From the Desk of..."REALTOR at the Crossroads"

You’re a

REALTOR at the Crossroads

This is not a time for ‘dabbling’ in real estate. If you’re not a BIG DOG or prepared to become one, you really must stay on the porch. If you’re a little ‘soft around the edges’ and cry at scary movies, now would be a good time to non-renew your license.

Challenging Times

We are hard pressed to remember a time which has been harder for the housing market, and consequently, for real estate professionals in the past 25-30 years. If you are still trying to decide whether or not to renew your license, then read on. I have been warning that we were headed for just this situation since 2002. Mostly, I have been laughed at for my trouble or asked “Are you serious?” I was serious and correct. Everybody else is adequately covering the challenges now that we are actually in the midst of them. I have chosen always to understand my environment and figure a way to become at peace with it. So, let’s fast forward to the best of times.

Best of Times

This is the best of times to seize the opportunities being presented by today’s challenging real estate market. If you have lived a few years past, say, 30, you know that inherent in all difficulties lies the potential for new opportunities. This really is the best of times to take stock of both your personal and professional lives and decide—AGAIN—what you want to become when you grow up. While traditional real estate sales, for the average REALTOR, have become difficult at best, YOU are not average. You decided to read this article hoping to find insight and perhaps direction since you recognize you are at a crossroads.

Today’s Reality

No matter what city or state you happen to call home the challenges facing real estate professionals today are remarkably similar. There are more properties available for sale, a somewhat (or perhaps extreme) smaller pool of traditional buyers, tighter guidelines for financing, more REOS and a multiplicity of factors pushing property values down. Did I describe your market pretty accurately? There are exceptions, of course, but your market is likely described above. Today’s reality. Your success depends very little on what is going on in your market. Instead, your success is tied to how you respond to the market and whether or not you position yourself to be one of the agents who not only survives---but thrives—during this turbulent market. A concentrated, committed, full-time effort will almost guarantee success.

Specialization in Expanding Fields

The successful real estate professional two years from now will be able to look back and tell you with clarity exactly when they stood at the crossroads and made a choice which took their career to a new level. Specialization in one of those areas which are expanding because of the downturn will allow you to become one of those future success stories.

What Might a Career Shift Look Like?

• REO sales person—representing lenders/servicers by selling bank owned property. ( I am a former Fannie-Mae Broker specialist.) Can you imagine the volume of listings I would have now if I still represented them?
• Trash-out Specialist—handling all the details needed to trash-out and prep homes which have been foreclosed
• Locksmith—again—working for lenders to re-key when properties are vacated prior to foreclosure and again after the sheriff’s sale for placement on the open market as an REO
• Reverse Mortgage Specialist—working for a company which sells reverse mortgages to seniors who have equity in their homes as a way to avoid foreclosure/enhance their lives
• Foreclosure Intervention Specialist—(FIS)–starting a business as a consultant to offer foreclosure intervention counseling/representation, especially in upper end markets/areas
• Investor—in rental property you expect to hold for the duration of this down economy
• Property Manager—for single or multi-family—WARNING—not a simple as saying you can.
• Short Sale Specialist—again-not as simple as saying you can. Agents who have learned to be proficient at the strategies for successfully completing a short sale will be in demand. You would have more business than you could handle—IF YOU KNEW the secrets to successful short sales.
• Default Counselor—not the same as a foreclosure intervention specialist at all. You would most likely work for a non-profit agency doing counseling or you might start your own firm
• Real Estate Attorney–who decides to represent consumers who are struggling with their mortgage payments. You would also receive referrals from REALTORS, default counselors, and foreclosure intervention specialist when legal help was needed—WHICH IS CONTINUALLY.
• Lawn Care Company—not very glamorous---but definitely a business with a strong demand. As more foreclosures occur lenders are increasingly under the gun to keep properties which they own maintained. They’d rather pay you than the city.
• Show Home Franchisee Owner—finding qualified tenants for upper end properties while they remain listed. It’s a different class of property management. Great income—thriving in some markets.
• Property Valuation—using professional BPO forms ( such as the Fannie Mae BPO long form) and skills which include making adjustments for individual components of the property. Your most likely employer: lenders and servicers. Additionally, I believe consumers would be willing to pay for fairly accurate assessment of their property’s current resale value in order to help with their difficult choices in this climate. (I’m sorry guys, the traditional BPO or CMA is not thorough enough for today’s market.)

