Protect your free and clear property

So you worked your whole life paying off the mortgage on your dream house and finally achieved just that. It's a fantastically rewarding feeling. As time passes, you realize how much you have enjoyed not making payments any longer when all of a sudden one day your doorbell rings and it's the sheriff serving you a notice. Through all the confusion and heartache on that and subsequent days, it becomes clear that someone has searched the Public Records, found your property had no loan recorded against it and proceeded to forge a deed transfering title to themselves - followed by a new mortgage or even just a sale to a third party. Regardless of the situation, it's the start of an unbelievable can of worms for you and your family. It can happen and as proof.....one of the most notable properties in the country was stolen (but given right back - full story http://www.nydailynews.com/money/2008/12/02/2008-12-02_it_took_90_minutes_for_daily_news_to_ste.html

While this seems unlikely, it can happen and does, more frequently than you think. In an effort to protect themselves, I am aware of one situation wherein the homeowner sought to protect themselves by executing a Deed of Trust from themselves to their Trust, creating a 'cloud on title' which would make it a little more difficult for a forger (not a bad idea but seek counsel if you decide you want some protection). For the Forger, they would have Trust Certifications, Security Documents and Releases to deal with and a subsequent Title Insurer would look at these carefully. Finding a situation like this might cause a potential Forger to look to another property - kind of like having a big German Shepherd in the backyard, a burglar would probably look elsewhere to apply his nefarious talents.

The criminal mind is always working to find ways to get ahead, a real waste when you consider the potential lost putting that type of creativity to good use, equally - we must find ways to stay ahead of them. Keep the faith!

Go Short Sale or Let ‘em Foreclose?

Information to help you decide - Go Short Sale or Let ‘em Foreclose?

Most homeowners aren’t up to speed on the difference between a Short Sale and a Foreclosure. They only know that if they can’t pay their mortgage and keep their home that they worked so hard for, one of the two is in their future.

NOW HEAR THIS! A SHORT SALE has less serious consequences for the homeowner than a foreclosure. Let me explain a few of the finer points … Credit scoring after a SHORT SALE may be reduced by as little as 50 points if you’ve kept everything else current and may count in the scoring for only 12-18 months; whereas, a Foreclosure can lower your credit score anywhere from 200 to 400 points and may affect your credit score for 3 years, or more. The major credit scoring companies may change practices in the future but that’s where it’s at today.

A homeowner who successfully completes a SHORT SALE is ineligible for a Fannie Mae backed mortgage after a mere two years whereas the homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years. Investors are another story for another day.

The next issue is Mortgage Debt Relief, this is a biggie, and as I don’t make it a habit to comment on tax issues (I’m a REALTOR not a CPA) check with your tax consultant and ask them to explain what you’ve read here… http://www.irs.gov/individuals/article/0,,id=179414,00.html

The majority of homeowners aren’t interested in the fine points discussed herein and are mainly interested in “what’s happening to me and how can I make it better” and that’s OK. Just remember this…A foreclosure is a sure thing – just don’t make your payments – you can’t miss. A SHORT SALE is not so sure. There are specific requirements necessary to qualify for a SHORT SALE (Hardship, i.e. mortgage payment increases from interest rate changes, job loss, illness, etc.. ) plus if you have any tangible assets, your Lender is unlikely to approve the SHORT SALE, in fact, more and more, Lenders are asking homeowners to contribute cash prior to approving the SHORT SALE.

In closing, if you think the ship is sinking, contact your REALTOR. You can look to your REALTOR for guidance and counsel to the extent they are able to provide it, but as of today, it’s looking like a SHORT SALE is way ahead in the picture… Let’s discuss your particulars. As I am only licensed in the State of California, I can only discuss particulars affecting California Real Estate and the associated laws and practices particular to same. Contact info is available by clicking the link to my website http://RogerASullivan.mywindermere.com Keep the faith!

California Foreclosure Timeline

The following time-line is applicable for non-judicial California Foreclosures under a Deed of Trust. Foreclosures begin with the Trustor (borrower) not making the monthly payments to the Beneficiary (Lender), the first missed payment is technical default, but in practical terms, most Beneficiaries do not begin the process until the third payment is missed. If the Beneficiary cannot resolve the defaulted payment amount with the Trustor through Forbearance or other Loss Mitigation measures, the Beneficiary will instruct the Trustee to begin Foreclosure proceedings.

Day 1
Notice of Default is filed with the county recorder.

