Foreclosure | Pasadena & South Pasadena Real Estate

Shorter Response Time on Short Sales

December 17, 2009 By Doug Willis Leave a Comment

Do you owe more on your home than it is worth?

Many of the programs designed to help homeowners in distress have provided less than satisfactory results. Some of the qualifications needed to restructure or modify a loan have come with fine print that have proven to be more well intentioned as opposed to actually helping the people they were designed to benefit.

Many homeowner's are finding they owe more on their home than it is worth

Adding to the stress of the ticking foreclosure clock is the uncertainty along with the unresponsive reply of the person or entity that now has control of your destiny……the lender. Be prepared to ride the stationary bicycle, no matter how hard you peddle, you’re not going anywhere.

If your journey toward home redemption has been less than disappointing, then the possible outcome was a short sale or foreclosure. At this point some people just give up, walk away and let the lender have the house back. We have actually worked with homeowners that may have been in a bankruptcy and the attorney has advised them to let the bank have the house. We’re talking foreclosure here. The after affects can be devastating. It has been reported that a foreclosure can reduce your credit score by up to 160 points. A short sale unlike a foreclosure does not have an impact on your FICO score. It will however be reduced by missed or late payments.

As we enter the third year of the real estate and mortgage meltdown, it now appears that the Treasury Department has issued new guidelines on short sales that will dramatically alter the way in which short sales are approved.

Components of the Plan

The new program will be beneficial in the following was:

Speeds up the process – lenders will now have 10 days to approve or deny the proposed sale. In the past, a short sale could take as long as 6 months.
Moving allowance – when completed the seller’s receive $1500 for moving expenses. Currently short sellers receive no proceeds from the sale of their home.
The program also allows up to $3000 for second lien holders who many times see their balance reduced to zero during a short sale. The program will also pay $1000 to mortgage service companies and investors who hold the first mortgage for allowing the program to proceed.

The program is not officially effective until April 5, 2010, but does allow for early adoption if certain requirements are met.

Short Sale Summary

On its surface this program sounds exactly like what is needed to expedite the housing recovery. It will be interesting to see if the 10 day time frame for either the approval or rejection can be met. I have only read many piece meal articles and nothing that spells out how everything is to work. It does appear that the homeowner will have to submit to either a loan modification or refinance which would ultimately be rejected for the homeowner to proceed. At this point the bank is in possession of all of the homeowners financial information so a quick decision could have been in the process for quite some time.

Lets hope this program works.

Filed Under: Current News, Foreclosure Tagged With: new short sale guidelines, short sale alternative to foreclosure

Foreclosures About 25% of Pasadena Home Sales

November 17, 2009 By Doug Willis 1 Comment

The number of foreclosure filings in the City of Pasadena has been increasing as it has just about everywhere. Having said that, it does not necessarily mean however that more people are losing their homes. I know that seems like a contradiction and almost sounds like political doublespeak. Let me see if I an explain this…

About 740 properties in Pasadena are in Foreclosure

The Foreclosure Process

From the news reports you would think every home sold these days has been repossessed by the bank or is in some classification of being a “distressed property“. While that may closer to the truth in the Inland Empire it is not necessarily so in Pasadena. According to ForeclosureRadar, there are about 743 properties in Pasadena today in 1 of 3 stages of foreclosure. They can be in the very early stages of (1) preforeclosure meaning a “notice of default has been filed against the homeowner for not making their payments or they can actually have an (2) auction date scheduled. This is usually at the Pomona courthouse when the homeowner has failed to pay off the accrued mortgage balance including the late and legal fees. If nobody bids or does not bid high enough then the property will become (3) bank owned. Bank owned properties are usually listed with a real estate broker and are back on the market for sale in a short time.

By the Numbers

We have been very fortunate here in Pasadena that our real estate market began to bounce off of the bottom in January ’09 and has yet to look back. But what has been driving the increase? The monthly sales numbers are very healthy, but how much of it is due to distressed property sales which include short sales and bank owned homes?

Pasadena Home Sales in Foreclosure

Pasadena is on track to sell about 1250 housing units in 2009, up from about 1100 last year. With ForeclosureRadar reporting 740 units in foreclosure, you can quickly determine that is a large percentage of Pasadena’s housing inventory.

I did a short comparison and looked at the months of September and October when the number of home sales were 113 and 131 respectively. October home sales were very high on a historical perspective as the market typically descends from its summer highs. I was surprised to find out that of the 113 home sales in September only 25 (22%) of them could be attributed to either a short sale or a bank owned. For the month of October with 131 sold units, distressed sales jumped up to 38 properties, representing 27% of all the homes sold.

