SAN DIEGO REAL ESTATE AGENT BLOG » Foreclosures

FORECLOSURE RISES DESPITE ECONOMIC STIMULUS

Michael Carter - San Diego Real Estate Agent — Thu, 16 Jul 2009 23:18:06 +0000

The foreclosure crisis continued to grow in the first half of 2009, affecting more than 1.5 million homes, according to a mid-year report from foreclosure listing service RealtyTrac Inc.

The report cites a 9 percent increase in total properties in foreclosure compared to the previous six months, and a nearly 15 percent increase in total properties facing foreclosure compared to the first six months of 2008.

The report also says that 1.19 percent of all U.S. housing units (one in 84) received at least one foreclosure filing in the first half of the year.

“In spite of the industry-wide moratorium earlier this year, along with local, state and national legislative action and increased levels of loan modification activity, foreclosure activity continues to increase to record levels,” said James J. Saccacio, chief executive officer of RealtyTrac, in a prepared statement.

States with the highest foreclosure rates are:

Nevada
Arizona
Florida
California
Utah
Georgia
Michigan
Illinois
Idaho
Colorado

States with the highest number of actual foreclosures are:

California
Florida
Arizona
Illinois
Nevada
Michigan
Ohio
Georgia
Texas
Virginia

Source: RealtyTrac (07/16/2009)

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Learn How to Fight Back Against Your Lender and Save Your Home

Michael Carter - San Diego Real Estate Agent — Fri, 24 Apr 2009 02:38:15 +0000

Loan Modification & Loss Mitigation Strategies

A loan workout or loan modification is an agreement that is negotiated with your current lender that changes the terms of your current loan. Lenders are willing to negotiate when borrowers are facing financial difficulties and can’t obtain other financing alternatives. You must show the lender why it would be in the lender’s best interest to agree to a workout arrangement. If convinced, a lender may be willing to reduce the loan interest rate, reduce monthly payment amounts or change other loan terms.

A loan modification generally occurs where the parties to a problem loan mutually agree to workout the problem by creating new and better loan terms. The hope is that the new loan will enable to the borrower to meet their obligations.

When applying for a loan modification, make a game plan on how exactly you are going to approach them. These people are trained in minimizing loss for their company and they get paid to by getting the most amount of money out of you as possible or declare that your case is un workable and foreclose on you. That is how they mitigate loss. If you understand this, then you’ll know that you have to approach them and all conversations very carefully. Everything can and will be used against you.

Items You Will Need When Applying For a Loan Modification
Document income and expenses. Keep all correspondence (even the envelopes) Before negotiating a deal, gather all the information you need, starting with any correspondence from your lender. That includes anything that you have unopened from the lender. Don’t throw away envelopes from the servicer — postmarks sometimes can make the difference between being eligible or ineligible for relief.

Collect everything that relates to income and expenses. Find your last four pay stubs. They want to see at least one month of income. If your income is very sporadic, the support your story by showing how you’re getting paid so we can calculate an average over time. Gather at least three years worth of W2s and tax returns, plus three to six months of bank statements. Find all the mortgage paperwork and add that to the file. Pull together all bills, paid or not, from the times you were falling behind on the house payments until now. Include utilities, auto payments, credit cards, student loans, child support, medical bills. Find the winter and summer heating and cooling bills. You need to also include everything that documents why you fell behind. An employer’s notification of reduced hours or a layoff, an invoice for an auto repair or a furnace replacement, a shutoff notice from a utility.

What to Do When You Call Your Lender:

Your lender has two platoons of employees who talk with delinquent borrowers. The first is the collections department, which consists of people who try to pry money out of you and get you current on the payments. The second group consists of the loss mitigation specialists. These departments go by different names, depending on the servicer, including foreclosure prevention, loan resolution and delinquency customer service. We’ll use the most common name for the department: loss mitigation, or loss mit. It can be difficult to get through to the loss mitigation department if collection agents are discouraged from transferring calls. This is one of the benefits of having a helper, such as an attorney or a housing counselor. The first will intimidate bill collectors and the second might have contacts within the loss mit department.