Dare to Re-Define Yourself

Trust me, time is on your side. The current wave will be rolling for the next 5-7 years or more. Get ready for the next ‘stage’ of your real estate career. Since I entered real estate in 1993, I have gone from buyer’s agent for entry level homes to listing agent to Fannie Mae Broker-Specialist to becoming a national trainer on foreclosure issues. Life is about ‘stages.’ Get un-stuck, buckle up and hang on!!.

You’re a REALTOR at a crossroads; which path meshes with your skills and interests?

Observations From the Desk of Mildred Wilkins,
President and Founder of Home Ownership Matters, LLC.

© Copyright 2008, Home Ownership Matters, LLC. All rights reserved.
(FIS) is a registered trademark of Home Ownership Matters, LLC.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Q&A: Gifting Property

Q.  My wife and I own a piece of property which we would like to give to someone else but we are not sure how to go about doing that.  I was told it is a simple procedure and does not require an attorney.  Can you direct us to what we should do?

A: The process is actually very simple to complete though you really do need to consult an attorney about the implications of such a move since once it’s done, it’s done.

To transfer title to someone else, to ”gift” your real estate property to them, can usually be facilitated by completing a “quit claim deed” which identifies you as the owner of the real estate, provides the address and legal description of the property to be transferred and the name of the party to whom you are giving it. Most often this is a one page document, you can get a copy from many large real estate offices or an office supply store. 

The form will need to be notarized and then recorded in your local recorder’s office. A small fee will apply ($35-$50). Please understand that you have now transferred ownership rights in the property. This has NO impact whatsoever on who is responsible for making the payments on this same piece of real estate. Having said that, this is not a viable option for dividing up property in a divorce if the objective is to change who is responsible for the mortgage. Refinancing the home is the way to accomplish that objective with one party taking out a loan to pay off the old mortgage which simultaneously changes the ownership to only one party.

Again, talk to an attorney about this very important real estate transaction. Don’t let the fact that it is simple and commonplace trick you into believing it does not have major consequences.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Involuntary Lien

The WORD for Today is:

Involuntary Lien—any lien, such as a tax lien, judgment lien, etc which attaches to property without the consent of the owner. Such a lien is unlike a mortgage lien, which a borrower voluntarily agrees to have placed against a property.

A legal claim against property that must be satisfied when the property is sold. A judgment affecting all the property an owner has or acquires during the legal life of the lien. Statutory and involuntary liens fall into four categories:

1. Property tax liens—These are placed against a property when the property taxes are not paid on time; they are given precedence over all other claims; if they continue to be delinquent for five years, the property will be sold off to pay the taxes; whenever a property is foreclosed upon, taxes are always the first debts paid.
2. Judgment liens—These are general liens resulting when a person suing another person wins a judgment from a court for the sums owing and records an abstract of that judgment
3. Mechanics liens—These are recorded with the county by contractors, subcontractors, materials suppliers, or workers who wish to be paid for their delinquent bills covering labor or materials on new construction, land improvements, or remodeling projects
4. Federal or State liens—These result from unpaid federal or state taxes, personal and inheritance taxes being the most common.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Q&A: Acquiring Real Estate with Tenants

Q: We have just bought an investment property which the seller lived in and rented out the other side. The seller has already agreed to vacate prior to closing but we do not know what to do abut the tenant. How do we get them out of the second unit?

A: Acquiring rental property which is currently occupied can be a good or a bad thing. Depends. I love that word. Depends.

