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If you read some of the nonsense news floating around by supposed “experts,” we are all about to get free and clear homes! Don’t believe it. Here is what is true: Most lenders are coming under a great deal of scrutiny right now for their improper foreclosure practices. (Incorrect notaries, can’t find the original note, not reviewing the documents thoroughly, etc.) Bank of America quickly called a moratorium on ALL foreclosures, then quickly called it off, saying they had reviewed all their foreclosures and everything is perfectly fine, no problems here. Politicians, consumer groups, attorney generals, and the Fed don’t believe this for a second and you can bet there will be reviews, lawsuits and demonstrations galore to further delay foreclosures until all lenders are following the rule of law.

Here is what I DON’T believe is true: That any of the above will result in all of us getting our mortgages wiped clean and getting to stay in a free and clear home. I am NOT saying that the above problems are not legitimate or serious. And I’m sure that a few judges here and there will take the “Robin Hood” approach to this and void out the mortgages for a lucky few. But I do NOT believe we are about to see wholesale voiding of mortgages across the nation. If you aren’t paying your mortgage, eventually your lender WILL get their paperwork straightened out and they WILL foreclose.

What this DOES give us is TIME. Time to work out a loan mod or short sale if you are in trouble on your mortgage. My belief is that lenders now have one more BIG reason to work something out with you in order to avoid a foreclosure. If they foreclose, they may have to face you fighting them in court, or even trying to get the foreclosure reversed later. But if you both agree on a loan mod or short sale, it’s a win-win. I’m seeing banks get MUCH better at short sales in just the last few month, and that was before this foreclosure mess happened. Need help? Let me know.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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I’ve come across some websites over the past few years that may prove helpful to some of you. First, a disclaimer: I don’t endorse, or agree with everything on these websites. Please use common sense and restraint. But there may be some nuggets of information you may find useful. Also, be very careful about the advertisers and forum posters on these sites. Many scam-artists are just dying to take whatever money you have left by promising you miracles in exchange for a small fee.

www.HelpWithMyBank.gov – This site is run by the US Department of the Treasury as a conduit for bank consumers to complain about unfair treatment by their federally-chartered bank. I’ve heard a few isolated reports of people logging complaints into this website, and getting a response from their lender within days.

www.NACA.com – This is a national non-profit group (and HUD-approved counseling agency) that is trying to help homeowners get their loans modified or otherwise work out problems with their lender. They are QUITE overwhelmed, so don’t expect instant responses. Also, their seminars tend to be PACKED with people, so get ready to wait in long lines. But I have heard some success stories from clients in regards to NACA, and it’s free, so it may be worth a look.

www.Loansafe.org – This is a VERY popular forum for distressed homeowners to share stories and even tips and tricks of how to deal with your lender. This site tends to lean toward the attitude of “walking away from your mortgage” even if you can afford it, so I almost didn’t even include them in this list (because I don’t agree with that way of thinking), but there IS quite a bit of good info on this site, so please filter what you read here.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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What started out as a whisper in a few remote mortgage blogs has turned into a firestorm across front pages of major newspapers and the steps of most state and even the US Capitol buildings. If the allegations are true, it looks like many lenders were taking some legal shortcuts in their rush to foreclose on homes the last few years. There are many issues at play here. One of the biggest is where the foreclosing lender can’t prove they actually own the loan (the “show-me-the-note” defense). Another issue deals with questionable notary signatures on foreclosure documents and bank employees not reviewing the documents carefully (one guy reviewed 10,000 files a month). Another issue deals with a company called MERS that was “nominated” by many lenders to stand in their place at the County courthouse so they could sell the loan off quicker and easier. But some judges aren’t letting MERS foreclose on homes since they aren’t the ones that own the loan (this one issue could affect millions of home loans). Many politicians and attorney generals (most of them up for re-election next month) are aggressively calling for moratoriums on some (or all) foreclosures until the banks’ foreclosure processes can be reviewed. Some lenders are even voluntary holding off on foreclosures for an indefinite period to do internal reviews.

This may be a temporary paperwork snag that gets resolved quickly, or it may be the start of a major breakdown in our financial industry. If lenders can’t foreclose, and class-action lawsuits spring up to reverse prior foreclosures, hold onto your hats. I predict at the very least we’ll see fewer foreclosure actions in our near future. This may also make lenders more willing to approve a loan mod or short sale. I DON’T think we are all going to get free and clear houses out of this, so I wouldn’t hold out for that if I were you. Most lenders will continue the foreclosure process if the borrower isn’t paying, they may just stop short of the actual final foreclosure step. But once the legal hurdles are cleared, they’ll still foreclose.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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I told you a few months ago about a bill pending before the California legislature called SB 1178 that I was hoping was going to pass. Here is the background info: In California, “purchase-money” loans have some special legal protections. In general, if you get a loan to purchase a principal residence, the lender can only pursue the property in the event of non-payment. This means they can’t pursue you personally for any deficiency. This even applies to junior mortgages IF they were truly used to purchase the property. The problem lies in that once you refinance a purchase-money loan, it loses that special legal protection and becomes what’s called a “recourse” loan. This means the lender CAN now pursue you via judicial foreclosure, or a junior lender who gets wiped out after the 1st lender forecloses can pursue you in the courts. Many (if not most people…) were not aware that they were losing this legal protection when they were refinancing their loans.

