Vancouver Wa Real Estate Blog

— Until lenders demonstrate that they are adhering to all existing laws, regulations, and contractual guidelines related to loss mitigation and foreclosure legal process, the civil rights groups believes that lenders in all 50 states should not move forward with any foreclosures.   —-  Across the country, lenders are announcing temporary foreclosure moratoria.

• Neighborhoods across America are being destroyed as a result of the foreclosure crisis. The foreclosure crisis fallout is not limited to individual homeowners. Each foreclosure has enormous spillover effects, and communities, especially communities of color, are seeing their home vacancy and crime rates increase while home values and tax bases are eroded.

• Research demonstrates that just as communities of color were more likely to receive predatory subprime loans, they also suffer more from foreclosures. As devastating as it has been for too many American families, the foreclosure crisis has disproportionately impacted communities of color. According to recent research by the Center for Responsible Lending, African-American and Latino borrowers are 75% more likely than their White counterparts to experience foreclosure. Moreover, the higher the concentration of racial minorities in a community, the higher the rates of foreclosure.

• Lenders are not equipped to handle the current volume of home defaults. A foreclosure moratorium will give them a chance to develop adequate systems and capacity to preserve homeownership. The groups are calling on Congress to investigate the widespread fraud and misrepresentation in foreclosure filings, and to revive legislation that would allow loan modifications in bankruptcy court proceedings.

• All lenders must be required to evaluate homeowners for loan modifications and other solutions, with strong transparency and accountability. Lenders who participate in the government’s foreclosure prevention program (HAMP) or handle government-insured loans are already required to do so. Homeowners must also have recourse when their lenders deny loan modifications leading to unnecessary foreclosures.

Many homes were foreclosed upon based on banks’ inaccurate or fraudulent documentation. While the extent of the fraud has not yet been revealed, many lenders have instituted no foreclosure stop at all, and no lender has yet issued a national moratorium.

Crystal Boldt Foreclosures and Shortsales

TO WALK  or “NOT” TO WALK ……

Borrowers considering a strategic default need to be aware and recognize the damaging impact their actions can have on others.

Not many would care about strategic defaults if walkaway borrowers and their lenders were the only parties affected. But homeowners can’t do anything in this downward spiral. Foreclosures do not just affect the lender and the borrower, they also decrease nearby Vancouver, WA home values and destabilize an already struggling Vancouver, WA housing market.

While acknowledging that strategic defaults can be in the best interest of the defaulters, it is very unfavorable  to the  personal wealth of their neighbors.   It also gives lenders more reason to increase the cost of borrowing for everyone.

When you look at it from a cash-flow perspective, when someone is that far upside down, the decision seems easy. With prices continuing to drop, some homeowners would need to keep paying for years just to break even. However, walkaway borrowers should consider the hit they  may personally take.  Many states allow lenders to sue borrowers for repayment when a foreclosure sale doesn’t cover the mortgage balance.  Other consequences may be that  banks refuse to lend to people who have strategically defaulted and landlords will be cautious of renting to them – making it very difficult to find somewhere else to live.

Overall, I think it’s hard for most homeowners to walk away from their homes.   For most people,  their home is more than just a financial vehicle. They have their emotions tied up with it, their family, their friends, their community. I believe most homeowner’s are trying their hardest to hang onto them or work with the banks to make the best of their situation and obligation.  I feel that most homeowners will make the right choice if educated about all that is affected when walking away from the home.

Crystal Boldt Foreclosures and Shortsales

Real Estate Pros Push for Better Washington Short Sales

As anybody who has dealt with one knows, short sales should be renamed “long sales.” But that could be changing.

One of the real estate professionals leading the charge to revamp the short-sale process is George K. Wonica, owner of Wonica Real Estate & Appraisals on Long Island, N.Y., and chair of the NATIONAL ASSOCIATION OF REALTORS® Conventional Finance and Lending Committee.

Wonica already has met with 10 mortgage bankers and servicers in Florida to address the problem, and plans a similar meeting this summer in Las Vegas. He points to the uniform short-sale form developed by the California Association of REALTORS® as a good example of what the industry needs.

Short sales appear to be good for both banks and buyers. A study by Connecticut-based Clayton Holdings Inc. showed lenders from May to October 2008 lost an average 37 percent through short sales versus 56 percent on homes sold after foreclosure.

