Q&A: Sheriff's Sale/Redemption

Q.  We have been trying to save our house from foreclosure but could not come up with enough money to stop the bank from foreclosing. We have just received notice of the sheriff’s sale for next month. We are not sure what to do. Are we supposed to go the sale? How long do we have to stay in our house now that the sheriff’s sale is scheduled? Seems just when we think it can’t get any worse, it gets worse.

A: Foreclosure sales are all too common these days. First, there is no real need for you to attend the sale. If you have been able to pull together enough money to redeem your home (and keep it), then you would have needed to make arrangements PRIOR to the sale date. 

The exact amount of time will depend on the foreclosure laws in your state and specific redemption rights. These vary from state to state. You may have until the day before the sale or it could be that you must pay several days before the sale. A few states will allow you a redemption option even after the actual sale has been completed, whether someone bought the home or not.

Typically, on the day of the sheriff’s sale the clerk of the court (or trustee) will conduct a very formal process of offering the listed properties at a minimal amount preset by the mortgagee as a starting bid. The amount which can be received will also be impacted by local foreclosure guidelines. Bidders must have provided documentation that they can complete the transaction within a short period of time (perhaps 30 days +/-) and will typically have to bring guaranteed funds for at least 10% of the amount they are prepared to bid.

The amount of time you will have to stay, after the sheriff’s sale, is also determined by state law. There is no universal answer of 10 days or 30 days across the country. Find out what the timeframe is in your city. If you are unable, financially, to move without some help, please be aware that you are very likely to be approached by a representative from the lender or servicer, or even a new buyer, within a few days after the sale wanting to know when you will vacate. Asking them to help you in the form of “cash for keys” is a good option. You may be able to get as much as $1000 to $1500 in most parts of the country to help you move on. Cash for keys can be paid to tenants as well.

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: Stay or Go?

Stay or go? How do I know?

Q: I am behind on my mortgage and while I would like to keep my home I can’t possibly see any way for me to make the payments since my interest rate jumped and my payments skyrocketed. The person at the bank “implied” I should just go ahead and move if I can’t make my payments. A couple of friends are also encouraging me to move now. I am not sure who to listen to. When is the best time to move if you are facing foreclosure?

A: Listen to me. First, please understand that you have the ‘Right of Possession” of your home until either, you voluntarily relinquish it (see abandonment—Jan 24) or that right has been severed. Depending on the foreclosure statues in your states usually you have the right of possession until the sheriff’s sale. Even though you are not making payments, the lender must still adhere to the guidelines in your mortgage note or deed of trust—in compliance with applicable state laws—before you can be forced from your home. Don’t speed the process up by vacating when you are not required to. You still need to use common sense—if the foreclosure has already occurred and you expect the sheriff’s auction, followed for forceful eviction to occur in February in Connecticut you might want to move in November.

In my personal situation back in 1991, I moved out on a Monday in March–BEFORE the sheriff’s sale, which was scheduled for that Saturday. My now ex-husband did some fancy lying and got the sheriff’s sale postponed—until July. There are two ways to look at this: I avoided the humiliation of being there at the time of the sale for myself and my kids but I also incurred housing expenses several months before I would have HAD to do so. You will have to make a judgment call, based on your personal situation.

Perhaps your situation will change—prior to the actual auction. The new administration may implement some guidelines which make your situation workable, there could be a moratorium of either foreclosures or auctions in your area—any number of things could change the situation for the better. Make an informed decision about what works best for you. I’m rooting for you.

Bottom line is, you have the right of possession until the fat lady sings. In foreclosure issues the FAT LADY is the sheriff’s sale.

© Copyright 2009, Home Ownership Matters, LLC. All rights Reserved. "Answer Book in a Foreclosure Climate" by Mildred Wilkins, available in 2009 from www.DovePublishingHouse.com.