Within 10 business days
Mail Notice of Default to borrower address

Within 1 month
Mail Notice of Default

After 3 months
Set Trustee Sale date

25 days before Trustee Sale date
Send notice of sale to I.R.S.(when necessary)

Within 10 days from 1st publication of Trustee Sale
Send beneficiary request for property directions

14 days before Trustee Sale date
Record Notice of Trustee Sale

7 days before sale date
If court action, 7day rule may apply

5 business days before sale date
Expiration of borrower’s right to re-instate the loan

Sale date
Property is sold to highest third party bidder or reverts to Beneficiary at public auction

I posted this in the event you needed some information but I truly hope you do not. Keep the faith!

Prepare yourself to be a First Time Buyer

So you've made the decision to acquire your first home and with any luck the government is going to help with a nice tax credit for the effort. To ensure this is a successful endeavor there are a number of things you can do to help your cause. This is true whether you are a real first time buyer one that fits into the moniker qualifying for the Federal Tax Credit. Here's some things you should start working on as soon as possible or a minimum of six months before you plan on buying a home.

The first and best thing you can do for yourself is to not apply for any credit until you have successfully purchased your home. No cars, no furs, no computers, etc... no luxury items that would require opening a new account with a new creditor.

Next you should pay any and all Collection Accounts followed by reducing the debt that you have amassed as much as you can. After the Collection Account payoffs, payoff or paydown those credit cards starting with the cards that carry the highest interest rate. Checking with your tax preparer will usually confirm that none of this debt or the corresponding interest is tax deductible. If you have money in the bank discuss paying this debt off with your tax preparer. The same goes for any and all consumer debt, car loans, personal loans, student loans.....Pay them off as quickly as you are able.

This is something that a lot of home buyers don't do because they want to use all their available cash for a down payment. What people don't know is that if they have too much debt, they might not even qualify for a loan to purchase their dream home, or the interest rate offered could be increased as their qualifying ratios (debt/income) don't fit into the undewriting guidelines set by the Lenders of 2009.

Next vehicle to help your cause is the credit scoring. Do you know what your scores are? It pays to know what the credit world thinks of your ability to repay debt. This is evidenced by the scoring the three major credit companies assign to you. You should check your credit and scoring by getting yourself pre-qualified with a Real Estate Mortgage professional. Some prefer to work with a specific bank but a Mortgage Broker provides you an opportunity to capture the best rate and terms available in the marketplace on any given date. Read the report carefully and dispute any inaccuracies right away. This is your chance to correct any inconsistencies/errors that have occured over time plus you might have attempted to correct items earlier only to find that the reporting entity never followed through.This takes time to fix.

Being aware of and following through on the above referenced tips is going to afford you the best opportunity to survive the biggest decision and life changing action you will ever encounter. Give yourself the best chance and don't worry about missing out on a deal or low prices, etc... It is what it is and foreclosures, bank owned homes, short sales, and other distressed properties will be with us for a number of years. There may be signs that we are coming out of the economic tailspin we are in but don't think you have to rush into anything. Do it once and do it right giving yourself the best chance and the best deal on your Dream Home. Keep the faith!

1st X Buyer Tax Credit response from Senator Feinstein

From: senator@feinstein.senate.gov
To: rsullivan@windermere.com
Date: Monday, September 21, 2009 12:54pm
Subject: U.S. Senator Dianne Feinstein responding to your message

Dear Dr. Sullivan:

Thank you for contacting me to express your support for expanding the first-time homebuyer tax credit. I appreciate the time you took to write and welcome the opportunity to respond.

In July 2008, the Housing and Economic Recovery Act of 2008 (Public Law 110-289) provided first-time homebuyers with a tax credit, equivalent to an interest-free loan, worth up to $7,500. The tax credit applied to homes purchased between April 9, 2009 and July 1, 2009. As the housing situation worsened in the fall of 2008, additional action was taken to prevent further declines in home values. Congress included in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), a more robust first-time homebuyer tax credit. Specifically, the tax credit was increased to $8,000 for homes purchased in 2009 and will not have to be repaid.

I understand your belief that the first-time homebuyer tax credit should be increased and expanded further. As you know, on June 10, 2009, Senator Johnny Isakson (R-GA) introduced the "Home Buyer Tax Credit Act of 2009" (S. 1230), which would increase the credit to up to $15,000, remove income eligibility limits, and expand it to include homebuyers purchasing homes other than their first. S. 1230 has been referred to the Senate Finance Committee, of which I am not a member. Please know that I will keep your support for this legislation in mind should it come before the full Senate.

Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.

Sincerely yours, Dianne Feinstein
United States Senator

Further information about my position on issues of concern to California and the Nation are available at my website http://feinstein.senate.gov/public/. You can also receive electronic e-mail updates by subscribing to my e-mail list at http://feinstein.senate.gov/public/index.cfm?FuseAction=ENewsletterSignup.Signup. Keep the faith!