Lenders recognize this and are trying to speed up the process. David Knight, a senior vice president at Wells Fargo Home Mortgage, says, “We think (a) short sale is superior to foreclosure … A short sale is not a bad deal all around.”

Additional liens are often the big holdup, but there could be progress on that front. In April, Bank of America, a major holder of second liens, announced that it would accept 5 percent of sale proceeds after real estate commissions and other costs on short sales. Previously, it had sought 10 percent.

Source: Inman News, Gilbert Mohtes-Chan (05/07/2009)
via REALTOR® Magazine-Daily News-Real Estate Pros Push for Better Short Sales.

Crystal Boldt Foreclosures and Shortsales

The lack of commitment is a key problem in distressed sales. Without a commitment to hang tough for the many months it takes to close the deal and/or submitting multiple offers on many short sales at the same time, derails efforts of buyers who are committed to that one property. 

Salespeople and potential buyers are creating problems when they make offers on several clark county short-sale properties at once in the hopes of finding one that will make it to closing.  The salespeople who encourage buyers to make offers on several short-sale properties to see which deal sticks, are also wasting other agents and sellers time. 

 Agents can also derail transactions simply by not preparing well. One-third of homes listed as a potential short sale have no business being called that.  In many cases, the seller really can’t make a qualifying hardship case to the lender. To save everyone time and effort, agents should carefully qualify sellers upfront to be sure they have a genuine hardship.  

 Agents can also derail transactions involving sellers who have a legitimate hardship by simply being unprepared and submitting an incomplete proposal. The property might have several junior liens that the listing agent never took the time to learn about, creating a snag later in the process and raising a question in the lender’s mind about the preparation of the agent. At a minimum, agents should go to a lender only after they’ve prepared a complete, well-organized proposal to the lender, because absent that the deal is unlikely to survive the rigors of the process, creating a bad experience for everyone, particularly buyers. 

 We’ve got to start creating an experience that reasonably resembles a traditional buyer experience or we are doing damage to our industry.

Crystal Boldt Foreclosures and Shortsales

Vancouver Foreclosure Prevention Plan

When people lose homes to foreclosure, our communities, the housing market, and our economy all suffer.

Separate from the stimulus package, President Obama has made up to $200 billion available to shore up investor confidence in the mortgage secondary market and up to $75 billion in incentives to encourage lenders and borrowers to refinance troubled loans. The effort is critical because of the destabilizing impact of high foreclosures and distressed sales, says NAR.

The plan details include:

• Help for home owners making their payments but at risk of default. Home owners with a conforming loan could be eligible to refinance as long as their mortgage doesn’t exceed 105 percent of the home’s current market value.

• Help for home owners already in default and in need of loan modification. For lenders that voluntarily agree to lower a borrower’s payment so that it makes up no more than 38 percent of the borrower’s income, the government would share the cost of lowering the mortgage burden further.

• Doubled resources to Fannie Mae and Freddie Mac. To encourage investors to buy the secondary market companies’ mortgage-backed securities, the government promises to back them to up to $400 billion, twice the current amount.

Guidelines for the program could be out before April 1. If you’re working with borrowers who are having trouble keeping up on their mortgage, tell them to call their mortgage servicer or a HUD-approved nonprofit housing counseling agency.

The stimulus package and foreclosure plan are a good start to solving the nation’s economic woes, says NAR 2009 President-elect Vicki Cox Golder. “By helping good people caught in bad mortgages, we’re keeping inventory from being added to a market already under stress.”

Crystal Boldt Foreclosures and Shortsales

What You Need to Know When Making an Offer on a Vancouver Short Sale

Are you looking to buy a new home? Are you thinking that now’s a great time to find bargains? Before you make an offer, it pays to know a little about the seller’s situation.

If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You’re a good candidate for a short-sale purchase if: Read more…

Crystal Boldt Foreclosures and Shortsales

Rising unemployment is driving higher rates of Vancovuer foreclosures as well as cities and states all over the country.

The Mortgage Bankers Association says the pain is spreading to places that have so far been fairly isolated from major foreclosure problems. For example, mortgage delinquency rates are rising in Louisiana, New York, Georgia, Texas and Mississippi as job losses rise.

Mortgage bankers say job losses are changing the cause of delinquencies. Previously, more than half of foreclosures involved adjustable-rate mortgages. Today, the rate of delinquency on fixed-rate mortgages is rising, according to the bankers.

