lack of response to her sale, who was able to get the bank’s attention in a simple way: by tweeting about her dissatisfaction. I loved this story because it shows that while banks may think they have the power in these situations to ignore files until they are ready to deal with them, they do not like bad press. I personally know another agent for whom this same tactic worked with a different lender – one tweet and she was contacted by the bank.
I have to admit that Bank of America has been pretty responsive – not in the traditional way (I am waiting on them to approve 2 short sales right now, and it has been several months), but if you contact them via other means. About a month ago I was a bit fed up with some sales that involved B of A. I was able to obtain the emails for people very high up on the chain of command (thanks to a trusted colleague), and sent them a letter. In it I talked of my dissatisfaction with the way they have been handling short sales, of the need to find REO agents who were honest. In short, people are unhappy, I wrote. I was contacted within a few days by the assistant to one of the big wigs at B of A, who was extremely pleasant and helpful, and truly wanted to make sure I had a better experience with Bank of America.
Just this morning I sent a message on Twitter to Bank of America, as I have a few contracts that have been awaiting their approval since June. Within minutes I received a Tweet back, asking me to send a message with my contact information and the best time to reach me…voila! The moral of the story is banks do not like bad press, even though they must know the majority of real estate agents and people in general in this country are not happy with them. There are ways to get their attention, but sometimes you just have to think out of the box. Social media does have power, for all those doubters. Big industries and corporations monitor their social media reputations, and we can all gain from that.
In trying times you can surely bet that there will be those who will come up with ideas – some good, some bad. There is one mortgage servicer that has been following a plan for the last year, and it has proven successful in helping underwater homeowners (those who owe more to their mortgagors than the current market value of their homes). The program has been so successful it is going to be applied to many more loans the servicer is acquiring.
Ocwen Financial, a mortgage company that services 460,000 loans throughout the country, just completed a one year study of their new program, achieving an unbelievable 2.6% redefault rate (compared to nationwide 40-50% redefault rates for federal programs). Here is how it works: the mortgage servicer agrees to reduce your loan balance to the point that your debt is 5% below current appraisal value (giving you equity in your home). They then modify your mortgage so your new monthly payments are based on your reduced principal balance. Over the next three years, in annual increments, they write off the amounts of the original debt that they reduced (so you are truly paying a mortgage based on current value, with equity, and there is no tacking on the old balance to the end of your loan).
There is a catch: the homeowner has to agree to keep loan payments current, and has to share 25% of any future gain realized if the home is resold. Sounds like a good plan, right? Considering that there are an estimated 11 million homeowners who are underwater on their mortgages, with an expectation of 2 million of those who will face foreclosure (according to an article posted today by Ken Harney), this could be a program that might prevent more foreclosures if adopted by other lenders.
I think this idea is good enough to share, and I hope that other lenders will follow suit and initiate similar programs. Some big lenders, like Wells Fargo and Bank of America, do offer principal reduction programs, but they do not utilize the “shared appreciation feature” inherent in Ocwen’s plan. I believe it is a brilliant possible solution for many people, so if your loan is not serviced by Ocwen please discuss this with your lender. Thank you to Ken Harney for bringing this story to light.