SB 1178 would have changed this to where purchase-money loans would have retained this legal protection, even after a refinance. (It would not have covered any equity money that you had pulled out of the property, which seems fair.) What was especially interesting is that was going to apply to loans currently on the books, not just new loans made after it passed. One of the big sticking points to many loan mods, short sales and foreclosures is whether the loan is purchase-money or recourse. Many lenders will negotiate more on purchase-money loans, because they have fewer options to pursue the borrower after. If a borrower tries to “walk away” from a recourse loan, their lender may be able to pursue them later, so the lender tends to take a harder line in negotiating on those loans.

Well, unfortunately, our Governor vetoed the bill as he felt this new law was amending a prior contract after the fact. I have to grudgingly admit that he is technically correct. I was still hoping it was going to pass because it would have helped so many people.

This is general information, please seek legal advice. If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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I wish I had a dollar for every time I heard someone say, “Yeah, I’m upside-down in my home. But it’s just my second mortgage. I’d be OK if that just went away…” Of course, this sounds like wishful thinking, but then again, maybe not.

First, let me recap my basic advice for someone who is in trouble on their mortgage. First, try to stay and pay if you can and if it makes sense (cut back expenses, earn more income, etc.). Second, apply for a loan modification and/or FHA short refi (if you qualify). If none of those work and foreclosure looks imminent, consider doing a short sale. Way down my list of options would be foreclosure, deed-in-lieu of foreclosure and bankruptcy.

But if you have a second mortgage on your home, there is another strategy that you can employ at almost any point in the above list. Call them up and see if they’d be willing to settle with you. This means you give them a lump sum of money in exchange for them releasing you from obligation on the note, and they remove the lien (the deed of trust). I’ve recommended this to several clients recently and they are having varied amounts of success with it. I’ve seen them approve settlements for anywhere from 10-90% of the balance. It all depends on the borrower’s financial situation (they will ask you for a complete set of your financials), and how close to foreclosure you are. Most 2nd mortgages get absolutely nothing after a foreclosure, and only $2,000 to $5,000 in a short sale, so sometimes they jump at the chance to settle!

Obviously this strategy won’t be for everyone because you will need to be able to come up with the funds. However, one lender was willing to give the borrower up to 6 MONTHS to come up with the money. But if you are in a situation where your 2nd mortgage is your main problem, and you can get your hands on a lump of money, it’s worth a shot! [This may negatively impact your credit and/or incur a tax liability, so seek expert advice first.]

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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You may have received an email recently warning you that buried deep within the Obamacare legislation is a 3.8% sales tax on all real estate transactions that will start in 2013. PLEASE reply back to that person that it’s not true, and don’t forward it to anyone else, either.

Here is what is true: There IS a new 3.8% tax on the “unearned” income of high income taxpayers (single-filers making more than $200K and joint-filers making more than $250K). This is being called the “Medicare Tax” because it is meant to shore up Medicare’s shaky finances. It would apply to income from interest, dividends, annuities, royalties, capital gains and rents. (They call this “unearned” income because in general this type of income mostly results from the investment of your money and/or your efforts in the past, not so much your active participation in the activity now.)

Don’t forget that the exclusion for up to $250,000 (single-filer)/$500,000 (joint-filer) in gain in a personal residence is still on the books. This exclusion still applies before the 3.8% tax kicks in. So if you are not a “high income taxpayer” and you had less than $250K (single-filer) or $500K (joint-filer) capital gain on your principal residence, this new 3.8% probably does not apply to you.

Where this new tax DOES impact real estate is in terms of some high-income investors that own rental property. If you make more than the $200K/$250K income thresholds, your net rental income may be subject to the new 3.8% tax UNLESS your rental property business IS your main occupation, which makes it “earned income.” (However, there is a new .9% tax on “earned income” for high-income taxpayers, as well.)

***I AM NOT A TAX EXPERT. PLEASE CONSULT A TAX PROFESSIONAL FOR SPECIFICS TO YOUR SITUATION.*** If you have questions on any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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Another week, another new plan to “save” the housing market is released by the government. This one is called FHA Short Refinance. It allows some under-water homeowners to get a brand-new FHA loan at 97.75% of their home’s value. The basic requirements are that the loan must be current (I heard one report that some lenders will only do this if you have been current for the past 12 months), you must meet all the FHA requirements for getting a new loan (which means the maximum loan size will be $729,750 and your debt ratio, credit score, etc. must be in line), principal residences only, and your existing first lender must agree to write off at least 10% of your balance in order to get you down to the 97.75% figure. If you have a second mortgage, they’ll have to agree to write down their loan balance so your total loans don’t exceed 115% of your value. These principal write-downs are to be permanent forgiveness of the money.

