Loan Modifications Not Working - Surprise!

This comes as no surprise in our office that Loan Modifications have had an anemic impact on this market. There's lots of reasons; far too many for this blog report. But needless to say, short sales are another alternative. Please read the article, and feel free to call me for further details.

http://www.dsnews.com/articles/tarp-inspector-generals-report-says-hamp-is-failing-2011-01-26

For more information on real estate in the Salem, OR area, visit my website at www.amymcleod.net

TITLE INSURANCE IS SOOOO BORING...OR NOT?

Good Grief - there's so much about real estate in the news these days, it's hard to keep up. Lots of inventory to pick from, historically low interest rates, foreclosures, short sales, hanky-panky at the banks during foreclosure proceedings, and on and on and on.

So, why, you say, would Amy need to talk about something so boring as title insurance. Who even knows, really, what it is or does? I think I signed something the last time we closed on a loan, but there was a pile of papers 4" thick. Who knows what all was in those documents?

EXACTLY!


But these days my friends, you need to know. (you really needed to know every time you signed, but hey - we all trusted. And now look look at the pickle we're in!)

In Oregon, our sellers customarily provide the new buyer with a Warranty Deed. The long and the short of it is that this is the most common form of Deed. This deed conveys title, and covenants that the Seller has the right to sell and has good title free from encumbrances except as stated. Title insurance, that is purchased at the time of closing, is just that - an insurance that's there as a safety net for the buyer in case there is some sort of mistake and the title is transferred with an encumbrance discovered after closing. It's a great system.

So - what's the big deal? The big deal is that many of you are contemplating a purchase of some of this great priced foreclosure property. The price is right, the interest is good, and lets face it, not all of them are trashed. Sounds like an opportunity.....and it is. There's just one small catch.........

That small catch has to do with the lenders selling the foreclosed property. Many of them use their own Addendum to the real estate sales contract. Contained in those addendum's is language often expressing that the seller is conveying the title to the buyer by means of a Special or Limited Warranty Deed, Quit Claim Deed or Bargain and Sale Deed. So??????

Each of those deeds has their own limitations on how much the "seller/lender" is representing with respect to how clear the title is. As an example; the Special Warranty Deed promises that the Seller/Lender will defend the title to the property back to the acts of the Seller only! That means the Lender says "I know this title is clear for as long as I've held it since the foreclosure." WOW - there could have been a lot going on prior to that short period of time!

Does this mean you should be afraid to buy a foreclosed property? Not at all. But it does mean you need to take precautions.

Deal with a reputable Realtor who reads and understands the possible impact of the addendum's you might receive from a Lender/Seller. Insist on a reputable title company or escrow attorney to handle the search of title. Be sure that there is title insurance in place. If it's not paid for by the seller, then you as the buyer should buy it for yourself. And seek the advice of an attorney if there's any confusion on this issue, or any other issue in a real estate transaction.

Hope that gives you an idea about why title insurance certainly is not boring. In this crazy new real estate world we're in - we've all got to be better informed and more vigilant about protecting our interests as we proceed through any transaction.

Call/email/or Facebook me if you have questions. Now go make lemonaide out of all those lemons!

P.S.: Thanks Ted :)

WRONGFUL FORECLOSURES - WHO GOT IT RIGHT?

We've been working daily in our office, over the last two years, to try and understand what keeps happening in the real estate/mortgage market. It seems as if weekly there's some new crisis, issue or program that we have to unpack and try and understand for the benefit of our clients.

The most recent bomb came in the form of assertions that there were "robo-signers" signing literally hundreds of foreclosure documents without benefit of review. Oh that that was the real problem. Having a little inside information on what the real issue was, I watched with interest as the BIG mainstream media outlets played this story.

And then to my delight, my local news publisher asked if he and I and Shel Perrigan, a Loan Examiner, could sit down and discuss what was going on in the mortgage market now. Could we ever!

The results of that meeting led our publisher, Lydon Zaitz to do an OpEd piece that actually captures exactly what the problem is. I've included the link so you can read his very direct and clear piece on the foreclosure mess.

As this story has been breaking, I keep hearing over and over, "well they didn't make their payments anyway, so who's really concerned about a robo-signer, or whether they fully reviewed the documents or not." Hmmmmmm.......

Once you really know the in's and out's of what has been happening, there's reason to be concerned. Each of us are just one administrative mistake away from a potential foreclosure (although admittedly that is not the bulk of the problem). But more than that, why have any rules? Why have any contracts (which is what a mortgage is), if any violation by one party means the other party can violate terms of the contract at will.

This is a serious issue. So far, Oregon's Attorney General has taken a "wait and see" position. I hope after reading Lydon's OpEd you might be compelled to contact your State Representative or the Attorney General's office and see what they might do now to protect the rights of Oregonians.