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

Q&A: Landlord in Foreclosure

Q: I have been renting a wonderful house for the past 8 months and really like the neighborhood. My landlord was really nice when I first looked at the place, but I have not heard from him for the past two months. No reason I should, since everything was working okay. Today I came home to find a sheriff’s sale notice stuck to the front door. The landlord’s number is disconnected and I don’t know what to do. Who should I call? What can I do? What did he do with my rent money?

A: First, slow down and take a deep breath. It probably won’t make you feel any better to know that thousands of folks across the country are facing the same dilemma: what to do when your landlord fails to pay the mortgage even though you are paying rent on a regular basis. It has become a common problem.

It is important that you not panic. Let’s discuss the things you can do which are likely to be of help. It is also a good plan to avoid doing stupid stuff which might make you feel better for a minute but will not improve your situation. (Example: tearing something up.)

Before you do anything else: decide what you want. Given this new turn of events, re-consider your options carefully before you decide what steps you will take.

Specifically:

a. do you want to stay through the term of your lease?
b. would you be just as happy to move on to some other option now that you have been given the chance to “break your lease”?
c. do you just want the time to carefully pack and move?

Make a decision, then move to action.

If the sheriff’s notice does not say when the sale will take place, then get that information from the local sheriff’s department so you have an idea how much time you have to take whatever action you have chosen.

Next, check the landlord tenant laws in your state to see what recourse you have, under the law, if the landlord goes into foreclosure. These laws should be readily available, perhaps on your Attorney General’s site.

Then check the foreclosure laws in your state (use google “ _______ state foreclosure laws”). You are looking specifically for notifications required of tenant occupied properties when a foreclosure is pending. Some states require notice be provided to the “unnamed tenants” of a property as part of the foreclosure process in order to avoid exactly your situation. This will be particularly important if you want to stay during the remainder of the leased term.

You need to get some information about the property in order to proceed further. You can start with the information on the sheriff’s notice which will give you some details to get the other information you must have. You will likely need to talk to the county clerk’s office, perhaps the tax assessor and as well as do some on-line research. You will need:

a. the correct names on the title
b. lender or holder of note
c. insurer of the note (if it is Fannie Mae or Freddie Mac you are lucky)
d. attorney who is representing the lender

Notify the sheriff’s department, the attorney, the lender (if you can find a number) and the insurer that you are residing in the home, as a tenant. Be prepared to show that rental payments are current.

If the insurer is Fannie or Freddie, both have implemented programs which will allow tenants to continue to reside in the homes and rent directly from Fannie or Freddie during the time they are being marketed for sale to a new buyer. (Are you up for that?)

Pull yourself together and make a ‘new’ decision based on adjusted circumstances.

**I did not forget that you asked what he did with your rent money. Probably wine and loose women. Doesn’t matter, what is your next step?

Oh, by the way, don’t send off next month’s rent payment just yet.

Copyright © 2009, Home Ownership Matters, LLC. All Rights Reserved.
"Answer Book in a Foreclosure Climate" by Mildred Wilkins, available in 2009 from www.DovePublishingHouse.com.

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

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.)

WORD: Eviction, Forceful Eviction

The WORDS for Today:

Eviction—a court action to remove someone from a property which is owned by another. Eviction is frequently required after a lender has been forced to foreclose against a homeowner who has become unable to make the house payments, and then refuses to vacate the property after notification of the pending sheriff’s sale.

Forceful Eviction—the use of legal recourse by the lender to gain possession of the residence. If the property is occupied by the owner of record in a fee simple title, then the owner has the right to continue to live in the home, rent free, until the foreclosure sale. Once the sale has occurred, the lender is entitled to possession and may then take steps to force the consumer out.

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..."Nothing from Nothing"

Nothing from Nothing Leaves Nothing

“And that ain’t nothing, believe you me” is a refrain of a popular song from my youth. Who knew they were talking about real estate commissions? In today’s tight market it behooves you to start with the end in mind. Literally. It would seem obvious that licensees would always do that since they’re self-employed, paid only via commissions. Unfortunately, keen observation signals that far too often REALTORS® focus on the accumulation of listings without focusing on the realistic possibility of a completed closing. They bought into the myth that whoever has the most listings is the winner of the trophy and therefore is most productive.