Depends on:

1. Whether or not your contract says that the purchase is subject to the current tenant’s lease. What that means is: If their lease expires in 10 months, they belong to you and they stay for the next 10 months
2. If your contract states that their tenancy expires if there is a transfer of the real estate, then you have the RIGHT to get rid of them and we need to get to the “HOW”. But before we do, if they are good paying tenants, why don’t you want to keep them? Do you have other plans for the property which requires that they move? Did you forget to consider this before you started the buying process?
3. If you are not absolutely sure what your state law is concerning landlord-tenant rights, now would be an excellent time to check. And
4. Finally, if they will not leave nicely, and you really want them to go, then you will need to do a forceful eviction.

A forceful eviction should always be handled in accordance with state law. So don’t even suggest that is what you plan to do until you have read/studied the guidelines on what is required in your state.

The local sheriff’s department is an excellent place to start with a quick phone call to ask them what is the procedure, what forms are required, how much it costs, how much notice must you give, etc.

Additionally, they can probably direct you to the correct website to study up on this new aspect of your adventure as a new landlord.

P.S.
I almost forgot. You might consider offering them “CASH-for-Keys”. That’s a tidy little concept which is fast gaining popularity as a way to get folks out of foreclosed homes and could be used in this scenario as well.

“CASH for KEYS” is handy when you need someone to go away quickly, quietly and without leaving a mess. Simple—You offer cash as an incentive to vacate your property. How much cash depends on their needs and how badly you want them gone. Is it worth $1000 to have them out in 10 days? It is if the eviction process takes months and could cost you a lot. It is if the clean-out could cost you twice that amount or if they do damage on their way out as a way of getting back at you for a forceful eviction. Is it worth $500 if they leave in a month but agree to leave the home in good condition, promise to remove all trash and other debris and go away nicely?

As a Fannie Mae Broker-Specialist I was authorized to grant up to $1000.00 for ‘cash-for-keys’ provided you agreed to leave the home broom-swept, everything intact and you vacated by the time you said you would. Cash-for-keys is a reasonable request/offer when you have acquired real estate and need to remove the ‘body’ which remains. The amount is negotiable and should hinge on the size of house, time of year, how fast the home will be vacated, is the money required for a deposit on another property, moving expenses or other legitimate need to facilitate the ‘body’ disappearing.

General guidelines for cash-for-keys include:

1. A written agreement which states all the particulars—how much, to whom, by whom, what is expected, when will money be delivered
2. It must be signed by someone in authority with the agency who is offering the cash
3. You should assume that if you do not have a copy—you do NOT have an agreement
4. Terms of acceptability—home broom swept, all trash removed, etc.
5. Specific date and time these must be completed
6. Other details as the parties deem necessary

WARNING: Cash-for-Keys is a type of contract. Give it the respect of a contract. If you have entered into a cash-for-keys agreement (contract) you must honor all the terms as you agreed or you should expect NOT to receive the money. If you promised to vacate by 5 p.m. on Friday that is not the same as 8 a.m. on Saturday. I’m sorry, you lose.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

What's That Mean? (O-Z)

OCC- Office of the Controller of the Currency

PI– Principal and Interest

PITI- Principal, Interest, Taxes and Insurance

PMI- Private Mortgage Insurance

POB- Point of Beginning

P.O.C.- Paid Outside of Closing

PUD- Planned Unit Development

QWR- Qualified Written Request

RAL- Refund Anticipation Loan

REIT- Real Estate Investment Trust

RESPA- Real Estate Settlement Procedures Act

REO- Real Estate Owned

RTO- Rent-to-Own

SRA- Senior Residential Appraiser.

SREA- Society of Real Estate Appraisers.

SRPA- Senior Real Property Appraiser.

TILA- Truth-in-Lending Act

Y.S.P.- Yield Spread Premium. See Predator Lending Practices.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Mortgage

And the WORDS for Today are:

Mortgagor-is the owner of real property who grants a mortgage to a lender in exchange for the money to purchase the property. The mortgagor pledges to repay the loan under specific terms and conditions and are subject to foreclosure if they fail to do so.