The trick with any bank and getting a work out done is learning to navigate their phone system so as to increase your chances of getting a live person. Over the years Ive learned some tricks that help, sometimes you hear options that you know will lead to a person like when it says “to speak to a representative press ___” but sometimes they don’t give you these options (cricket wireless is the worst at this) so you have to think, what options WOULD get a live person. For example often anything that involves new clients signing up will get a live representative…cause they always want new business. You have to be a little savvy though, you cant just tell the sales guy you called them so you could get a warm body to answer the phone!

Once you get a live person, you want to be working your way up to a decision maker. This is sometimes harder to do for a homeowner than a 3rd party. Often with the homeowner they get stonewalled at the first level, and sadly the first tier in Loss Mitigation is really a glorified collections department. They are paid hourly employee’s who have very little if not zero motivation to go the extra mile and help you get some needed comfort and relief while resolving your problem. Often they just compound the problem by being rude and demanding, telling people things like “just pay your bills”. So its essential that you get beyond these people and to a specialist.

Sometimes to get to this point you have to put up with the hourly employee’s through a process of filling out their forms and information. Providing them with items such as pay stubs, tax returns and a whole host of financial information. Once everything is provided, then some lenders will assign the file to someone higher up in the loss mitigation department.

The MOST crucial element to this whole process is your Budget and if you have dome your due dillegence, you’ll be ready . They will ask you for a detailed list of your monthly expenses. If its too tight, you may not get approved, if you have too much extra income you are going to have an outrageous payment plan. Don’t agree to it!

The 2nd MOST important thing you can do is DO NOT SPEND YOUR HOUSE PAYMENTS. Often people stop making their payment because they are falling behind on other bills, or they cant quite make the whole house payment. Over the years more often than not, the people I met with still have an income coming in each month, they just cant meet all their obligations, so while the house is falling behind they take advantage of the fact that they aren’t paying the house payment in order to catch up on other debts. THIS IS NOT WISE AT ALL. Sock away as much of that money each month as you can. Its crucial, heres why;

If you don’t pay your mortgage for 3-4 months and your lender decides to negotiate a repaymenyt plan or a loan modification, then they will want what is called “good faith” money for you to come to the table with. Typically this is from 30-75% and sometimes 100% of what you owe in delinquent fees and attorney fees. Often I speak with homeowners who spend all their money and have nothing to work with. If that is the case, then don’t expect them to work with you or you better have a REAAAALLLY god explanation and proof as to why you have no money to bring to the table.

We all know life throws curve balls at us, its the nature of the game, you’d better just expect it, cause its coming in one form or another. Whether it be a car breaking down, an illness, injury or death. An accident in a car, you just don’t ever know and its ALWAYS a good idea to have a rainy day fund. The crazy thing about going into foreclosure is that you can actually come out of it better off than you went in sometimes.

Is it Better to Just Walk Away and Start Over?

Many homeowners are just in over their heads. Many they love their home and their family does too. But what good is it when you are so stressed out that you cannot enjoy your home. Your maxed out and you don’t have a dime to take the kids for an ice cream or the movies. That’s no way to live. This is a serious time to really sit down and see if it’s all really worth the stress and heart ache. If it’s not then maybe it’s time to just thorw in the towel and down size. Get something you can afford and enjoy. Just close the door on this time in your life and move on. Sure, it will affect you for years, but place your health and well being before making a house payment. If this is you, you’re not alone. Think about it. Is it all really worth the pain and stress? You’re already down, maybe it’s time to just move on and take that money and get a nice little place to rent and regroup.

By saving up your payment for 2-3 months or more depending on the foreclosure time line in your state, you can not only have enough to put together a really nice plan with your lender, but also have some in the bank for a rainy day or worse case scenario, a rental. Often payment plans with the bank can be pricey and very short terms, like 6 months total to repay what you fell behind on. The people iI have worked with who took my advice to save up and keep some funds in the bank, were successful most of the time at keeping their home. Because they were prepared for life’s curve balls. Even though they had fallen behind in the past, if they had an expense one month, they just pulled a little from the slush fund in the bank to help supplement their house payment that month.

The Lender Has Made You a Deal, What Now?

