Saturday, July 24, 2010

California Foreclosures Drop to 3-Year Low

The number of home owners in California entering foreclosure in the second quarter dropped to a three-year low, according to research firm MDA DataQuick.

Default notices, the first step in the foreclosure process, fell 43.8 percent in the second quarter compared to the same period last year.

Analysts say the decline is due to banks pushing loan-modification programs and short sales. Also, fewer homes are underwater thanks to a recovery in home prices, so a smaller number of home owners are walking away.

Ironically, regions of the state where homes are cheapest are most likely to see the highest number of default notices. According to DataQuick, neighborhoods with a median sales price of less than $300,000 experienced 10.6 default notices for every 1,000 homes, while neighborhoods with prices above $800,000 accounted for 2.9 notices for every 1,000 homes.

Source: Los Angeles Times, Alejandro Lazo (07/22/2010)

Keep the faith...


Tuesday, July 20, 2010

What is a Short Sale?

This past April the government began to offer financial incentives to Lenders to push short sales through a program called Home Affordable Foreclosure Alternatives ‘HAFA’. The program is designed to stimulate home sales. The program imposes specific requirements on the Lenders/Servicers participating in HAMP that in order to continue they must participate in HAFA. (To find your servicer you can check this link: ). Other requirements can include requiring certain debt forgiveness, an abbreviated time frame to respond to short sale offers, and provides government payments to homeowners (for moving and/or relocation expenses), servicers, and lien holders.

What is a Short Sale?

A short sale is a pre-foreclosure residential real estate transaction wherein the owner of the mortgage (Investor or Lien holder ‘Lender’) agrees to allow the home owner to sell their property for less than … or short of … the outstanding balance owed on the mortgage loan, and agrees to release the property from the mortgage clearing the title for the Buyer.

Homeowners who are in default or behind on their payments desire to sell their homes "short" to avoid a foreclosure action and to reduce the hit to their credit or reduction to their credit score as a result of a foreclosure. Because of the "shortage", the transaction may involve "debt forgiveness" by the Lender (This could involve a taxable event at Federal and/or State levels which is why you are advised to seek both legal and tax counsel). Lenders would prefer a short sale compared to a foreclosure as they generally garner approximately 12% higher net than if they are required to foreclose plus with foreclosure there is potential for increased costs and risks for the Lender in terms of carrying costs…. eviction, property maintenance, insurance, taxes, homeowners association dues, municipal fees, and the like -- or a loan modification, with the associated lack of certainty; in addition, a short sale gets the non-performing mortgage loan asset off of the Lender’s financial books.

Now that you know what a ‘Short Sale’ is, we will investigate who can assist you.

Stay tuned and keep the faith…..


Friday, July 2, 2010

Before you decide on a Short Sale, have you tried ...

refinancing and/or modifiying your loan with your existing Lender???

There are programs available to assist those experiencing issues paying their current monthly payment: H.A.R.P. – Home Affordable Refinance Program and H.A.M.P. – Home Affordable Modification Program. Information is available at If you're experiencing problems and wish to protect your investment/remain in your home, you should investigate the Home Affordable Refinance Program. Log on to check your eligibility or seek counseling. If you do not qualify for H.A.R.P., investigate a loan modification” Loan Mod” under H.A.M.P. by going to the same website. For many years, Loan Mods have been a great tool for borrowers down on their luck. They couldn’t pay the monthly payment and it was usually due to some economic hardship-lost job, illness, etc. The Loan Mod was the safety valve to keep the American Dream alive – a roof over your head you could call your own. Loan Mods have come to the forefront to help many more borrowers suffering in our economic slump. Their situation is different as they realize that they owe much more than their property is worth. Over 85% of borrowers who apply don’t get a modification approved and for a myriad of reasons: They make too much money or have too many assets, they don’t really have a hardship, just spending/credit problems, they fear reprisals for erroneous information given when they originally applied for the loan, they just don’t like doing paperwork of any kind, they lose faith and just don’t follow up on the process, they fail to make the payments agreed to in the trial phase, they decide to give up as no one will help them and it’s better to live free until someone knocks on the door or have simply walked away and mailed in the keys. These folks have given up on retaining their home and are done with the headaches for now; however, Uncle Sam, the State taxing authority and the credit companies are not going to make anything any easier (Some exemptions may apply). Walking away could just exacerbate the problem. You should speak to legal/tax counsel and you might consider speaking to a Real Estate Agent because if a loan modification doesn’t work for you, the next alternative is the Short Sale. Stay tuned and....... Keep the Faith!