Just like all the other plans that have been released, it sounds great at first, but just like the others, the biggest challenge will be in the implementation. The government is predicting that 500K to 1.5M homeowners nationwide will be helped with this program. Critics are predicting that only 2,000-3,000 will be helped. The biggest loophole is that it is a voluntary program. Your current lender does not HAVE to participate. Lenders are already quite reluctant to do principal reductions for those borrowers who are delinquent and/or foreclosure is imminent. They will probably be even LESS likely to drop principal for those borrowers that are current. Also, this program doesn’t appear to be an option for those that already have a FHA or VA loan, or a loan that is guaranteed by Freddie Mac of Fannie Mae. These last four entities account for a large percentage of outstanding loans, so that means a LOT of people won’t qualify right now. (The program may be expanded to include them at a later date.)

To find out if you qualify, call your preferred mortgage professional to ask. If you need a referral to a local lender that is familiar with this program, give me a call.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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When you are applying for a loan modification, it’s important to keep in mind that this process is similar to when you applied for the loan originally. Your lender will want to see a bunch of documents from you (income verification, bank statements, hardship letter, etc.) in order to make a financial decision. In this case, they aren’t making a decision if they should lend you more money, but they are deciding if they should lower your rate, change your terms or even lower your balance. All these decisions will cost your lender money. They may consider doing that if modifying your loan will lose them less money than the other options.

But my point here is that they are making a financial decision based on the information you provide. That means that you need to be 100% truthful with them about your income, your assets, your liabilities, your hardship, etc. If they make a decision to modify your loan based on the information you provided, and they find out later that information wasn’t 100% factual, they could come after you later for loan fraud. Loan fraud has a maximum penalty of 30 years in prison AND a fine of up to $1M. Good luck getting a job with a fraud conviction on your record.

Think no one will look at your file? Think they are too busy to audit their own files? You could be right, lenders are swamped right now. But did you know there is no statute of limitations for fraud? And I just read a report in a prominent mortgage trade newspaper how one company just reviewed 80,000 of the loan mods they did last year, and they found discrepancies or outright fraud in many of them. They will pursue some of these cases.

***FREE SHORT SALE/LOAN MOD SEMINAR – 9/15, 7 PM. NEW GOVT PROGRAMS, WHO QUALIFIES FOR LOAN MOD/SHORT SALE, IMPACT ON CREDIT & MORE. CALL ME TO RSVP***

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty

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FREE SHORT SALE/LOAN MOD SEMINAR

TOPICS TO BE COVERED:

• New government program can pay you $3,000 to do a short sale.

• Find out who is a good candidate for loan modification vs. short sale.

• Can lenders pursue you after short sale/foreclosure/loan mod?

• Impact on your credit score and ability to buy another home.

• Why you may still get a 1099 after a foreclosure or some loan mods, but learn what exclusions you may qualify for per the IRS.

 

DATE: 9/15/2010     TIME: 7:00-8:00 PM

PRESENTER: Brian Sharp, Certified Distressed Property Expert

 MUST R.S.V.P. TO RESERVE A SEAT

  PHONE: 925.998.9712     EMAIL: Info@SharpHomesOnline.com

 

If you can’t make this date/time, contact us anyways to be notified of the next seminar, or to schedule a private, confidential appointment.

If you don’t need this, give it to a friend!

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NEW CALIFORNIA LAW

A new law was just passed that will affect nearly every California homeowner. Senate Bill 183 requires carbon monoxide detectors be placed in all California dwelling units. They have set a deadline of July 1, 2011 for single-family homes, and January 1, 2013 for all other dwelling units (multi-family, apartments, motels, etc.). And of course we can’t have a new law without a new disclosure, of course. So starting January 1, 2011, the California standard disclosure forms will ask if the home is in compliance with this new law.

Personally I am a fan of carbon monoxide detectors. I’ve had one in my house for at least 10 years. I think it is a wise precaution to have. According to the American Medical Association, carbon monoxide poisoning is the leading cause of accidental poisoning deaths in the United States. The California Air Resources Board has determined that 30 – 40 "avoidable deaths,” on average, occur in California each year due to unintentional carbon monoxide poisoning. Additionally, this is the cause of 175 – 700 "avoidable" emergency room visits and hospitalizations in the state.

This is different from some of the other laws that have been passed in the past that make the retrofit a “point of sale” ordinance. For example, there is a requirement for gas shut-off valves for homes in the unincorporated areas of Contra Costa County, but that requirement only kicks in when the home is sold. This new law applies to EVERY home in California. (Well, at least those homes that have "a fossil fuel burning heater or appliance, fireplace, or an attached garage". "Fossil fuel" means "coal, kerosene, oil, wood, fuel gases, and other petroleum or hydrocarbon products, which emit carbon monoxide as a byproduct of combustion.")

So if you don’t already have a carbon monoxide detector in your home, grab one next time you are shopping and install it. It’s a smart thing to do, and soon, it will be the law.

If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty