FORECLOSURE MYTHS: WHAT'S TRUTH?

Although there are a number of programs available to help homeowners who have defaulted on their mortgages keep their home, the large amount of misinformation tends to result in troubled homeowners failing to contact their lender until it is too late.

• Some homeowners believe, incorrectly, that contacting their lender early in the process will draw attention to their situation and result in a quicker foreclosure. In reality, contacting the lender or servicer is an important first step, and the sooner, the better. Contacting the lender provides the homeowner with an opportunity to explain their situation and the steps necessary to deal with it.


• It is a common misconception that missing one mortgage payment will lead to foreclosure. However, the foreclosure process doesn't begin until payments are 90 days delinquent. Lenders generally have a financial interest in keeping homeowners in their homes, so making contact as early as possible could help lenders modify terms of the mortgage or devise a repayment plan.


• Once homeowners are behind on their mortgage payments, it becomes challenging to dig out of the hole. Some homeowners try to solve this by depeleting their savings or dipping into their retirement accounts to become current on the loan. Most financial experts advise against this.


• Delinquent homeowners may think they should stop making mortgage payments to get their lender's attention, which often isn't the case. When possible, homeowners should stay current on their mortgage payments and continue to contact their lender on a regular basis.


• Homeowners who have applied for assistance or loan modification programs in the past and were turned down are advised to reapply. Program parameters are constantly changing, so the rules might have been liberalized since the last time the borrower sought help.


• A number of free, government-sponsored housing services are available through the Dept. of Housing and Urban Development (HUD). A list of HUD-approved agencies can be found at http://www.hud.gov (Read the full story http://lat.ms/ihLJTs

Don't hesitate to contact me if you have questions about foreclosure and whether or not a short sale could help your situation. I am a Certified Distressed Property Expert and have had a lot of experience helping homeowners in these situations!

SELLERS! Don't Get Scammed!

Misfortune seems to bring out the good in most people; however, there are always some out there who wish to turn someone's misfortune into good for themselves alone!

A new study by CoreLogic shows banks and distressed home sellers will lose more than $375 million this year by selling undervalued houses to third-party buyers, which generally result in a quick sell and profit and tend to be fraudulent sales.

According to law enforcement and banking industry experts, the fraud works like this: Investor groups partner with local real estate agents whose job is to spot borrowers in financial distress and persuade the homeowners to sell to investors in a short sale at a low price. Then, the agent contacts the bank with the investors'
short-sale offer. So far so good. At least it appears so!

Meanwhile, the agent finds a buyer who wants to purchase the property for a higher price than that which the investor buyer is paying for the property, but the agent never presents this offer to the bank, nor does he tell the homeowner about this buyer. This new buyer knows nothing about the investor. To back up the investors' low offer - the only offer the bank is aware of - the agent produces an appraisal that confirms the low valuation. The bank then approves the sale and the investment group purchases the property. After the closing, the investors then sell the house to the other buyer at a higher price. The agent and investors then split the profits. The original homeowner never knows what hits them!

How do you keep this from happening to you? Or your friends who may be considering selling their home "short" in order to keep from foreclosure? Use a REALTOR you can trust. One who has experience in Distressed Property Sales. One who is looking out for the best interest of the seller.

I have had many years of experience in foreclosures, pre-foreclosures and short sales, on both the buyer side and the seller side. I am a Certified Distressed Property Expert. And most importantly, I can be trusted. Call me with any questions you have about your property - what it is worth, should you short sell or foreclose? Can you get a loan remodification? What options do you have? I would be glad to help you!

Help for Troubled California Homeowners On Hold ... But Not For Long

California expects mortgage-aid program to begin in weeks.

The California Housing Finance Agency (CalHFA) reported this week that its “Keep Your Home California” program will be delayed because of logistical issues with the program. The program was scheduled to begin Monday, Nov. 1.

· The “Keep Your Home California” program is a $1.83 billion government aid program that will pay down loan balances and provide monthly cash assistance to struggling California homeowners.

· One of the logistical complications that has caused the delay is the fact that Fannie Mae and Freddie Mac last week instructed their loan servicers to participate in the program, dramatically increasing the number of potentially eligible homeowners.

· Funded with federal money, the program offers four different types of cash assistance for an estimated 100,000 low- to moderate-income California homeowners. Additionally, eligible borrowers must have endured some sort of loss of income.

· The two primary forms of aid include $875 million dedicated toward unemployed Californians who need help making their monthly payments, and $790 million to be used to directly reduce mortgage loan balances.

· Although the program has been delayed for several weeks, homeowners struggling to make their mortgage payments are advised to not wait for assistance programs to begin before contacting their servicer or lender. Instead, homeowners should begin working with their lender or servicer at the first sign of difficulty.

· More information about the “Keep Your Home California” program can be found at www.keepyourhomecalifornia.org. A toll-free hotline soon will be established.

As a Certified Distressed Property Expert, I can help you navigate your way through the maze of programs and what is available for you. Contact me for help today!