Mortgagee-Is the lender in a mortgage agreement.

Usually refers to the party who lends money and receives a mortgage. In some states the lender is treated as the “legal owner” (deed of trust) and may be entitled to rents from the property if it is abandoned by the homeowner. Other states treat the mortgagee as a “secured creditor” with the mortgagor considered to be the owner.

Adjustable Rate Mortgage (ARM)-is a mortgage loan, which gives the lender the right to adjust it interest rate at regularly scheduled intervals on the basis of changes in a specified index. The borrower mortgage must state how often the rate can change as well as set a cap for how high the rate may be increased. You should avoid an adjustable rate mortgage unless you feel certain your income is going to increase sufficiently to allow you to make higher mortgage payments at a later date.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Lis Pendens (Pending)

And the WORD for Today is:

Lis Pendens - a legal notice, typically recorded in the chain of title to real property to warn all persons that the subject property is the subject of litigation and therefore any interests in the property which might be acquired during the period when the lawsuit is still pending will be subject to the outcome of the lawsuit. Lis pendens may be required by statutes in some areas or only permitted. It effectively constitutes “giving of public notice” since the recording is a part of public record.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Short Sale Buyer: 10 Critical Areas of Concern

Short Sale BUYER

Ten (10) Critical Areas of Concern

If you are thinking of buying a home in today’s market, there is a pretty good chance that you will find a home you like which is upside down (seller owes more than the house is worth in today’s market and the sale will require that the lender approve a short sale). Buying a ‘short sale’ is not necessarily a BAD thing but it is definitely a DIFFERENT thing than a regular purchase and so you need to ask yourself some important questions before you embark on this journey. I am going to assume that if you know the right questions to ask that you will be diligent about getting some good answers before you move forward.

Here are areas where you need to do your homework:

1. AGENT—Is your real estate agent experienced in working with short sale buyers? Know how short sale transactions differ from regular transactions? Provided you with sufficient documentation to help you know what the current value of the property is?
   
   
2. TIMING—Are you aware that it could take months (several months) for you to get an answer and go to closing on a short sale? Can you afford to wait for an indefinite period of time? Can you STAY in your current housing until you get closed—however long that might be? Did you know you can decide to walk away anytime you want to even though you have made an offer? Simply tell your agent to rescind your offer if you want to consider another house. (You know to do that in writing, yes?)
   
   
3. NEIGHBORHOOD—Have you done the research you need to do to be sure that the back side of the neighborhood is as appealing as the front side? Are you comfortable with the mix of owners vs. tenants in the neighborhood? Is the neighborhood moving more toward tenants? Are homes well-kept or more of them in disrepair? Have you driven the area at night—do you feel comfortable with the nighttime look and feel of the area you will be calling home? Is there a significant numbers of homes empty—whether for sale or otherwise available for occupancy (rent, lease, etc)? Are property values still falling or have they hit a plateau? Where did you check? (and don’t tell me you just asked your agent). Are you comfortable with the levels of taxes in the area? Are there any special assessments which you need to consider? If there is a neighborhood association, how financially sound is it? Have you stopped and talked to neighbors to see what is REALLY GOING ON IN THE NEIGHBORHOOD?
   
   
4. PROCESS—Did your agent carefully explain the short sale process to you? Did you ask for a response based on how long you are willing to wait (2-3 months) or based on the traditional practice of allowing only a few days? You wrote an offer which was presented to the local owner/seller but then forwarded to their lender/servicer for consideration. Are you aware that the lender may/will consider multiple offers and then make a decision on ONE of them? Were you warned that the Lender may counter your offer—after a very long time—even months after you initially wrote the offer? Are you prepared to increase the amount you are willing to pay or risk losing the house? Have you pre-determined how much you are willing to pay? May I suggest that should be the amount you should offer in the first place?
   