Beyond that, we will get through these times. I'm reminded of the stock we all come from everytime I look at the Pioneer on top of our Capital. We're tougher than all this! Now here's the piece:

http://keizertimes.com/?p=3465

Avoid Foreclosure in Salem, OR

Short sales provide better solution for families and communities

HAFA is a government-sponsored initiative overseen by the U.S. Treasury Department and administered by Fannie Mae. It assists all Home Affordable Modification Program (HAMP)-eligible homeowners in avoiding foreclosure, specifically through short sales or deeds-in-lieu of foreclosure.

“This is the first government program that gives incentives for short sales and lays down the process for short sales,” Charfen said. “More importantly, HAFA has brought more attention to short sales and that means banks, REALTORS® and the government are paying attention to short sales.”

REALTORS® should see the benefits of HAFA. “Many times REALTORS® spent time educating the consumer with little or no support. With the government stepping forward on this issue, it puts short sales in the forefront,” he said. “We’re already seeing banks that have added staff to process short sales and they’re stepping up the process so it doesn’t take as long.

“Short sales are so much more beneficial than a foreclosure. Previously we saw seven out of 10 properties in foreclosure were never listed,” Charfen added. “With a short sale, it offers a dignified solution to a family in financial crisis. You see less deterioration in the homes, less property values falling and it helps the overall community. With every foreclosure in a community, we can see property values for surrounding properties decline as much as nine percent.”

“HAFA has been a long time in coming,” he continued. “It’s been a huge collaborative effort with the government and many other organizations. There is no silver bullet to solving the foreclosure crisis and there’s no question that we’re going to continue to see increases in defaults. HAFA offers the real estate market a chance to move forward and stop the decline in property values.”

-Originally published on PAR's Just Listed
http://www.parjustlisted.com/archives/4214?utm_medium=email&utm_campaign=de036dde76-RSS_EMAIL_CAMPAIGN&utm_source=PAR+Just+Listed+Daily+E-News#utm_source=feed&utm_medium=feed&utm_campaign=feed

WHAT? - 27.2% Drop in House Sales. Who Knew?

Don't fall over in shock. 27.2% drop in housing sales and me blogging twice in one week, unheard of! But such shocking news being blasted everywhere requires this response!

Let me just say this, "Who Knew?" And the answer is, we did.

I'm just going to tell you I need to blow off some steam after listening to all the news reports yesterday. These same "reporters" were telling everyone in April, May and June that sales had made record increases over the previous year. As they were speaking then, I was yelling at my TV, "the 1st Time Home Buyer Credit stupid!" But did anyone listen. No! Especially not sellers.

Sellers heard the news and assumed the market was back. And for a moment, for some, it was. Unfortunately when most of us have visions of the market being back, it's at pre-2007 crash levels. The reality was, reporting those increases "over the previous year" referred to a market that was already way down in 2009.

So where are we today? While 27.2% sounds awful, it is simply a reflection of the 1st Time Home Buyer Credit ending. It's a reflection of a real estate market that is trying to normalize after being tampered with - again. It's a reflection of a real estate market that is often quieter in July because of families finishing up sports programs and taking vacations. And it's a reflection of a real estate market that is going to continue to decline a bit, until we clear out the distressed property inventory and improve the job picture.

And where does this leave you my friend? If you're a buyer, buy! You have 4% interest rates, home values that have nearly rolled back to pre-2000 pricing and inventory abounds. We even found that buyers buying now may do better on pricing than the value of the $8,000 tax credit. So what are you waiting for???? There is one caveat to buying, though. Buy with plans to be content in your home for about 12 - 15 years. No more musical houses!

If you're a seller, sell quickly. This market is projected to continue it's decline through 2012. Time is your enemy. To my Boomer friends, consider moving up your retirement plans. This is going to be a long slow recovery. Losing another chunk of your housing value, and then trying to down size in 5 - 10 years might not be the best plan. Call for my insights. My honey and I have been having long discussions over this very topic. Do you really want to vacuum the 2400sqft house when you're 65 and 70? How 'bout the weed-picking on the 1/4 ac lot? Think about it!

Think about it, you say. Let's be honest, these are confusing times. Most of us have never lived through an economic period like this. So when you hear this kind of news, CALL and get some good interpretation, and most of all, context for it. Your situation may call for action, or it may call for you to sit still. Either way, we're here as your Housing Counselors.

Lastly, don't be afraid. This housing market will correct itself when the job market improves. So lets put all our efforts and emotion into banging the drum on the legislative steps about JOBS. That's the key to cleaning up this mess.

Now - lets go have a glass of cyber-wine and take a deep breath!

ONLY A CRAZY PERSON WOULD BUY IN THIS MARKET!

WOW - it must have been summer, because time certainly got away from this amateur blogger!

That being said, what is going on in the real estate market now?? Everyday a person picks up a paper, listens to a news report or surfs the internet and finds nothing but confusion. Let me just say, it's not as confusing as it might seem. Most of the stories you hear or read carry little or no context, and certainly don't come from a local perspective.

Here's an example from just the past couple of months. Beginning in April 2010, reports were that sales were up. May, sales were up and, suprise, June sales were really up. Well no duh - it was the rush to close sales for the First Time Home Buyer Credit. Now, reports are that sales are down. Again I say, "Duh." First Time Home Buyer Credit is over!

So what should a buyer do? The burning question on everyone's mind is, "Should I buy now?" And let me respond ever so clearly, "YES!"

Well that sounds just crazy, doesn't it? And I have to be honest. I was having a hard time knowing whether to advise buyers to buy now or wait. That was, until I heard from an economist, that this is exactly the time you should be buying. Sound Crazy? Read further.

Only about once every generation (about every 35 years) does the gas literally go out of real estate values. Now I'm not talking a little 6 month downturn. I'm talking about an all out crash. In my most recent memory, this type of event has occurred during the Great Depression, In the late 70's/early 80's (remember 18% interest only - I do), and then now.

That gas going out is when your Aunt Tilly bought her home in San Diego for $9,000 and can now sell it for $350,000. That gas going out is when my Honey and I bought our first house in 1982 for $40,000 and it's now worth $200,000.

So what do you think this gas-out will bring? Combine these prices with a 4.5% interest rate and you've hit the jackpot baby!

But there's one little catch and this is where great Realtor's can help you with your buying decisions. That catch is the same one I've talked about before - changing your paradigm about what your house is. This home is a place for peaceful enjoyment, privacy and a place to build memories...for a VERY long time (read 15 - 20 years). It is no longer your ATM or the family's 3rd income earner. Contentment needs to reign supreme in your home.

Hope that helps. And now lets bring on the Fall!

GRANDMA MUST HAVE SPOKEN TO FANNIE MAE!

It's been a few weeks, but in my last blog I told you my Grandmother would have rolled over in her grave while 60 Minutes was doing their piece on strategic defaults.

You remember, that was the little piece of journalism telling the world how financially solvent couples were simply deciding not to pay their mortgages because the new neighbors got the same houses for much less. The "Why Should I Have to...." cry was echoing off my vaulted ceiling out of the television speakers.

Well, apparently Fannie Mae, one of the larger loan insurers, doesn't much like the idea of strategic defaults either.

Fannie Mae announced policy changes on Wednesday that will have a dramatic effect on the ability of borrowers who have defaulted on their loans to receive future Fannie Mae insured loans - and they insure a bunch.

Under the changes, a defaulting borrower who has the ability to pay, OR who did not complete a work-out alternative in good faith (read Loan Modification, Short Sale or Deed in Lieu of Foreclosure) will be ineligible for a new Fannie Mae backed mortgage for a period of SEVEN (yes, I said seven) YEARS!

That's a long time. Hmmm, lets see; seven years ago I had children at home, who were still a ways away from High School graduation (now they're both gone and one is married!). Seven years ago was a different decade. Seven years ago was a different President and a different economy. Do you get my drift?

So what's Fannie Mae's goal here? Read further....."We're taking these steps to highlight the importance of working with your servicer. Walking away from a mortgage is bad for borrowers, bad for communities, and our approach is to deter the disturbing trend toward strategic defaulting." says Terence Edwards, Executive Vice President for Credit Portfolio Management (obviously someone important I guess).

And there you have it. What I would refer to as the goverment's version of Grandma's wooden spoon. I'm not out there with some folks who are pointing the finger at everyone in trouble on their mortgage, declaring they were foolish to take these risky loans. Lets be honest. This market has tanked in our area about 25%. So unless you have 30 - 35% in equity, you yourself are one life event away from being in the same boat.

That being said - it makes me sick when people are gaming the system for personal gain at great expense to the rest of the community - and that's what these strategic defaulters are doing. (May I just remind everyone that when you signed your mortgage contract you did not say you would pay UNLESS the house dropped in value? You said you'd pay until the obligation was met or until you sold the property......'member?????)

So friends, lets all do our part to help right this real estate boat. We all have a stake in it. To preserve the right to future borrowing, under reasonable rate and terms, protect yourself if you find defaulting on a mortgage becomes your reality. Contact your lender (but check what they tell you with other local advisors), contact a Realtor who has the CDPE or CDPD designation, contact Consumer Credit Counseling for help with a loan modification (it's free). All these people can explain your options....those that will keep as many possibilities open to you in the future.

But most of all, don't expect to bank the mortgage payment while "strategically" defaulting on your loan. It could cost you a lot more than just a low credit score.