SAN DIEGO REAL ESTATE AGENT BLOG » san diego loan modification

Key Features of the New Housing Rescue Plan

Michael Carter - San Diego Real Estate Agent — Mon, 29 Mar 2010 18:06:10 +0000

The government’s newest housing rescue effort, which was announced Friday, includes these key tenets:

· As much as $14 billion of the Troubled Asset Relief Program (TARP) will be made available to pay for writing down second liens for loans whose borrowers refinance through the Federal Housing Administration.

· Lenders that facilitate refinances through the FHA will be required to write down the principal of the first mortgage by at least 10 percent so the home owner has a loan-to-value ratio no higher than 97.75 percent.

· Lenders of second liens will be offered incentives of 10 cents to 21 cents per dollar of principal they write down in connection with an FHA refinance.

· Borrowers who lose their jobs can apply to have their mortgage payments reduced for three to six months while they search for a new job.

· Borrowers with a payment still greater than 31 percent of income after they find a job will be considered for a permanent loan modification.

· To encourage more short sales and “deed in lieu” of foreclosure transactions in which the lender settles the loan for less than is owed, the government will double assistance to borrowers to $3,000 and increase incentives to subordinate lien holders and investors to $6,000.

Source: Reuters News (03/26/2010)

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

Bank of America to Reduce Mortgage Balances

Michael Carter - San Diego Real Estate Agent — Thu, 25 Mar 2010 01:46:53 +0000

Bank of America said on Wednesday that it would begin forgiving some mortgage debt in an effort to keep distressed borrowers from losing their homes.

The program, while limited in scope and available by invitation only, signals a significant shift in efforts to deal with the millions of homeowners who are facing foreclosure. It comes as banks are being urged by the White House, members of Congress and community groups to do more to stem the tide.

The Obama administration is also studying whether to provide more help to people who owe more on their mortgages than their homes are worth.

Bank of America’s program may increase the pressure on other big banks to offer more help for delinquent borrowers, while potentially angering homeowners who have kept up their payments and are not getting such aid.

As the housing market shows signs of possibly entering another downturn, worries about foreclosure are growing. With the volume of sales falling, prices are sliding again. When the gap increases between the size of a mortgage and the value that the home could fetch in a sale, owners tend to give up.

Cutting the size of the debt over a period of years, however, might encourage people to stick around. That could save homes from foreclosure and stabilize neighborhoods.

“Banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that’s a sea change from where they were a year ago,” said Howard Glaser, a housing consultant in Washington and former government regulator.

The threat of a stick may be helping banks to realize that principal write-downs are in their ultimate self-interest. The Bank of America program was announced simultaneously with the news that the lender had reached a settlement with the state of Massachusetts over claims of predatory lending.

The program is aimed at borrowers who received subprime or other high-risk loans from Countrywide Financial, the biggest and one of the most aggressive lenders during the housing boom. Bank of America bought Countrywide in 2008.

Bank of America officials said the maximum reduction would be 30 percent of the value of the loan. They said the program would work this way: A borrower might owe, say, $250,000 on a house whose value has fallen to $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account.

As long as the owner continued to make payments on the $200,000, $10,000 in the special account would be forgiven each year until either the balance was zero or the housing market had recovered and the borrower once again had positive equity.

“Modifications are better than foreclosure,” Jack Schakett, a Bank of America executive, said in a media briefing. “The time has come to test this kind of program.”

That was the original notion behind the government’s own modification program, which was intended to help millions of borrowers. It has actually resulted in permanently modified loans for fewer than 200,000 homeowners.

The government program, which emphasizes reductions in interest rates but not in principal owed, was strongly criticized on Wednesday by the inspector general of the Troubled Asset Relief Program for overpromising and underdelivering.

“The program will not be a long-term success if large amounts of borrowers simply redefault and end up facing foreclosure anyway,” the inspector general, Neil M. Barofsky, wrote in his report. One possible reason is that even if they get mortgage help, many borrowers are still loaded down by other kinds of debt like credit cards.

Bank of America said its new program would initially help about 45,000 Countrywide borrowers — a fraction of the 1.2 million Bank of America homeowners who are in default. The total amount of principal reduced, it estimated, would be $3 billion.

The bank said it would reach out to delinquent borrowers whose mortgage balance was at least 20 percent greater than the value of the house. These people would then have to demonstrate a hardship like a loss of income.

These requirements will, the bank hopes, restrain any notion that it is offering easy bailouts to those who might otherwise be able to pay. “The customers who will get this offer really can’t afford their mortgage,” Mr. Schakett said.