Buyer Turn-Offs: What to Do if YOUR House is a Turn Off!

We talked about the features buyers look for, and some things you can do and should NOT do to make sure you show your home's best side to buyers. Now, I want to talk about the top buyer turn-offs, and what to do if your house fits the description.

The top turn-offs for both men and woman are structural damage, bad odors, a busy street, and an awkward floorplan.
First of all, a homeowner must accept reality that if any of these features apply to their home, it will make their home less desireable than a home that does not have these features. Therefore, the home must be priced below a comparable home in size and location. A buyer will naturally buy the home that appeals to them the most within their budget. Reduce the price, and you appeal to a buyer who normally could not afford a home in your area, or a home with as much square footage, or a home with a beautiful yard, etc. There is a buyer for every home, I assure you!

1. Let's take Structural Damage. This often happens to homes that were rentals for a long time, or perhaps the home was owned by folks who became disabled and could no longer either afford to keep the home up or just didn't notice the problems occuring. Perhaps there was a leak in the attic or under the house that slowly caused damage. What to do?

You have three choices: Repair the damage before you put the house up for sale, or sell the house as it is with the knowledge that much of the repairs will need to be paid for by the seller in escrow, or sell to a cash-only buyer. The fact is that unless the price of a structurally damaged house is considerably below comparables, a buyer will not purchase the home without having the damage repaired. Most buyers do not have the capital to repair structural damage. Also, if the buyer is getting a loan on the home, most banks will not loan on a home with structural damage. As your agent, I would assess what the damage is when I list your home and make recommendations based on what I observe.

2. Bad odors. It's a fact of life that we all get used to the smells in our own home! Even some odors that would knock a visitor down seem to go undetected by the resident. Obviously bad odors are a turn off, and if a home is listed without the odor having been eradicated, buyers will run the other way. What to do?

Before you list, get rid of odors caused by cigarette smoking, animals and relaxed house cleaning. Often carpets need to be replaced and walls painted to get the home smelling show-ready. Ask a friend you trust to come over and give your home the sniff test. If you choose to sell your home as is - odors and all, expect to have to lower your price below the comparables to get any buyer interest.

3. A Busy Street. This is a tough one, but not impossile to deal with. Your sales price will have to be adjusted regardless of what you do, but it is possible to make your home appealing even on a busy street. I would recommend putting in dual-paned windows at least on the side of the traffic. Dual-paned windows are a great selling point all over the house, and I would definitely recommend replacing all windows if they are single paned.

Next, I recommend a fountain in your outdoor space. A nice tinkly one that distracts from the street noise. I actually live with a busy street behind my home, and we have a wonderful fountain outdoors. Visitors rarely comment about the street noise, and we rarely notice it.

Plant screening plants to block the view of the busy street from windows. And of course, make sure your home is clean and staged before listing!

4. And lastly, the Awkward Floorplan. If you've got it, you may not even know it, you are so used to it. Buyers are looking for open floorplans these days. If you have no remodeling $$$ to remove walls, you must know that your sales price will need to be below the comparables to make up for the floorplan. Sounds ridiculous, but buyers know what they want.

For floorplans that are set in stone - no way to change it - I would recommend focusing on the positive features of your home mentioned in my prior article. Make sure you have a killer backyard, or a killer kitchen. Something that stands out that buyers want that makes up for the floorplan. Make sure your home is clean and freshly painted. As your agent, I will help you arrange your furniture to distract from the floorplan.

There IS a buyer for every home. Sometimes it takes elbow grease, and often it takes being realistic about the features your home is lacking and the turnoffs your home has that you have no control over, and adjusting your price to compensate. As your agent, I will evaluate your home and take your home's best foot and put it forward and center in order to get you the best possible price in today's market!

Distressed Homeowners! RED ALERT!

The Big Banks are Still Opposing C.A.R.'s Bill to Protect Borrowers

The vote is TOMORROW! Please call TODAY!

Call Senator Dennis Hollingsworth Today!
Urge him to vote "Yes" on SB 1178.

Call 1-800-672-3135 and enter my PIN number -- 196519571 I just did and it took 1 minute!

This is an important vote for many homeowners who are not able to make their balloon payments or their mortgage is readjusting, making it impossible for them to continue to make their payments. These homeowners cannot sell the home for what they owe, and if they "walk away" or sell their home in a "short sale", they oftentimes will be held responsible to be taxed on the deficiency. The banks are digging in their heels about this legislation, even though they are getting bailouts by the Federal government to see them through.

Responsible homeowners who have gotten stuck in this bind could use some mercy from the government in the form of not having to pay the taxes on the amount of money they lost the banks on their mortgages. Please know that this legislation will only cover homeowners whose mortgage is strictly for their home and will not cover equity taken out of homes for other purchases!

Call Senator Dennis Hollingsworth Today!
Urge him to vote "Yes" on SB 1178.

Call 1-800-672-3135 and enter my PIN number -- 196519571 I just did and it took 1 minute!

Thousands of responsible homeowners need our help.

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