   
5. RISKS—Are numerous but forewarned is better than being caught off guard. Risks include:
   
   a. The SELLER may file bankruptcy—and the house cannot be sold to anyone
   
   b. The LENDER may foreclose and the property become unavailable
   
   c. ANOTHER OFFER may be accepted instead of yours (even if the seller signs your offer that does not mean that the LENDER/SERVICER is going to approve your offer instead of another one which they have received)
   
   
6. LONGTERM—Have you carefully considered whether this house meets your long-term needs (say for the next 10 years)? Lifestyle? Location? Size? Amenities? Condition? Does it have ‘growth potential’?
   
   
7. FINANCING—Do you already have a firm loan commitment from your institution—not a pre-approval? You should start out with a /loan commitment/ to increase your chances of getting your offer accepted and to avoid any surprises down the road. Can your lender use the appraisal recently acquired by the selling institution in order to speed up the process at the end? Did you know that your earnest money check should not be cashed until AFTER you have an offer accepted by the LENDER who is the real decision maker on a short sale transaction? (That could be 3 months from now.)
   
   
8. INSPECTION—Are you aware that most states allow you to have inspections on any property which you wish to acquire (including REO’s, short sales and anything listed ”as is”?) Is your agent encouraging you to have a full property inspection as a way to be sure you fully understand the ACTUAL condition of the property you want to acquire? (Good agents will insist that you should, especially on a short sale which probably has not been well maintained if the home is in foreclosure). Are you aware that you can decide NOT to move ahead with the purchase if the inspection shows some substantial issues which are unacceptable to you?
   
   
9. REPAIRS—Are you prepared to cover the cost for any repairs which are needed immediately (and in the near future) once you close? Have you gotten estimates based on the items uncovered during the inspection?
   
   
10. GETTING TO THE CLOSING—Are you prepared to wait a few or several months to get to the closing date? Are you comfortable knowing you may be asked to increase your offer amount at the last minute, once the lender knows EXACTLY how much is needed to make the deal work under the guidelines from the Guarantor on the loan?

I am a firm believer that if you point someone in the right direction, they will usually get where they were headed. These are not ALL the questions you need to be asking but you are certainly headed in the right direction.

A short sale does not have to be a nightmare. Not with an experienced agent and a well educated consumer. Good luck with your new home experience.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Inability to Rent Property

And the WORD for Today Is...

Inability to Rent Property – may trigger the default on a mortgage. It should first be pointed out that most mortgages DO NOT allow for the renting of a property (home) if it was acquired to be owner-occupied. To leave the house and move elsewhere constitutes abandonment. In a situation where such a borrower has been forced to relocate in order to remain employed, then a lender may consider allowing an exception hoping the borrower can rent the property for enough to cover the mortgage. When this is not possible then you have a default caused by the inability to rent the property. Likewise, if it is an investment property and the owner cannot rent it at all due to market or property conditions, then the inability to rent may lead to default and ultimately to foreclosure. See “default trigger event”.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

From the Desk of: REO Landmines

Let’s start with the basics: REO (real estate owned) refers to real estate which is owned by entities such as lenders, servicers or corporations. There are several ways property becomes REO but most often it is through default of the borrower who is either foreclosed upon or voluntarily relinquishes the property through deed-in-lieu. Corporations also become entitled if they acquired the home as part of an employee relocation package buyout.

Whatever mechanism resulted in the acquisition, a piece of real estate is now owned by an entity who needs to sell it. A special division, either called the REO or disposition division, is usually charged with the task of turning REO properties into liquid assets. As the foreclosure problem worsens the percentage of homes on the local market for sale which are, in fact, REO’s has increased. Strategies for dealing with the holders of these properties are somewhat different than purchasing from a private citizen. Those differences can be looked at as potential landmines if you are not familiar with the process.

Landmine # 1. Most REO properties are sold using a standardized contract which will be used throughout the nation. (for instance, HUD, Fannie Mae, VA). The language and terms in these contracts will supersede anything you write in your local purchase agreement, therefore, it is critical that you understand all the language in their standard contract.