Something is Wrong With This Picture . . .

Can you imagine an agent who regularly carries an inventory of 25+ listings (average price $125,000) but is seriously struggling. Obviously, the agent has no problem convincing folks he can sell their home. The problem lies in failing at some other very basic issues which are likely to prevent someone from converting a listing into a “closed” transaction. Let’s consider the most likely culprits.

Silly Details

This will surely not be stepping on your toes to mention “silly” reasons why a listing is unlikely to result in a sale.

• The owner filed bankruptcy, two weeks ago
• The spouse never signed the listing contract
• The lender will be “short” and no one mentioned it
• The house is already scheduled for a sheriff’s sale
• The paperwork for a deed-in-lieu was mailed the day you had your listing appointment
• The “summons” was received two (2) days before they called you

Shame on YOU

In today’s market it is not intrusive to conduct a thorough analysis of the reasons why a potential seller chooses to sell at this junction—that just reflects market savvy. Further, it is a disservice to the potential client and to your agency/yourself to list property without addressing the most common reasons why real estate becomes “unavailable” for the completion of the transaction in today’s market. What a shame to have unearthed the proverbial needle in a haystack (a qualified, ready and able buyer) only to discover you don’t have anything to sell. If you are lucky—really lucky—this qualified buyer will be too busy to sue your client for “failure to perform,” with yours truly as a co-conspirator.

Price ‘em RIGHT…from the beginning

The operative word is RIGHT. The correct view is from a buyer’s prospective. Must I tell you I mean for today’s market, not the market THAT WAS—which is no more. If you’re not able to convince a potential seller of the appropriate listing price based on your BPO/CMA and supporting documents, are you a good enough salesperson to convince someone to buy it at the inflated price you listed it for? Think about it.

Is the owner committed?

I’m sorry, I didn’t mean “should the owner be committed” or perhaps, “the owner plans to get committed.” I mean, IS THE OWNER, TODAY committed to selling their home? Well, how can you tell? That’s easy. An owner who is committed to selling has some basic awareness of the market and will be receptive to your education/documentation of current value. They will already be working on getting their home ready for showings and quite willing to set a definite date when those preparations will be complete. A committed seller is not “testing the water.” They have concrete plans for moving. In other words, they’re an active participant in their real estate process, not your reluctant sidekick.

Ready for the debut?

Not you, the house. Too often, in their anxiety to seal the deal and tally another listing, agents list homes which are not only not ready for showings (clutter, minor cosmetic issues which need to be addressed, lack of curb appeal, etc) but whose owner has demonstrated a lack of commitment to making them ready. It’s such a simple practice to ask “How long will it take to get your home ready for showings?” (Notice, I did not say for listing). Then clearly say, “Call me when it is ready for showings. We can then do the paperwork needed for the listing agreement and I will take photos for marketing.” There, wasn’t that simple? Don’t list a home you are ashamed to have viewed. Day One. Dot. Period.

The Four Rules for Listing

The “rules” I encourage you to implement assume your relationship with your client is strong enough to have resolved any issues related to:

1. a. Appropriate market-based pricing
2. b. Acceptable condition
3. c. Provisions for showings
4. d. Possible impact of “undisclosed pertinent information"
5. e. Any “other” current realities

Rule #2—List at no more than 3-5% above the current market (short sale is an exception to this rule)

Rule #3—List only when the home is “camera ready”

Rule #4—List only AFTER the seller has demonstrated they are committed to selling

Closing = Commission Paid

Now for the first and most important rule. The FIRST rule for listing should be: Don’t list anything you don’t REALISTICALLY believe you can close. It was a good rule to live by when I started my real estate career in the early 90’s. This was not a company rule, but my personal standard in order to become a successful REALTOR®. My logic was that if I closed everything I listed, then folks would believe that I was a good REALTOR®. Such a novel idea. But it worked. My fall-thru rate with buyers was less than 5%, almost always because of inspections issues. My expired listings—less than 1%. Time on market—well below the average for the market then. I appreciate that times have changed. Nonetheless, it was an excellent idea then. I encourage you to consider adopting it as your personal mandate today. You’ll accept fewer listings, but if you close 90-95% of what you list, will you be better off in 2009 than you were in 2008? You do the assessment. It’s a business decision. Marketing listings which are not likely to sell is costly.

