Realty World Tri-Shasta

• Forebearance – lender may allow the borrower to skip a payment or make a partial payment if the borrower can suggest a reasonable plan to catch up on the amount in arrears.
• Reinstatement – borrower agrees to make a lump sum payment in the future to bring the mortgage current.
• Repayment Plan – lender may allow the borrower to catch up on what is owed by increasing the monthly payments until the missed payments are brought current.
• Loan Modification Plan – Modify a mortgage – converting it to a fixed rate mortgage at a lower interest rate and extending the years of the mortgage to reduce monthly payments. Giving more years to pay off – adding the missed payments to the balance of the mortgage.
• Forgiving Part of the Loan – makes payments affordable.
• Deed in Lieu of Foreclosure – it is a friendly foreclosure, the loan amount must be lower than the anticipated sales price.
• Cash for Keys – the lender and the homeowner agree to exchange cash from the lender for the keys to the property.
• Sell the Home – set a price that will attract many qualified buyers. Upside down property – the financial institution may be willing to forgive some of the mortgage to make a sale possibly in order to avoid foreclosure – Short Sale.

• Credit card debt is out of control.
• Paying for necessities with credit cards.
• Cannot meet monthly financial obligations.
• Borrowing from friends and family.
• Loss of employment or reduction in hours or wages.
• Major illness which can cause loss of work and increase in health expenses.
• Divorce, separation or other traumatic family or personal situations.
• Death of a spouse or significant other.
• Cannot pay the new Adjusted Payment on the ARM mortgage loan.
• Major unbudgeted maintenance expense.
• Excessive debt is the number one cause of financial collapse and foreclosure.

Distressed properties are foreclosed homes or homes in a Short Sale situation. We have both available in the Shasta County real estate market. Here are some tips to help buyers who are looking to purchase a distressed property.

1. Have the money before you shop.
2. Be mentally prepared for delays, aggravations, and red tape.
3. No contingencies.
4. Flexibility as to the condition of the property.
5. Be prepared to make an offer.
6. Motivation rules the day.
7. Buy at the bottom of the market.
8. Quick settlement.
9. Inspections.
10. Examination of title.

• Be proactive about the problem when the first warning signs appear.
• Contact your lender when you become aware that you have a problem.
• Read the mail.
• Contact HUD approved housing counselor or call a real estate agent for advice.
• Prioritize your spending by paying for the necessities of life first.
• Look for ways to generate cash.
• Do not get scammed by a private “foreclosure prevention specialist.”
• Make an appointment with a real estate agent to discuss the problem and to get their advice.

1. If the Seller is current with their payments even though they may be upside down in their home.
2. When there is no real hardship that has caused the delinquency of payments.
3. If the property is a second home or an investment property. There have been some exceptions.
4. When the Seller has filed for bankruptcy protection under Chapter 7 or Chapter 13.
5. A recent cash-out refinancing of the home prior to the Seller deciding to sell the home or the Seller has recent Home Equity Line of Credit.
6. When the proceeds of the sale are not sufficient to satisfy the Lender in the first position and giving sufficient percentage to those junior liens after all closing costs are paid in full.
7. Clouds on the title due to outstanding liens.
8. The time frame for the sale process is not adequate to complete the sale.
9. The Seller has access to enough funds to be able to satisfy the outstanding debt from the proceeds of the sale of the home.
10. The Seller wants to receive monies from the sale of the home after the discounted payoff to the Lender and all closing costs.
11. Potential zoning or building code violations.
12. The Short Sale Submission Package is incomplete.

• It is estimated that the average cost of handling a foreclosure for the financial institutions is right around $50,000.
• REO properties sell for more than comparable Short Sale properties because of the cost incurred by the financial institution in acquiring the property.
• Disclaimers on REO properties are not available from the lender because they cannot represent the condition of the property or neighborhood information.
• The average REO listing is for 90-days, this is based on a national average not the Shasta County real estate market.
• Most REO properties are sold in “As Is” condition.
• REO purchases are less of a risk than buying at a foreclosure auction, but contain considerably more risk than a Short Sale.
• REO properties can usually be purchased faster with less problems than a Short Sale.
• REO properties are usually priced to sell. Making ridiculously low offers is a waste of time and may not elecit a counter offer.

Following are five definitions related to the foreclosure process. Yes, these definitions are even for the foreclosures within our Shasta County real estate market.

Redemption

Redemption is the borrower’s right to buy back the property or bring the mortgage current while the property is being foreclosed or after the it has already been foreclosed on.

