Will Banks Pick Up the Pace?

With states battling their own budget issues and seeking additional sources of revenue, house in foreclosure become wildfire on a windy day. Homeowners who are not making a mortgage payment are very likely not paying their property taxes. Compound this with the impact of reduced property values and you begin to see how it escalates. Local and State governments need these houses to be occupied by people who can afford them and to have the past due tax bills brought current.

Completing the Foreclosure Cycle

Cancellations which have seemed ubiquitous in the foreclosure process have been declining while bank repossessions and auction sales have shown small increases.

Estimated Market Value

The majority of homes in the foreclosure process have an estimated market value below $600,000 as indicated by the filings recorded in January. Possibly due to the ease of financing options that were available with no money down and a combination of 100% loans with an 80% first and a 20% second. If there was no equity or investment by the owner (buyer) is there a reason to stay when market values begin to drop? Strategic foreclosure became an option.

Foreclosure Inventory in Pasadena

Preforeclosure filings reached thier peak in June and have steadily declined but one has to wonder if this represents an accurate assesment of the market. Properties which are Scheduled for Sale and Bank Owned have shown slight increases in the last few months.

What’s Next?

Whether or not we see an increase in foreclosures, one thing is definitely certain. Banks are ramping up their distressed property efforts by sending letters to homeowner’s suggesting they do a short sale (it’s about time; as I advocated this in a similar post about the foreclosure lottery) to avoid foreclosure and also promising shorter response times and expeditied approval processes. This is welcome news for many reasons, but a clear indication that progress is on the horizon.

Facinig Foreclosure? We Can Help!

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.

Foreclosure Search

1. On the up2daterealestate.com home page. click on the “Search Foreclosures” tab. This will bring you to a map and a window to enter the information you require.



2. In the “Location” box, enter the zip code. For instance, entering zip code “91107″ will return about 6 pages, each with 20 itemized listings of homes in some stage of the process “pre-foreclosure”, “auction” “bank owned”.
3. Click on the “Next” tab and the following list will be presented along with each item on the map which has now changed.



4. In the “Type” box, enter the property you wish to find such as single family, condominium, multi-family, etc

Occasionally you may see a property listed more than once. This usually means that the property has more than one loan against it that has now entered the foreclosure process. A home identified as “pre-foreclosure” in green letters may offer an opportunity to be purchased below market value in what is known as a “short sale“. Through a negotiation process, the lender may agree to allow the property to be sold for less than the amount that is owed. If a homeowner finds themselves in this situation, possibilities do exist. The worst thing a homeowner can do is to do nothing.

If you find yourself in the position of buying or selling a home, give us a call so that we may explain to you the process as well as the options that may be available to you.