Respond to your lender, but don’t be rushed into making a promise that you can’t keep. Before making a deal with your lender, describe your situation to an attorney, accountant or a knowledgable mortgage person. You need to make sure that it is reasonable and not an agreemnet that will stop foreclosure for a month or two.

Many lenders are likely to offer a forbearance. Theses are only good for a short term band aid and not for the long term. Most commonly, this entails adding a set amount to each month’s payment. A forbearance plan can go as long as 36 months. But many are set to fail and are completely unreasonable for borrwers to pay back. Usually this will require palcing the delinquent amount on top of your monthly mortgage payment. If you had troub

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

Loan Modifications In San Diego

Michael Carter - San Diego Real Estate Agent — Thu, 12 Mar 2009 20:44:15 +0000

The declining housing market and the weary buyers, San Diego real estate agent had to adapt to the changing market. One way is doing a Loan Modification for clienteles that’s about to lose there home or unable to refinance because they are upside down with there mortgage. The Obama stimulus plan allowed Loan Modification to be more of an avenue for home owners.

What is Loan Modification?

Loan Modification is another tool San Diego real estate agent can utilize to save there clients home or investment homes. Ways this is possible is by modifying loans to reduce the interest rates, payment and sometimes the balance (Mortgage Balance Short Sale). One example is by reducing the loan to 2% for 5 years and adjusts to 5% for the remainder life of the loan. Not all loans can qualify for a loan modification, especially with the Obama Stimulus Plan. Homeowners that are 105 LTV can qualify for a loan modification but what about the majority. In the stimulus plan, it was determined that loan modification is not meant to stop foreclosure but to reduce it.

Besides short selling, San Diego real estate agents can now use loan modification to help there clients stay in there home. But be diligent in doing the research on the company that’s doing a loan modification and make sure “You Are In Caring Hands”.

Michael Carter
San Diego Real Estate Agent
MTC Future Realty
(619) 488-5774

San Diego Short Sales Dying

David Marasco - San Diego Real Estate Agent — Wed, 18 Feb 2009 00:09:30 +0000

Having been in the business for nearly 4 years now we have been akin to the trends of the short sale market in San Diego. San Diego Short sales have dominated in markets such as Chula Vista, La Mesa, Spring Valley, and all over Rancho San Diego for the past few years but it wasn’t up until recently where we have seen the number of short sales decline. Perhaps this is due to the Stimulus package president Obama set up to help or perhaps we are finally reaching the absorption phase of the real estate life cycle in San Diego. Whatever it is, there is no denying that short sales in San Diego in general are seeing a steady decline in its numbers.

Dynamics of a San Diego Short Sale
I have closed short sale deals in Florida, California, Nevada, Georgia, and North Carolina and have had to deal with a variety of different law structures but there is one constant. Short sales can be a huge undertaking especially if they are not handled with care. San Diego Short sales face an even greater hurdle because the prices of houses are generally more expensive here than they are in most parts of the country.

In either case, San Diego short sales pose a different but obtainable challenge because for the most part the idea remains the same. To convince the lender to sell below the principal balance on the borrower’s loan at a reasonable market value price. This dynamic poses a large challenge in some parts of San Diego mainly due to the fact that in some areas in San Diego like Chula Vista, prices have dropped much more dramatically than say Point Loma. Coupled with the time some lenders can take to process just the paperwork that upon completion the house has already declined in value and the original buyer has either found something bigger at a cheaper price or the appraisal cannot meet the value of the offer.

San Diego Real Estate Market For Short Sales
There is no denying that a house that winds up on the San Diego (Dowtown San Diego or El Cajon) courthouse steps (foreclosure) will cost the lender thousands of more dollars than if they had sold it below market value as a short sale. Sometimes the amount of money saved could be in the hundreds of thousands depending on location of size of the house. For this reason alone, more and more lenders as well as government officials have come up with different ways to help the borrower stay in their homes. Whether it be a reduction in interest rate or modification of a loan lenders are working tirelessly to avoid foreclosures.

Until these plans go into affect for San Diego Homeowners Lenders will to continue to lose millions of dollars from foreclosures. However, we are already seeing that Short sales in San Diego have slowly but surely started to decline which is a good sign but there remains a lot of work left to do.