Notice of Default

Notice of default is a notice send from a financial institution to the borrower when the borrower’s mortgage payment is past due, the letter states that the mortgage is in default. The notice discloses the date at which the foreclosure proceedings will begin if the mortgage is not brought current.

Real Estate Owned

Real Estate Owned, or REO, is the real estate owned by the financial insitution including real estate obtained through the pre-foreclosure process or through the foreclosure.

Bankruptcy

Bankruptcy is the legal declaration of an individual’s inability to pay their debts.

Deficiency Judgement

A deficiency judgement is a judgement lien against a debtor whose foreclosure sale did not produce sufficient funds to pay the mortgage in full. Some states do not allow deficiency judgements for this purpose.

The four factors contributing to the rise in foreclosures are: Predatory lending, declining prices, unemployment, and increased debt.

Predatory lending is when borrowers are approved for a loan but do not have the financial capabilities to meet that debt. The lender also fails to provide the necessary information that shows any future adjustments in the interest rates – such as you would see in an Adjustable Rate Mortgage (ARM).

Declining prices is a factor because many homes out there are worth less than what is owed on the loan, which means some home owners are upside down in their homes. With home values sitting where they are at, homeowners are choosing to walk away from their property if they are having problems making their monthly payments. This allows foreclosure and foreclosed properties tend to be sold below the market prices, thus lowering home values.

The job market and real estate market are tied together; if there is a rise in unemployment, this will affect the real estate market. The creation of new jobs increases the need for homes, it would take approximately 1.2 new jobs to create the need for one home.

The number in credit card debt and installment debt has been ever increasing over the years, along with the interest rates of those loans. That is why increased debt is one of the contributing factors in the rise in foreclosures.

Here in Shasta County, we are facing all four of these factors and as long as we continue to have these factors our real estate market will continue to be governed by these foreclosures on the market.

There was an article in last weeks Valley Post regarding the highly anticipated Anderson Vineyards here in Shasta County. Some of the lots and homes in the new subdivision have been on the market for a few months now, but just last there was finally an article regarding this break through. Here is a brief overview of what the article contained:

Water key to getting subdivision sales back on track

Just days after the City of Anderson issued a conditional occupancy permit for two homes of The Vineyards at Anderson subdivision, prospective buyers had a chance for a walk-through.

Jordan Taylor, a local developer who represents U.S. Acquisitions Real Estate III, LLC, a private equity company based in Denver, Colo., said that company purchased the foreclosed home loans from the previous builder after problems with adequate supplies of potable water with pressure sufficient for fire safety were discovered in 2007.

Work on all houses in the subdivision had virtually stopped until the water issues were finally resolved late last fall with the installation of a nearly $1 million pumping station that connects to the City of Anderson’s municipal water system and treatment plant.

Originally designed and priced for the top end of the real estate bubble in 2007, the 12 houses that were originally intended as showcase model homes have all been finished with first-class amenities and details, Taylor says.

All of the homes built so far have tile roofs with radiant barrier roof sheeting and drop attics, low emission windows that feature vinyl-clad wood construction, high efficiency HVAC systems, security features, vinyl or wrought-iron fencing, built-in fire suppression systems and more.

Taylor committed to the project that later this spring, his own development company has plans to start construction on some of the 115 available lots in Unit 1 Phase 1.

The article was written by George L. Winship, an editor for the Valley Post. The Valley Post is the January 13, 2010 paper and the article can be found on the front page of the paper.

I am also proud to say that our office is also involved with a couple of the lots there in The Vineyards subdivision and we hope to do even more business up there.

Many people don’t realize how important it is to have that pre-approval letter in hand before viewing houses (unless, of course, it is a cash transaction). Getting pre-approved with a lender of your choice will help you set certain guidelines when it comes time to home shopping. There are plenty of lenders to work with here in Shasta County, go out there and find one you are comfortable with and go with them. Your real estate agent will be able to find you homes within your price range – that way you don’t have to worry about falling in love with a home and then finding out later on that you can’t afford it.

Another reason why it is so important to be pre-approved with a lender is because of the number of short sale and foreclosed properties on the market. When putting an offer in on a property that is in a short sale situation or is owned by a bank they usually require a copy of your pre-approval letter included with you offer – or they simply will not look at it.

The lenders try to make the pre-approval process as painless as they can. Also, after they have all of the necessary information you can give them your real estate agents information, that way both your lender and agent will be able to communicate directly to make your home buying experience less stressful and smoother for you.