6% of Nothing is Nothing

One of the prime reasons I teach and write is because I recognized that the strategies which are being used by many agents are counterproductive and therefore, very frustrating. Handling foreclosed properties for Fannie Mae, after some well-meaning agent had tried to sell them—the traditional way—predictably resulting in foreclosure—I decided to teach agents how to better understand the lender/insurer’s position, and how to successfully structure a short sale. It works, IF YOU WORK IT.

Getting to the closing table is the ultimate goal for all real estate professionals. Strategies for posturing yourself, from the inception of the transaction, with the goal of getting to the closing is the cornerstone of the foreclosure related classes taught by HOM. The (FIS) certification is wholly focused on GETTING TO THE CLOSING TABLE.

Want to learn more?

Web: www.HomeOwnershipMatters.com.

Blog: http://www.HomeOnwershipMatters.blogspot.com/

Mildred Wilkins

President of Home Ownership Matters

Author of “Your Real Estate Advisor”

available at: www.DovePublishingHouse.com

Toll-free 1 (866) 507-5105

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

You can find more articles by Mildred at HOM's website.

(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: Cash-for-Keys

The WORD for Today is: Cash-for-Keys:

Cash-for-Keys is a common practice utilized by representatives of lenders or guarantors who are attempting to facilitate the vacating of a recently foreclosed property. A sum of money ($500-$1000 is common) may be offered to the former owner of the home or a tenant who has not left the property by the date of the sheriff’s sale. They will usually be asked to sign an agreement to leave the home totally empty, state a specific date and is binding only if signed by both parties.

Has become a common practice in the foreclosure business where a REALTOR or other representative of the servicer who is processing a home which has been lost through foreclosure will offer to pay the consumer (still residing in the house) an amount of cash to vacate and turn over the keys after cleaning out the house. There are occasions when cash-for-keys may be offered to a tenant who is the occupant. This practice generally benefits the lender or servicer by helping them to gain possession faster than they would by utilizing a forceful eviction as well as the financial benefit of having the consumer agree to leave the property clear of all personal belongings and debris. The consumer benefits by having an additional sum of money to help them with expenses needed to move or pay a deposit on their next residence. A consumer might expect between $500.00 to $1000.00 depending on their circumstances, the part of the country where the home is located and the particulars of this specific file. There is no automatic. They will usually be asked to sign an agreement to leave the home totally empty, state a specific date and amount being offered. Such an agreement is not binding unless it is written and signed by the lender or the representative-agent-who is operating on their behalf. It is always in your best interest as a consumer to get such an offer in writing.

© 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.)

Welcome!

Welcome to Home Ownership Matters’ Blog!

Why write this blog? Quite simply because the time is right. Because I understand where you’re coming from. I have been urged by many students in my training sessions to start a blog for several years. It seemed like a daunting task until I hired my current Marketing Assistant, Heather Meade. Her training and expertise has made this possible at a time when the housing crisis has made it more important than ever that consumers be given basic information to help them make informed choices about so many of the challenges associated with real estate today.
Who is Mildred Wilkins?

I am a foreclosure intervention and loss mitigation trainer, a speaker. I am a consumer advocate who also happens to write. Most importantly, I’m a person, just like you, who has had hopes and dreams and inspirations blow up in my face. I have grown and survived DESPITE those blow-ups. I have lived—therefore I teach.