First Time Home Buyer Tax Credit Extension

How important is the First Time Home Buyer Tax Credit to your purchase of a home? The deadline for closing to qualify for the credit is nearing - November 30 2009 - if not, imminent considering how long it takes to close a transaction once contracts are accepted. Inventory is depleting, prices are rising and finding the right house is getting difficult plus many first time buyers are stuck in Never-Never-Land waiting for Short Sale and REO Lenders to process submission and offers made.

Take heart in that Congress is considering an extension of the first time home buyer credit. Some in Congress are even proposing to increase the credit from $8,000 to $15,000 plus they want it to apply to anyone who buys a home. Extension and/or amendment to the credit seems likely as there are a number of House bills being proposed to do so. Each bill carries a slightly different twist beyond mere extension.

Numerous proposals and ideas to continue to spur the housing market have emerged:

A Senate bill submitted by Sen. Johnny Isakson, R-Ga., and co-sponsored by Senate Banking Committee Chairman Chris Dodd, D-Conn., proposes raising the credit to $15,000 for any home buyer with no income limitation.

Rep. Kenny Marchant, R-Texas, last month submitted a House bill that would extend the current $8,000 credit for first-time home buyers through June 2010 and would also provide a $3,000 tax credit to current homeowners who refinance.

Rep. Eddie Bernice Johnson, D-Texas, introduced a bill that would extend the $8,000 credit to 2010 and now include ALL home buyers.

The Business Roundtable, a separate group composed of CEOs from large companies, earlier this month asked Congress to raise the credit to $15,000 and make it available to all home buyers.

The National Association of Realtors wants to expand the tax credit to $15,000, and it wants to allow all buyers to be able to qualify, not just those who have been out of the market for three years, according to The New York Times.

There was talk of a bill by Isakson to introduce a bill that would provide up to a $15,000 tax credit to any buyer who stays in their newly purchased home for a minimum of two years, according to the Times.

However, the most recent introduction is from Maryland Democrat Sen. Benjamin Cardin introduced S.B. 1678, and it is co-sponsored by senators John Ensign (R-Nev.), Johnny Isakson (R-Ga.), Senate majority leader Harry Reid (D-Nev.) and Debbie Stabenow (D-Migh.)… The bill wouldn't change anything on the tax credit except the expiration date.

Realogy Corporation, a global provider of real estate and relocation services, announced its support of a bi-partisan Senate bill (S. 1678) Read more: http://rismedia.com/2009-09-20/realogy-supports-new-bi-partisan-senate-bill-to-extend-first-time-homebuyer-tax-credit-for-6-months/#ixzz0RkwiHHWw Keep the faith!

Real Estate Contract Negotiations 101

Wouldn't you like to be able to drive down the street, find a house available in your dream neighborhood and get an offer accepted for a bundle below the Owner's asking price? Your not dreaming, it could happen ... but not very often.

In today's economy there are advantages and disadvantages to attempting to negotiate the best deal you can get on real property. If you have a Realtor on your side, you stand the best chance of winning the battle. A Realtor should have a grasp of the market or pricing trends in your dream neighborhood. A Realtor should have knowledge of competing offers which would greatly influence negotiation. A Realtor may have a grasp of the Owner's motivation. A Realtor generally should be more experienced in negotiating contractual terms (Negotiating skill is something you are borne with and perfect throughout your life/business career - i.e. They've been involved in way more contracts than you). These are a few of the examples of how a Realtor can assist you and therefore be better able to advise you when thinking of negotiating.

If you are in need of Real Estate Sales, Leasing or Acquisitions assistance in Coachella Valley, you can call me directly @ 1-760-610-3245 or email me: rsullivan@windermere.com

You can read some very interesting statistical information with respect to negotiating in a great article linked below entitled: Taking Advantage of Negotiation – U.S. Homebuyers Paid $7,039 Less Than Listing Price in July

http://rismedia.com/2009-09-14/taking-advantage-of-negotiation-u-s-homebuyers-paid-7039-less-than-listing-price-in-july/

Loan Modifications and Foreclosure Assistance

Many homeowners today have an interest in availing themselves of a loan modification. They've worked hard to get their dream home and instinct says they should fight to keep it. Reluctant or uncomfortable with loan documentation, loan terms, unfamiliar paperwork and/or dealing with the procedural headaches of interfacing with the Lenders of 2009, who themselves are entrenched in paperwork of the innumerable applications for same, many homeowners/borrowers turn to assistance from companies who specialize in this process or who, at least, advertise that they do. The same can be said for the companies who advertise they can rescue you from the grips of foreclosure. May be they can...but the Federal Trade Commission is looking into banning them from collecting fees from you UPFRONT.....check this out: http://www.inman.com/news/2009/09/17/feds-may-restrict-mortgage-rescue-fees