Facing foreclosure?

The graphs indicate that most of the distressed property sales are occurring in prices less than $500,000 but can also happen at any price point. Even in excess of $1,000,000. Lastly some advice for property owners who find themselves facing the prospects of foreclosure. Don’t ignore the correspondence from the bank, ignoring the problem will not make it go away. A short sale is by far a much more desirable outcome than a foreclosure. If you do not know where to turn or whom to call, contact me. I will be glad to help.

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Filed Under: Foreclosure Tagged With: foreclosures in pasadena, How many home sales in Pasadena are in foreclosure?, Short sales in Pasadena

Helping Pasadena Homeowner’s Avoid Foreclosure

September 11, 2009 By Doug Willis 1 Comment

Does Your Real Estate Agent Have This Designation?

The number of homes approaching foreclosure in Pasadena is approaching 700 and has been steadily rising for the past several months. As the moratoriums on foreclosures comes to an end, as homeowners exhaust all possibilities to keep their homes, it seems inevitable that the foreclosure rate will keep rising and rising for some time.

Facinig Foreclosure? We Can Help!

If there is a silver lining to all of this the foreclosure process has overwhelmed the lenders that own the notes and there isn’t enough manpower to expedite all of these in a timely manner. The net result being is that people are usually allowed more time in there homes and in some cases much more time.

Having a “Notice of Default” posted on your door even though you have been expecting it can be a stressful and embarrassing event. At this point you have to decide what course of action you are going to pursue. Many homeowners don’t realize the number of options they have at this point or the consequences that will follow their actions or inaction’s for the next couple of years or the rest of their lives.

You Must Attempt to Avoid Foreclosure

The last thing you want on your credit record is a FORECLOSURE. It will be an albatross around your neck, it will be the equivalent of the scarlet letter. A foreclosure will most likely be a major deterrent to any employer and could very well prohibit your chances of a promotion. If you have a security clearance, a foreclosure may provide irreparable damage.

Now that we have an understanding, what are the best options available to you?

By now, if you have missed a few house payment’s you definitely have the attention of your lender. Find out if you qualify for a loan modification. I have heard of some lenders cutting the interest rate up to 2 points and extending the term of the loan for 40 years in an attempt to make it more affordable for the owners. Maybe a forbearance program can be negotiated, whereby the lender agrees to a major reduction in your payment for a certain time. In most of these programs I have heard about, I am not aware of any principal being written off. Not to say they don’t exist, I am just unaware of it. In many cases the amount you owe or the amount being modified is just added to the back end of you loan. You’re still paying what you have missed, it just now could be over a longer period or amortization.

A Short Sale Can be a Win Win

If you lender is unwilling to renegotiate the terms of your loan, then it may be time to explore a short sale. Mention a short sale to many real estate agents and they will turn and run. Why, because short sales are more time intensive and all of an agents effort may be for naught if the bank is unwilling to approve the sale. Many agents have never done a short sale therefore the learning curve can be long.

Yes, they can be time intensive, and the paperwork necessary to complete the transaction can stuff a filing cabinet. Like most things there is a procedure and a set of steps to follow that can increase the effectiveness and success of your home being approved for a short sale.

Does Your Real Estate Agent Have This Designation?

The advantages are many. It is much less likely to cause the severe damage to your credit file like a foreclosure would. The term “short sale” is probably not going to show up in your credit report and it is quite possible that an entry such as “settled in full” will be the only explanation.

Many banks are much more agreeable to doing short sales these days. Believe me, banks do not want your house back. They would much rather sale what has now become a non performing asset and get it off of their books. The other nice thing about this process is you , the homeowner are in charge of the process. You will decide which offer to accept and present to the bank. While the bank will make the final decision as to the price, you have most of the decision making up to that point.

If you decide to investigate the possibilities of a short sale, speak to an agent who has earned the “Certified Distressed Property Expert” designation. This is not the time to be providing on the job training to an inexperienced agent.

Filed Under: Foreclosure Tagged With: How do I avoid foreclosure, my pasadena home is in foreclosure, Pasadena homes in foreclosure

Short Sale vs Foreclosure and the Potential Outcome

March 19, 2009 By Doug Willis 5 Comments

Homeowners today who can’t make their house payments and find themselves in a financial hardship may inevitably be faced with two options, a short sale or a foreclosure. I don’t think there would be much debate on the subject. If you found yourself in this position, a short sale would be the preferred choice.

Why then do so many people lose their homes in the foreclosure process?

First of all, a mentality exists that if the problem is ignored it will go away. Many lenders these days are so overwhelmed that they may be an implied participant to this perspective. Understand first that a homeowner is in default once the house payment is late. Is a lender likely to initiate foreclosure proceedings if your payment was due on the 1st and they have not received it by the 17th? Highly unlikely. This process used to take about 90 days before a “Notice of Default” was filed. According to a seminar I just attended, the speaker who is an attorney stated that lenders are so behind it is now taking almost 5 months before the lender files the notice. This notice which informs the property owner they have 90 days to cure the default or they proceed to a “Notice of Trustee Sale”, which will set the auction date of the property. I am seeing additional extensions being given on the “Trustee Sale” in the amount of 30 days. I have seen three extensions provided recently on one property.
Homeowner’s are unaware that options do exist or they wait until the last minute when it becomes too late. I have also seen people faced with the stress of foreclosure be too ashamed to speak with anyone who can help them. I would think when the process server shows up at your front door and posts the “Notice of Default” it becomes time to seek some advice and guidance.
Lastly, a homeowner in foreclosure thinks that through their own initiatives they will be able to refinance, rent, or have someone else assume the mortgage. Homeowners in default may be underwater on their house and no bank is going to refinance a property in the preforeclosure stages, you cannot rent it and cover the payment, and no one wants your problem mortgage.

As discussed, options are available to homeowners. I found the following chart at impact your sales now and it was published by the Depressed Property Institute.

One thing I would point out to you regarding deficiency judgments at the bottom of the page. My knowledge is that California uses a non judicial foreclosure process and deficiency judgments do not apply. Having said that, I am not an attorney, nor do I give legal advice. Please seek the advice of a legal or tax professional.

I should point out that the Distressed Property Institute has a disclaimer to the effect that they do not guarantee the accuracy nor will they assume any responsibility for this document. I think this is an informative guide but I would be remiss if I did not encourage you to seek legal counsel as to the recommendations or consequences in this document.
short-sale-vs-foreclosure

Filed Under: Foreclosure Tagged With: Foreclosure options, Is a short sale the preferred method of foreclosure, what happens after a short sale

Foreclosure and the Three Magic Words

March 6, 2009 By Doug Willis Leave a Comment

How can three words say so much? Every Saturday morning “Good Morning America” features a segment where viewers submit their own video’s and hold up a sign expressing their thoughts, which are only printed and not spoken If you have never seen it, the displays make a profound statement.

When my daughter used to watch that purple dinosaur, we would hear the magic words sung over and over, time and time again. I never thought that magic words would be applicable to real estate. Apparently now, they just might be.

I first heard the argument for the magic words at a seminar I attended a few weeks ago regarding loan modification. I didn’t give it much credibility simply because I felt the presenters were there looking for retainers. People in foreclosure can be under a tremendously stressful burden. Just like a patient with a terminal illness who will try the latest medicated cocktail in a last ditch effort to stave off the grim reaper, a homeowner in foreclosure may throw money at the latest con man who guarantees the house can be saved. Then another story appeared on one of the local news channels this week. It appears the movement may be gaining some momentum.

Produce the Note

Could this be the new battle cry of the pending foreclosed….Produce the Note!

The premise behind this is since your promissory note is not likely to be held by the issuing lender, but more likely to be sold, repackaged, and therefore location unknown, it becomes highly unlikely that a foreclosing lender can present the actual original paperwork.

To me it’s the old defense we would try and use in high school when we performed a rolling stop at a stop sign, or being charged with going 45 in a 30 mile per hour zone. Our only hope was that the police officer spelled our name incorrectly, or made a mistake in reporting our license number. The likelihood of it being tossed were slim, but until the court date you were hopeful, you thought the citation gods might smile on you. And isn’t that one of the hottest topics today in self improvement…The Laws of Attraction. you think it, you will become it.

The bottom line is does the strategy work? The best advice I can give if you find yourself in this predicament is to seek legal counsel. Get the recommendation of a qualified attorney, seek a second opinion. Many attorneys will provide an hours worth of consultation and offer their advice. If you have to spend a couple hundred dollars, it could save you thousands in the long run.

Filed Under: Foreclosure Tagged With: foreclosure alternatives, my home is in foreclosure, stop foreclosure