Writing is our most basic and clearest form of communication. The internet, via such tools as this blog (and website; www.HomeOwnershipMatters.com) has made it possible to reach thousands of folks in real time. I invite you to share my real estate lessons. I love to tell my students; “I’ve already taken the class and paid the price for this lesson. You can listen and avoid having to take it yourself.” I have benefited in other areas of my life from listening to the folks who already did it the wrong way so I could avoid their pitfall. I had no such teachers in real estate, so I had to learn the hard way—MYSELF.

I’ve gone from being born Black and poor to uneducated parents in southern Alabama, to graduating with honors from college, to middle income with a position at Purdue University, to a stay-at-home mom, to a divorcee with two children. I did my 6 months on welfare.

I’ve done most of the wrong things related to home ownership—and survived to tell the story. I’ve purchased several homes. I’ve built a new home ---and walked away at closing leaving thousands in a deposit on the table. I’ve bought without an inspection—leading to disastrous problems being uncovered a few months later. I’ve gone through foreclosure—and ended up with the deficiency judgment to prove I was there. Miraculously, I had not filed bankruptcy until AFTER the judgment for the deficiency on the car ($8 K and the house $28 K were recorded). I filed bankruptcy, started over and rebuilt my credit. I’ve lost a child, gone into depression and destroyed my credit again.

Professionally, I worked as a full-time REALTOR for 10 years in Indianapolis; I’ve helped others to buy their dream home. As a Broker-Specialist for 2½ years for Fannie Mae I sold their foreclosed properties. I was required to participate in the forceful eviction process as a representative for Fannie Mae. I was in charge of clearing out the remains of homes abandoned by folks in desperation when time ran out and the sheriff’s sale was imminent. I’ve written a weekly newspaper column on real estate to address the common concerns and complaints of consumers who don’t know where to turn. I’ve received professional training on Loss Mitigation. I’ve spent hundreds of hours studying laws, regulations, guidelines, pending legislation—all relating to predatory lending, mortgage fraud, foreclosure, bankruptcy, fair housing, appropriate disclosure and other subjects which directly impact our housing issues.

What will be included in this blog?

Each day we will share with you information we consider relevant to home ownership. For the first month or so most of the entries will be related to today’s more urgent housing issues—all those components connected to struggling to make your mortgage payment. We will eventually move on to home maintenance, taxes, insurance, and all sorts of other things, so continue to log on. Read and share. You could be just the answer someone needed today.

Contents:

• Today’s WORD—Will be an attempt to help you learn how to ‘talk bank’. Regular folks seldom know what the bank people are talking about. You hear the words, you may even know the words, but what the words MEAN is a whole other thing. It’s hard to communicate when you don’t know the lingo—Hence, Today’s WORD. Read it, learn it, share it.
• Fast FACTS—It is a basic fact that when you are making decisions, not just when you are purchasing a home, but ALL decisions relating to your finances become housing decisions. For instance, filing for bankruptcy impacts your future housing options. We’ll share some pearls of wisdom related to housing. We’ll make a diligent effort to give you FACTS which are relevant for most of the country. We encourage you to hold them close; treat them like the pearls they are.
• Myths and Misunderstandings—One of life’s cruel realities is that it does not matter how sincere you are—IF YOU ARE MISTAKEN. Too many folks across the country today honestly believed they could refinance out of a variable rate loan before the rate increased. They believed because they were ASSURED by a broker that they could. They believed that the broker was: working in their best interest and regulated by the banking industry. They were wrong on both counts and now they can’t afford the home they love. They misunderstood how brokers and banking work. They did not know the meaning of the word—prepayment penalty. We’ll shed some light on some common myths—clear up a few misunderstandings and prepare you to make better choices. Pass it on!
• Articles from the desk of . . .—will be included about once each week. These articles are slanted toward real estate professionals and many have appeared in REALTOR magazines or Broker-Agent somewhere in the country. Taking a course on the subjects discussed is the best way to become more competent in dealing with today’s transactions but reading any or all of these articles will certainly have a positive impact on your business. There is an ARCHIVE of articles available, FREE, upon request. For the complete list, please e-mail Heather at homeownershipmatters@gmail.com.
• Did You Know?—I didn’t think so. Well, anyway, I thought should share. There are tidbits—mere tidbits—of information which can dramatically change how we operate and therefore, dramatically change our outcomes. I am ecstatic when someone shares such a tidbit with me. Whether ordinary or extraordinary, if I didn’t know then I could not incorporate it into my life. Even if they say “Millie, every body knows that” I will happily say, “I didn’t, until now”. Knowledge is truly a powerful thing–I have always had an immense respect for knowledge. I revel in trying to attain more. I humbly share any I have. Embrace knowledge–whatever the source. Use it—Share it. Benefit from it.
• “Your Real Estate Advisor”—will be resurrected and added to the mix within the next two months. That was the name of the real estate advice column I wrote in Indianapolis for 5 years back in the 90’s. (It is also the name of my second book). We’ll talk about EVERYTHING housing: buying, selling renovating, building, maintaining, remodeling, and losing. Don’t be selfish—share the info—with family, friends, maybe even somebody you don’t particularly like. Make them wonder.
• Give me a “Q”—we’ll take a commonly asked question and provide an answer. Please keep in mind that the answer will be MY answer. By that I mean that what you will get is my opinion. That’s because it’s my blog. I expect you to have different opinions and encourage you to share those. Unlike the “FACTS” section we can have lots of answers to a single question. I am promising neither a rose garden nor THE answer. I promised you AN answer. You mustn’t yell at me. I’m sensitive.