Early reaction to the program was mixed.

“It is certainly a step in the right direction,” said Alan M. White, an assistant professor at Valparaiso University School of Law who has studied the government’s modification program.

But Steve Walsh, a mortgage broker in Scottsdale, Ariz., who said he had just abandoned his house and several rental properties, called the program “another Band-Aid. It probably would not have prevented me from walking away.”

Even before Bank of America’s announcement, reducing loan balances was growing in favor as a strategy to deal with the housing mess. The percentage of modifications that included some type of principal reduction more than quadrupled in the first nine months of last year, to 13.2 percent from 3.1 percent, according to regulators.

Few of these mortgages were owned by the government or private investors, however. Banks tended to cut principal only on mortgages they owned directly. Wells Fargo, for instance, said it had cut $2.6 billion off the amount owed on 50,000 severely troubled loans it acquired when it bought Wachovia.

Bank of America said it would be offering principal reduction for several types of exotic loans. Some of the eligible loans are held in the bank’s portfolio, but the program will also apply to some loans owned by investors for which Bank of America is merely the manager.

The bank developed the program partly because of “pressure from everyone,” Mr. Schakett said. Even the investors who owned the loans were saying “maybe we should be doing more,” he said.

Substantial pressure came from Massachusetts, which won a significant suit last year against Fremont Investment and Loan, a subprime lender. The Supreme Judicial Court ruled that some of Fremont’s loans were “presumptively unfair.” That gave the state a legal precedent to pursue Countrywide.

“We were prepared to bring suit against Bank of America if we had not been able to reach this remedy today, which we have been looking for for a long time,” said the Massachusetts attorney general, Martha Coakley.

Bank of America agreed to a settlement on Wednesday with Ms. Coakley that included a $4.1 million payment to the state.

Reducing principal is widely endorsed, in theory, as a cure for foreclosures. The trouble is, no one wants to absorb the costs.

When the administration announced a housing assistance program in the five hardest-hit states last month, officials explicitly opened the door to principal forgiveness. Despite reservations expressed by the Treasury, the White House and Housing and Urban Development officials have continued to study debt forgiveness in areas with lots of so-called underwater homes, according to two people with knowledge of the matter.

On a national scale, such a program risks a political firestorm if the banks are unable to finance all the losses themselves. Regulators like the comptroller of the currency and the Federal Reserve have been focused on maintaining the banks’ capital levels, which could be hurt by large-scale debt forgiveness.

“You have to be very careful not to design a program that would change people’s fundamental behavior across the country in a destabilizing way or would be widely perceived as unfair to people who are continuing to pay,” Michael S. Barr, an assistant secretary of the Treasury, said early this year.

Policy makers have been hoping the housing market would improve before any significant principal reduction program was needed. But with the market faltering again, those wishes seem to have been in vain.

Bank of America’s announcement came within hours of a fresh report that underscored the renewed weakness. Sales and prices are dropping, leaving even more homeowners underwater.

Sales of new homes fell in February to their lowest point since the figures were first collected in 1963, the Commerce Department said. Sales are about a quarter of what they were in 2003, before the housing boom began in earnest.

“It’s shocking,” said Brad Hunter, an analyst with the market researcher Metrostudy. “No one would ever have imagined it would go this low.”

By DAVID STREITFELD and LOUISE STORY

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

Will Rewarding Borrowers Prevent Defaults?

Michael Carter - San Diego Real Estate Agent — Wed, 10 Feb 2010 15:41:06 +0000

Will paying underwater borrowers to keep meeting their mortgage obligations prevent them from walking away?

Loan Value Group LLC says it is working with a major mortgage lender to test this theory.

Here’s the plan. The mortgage investor offers a cash reward to borrowers to keep paying. The amount varies by borrower based on income, negative equity, geography, and other risk factors. The more likely a borrower will default, the bigger the carrot.

The borrower can’t collect the payment until the mortgage is paid, although the rewards can be used to help pay off the mortgage if the property is sold.

The plan keeps lenders from having to mark properties to market and take big losses. Frank Pallotta, a founder of Loan Value Group and former executive at Morgan Stanley and Credit Suisse, says the program will pay for itself if only a few borrowers stay put and keep paying.

Source: The Wall Street Journal, Nick Timiaros (02/08/2010)

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

Don’t be among victims of foreclosure-prevention scams

Michael Carter - San Diego Real Estate Agent — Wed, 09 Sep 2009 02:38:41 +0000

WASHINGTON – How’s this for a business plan to make money during the housing bust? You buy or rent lists of recent default filings from across the country – thousands of people who have been notified by lenders that if they don’t get their mortgage payments back on track, the next step will be foreclosure.

