Archive for the ‘foreclosure’ Category

Some prognosticators are predicting a double-dip recession.  Experts like Jim Cramer from CNBC disagree. Is there a double-dip coming?  Signs are not clear but it is possible, but the real question is, will a another recession deflate the real estate market again? Gee, I hope so!! I got so many bargains two years ago and now the investor market has dried up and there’s too much demand vs. supply.  Personally, I’d like another crack at it to buy 2 dozen more houses to hold onto for the next boom.  Whether or not we go into a double dip recession, 10 years from  now it won’t matter.  Sure, people who buy for short term appreciation will get hurt by a D.D.R., but that’s their fault – I’ve always advised against short term appreciation swing investing and instead encouraged people to buy and flip or buy and hold long term (10-15 years).

From the Associated Press WASHINGTON — The number of homeowners in the Obama administration’s flagship foreclosure-prevention program is growing, data released Wednesday show. Yet it’s not all good news. About 231,000 homeowners had completed loan modifications through March. That’s about 21 percent of the 1.2 million borrowers who began the program over the past year. But another 158,000 homeowners who signed up have dropped out — either because they didn’t make payments or failed to return the necessary documents. That’s up from about 90,000 just a month earlier. Many more applicants are still in limbo, awaiting a final answer from their bank. Meanwhile, a Treasury Department official said Wed nesday that the administration is working to get the foreclosure-prevention effort on track after a slow and problem-plagued start. The program is designed to lower borrowers’ monthly payments by cutting mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Mortgage firms get taxpayer incentives to lower borrowers’ monthly payments. Homeowners have to complete at least three months of payments to qualify. Treasury officials say many disqualified homeowners will end up getting help anyway

The Obama administration may expand efforts to ease the housing crisis by banning all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program. The proposal, reviewed by lenders last week on a White House conference call, “prohibits referral to foreclosure until borrower is evaluated and found ineligible for HAMP or reasonable contact efforts have failed,” according to a Treasury Department document outlining the plan. Read more –>>> http://www.bloomberg.com/apps/news?pid=20601110&sid=ahuuwBS8KYq8

Realtors can get pretty creative.  First bus tours, now BOAT tours of foreclosed properties. Check it out –>>> http://abcnews.go.com/Business/story?id=7111055&page=1

Effective Feb 1, the Housing and Urban Development Department will waive for one year an FHA rule that prohibits insuring a mortgage on a home owned by the seller for less than 90 days, giving FHA borrowers access to a broader array of recently foreclosed properties.

WASHINGTON – Citigroup Inc. will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season. The New York-based bank said Thursday the suspension will run from Friday through Jan. 17. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck. >>> Read More

Among big lenders, Bank of America Corp. had the worst performance in the Treasury Department report card released Thursday. The nation’s largest lender completed just 98 modifications for the 160,000 borrowers who had signed up by the end of November. GMAC Mortgage had the most modifications of any lender, 7,100.

WASHINGTON – After a slow start, the Obama administration’s mortgage relief program has reached one in five eligible homeowners, a government report says. As of the end of October, more than 650,000 borrowers, or 20 percent of those eligible, have signed up for trials lasting up to five months, the Treasury Department said Tuesday. The modifications reduce monthly payments to more affordable levels. Launched with great fanfare in March, the plan got off to a weak start, but now nearly 920,000 loan modification offers have been sent to more than 3.2 million eligible homeowners. That works out to 29 percent, up from 15 percent at the end of July. Read more

Short sale flips – the process of shorting a property then reselling it for a cash profit in a simultaneous closing has been taking heat lately from title companies and real estate brokers.  Realtor blogs are filled with drivel about how these transactions are illegal or unethical. What’s the real truth? The Basic Process The process of the short sale flip works as follows. Step 1: Investor signs a contract to buy a house from a seller who is behind in payments. Step 2: Investor contacts seller’s lender to negotiate short sale Step 3: Investor gets lender to approve short sale Step 4: Investor lines up backend buyer Step 5: Investor closes with seller, paying off lender, then resells to backend buyer in simultaneous closing for a profit. In essence, this is no different than a regular wholesale flip except instead of paying off seller’s lender in full, investor pays off seller’s lender at a discount. The Hoopla Some Realtors and title companies think there should be full disclosure to the lender and seller about the resale of the property, otherwise the bank and seller are being “defrauded”. In order to be defrauded, someone must be owed a legal duty of disclosure. As far as disclosure to the seller, I see no issue because the seller is not getting any money out of the deal either way.  His lender will not agree to a short sale while the seller walks away with money.  So any profit made by the investor is fair game.  As far as disclosing to the lender that you plan on reselling the property for a profit, of course you are going to do that.  That’s what investors do – they make a profit.  If you planned on keeping the property as a killer rental instead of flipping it, there would be no issue.  If you fixed the property up and sold it 3 months later, there would be no issue.  For some reason everyone gets upset because you are flipping it an hour later for a profit.  In order words, what exactly triggers a duty to disclose to the lender that you intend to make a profit? Disclosure Chances are this will end up in court someday and a jury will have to be convinced that failing to tell people you are reselling your property for a profit is somehow a fraud upon the lender or the seller.  Nobody wants to be the test case, so I think that to be on the safe side, your contract with the seller should clearly disclose that you intend to resell the property for a profit. “Buyer may resell the property in a simultaneous closing for a higher price and make a profit.” This covers the seller, but what about the lender?  Well, the lender gets a copy of the contract in the short sale package the investor submits to the lender.  This puts the bank on notice (We all know that the package is 100 pages long and the bank’s loss mitigator is probably not going to read the contract in detail, but who’s fault is that?).  Should you further disclose in your cover letter to the lender that you have a buyer lined up to resell the property to at a higher price?  Maybe.  Maybe not.

If you owe more than your house is worth and it gets foreclosed, a bank can come after you personally for a deficiency.  Except, however, in states like CA which prohibit a deficiency on a personal residence (except if you refied your loan or it’s a VA loan).  In states that have anti-deficiency statutes, homeowners are more likely to walk away because there’s nothing to lose – except your credit. Read more