Enjoy the blog. It is intended to educate while keeping your attention. The words are all mine. Heather is responsible for everything else. You may reach her by commenting on this blog, or e-mailing homeownershipmatters@gmail.com

Reinstate and Redemption: Worlds apart

FACT: The two words have dramatically different meanings. To reinstate a loan means that the consumer is behind on their mortgage payment but has arranged with the bank to catch up the past due amount. Even though the lender has accelerated the loan (demanded payment in full along with all applicable costs and fees) the lender reserves the right to allow a re-instatement if they so choose. Most often the lender will decide this is a reasonable option in order to avoid a foreclosure if the consumer’s situation has changed and it appears likely that payments will be made in the future in a timely fashion. The amount needed to reinstate usually includes all past due payments, interest and may include attorney fees. Once the borrower has reinstated the loan, they resume payments just as they had before the default.

On the other hand, redemption typically means that the borrower must pay the entire amount of the loan plus all costs including attorney fees in order to re-claim their home AFTER the foreclosure has been completed. A consumer’s right to redemption, including how long they have in order to exercise this right, is determined by state statutes. What fees the lender is able to collect is governed by the terms of the mortgage note or the deed of trust. Redemption timeframes vary from a very short period of time which expires at the time of the sheriff’s sale or may continue for a matter of months. The longest redemption period in the country (related to foreclosure due to failure to make timely mortgage payments), is 1 year, in the state of Alabama.

Watch for a section on State foreclosure laws which will include redemption timeframes which will be included on the Home Ownership Matters website by the end of April under the Foreclosure section. Share the knowledge with your friends.

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 feedback, comments, and especially your questions. Don't be shy!)

Q&A: Leaving the House

Q: We have been notified that our mortgage is in default and that the lender can start to pursue foreclosure. They did not say how long this process will take or tell us we had to move, but we are sure it won’t take forever and wondered if we should just move out. Will the lender contact us to tell us when we need to get moved? What should we do?

A: STAY PUT. It is not in your best interest to vacate as soon as you receive the default notice. No matter what state you are in there has to be “due process” based on the default before you will need to vacate. How long you have will depend on a number of variables including whether you have a deed-of-trust, which allows for a trustee sale instead of judicial foreclosure, OR if you have a mortgage and live in a state which requires judicial foreclosure. Judicial foreclosure takes longer (several months).

Check with your state’s attorney general’s office to get the particulars on foreclosure in your state. Get clarity on when you MUST vacate (usually just prior to the actual sale date). BIDE YOUR TIME, in today’s climate, almost anything could happen.