Landmine # 2. Most REO properties are sold “as is”. While entities must allow for an independent inspection if one is allowed by state law, there is no requirement that any repairs be made as a result of the inspection.

Landmine # 3. Buyer are frequently charged a per day fee for delays in closing caused by their side of the transaction. Whether caused by the borrower, their lender or the realtor does not matter. It is not uncommon for the delay fee to be $100.00 per day.

Landmine # 4. Transfer of title will usually be granted with a special warranty deed or a Sheriff’s deed. Both provide a MARKETABLE title; not a CLEAR title. It is common for liens to remain attached.

Landmine # 5. When submitting an offer on an REO property, you buy the whole “kit and kaboodle.” What’s in the “kaboodle.”

Copyright 2007, Home Ownership Matters, LLC. All Rights Reserved.

(As always, if you have any questions, comments or feedback, we welcome and appreciate them. Just e-mail Heather at homeownershipmatters@gmail.com. Thanks for reading, and come back soon to see what else we've posted!)

Q&A: Mutual Release

Q. It seems to me that the seller of a property is protected from the buyer changing their mind and not moving forward with the transaction because of the earnest money which has been put down on the house. What protects the buyer from buyer remorse?

A. Contracts are legally binding

Terms of the contract cover whether or not the buyer can walk away due to inspection issues or if they fail to get mortgage approval or if the property does not appraise for a figure high enough to satisfy the buyer’s lender.

Earnest money as a deterrent

While the earnest money may be a deterrent to the buyer wanting to walk away from a transaction, the earnest money is being held in escrow and will not be released to either party unless both parties agree OR a court has made a determination of which party is entitled to the earnest money. So… in effect, both buyer and seller are protected unless and until they enter into a mutual release.

Multiple Purpose document

The mutual release is a wonderful, multi-purpose document. Its primary purpose is to get people out of a contractual agreement with the assurance that all parties are satisfied (enough) and will not bring any kind of legal action against any other party to the contract. We will all go home, forget we were ever involved in a contract with you and we will NOT call our attorneys next week (or ever).

Many real estate firms will use two specific mutual release forms; one tailored to things associated with the listing and one tailored to the purchase side of the transaction. It is also possible to use a GENERIC mutual release which has boxes so the appropriate reason can be selected from a list or a space for the specific reason in this case to be printed in.

Common Mutual Release Scenarios

The mutual release in real estate may be used to end the agreement when:

a. Inspection issues cannot be resolved, the transaction is stalled, agreement cannot be reached and closing is no longer desired. This is a very common occurrence in real estate transactions.

Form—Mutual release to the Purchase agreement

b. Seller needs to withdraw the property, for good reason, such as a family emergency.

Form: Mutual release to the Listing agreement

c. The buyer’s financing has fallen through, therefore, they are unable to close

Form: Mutual release to the Purchase agreement

A declaration of what happens to the earnest money would be stipulated in the mutual release.

A mutual release is a protection for all parties from future liability. I strongly recommend that you make every effort to reach a compromise and then translate that agreement into a mutual release—Signed by all parties to the transaction.

Good luck on dealing with the issues which are currently more pressing!

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

Q&A: Can they Take my Second House?

Q: If I have two houses and I lose one, will they take the other one too?

A: The short answer is that the lender can not just “take” your second home.

The complete answer is that you still need to be concerned about protecting your second home from liability as well as protecting yourself from future liability related to the foreclosure on the first home.

Future Risk

If the lender does not receive enough from the sale of the home after they complete the foreclosure and sell it as a bank-owned property, many states will allow them to go into court and request a “deficiency judgment”. In order for them to receive such a judgment they will need only to demonstrate that you agreed to repay a certain amount for the home and they got less than that.

Let’s say $276,000 was your mortgage amount and they only got $213,000 from the eventual sale of the property. There is a loss of $63,000. In addition, the terms of your note or deed of trust will grant them permission to also ask to be reimbursed for attorney fees and other allowable costs, based on the terms of your mortgage document and your state’s foreclosure laws.