You send each homeowner a personalized letter with this urgent message: We know you’re having a tough time right now, but WE CAN SAVE YOUR HOME! It’s not too late! We know how to get through to your lender and work things out to save your house. Call this toll-free number immediately!

The letters generate hundreds of callbacks. Many panicked owners agree to pay a fee of $1,200 to $1,300 for the foreclosure prevention services in advance.

You can guess what happens next: Little or nothing in the way of help in most cases. The homeowners lose their houses to foreclosure, and the rescue company keeps sending out letters and pocketing fees.

Late last month, the Federal Trade Commission settled with a Florida-based company – United Home Savers – that allegedly operated like this, and victimized more than 3,100 homeowners nationwide.

The company and its officers denied any legal wrongdoing as part of the settlement, but have shut down the firm and agreed to a $4.1 million judgment and close monitoring by federal officials of their future business activities. However, most of the judgment was suspended because United Home Savers and its principals had only about $22,000 in their bank accounts when the FTC froze their assets under court order.

United could not be reached for comment.

The 3,100 victims, in other words, probably won’t see a dime in restitution.

“What really hurts,” says Harold Kirtz, the FTC lawyer who led the government’s case against United Home Savers, “is that a lot of these people not only lost money upfront, but they also fell further behind on their mortgages” during the weeks and months while they waited for United’s staff counselors to work things out with their lenders.

That, in turn, made foreclosure for the homeowners even more likely.

But United is just one of literally hundreds of alleged foreclosure rescue operations that have prospered in the toxic wasteland of the mortgage market bust. Reilly Dolan is familiar with many of them. He is the FTC’s assistant director for financial practices and the coordinator of “Operation Loan Lies,” a joint federal-state effort that has targeted 189 companies allegedly running mortgage-modification or foreclosure-prevention scams. The FTC alone has brought or settled 19 cases against firms of this type in the past 12 months, Dolan said in an interview. “And more are coming.”

“This is now one of the top priorities” at the FTC, according to Dolan, because the sheer breadth of mortgage foreclosure problems “has caused a lot of scams to come out of the woodwork.”

Kirtz, who is based at the FTC’s Atlanta office, said even well-educated, financially knowledgeable consumers can fall prey to loan-modification and foreclosure-prevention rip-offs because “they are in a very vulnerable state,” threatened with the loss of the roof over their heads. As a result, they don’t ask the questions they should, and they don’t look for the clear warning indicators of potential fraud. What telltale signs should tip off financially distressed homeowners?

No. 1: If the company claims to be able to guarantee success in preventing foreclosure, no matter what your financial situation or mortgage details, don’t listen further to the marketing pitch. Nobody can guarantee you’ll get a loan modification, and nobody can guarantee that your lender won’t pull the plug and foreclose.

No. 2: Although there is no federal law against collection of upfront fees for loan-modification assistance – unlike so-called “credit repair” operations, where fees are prohibited until services are completed – any company asking for $1,000 to $4,000 in advance should be checked out thoroughly by the homeowner before sending in any money.

“We can’t say all advance fees are illegal,” Kirtz said. But when the fees are for things like “processing” and “administration” costs, “in most case they’re probably bogus.”

Finally, mortgage-modification companies that claim to have special inside connections allowing them to make your payments directly to your lender – provided you send your monthly checks to the modification company, not to your regular servicer – is almost certainly intent on just one thing: Cashing as many of your checks as possible, pocketing the money, and leaving you unprotected on the conveyor belt heading for foreclosure.

By Kenneth Harney

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

REAL ESTATE STABILIZATION

Michael Carter - San Diego Real Estate Agent — Thu, 14 May 2009 00:17:51 +0000

Price Stabilization Is First Step to Recovery

Home prices must stabilize before the broader economy can turn around, a panel of housing and economic experts said yesterday at a real estate summit hosted by the NATIONAL ASSOCIATION OF REALTORS® as part of its Midyear Legislative Meetings in Washington, D.C., this week.

Although there are encouraging signs in the housing market-including a pick-up of home sales in previously hard-hit markets, record affordability, and continuing low interest rates-prices have not yet hit bottom.

That’s keeping many households on the fence and making it hard for those who do jump in to get financing in the conventional market. What’s more, it’s making it harder for troubled homeowners to refinance, leading to more distressed sales, and thus further erosion in prices.