Mark Fleming, chief economist at property analytics firm First American CoreLogic, expects unemployment to peak in early 2010. He also expects housing depreciation to continue until the job market turns around.

Source: Investor’s Business Daily, Amy Reeves (03/12/2009)

via REALTOR® Magazine-Daily News-Rising Unemployment Not Helping Foreclosures.

Crystal Boldt Foreclosures and Shortsales

Today, Wednesday, Feb. 25th, the Washington state Senate passed SB 5221, the Senate version of the fix to the distressed properties law, by a unanimous vote of 48- 0!  This is great news for distressed Clark County property owners

The bill’s prime sponsor, Sen. Rodney Tom, told us today after the bill passed, “It’s really important in these economic times that those sellers that find themselves in the unfortunate situation of being forced to sell their home will now have the service of Realtors to help them maneuver through a difficult selling environment to minimize a very difficult situation.”
HB 1132, the House version of the bill, passed the House unanimously last week. Both versions of the bill will now be sent to the opposite chamber (House bill to Senate, Senate bill to House) to be considered.

Crystal Boldt Foreclosures and Shortsales

Vancouver sellers facing foreclosure often have the option of selecting a short sale or a deed-in-lieu of foreclosure as a possible solution to their financial difficulties.  Like most alternatives, both have their upsides and their downsides.  Understanding these options is the only way to make a truly informed decision.

Select either Short Sale or Deed-in-Lieu as early on as possible

The sooner you act on either a short sale or a deed-in-lieu the better. Once the foreclosure process is activated, you will not be in a strong position to negotiate with your lender because payments, interest and penalties have piled up. They can hold you financially responsible for their losses and seek a deficiency judgment that will appear on your credit report even if you don’t have the money to pay it.  In either case, however, avoiding foreclosure is always a better choice in terms of the effect on your credit.

In a short sale, your lender takes the loss

When you decide to use a short sale to prevent foreclosure, you should understand that the sale must have the lender’s approval and that lenders don’t always agree. What the lender is doing when they accept, is permitting you to sell your home for less than you owe them and taking the loss themself. If they go along with the short sale, it will relieve you of the burden as well as the cost, emotional strain and embarrassment of a messy foreclosure procedure. On the upside, a short sale is far less destructive to your credit rating than a foreclosure, as it is supposed to be listed as a “settled debt” on your credit report.  However, it is still harmful to your credit score and can reduce it by 200 points or more.

On the downside, the lender could always go after you to collect the difference between the short sale price and what you owed them by getting a deficiency judgment against you. However, more often than not, this doesn’t happen simply because they know that there is no money to recover and that they will have to pay all the costs of the legal action.

Deed-in-lieu may be your fastest way out

A deed-in-lieu of foreclosure is when you give your home back to your lender, take your losses and thereby prevent the foreclosure. Lenders will frequently accept this because it is a less expensive and time consuming process for them than a full foreclosure action. The upside is that a deed-in- lieu is a faster solution than a short sale and that it is more likely to be acceptable to the lender.  As far as credit score is concerned… it appears about the same as a short sale.

On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, they can get a deficiency judgment and try to collect it from you. Once again, they probably won’t proceed if there doesn’t appear to be any money to recover.

Crystal Boldt Foreclosures and Shortsales

Every day, more people slip into the foreclosure whirlpool and spiral downward toward the day they may have to leave their home. What should you do if you are on the verge of getting a foreclosure notice?

First and foremost,  face the issue head on and prepare for days and weeks of making phone calls and corresponding with people who may be able to help.  Don’t assume it’s too late to act.   As long as you are residing in the home, you probably have some opportunity to keep your home.

People facing foreclosure have more avenues to pursue than they might realize.

Potential solutions include:

- Negotiating a modification of the loan.
- Refinancing the loan.
- Listing the home through an agent for a possible “short sale.”
- Selling the home to an investor on your own.
- Declaring bankruptcy.

Short sales-in which the lender agrees to take less than is owed on the home, writing off some or all of the loss to avoid the expense of a foreclosure-typically are handled by real estate agents, which at least takes some of the pressure off of  the homeowner.

Yes, it seems the banks are just not moving fast enough. They are sitting on these, and it’s outrageous.  Though the process can be slow and frustrating, many professional real estate agents are working more short sales these days and have buyers lined up looking for bargains, .

Crystal Boldt Foreclosures and Shortsales