A crafty lender might end up changing a $63,000 shortage into a request for $89,000 as a deficiency judgment request. If you do not challenge this and a deficiency is granted, the lender/insurer then has the leverage to:

a. Use a wage assignment to garnish paychecks

b. Have judgment recorded on credit reports

c. Possibly intercept income tax refunds

d. Collect from anything you earn, marry, inherit

e. Attach judgment to any other real property you own, (second home) or later acquire

Having said all that, the short answer: they can’t TAKE the second home but they sure can make your life miserable. You are wise to consider the implications for a second home and need to seek legal advice to help you determine what is your next step to protect your investment in the second home, if that is possible. I’m betting that it is, but I am a writer, not an attorney. Yell for help. It’s attorney time.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Abandonment

The WORD for Today Is:

Abandonment–means you have voluntarily left the mortgaged property. If the borrower assumes another housing payment, say rent, they are demonstrating the ability to continue making house payments, even if the amount would have been reduced. Loss mitigation rights are nullified by abandonment. While a lender may CHOOSE to still work with you; they are not OBLIGATED to do so even on government loans. See default trigger event.

Refers to the voluntary relinquishing of ownership rights by failure to use the property. Abandonment usually requires two things:
a. failure to use the property (not being physically present for an extended period of time).
b. coupled with the intent to give up your interest in the property (the actual removal of your possessions from the property which would signify you have no further interest).

It is important to understand what constitutes abandonment because a borrower’s rights could be on the line. A lender has the right to aggressively move forward with foreclosure action under the “abandonment clause” in most mortgage notes. As an author/trainer I travel extensively and may be away from my residence for 2-3 weeks at a time (do not use the property). That does not constitute abandonment since my belongings are still in place and look as though someone plans to return eventually. Therefore, there is no intent to give up my interest in the home just because I am away for an extended period of time. A borrower who removes most or all of their possessions from their home while in default is usually guilty of abandonment and should expect foreclosure action to follow.

© Copyright 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Assessed Value

And the WORD for Today Is...

Assessed Value – is the value placed on a property by the tax assessor for the purpose of collecting property taxes. Due to the sheer volume of assessments which must be conducted, it is not uncommon to find mistakes in either the calculations or in the property description. Likewise, there may not be adjustments for exemptions the property owner is entitled to receive. It is a good practice to always carefully review the entire assessment, beginning with the description of your property. The assessor’s office may not be pleased to have you do so, but there is a process to challenge the assessment if you believe it is in error. Things to verify: accurate square footage, components of the house (number of bedrooms, bath, garage bays, etc), type and quantity of exterior material (home is all vinyl but shows assessment for brick front property). If you believe an error has been made assume it was an honest mistake, remain polite but work aggressively to get it corrected.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Advertising

And the WORD for Today is:

Advertising – in real estate, has changed dramatically, rapidly in the past 8-10 years with widespread use of the internet. Prior to the 90’s, newspaper ads and signs in front yards were the main way real estate advertising was done. That was then and this is NOW. Internet listing, virtual tours of the property, radio spots, television programs, “Talking Houses,” national m/s listing and other high tech options to both provide and receive information on properties anywhere IN THE WORLD are now commonplace. 1993, when I began my real estate career as a salesperson, seems a hundred light years ago in the “Dinosaur Age” of real estate sales. Information on ALL the properties, tax records, financing option and so much more data is currently available to help consumers make wiser decisions. The real estate professional is needed more as an expert to help today’s educated consumer select from this huge menu of information.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Title Policy

And the WORD for Today is:

Title Policy – common types of title policies are “mortgagee policies,” which protect lenders, and “owner policies,” which protect buyers. Most lending institutions won’t loan you money to buy a house or other property unless you purchase a mortgagee policy. This policy will repay the balance of your mortgage if a claim against your property voids your title. Mortgagee policies remain in effect until the loan is repaid. Most lenders will require you to buy a new mortgagee title policy if you refinance your home. When the new loan pays off the existing loan, the old mortgagee policy expires. You are entitled to a premium discount on a new mortgagee policy if you refinance within seven years. Owner policies insure property owners against the specific kinds of claims listed in the policy. When you buy a house and purchase a mortgagee policy, a title company will automatically issue an owners policy—for a set premium—unless you specifically reject it in writing. An owner policy remains in effect as long as you or your heirs own the property or are liable for any title warranties made when you sell the property. You should keep your owner policy, even if you transfer your title or sell the property.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Blanket Mortgage

And the WORD for Today Is...

