RE/MAX on Top in REAL Trends 500

RE/MAX on Top in REAL Trends 500

Call to Action! Enough is Enough!

California has protected borrowers from so-called "deficiency" liability on their home mortgages since the 1930s, but the evolution of mortgage finance requires that the statute be updated.

Current law says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner's liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers who are brought down by financial crisis to get back on their feet.

Unfortunately, the 1930s law does not extend the protection for purchase money mortgages to loans that re-finance the original purchase debt -- even if the re-finance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to refinance their mortgages, yet almost no one realized that by re-financing their mortgage to obtain a lower rate, they were forfeiting their protections. These borrowers became personally liable for the balance of the loan.

One can’t help but think, “When is enough, enough?” Banks have already foreclosed upon a family’s home and now lenders can continue to hound them for additional payment. How much more money can today’s families afford to pay when they’ve already lost their homes and most likely their jobs? Are they never to have the opportunity to begin again?

California Association of Realtors is sponsoring SB 1178 (Corbett) to extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and are now facing foreclosure. Most homeowners didn't know that when they refinanced they lost their legal protections, and now may be personally liable for the difference between the value of the foreclosed property and the amount owed to the lender. SB 1178 will be voted on soon by the entire Senate.

Action Items
Call Your Senator Today! Urge him or her to vote “Yes” on SB 1178.

Call 1-800-672-3135
Please see below for the PIN number to use for your state Senator:

East County & Temecula - Senator Hollingsworth 196519886

Carlsbad - Senator Wyland 205502883

San Diego - Senator Kehoe 177008152

Chula Vista - Senator Ducheny 187003870


(If your Senator isn't listed, that is because he/she is not involved in this vote.)

For more information http://www.car.org/governmentaffairs/getinvolved/redalertsb1178/

Green Tip of the Week

E-recycling earns retailers’ gift cards
RadioShack’s online electronics trade-in program allows customers to exchange used, portable electronics for a RadioShack gift card. Accepted items include GPS devices, MP3 players, notebooks, and game consoles. Visit http://radioshack.cexchange.com/online/home/index.rails to learn the trade-in value and download the prepaid shipping labels. Gift cards arrive within 10 to 14 days.

Time to clean out your garage, East County citizens?!

Are You Feeling More Confident?

We hear a lot about consumer confidence. It's up. It's down. It holds steady. I don't know about you, but my confidence can change depending on how much it cost for me to fill up my gas tank or my basket at Costco (horrors!).

Apparently there are people who measure how confident we are as a nation for a living. And this Conference Board samples 5,000 households all over the United States each month on how confident they feel. If 5,000 representative families feel more confident about a variety of issues, chances are, many of us feel the same way.

Well, then. You are feeling more confident than you did in March! You might not have realized that, so I thought I would let you know! And, you felt more confident in March than you did in February! Feeling better yet?

According to the survey, we are less concerned about current business and labor market conditions! More of us believe that present-day conditions are "good," and less of us think now that they are "bad." More of us are perceiving that "jobs are plentiful," and less of us are saying jobs are "hard to get."

You and I have a better outlook than we did in March, and more of us are expecting business conditions to improve over the next six months.

What I love about being an American, and being an East Countian specifically, is our resiliance. Most of us know others who are out of work or fearful of losing their job. Pay raises have not been plentiful for most of us. Yet we Americans refuse to lose our optimish, continue to work hard and look ahead to better days, at the same time enjoying the day we have been given.

Worry can't add a single inch to your height or a single dollar to your wallet! Confidence is contagious - and it is good for us, and it is good for our economy. Now that you know you are more confident than you were last month, go get 'em! And make sure you are registered to vote and use that American individualism to make a difference. It's contagious.

Revealed For the First Time: How Bad Foreclosure Hurts

I am often questioned about what a foreclosure would do to a credit rating. Not much has been made public concerning this issue and I have had to refer my clients to their tax professional for questions concerning foreclosing or declaring bankruptsy. And now for the first time, we are given a peek behind the financial curtain, thanks to CNN Money.

Here is a basic average hit your credit will take:

30 days late: 40 - 110 points

90 days late: 70 - 135 points

Foreclosure, short sale or deed-in-lieu: 85 - 160

Bankruptcy: 130 - 240

Mortgage borrowers can lose their homes three basic ways:

1. Foreclosure.

2. Short sale, where the home is sold for less than than is owed and the bank (generally) forgives the difference.

3. Deed-in-lieu, in which the borrower gives back the property and the bank again forgives any unpaid balance.

Some borrowers may think that because they never missed a payment, they can "walk away" from their homes with relatively little impact on scores. Not true. When a deed-in-lieu or short sale is reported as a partial payment, it's treated as a serious delinquency, just like a foreclosure.

Even if borrowers made payments faithfully for years before short selling or doing a deed-in-lieu, their credit score will still take a hit. The total decline will run about 85 points for the 680 score borrower to as much as 160 for the 780 score.

However, the worst thing that can happen to your credit score, according to the article, is bankruptcy because the effects are long-lasting. In a Chapter 13 bankruptcy, which involves partial repayment over several years, the stain will take seven years to remove. A Chapter 7 bankruptcy, which involves liquidation, takes 10 years to get over.

What Does It Matter If I Lost the House Anyway?

It matters! Absorbing a big credit-score hit can make many transactions more costly. It's not just paying more for credit card debt and auto loans, insurance can cost more as well.

The average savings for someone with a good versus mediocre credit score is about $115 a year for auto insurance and $60 for home, according to Loretta Sorters, of the Insurance Information Institute.

A low credit score can even make it harder to rent a home because landlords often use credit scores to weed out prospective renters. Ouch!

Despite the problems a poor credit score can cause, if you are in a totally unaffordable financial situation it's better to recognize that and cut your losses quickly; don't prolong the problem.

Although it certainly is easier to walk away, your credit score will certainly fare better if you sell your home before it forecloses. Banks have now come on board and are simplifying the process for sellers and agents. I have done many successful short sales for clients who have been underwater in their mortgage. If you believe you are headed for foreclosure, give me a call and I will help you determine if a short sale would be in your best interest.

http://money.cnn.com/2010/04/22/real_estate/foreclosure_credit_score/index.htm