If you have some time, are fairly organized and able to write a letter of 'Hardship" outlining your situation and requesting the modification, you can save yourself a lot of time and money. The application process, while not simple, is not overly convoluted. The Lenders generally have an application, with procedural guidelines and documentation requirements delineated on their respective websites. Most, if not all, states have information available as well. A little detective work will turn up good information. In any event, be patient and prepare yourself for a decent wait as Lenders are swamped. Be mindful of the acceptable definition of a 'Hardship'. Note that generally you must already be behind in payments for today's Lenders to consider a modification and you should investigate this carefully in the early stages of your endeavor. Keep a timeline in the back of your mind and if a different department contacts you about arrears/default proceedings, foreclosure and/or Trustee's sale, ensure that you communicate that you have a modification application in process and ask if they have communicated with that department and specifically request what your options are at that juncture. Best Wishes for Success! Keep the faith!

For Sale by Owner - tough time in the market for this

Positive(s) - I can save the commission and this is important because I've lost value
Negatives(s)- Oh, My! Where do we start?

a)Are you confident you know what to accomplish to prepare your property for sale?
b)Are you confident you can market your property for sale other than putting a sign in the yard and creating an ad on Craigslist?
c)Are you confident you can price your home to attract buyers?
d)Are you confident you will get the highest/best offer your property is worth?
e)Are you confident you can provide a buyer the disclosures required by state law?
f)Are you confident you can negotiate a contract with a buyer and protect yourself?
g)If the buyer has no representation, who will write the contract and more
importantly, who is representing your interest? Paying an attorney?
h)Have you considered that in selling and marketing your home yourself, you may be
limiting the exposure to buyers in the market to purchase?
i)Considered comparing the cost of commission -vs- additional carrying costs if the
actual sale takes more time than expected?

If you think you need assistance, contact me; however, if you've considered all of these areas of concern and still wish to proceed on your own, then check out the link for tips from Daily Press:
http://toprealestateguide.com/which-factors-determine-the-price-of-your-house.html
Keep the faith!

I was unsure of the need for yet another Real Estate Blog but I assured myself, as I had when I first considered a blog, that if you have something relevant to say and are sure someone will find it useful, you are nearly obliged to share it; so, I have come across some information that inspired me to communicate my feeling to the masses, in fact, it made me cringe. I do hope you find it helpful.

A Down Payment Anomaly http://www.nytimes.com/2009/09/06/realestate/06mort.html?_r=4a link to an article from the N. Y. Times which purports to offer advice to John Q. Public that you may be better off putting a lesser down payment than the 20% traditionally recognized by Lenders as the premium amount to garner better interest rates. I have never known this to be true during my 35 years in real estate and related industries. I have polled quite a number of my contemporaries who agreed that there are some majors flaws in this ideology. I must state that since no restrictive language pertaining to New York or New Jersey property is cited in the article, the author must be speaking in a general manner about real property throughout the United States and the associated rules for Fannie Mae and Freddie Mac. No one that I know in the Mortgage Business is aware of any guidelines that establish scenarios that might lead to less favorable rates for putting a down payment of 20 % to 25% of the offer. In a time wherein the entire industry, let alone Country, is reeling from low down payment deal failures, the statement “For most people, it turns out, smaller down payments result in lower interest rates" seems incomprehensible.

The statement that “Oddly, those people who put down 25%...were saddled with a higher interest rate..." and "The underwriting rules from Fannie Mae and Freddie Mac consider borrowers in the 20 to 25% down payment category to be the riskiest, in part because they are not required to carry private mortgage insurance…" Whoever would think that a borrower(s) with a large down payment who could avoid paying Private Mortgage Insurance 'PMI' would get a less preferential interest rate than the next borrower(s) who couldn’t put up the extra down payment but had to pay extra for PMI, might be the person who advised that borrower with the large down payment to buy PMI and get a better interest rate... “Holy Horse Feathers, Batman!” Additionally, if “in part because they are not required to carry private mortgage insurance” was part of the reason for being riskier, what was the balance of the reasoning? The article also mentions that PMI is tax deductible without discussing the restrictive nature of the deductibility.

For me, the most interesting things about this article were 1) it did not discuss investing the difference in the down payment over loan term; 2) it did not suggest that an attorney, CPA or Financial Consultant be employed; and 3) after all was said and done, cited a quote from the Mortgage professional that they still advise borrowers to make a down payment as large as they can. Yikes!

This state, that state or mis-state, remember that you should always consult a Real Estate Professional for the right advice or proper referrals to get you the information that is up to date and appropriate in your state. A good Realtor can do this for you – Referrals to no less than 3 qualified, reliable parties should be given to allow the consumer to elect the most suitable professional in the particular category of interest.

For Desert Real Estate or general musings, you can follow on Twitter@RogerASullivan and the website is http://RogerASullivan.mywindermere.com Keep the faith!