Blanket Mortgage – has two commonly used meanings. The first use is to refer to a mortgage which covers more than one property currently held by the mortgagor, such as a mortgage for a builder, which covers all the lots in a subdivision. Secondly, it is used to refer to a mortgage which is intended to cover all real property the mortgagor currently has or may acquire in the future. When used with this meaning, it is also called a general mortgage.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Normal Wear and Tear

And the WORD for Today Is...

Normal Wear and Tear – refers to the general wear and tear associated with the “intended” use of a given product or property. The key word here is “intended.” For instance, a home printer is not expected to print 30,000 copies per month so that volume is above the expected amount and a breakdown could be anticipated since its use exceeded “normal wear and tear.” In real estate, the term is used most frequently to refer to the use of property. An apartment manager (or rental homeowner) expects a property to reflect ordinary (normal) usage. You can see traffic patterns, for instance, where people enter a home. In a year’s time the carpet will not be bare based on a family’s regular coming and going. If you are running a day care for 25 kids, then the carpet wear would exceed what most folks would call “normal.” The return of a security deposit frequently hinges on whether the property shows “excess” of normal wear and tear.

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased atwww.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Investment Property

And the WORD for Today is:

Investment Property – usually refers to any property which was purchased for the primary purpose of creating a profit. The anticipated profit may come from either income or from the resale of the property. Investors who speculate in the acquisition of real estate for investment purposes should study closely the market in that area to avoid buying in a “down market.”

Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.

You can find more helpful definitions of WORDS like these in Your Real Estate Advisor which can be purchased at www.DovePublishingHouse.com.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)

WORD: Days on Market (DOM/D.O.M.)

And the WORD for Today is...

DOM stands for “Days on Market” and is used primarily by real estate agents to indicate the number of days between when a property was first listed and when it eventually closed. You would think this would be simple math and not likely to be misleading, but the reality is that it (like most things) can be manipulated to give a more favorable picture than the actual truth.

First, let’s discuss WHY the number is important. If you are a buyer, you are likely interested in whether or not the listing is a new one (with a low number of DOM). This might indicate the seller has not gotten too worried about getting an offer and may be less willing to negotiate. On the flip side, a larger number of days on market could very well signify a seller who is starting to worry about the chances of getting the price they want and has become more willing to negotiate as a consequence.

Next, let’s discuss how this is one of those times when what you see may be an illusion. If the property has been listed with Agent Y for 95 days, then the listing sheet will show 95 DOM. But suppose the property has previously been listed with Agent X for a full 6months, 180 DOM but the listing expired without being sold. The cumulative DOM is actually 180 + 95 = an astonishing 275.

A seller might prefer you not be aware of the lengthy timeframe the home has been marketed, without success. Many REALTORS would also prefer that you not have access to that information. Only recently have real estate boards begun changing their guidelines to include CUMULATIVE days on market as information which can be accessed by the general public. While the information has always been available for an agent who chose to check the listing history on a property, a potential purchaser could not gain access to this information which was controlled by MLS systems.

As a consumer advocate, I believe it is only appropriate that the potential buyer have full disclosure of ALL pertinent facts. It is certainly important to have an opportunity to question WHY a home has been marketed for over 9 months and not been sold. The answers to the WHY could shape the decision of this potential buyer—whether the issue was the price, condition, some external factor, whatever it might be. Those boards which have chosen to fully disclose this important information are to be commended; those who still fail to do so should consider the implications of providing less than full disclosure a material fact to the public.

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)