Be cautious about making another financial obligation too soon, since the date could get pushed back, the lender could go belly up and not be able to move forward with foreclosures for months, the government could step in and mandate a moratorium on foreclosures, or your state could take some action which grants you more time.

*** Borrowers who hold mortgages which are backed by Fannie Mae and Freddie Mac can breathe a sigh of relief that both entities are now required to aggressively pursue modifications whenever feasible.

In any case, if all else fails, then the local sheriff’s office will notify you when you absolutely must move. Best of luck.

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.)

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: Is the Seller Responsible for back taxes?

Q: When selling their home, is the seller responsible for paying the back taxes or tax liens?

A: Short answer: YES, to both.

Individual sellers of real estate are required to provide a clear chain of title and that requires that any back taxes or tax liens would have to be satisfied prior to or at the closing. In order to demonstrate that there are no outstanding debts against the property, the seller signs a vendor’s affidavit which affirms that there are no outstanding obligations which have not been paid. Additionally, they provide the purchaser with a general warranty deed further guaranteeing that a clear title has been conveyed.

Buyer Beware—Bank-owned sellers

The use of the word ‘their’ in the question above indicates you are talking about buying a home from an individual rather than an REO (bank-owned property) from an insurer such as HUD, VA, Fannie Mae or Freddie Mac. While these insurers are required to pay back taxes and Federal tax liens before they transfer title, they are NOT required to cover all liens and consequently you will most often receive what is called a “special warranty deed”, “sheriff’s deed” or “trustee’s deed”. Irrespective of what it is called, any of these types of deeds will be transferring “marketable title” but not necessarily “clear title” to you. You owe it to yourself to get clarity on all the words highlighted in this section before you purchase a home which is being offered for sale by an institution rather than an individual.

Pass it on! your ‘contingency’ and move to a closing.

What are contingencies?

They are stumbling blocks which must be addressed before you can close on the new home purchase. It might be that you have a home you must sell first. It might be that you need to get money from a 401K and have not yet applied for that to be released. You might need to pay off some outstanding judgments in order to get final loan approval to complete this transaction. It could be that you are awaiting a final answer from your employer about a possible job transfer or any one (or ten) other things.

Most important is to discuss with your agent whether or not there are conditions in the content of your offer, (probably under further conditions) which grant the seller permission to continue to show the home. If there are NO contingencies then I would say the home should have been pended and no, there should be no further showings.

Real estate contracts are somewhat complex but you really can understand them if you take the time to understand what the words really mean. Read your specific contract and see what they can and cannot legally do until the closing actually occurs. Best of luck.

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: Clear Chain of Title

Q: When selling their home, is the seller responsible for paying the back taxes or tax liens? I have always assumed that they would be.

A: Short answer: YES, to both. More accurate answer is: Depends on whether the seller is an individual or an entity.

Individual sellers of real estate are required to provide a clear chain of title and that requires that any back taxes or tax liens would have to be satisfied prior to or at the closing. In order to demonstrate that there are no outstanding debts against the property, the seller signs a vendor’s affidavit which affirms that there are no outstanding obligations which have not been paid. Additionally, they provide the purchaser with a general warranty deed further guaranteeing that a clear title has been conveyed.

Buyer Beware—Bank-owned sellers

The use of the word ‘their’ in the question above indicates you are talking about buying a home from an individual rather than an REO (bank-owned property) from an insurer such as HUD, VA, Fannie Mae or Freddie Mac. While these insurers (as well as other guarantors) are required to pay back taxes and Federal tax liens before they transfer title, they are NOT required to cover all liens and consequently you will most often receive what is called a “special warranty deed”, “sheriff’s deed” or “trustee’s deed”. Irrespective of what it is called, any of these types of deeds will be transferring “marketable title” but not necessarily “clear title” to you. You owe it to yourself to get clarity on all the words highlighted in this section before you purchase a home which is being offered for sale by an institution rather than an individual.

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.)