Tax Credit Bridge Loans on the Way

To put a floor under the market, the federal government must continue to intervene, panelists said, and expanding the first-time homebuyer tax credit is a good place to start. The credit should be expanded to all households, including those with higher incomes, increased significantly in value, perhaps to $15,000 to $16,000 instead of the current $8,000.

“Then it would start move real estate,” said Robert Sibcy, president of Sibcy Cline, REALTORS®, based in Ohio.

In a positive move, the U.S. Department of Housing and Urban Development is set to roll out guidelines permitting HUD-approved lenders, public housing finance agencies, and some nonprofit organizations to make bridge loans to home buyers. The loans would be collateralized by the $8,000 tax credit, giving buyers the upfront funds for a down payment.

The inability to use the credit for the down payment has been a major stumbling block for the tax credit. NAR has been calling for HUD to use its authority to allow the bridge loans.

During the summit, HUD Secretary Shaun Donovan announced that HUD has decided to allow bridge loans, sparking a loud cheer of appreciation from more than 1,000 REALTORS® attending the session.

“We want FHA consumers to access the credit to use as a down payment,” Donovan said. “I want to thank NAR for its partnership with FHA.” More details on the guidelines will be released in a few days, he said.

Donovan said the credit is expected to stimulate 100,000 first-time homebuyer purchases and 60,000 move-up purchases this year before it expires Dec. 1.

Further Government Actions Could Help

The credit alone isn’t enough to spur sales, many panelists said. Barry Bluestone, a professor of political economy at Northwestern University, called for the federal government to step in for a defined period of time, such as 18 months, to insure buyers’ home equity.

Providing protection against price drops would remove buyers’ reluctance to get into the market now, and since the program would be of limited duration, it could lead to a critical mass of households buying in the short-term and thereby shore up prices. Bluestone said he envisions the federal government insuring up to 85 percent of an owner’s home equity.

“This could stabilize prices over the next 18 months and cost the government practically nothing,” he said. “A small, temporary program can have a huge impact. It’s an idea whose time has come.”

Foreclosure Actions

The other way to stabilize prices is to finally get a handle on foreclosures, which exert heavy downward pressure on prices. Donovan said the administration is making gains in this effort with the voluntary cooperation of 14 of the country’s largest mortgage servicers, representing 75 percent of the market.

But several panelists said the voluntary effort hasn’t proven to be effective yet, and that a new wave of foreclosures is expected this summer.

“If modifications don’t work, we need to stop waiting for voluntary compliance,” said John Taylor, CEO of the National Community Reinvestment Coalition. “The government should buy [the loans] at fair market value, take them out of the market, modify them, and end the foreclosure crisis.”

The big worry about federal intervention among several panelists is the apparent lack of an exit strategy. It tends to be far easier for the government to get involved in the market, through interventions like the giant federal bank rescue plan, than it is to get back out.

“Right now the Federal Reserve is the mortgage-backed securities market,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. “I don’t know the exit strategy and how long this can continue. It’s scaring off other investors. If the Fed stops buying, [what happens?] How do we get out of it?”

Don’t Skimp on Mortgage Modifications

Martin Feldstein, the noted deficit hawk who chaired the Council of Economic Advisors for President Ronald Reagan, said mortgage modifications are one area where the administration shouldn’t skimp, even at the cost of growing the federal deficit, so he was disappointed that the administration is balking at the cost of that.

Referring to comments made by HUD Secretary Donovan, he said, “I’m disappointed the HUD secretary said it’s too expensive for the government to deal with negative equity mortgages…. We still have not dealt with the overhang of underwater mortgages.”

Even without further federal intervention the housing market will turn around, the panelists agreed.

The unknowns are how long recovery will take, how much damage will be done to the economy, and how strong the recovery will be.

The Shape of Things to Come

When the recovery does take hold, the housing market will be very different from what it was before, panelists said. The boom years of 2002-2007 were fueled not by income growth but by debt. After what’s been learned from that debacle, any future growth will have to be based on income growth, said Sarah Rosen Wartell, executive vice president of the Center for American Progress. Such growth will likely be far more moderate, but also more sustainable.

Wartell said the Obama administration was right to focus both on short-term stimulus and investment in clean energy, education, and healthcare reform, because those are the kinds of investments that can lead to the long-term income growth.

-Robert Freedman, REALTOR® Magazine

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

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.

Fannie Mae In Trouble

Michael Carter - San Diego Real Estate Agent — Tue, 17 Feb 2009 20:30:35 +0000