Already-low home prices are facing a new threat -- the possibility that the foreclosure crisis will push housing values even lower. The murkiness surrounding paperwork in thousands of foreclosure cases likely will slow the process of reselling foreclosed homes, the Obama administration announced Wednesday.
The areas most in danger of further home-price depreciation are those that have the most foreclosures -- Las Vegas, Phoenix and parts of California and Florida. The warning from the Treasury Department followed the first Congressional hearing regarding the robo-signing foreclosure mess.
Call you neighborhood realtor in Miami today: 786-942-0110 and find out about the market today.
Thursday, October 28, 2010
Tuesday, October 19, 2010
FORECLOSURE SUSPENSIONS OVER SO QUICKLY?
Two major lenders at the center of the foreclosure crisis took steps Monday to put the mess behind them by restarting home seizures that were frozen by documentation concerns.
Bank of America Corp. reopened more than 100,000 foreclosure actions, declaring that it had found no significant problems in its procedures for seizing homes. GMAC Mortgage, a lender and loan servicer, said that it also is pushing ahead with an unspecified number of foreclosures that came under intense pressure.
Monday's moves are part of a growing counterattack by lenders scrambling to stem a financial and political threat over allegations that certain employees signed hundreds of documents a day without carefully reviewing their contents when foreclosing on homes.
Bank of America, the nation's largest bank in assets, which imposed on Oct. 8 a nationwide moratorium on the sale of foreclosed homes, said it has begun preparing new affidavits for pending foreclosures in 23 states where a judge's approval is required. The paperwork will be submitted to courts by next Monday, and foreclosure sales will resume in those states starting in November, according to the bank.
Citigroup Inc. Chief Financial Officer John Gerspach said the bank has found no reason to halt foreclosures, calling its internal procedures "sound." "We have not identified any system issues," he said Monday.
Restarting the nation's foreclosure machine puts the lenders on a collision course with state attorneys general, who announced last week a nationwide investigation of foreclosure practices. Some state officials have been pushing for a wider halt to foreclosure sales, but Bank of America's moves show determination by at least some lenders to get back to business while the investigation proceeds.
A Bank of America spokesman said the bank has found "no cases" thus far of foreclosures that should not have "gone through." Last week, James Dimon, J.P. Morgan Chase & Co. chairman and chief executive, said that no one has been "evicted out of a home who shouldn't have been."
Some attorneys general said they have little confidence that problems with foreclosures have been fixed. "We've been in discussions with some of the major servicers, and as part of that they've assured us that they are fixing this problem, but we're not just going to take their word for it," said Patrick Madigan, a spokesman for Iowa Attorney General Tom Miller.
It will be hard for lenders to declare the foreclosure crisis over and get back to business as usual. Bondholders are escalating efforts to recover losses on soured mortgage-bond deals containing loans with flawed paperwork. Meanwhile, federal banking regulators are assigning additional employees to an ongoing review of large mortgage-servicing operations, according to people familiar with the situation. Officials want to make sure that documentation procedures are being followed and companies are meeting all legal foreclosure requirements.
Bank stocks surged Monday as investors reassessed last week's outlook for the cost of the foreclosure mess. Citigroup shares jumped 23 cents, or 5.8%, to $4.18 a share in New York Stock Exchange composite trading at 4 p.m., on better-than-expected earnings. Bank of America rose 36 cents, or 3%, to $12.34, while J.P. Morgan was up $1.05, or 2.8%, to $38.20.
Bank of America is the only major U.S. bank that announced a halt to all foreclosure sales while it reviewed documents for errors. Bank officials say they're readying new affidavits for 102,000 pending foreclosure actions.
A company spokesman said the largest investors in mortgages serviced by Bank of America have signed off on the new timetable. The bank will continue delaying foreclosure sales in the 27 states where court approval isn't required until a review is completed "on a state by state basis." The bank expects delays on fewer than 30,000 foreclosure sales nationwide.
"Now it may be legal, but I am not sure it's ethical," said Robert Quigley, a 68-year-old retired commercial fisherman, who received a legal notice last week that Bank of America is proceeding with foreclosure on his home in Lake City, Fla. A bank spokesman said the bank never said it would stop all foreclosure proceedings, just final sales.
GMAC, a unit of Ally Financial Inc., declined to comment on the number of foreclosures it has reviewed so far, but said they included loans with affidavits signed by employee Jeffrey Stephan. His testimony in a deposition that he signed 10,000 foreclosure affidavits a month without reviewing the underlying documentation led GMAC to halt evictions in 23 states last month while it scrutinized its procedures.
Several lawyers representing borrowers facing foreclosure by GMAC said affidavits signed by Mr. Stephan were replaced by similar filings with the signature of a different employee.
Michael Holmes, an antiques dealer in Belfast, Maine, thought he would get a chance to save his home because the affidavit used by GMAC to substantiate his loan amount was signed by Mr. Stephan. Instead, GMAC replaced Mr. Stephan's document in the courthouse file for the foreclosure proceeding with an affidavit signed by employee Davida Harriott. Her name also appears on substitute paperwork in pending foreclosure cases in Florida, according to court documents and lawyers representing the borrowers.
Gina Proia, a spokeswoman for Ally, said on Monday: "As each case is reviewed and remediated, it moves on." None of the revised foreclosure documents being filed by the company will bear the signature of Mr. Stephan, though he still works for GMAC, she said. Mr. Stephan and Ms. Harriott couldn't be reached for comment.
Ohio Attorney General Richard Cordray, who last week filed a lawsuit against GMAC alleging hundreds of counts of fraud related to foreclosure documents, said he is suspicious of efforts to replace paperwork. "Substituting new evidence in [cases] where there's been fraud won't help prevent the court from sanctioning them for the fraud that has already been committed," he said. "It doesn't unring the bell."
Bank of America Corp. reopened more than 100,000 foreclosure actions, declaring that it had found no significant problems in its procedures for seizing homes. GMAC Mortgage, a lender and loan servicer, said that it also is pushing ahead with an unspecified number of foreclosures that came under intense pressure.
Bank of America prepared to restart 102,000 pending foreclosure actions where court approval is required, applying new signatures to documents in 23 states. Rick Brooks discusses. Also, Elizabeth Bernstein discusses the various ways men, women, strangers and family members apologize.
Bank of America, the nation's largest bank in assets, which imposed on Oct. 8 a nationwide moratorium on the sale of foreclosed homes, said it has begun preparing new affidavits for pending foreclosures in 23 states where a judge's approval is required. The paperwork will be submitted to courts by next Monday, and foreclosure sales will resume in those states starting in November, according to the bank.
"This is an important first step in debunking speculation that the mortgage market is severely flawed," said Bank of America spokesman James Mahoney. More details will be disclosed when the company reports quarterly results Tuesday.
Restarting the nation's foreclosure machine puts the lenders on a collision course with state attorneys general, who announced last week a nationwide investigation of foreclosure practices. Some state officials have been pushing for a wider halt to foreclosure sales, but Bank of America's moves show determination by at least some lenders to get back to business while the investigation proceeds.
A Bank of America spokesman said the bank has found "no cases" thus far of foreclosures that should not have "gone through." Last week, James Dimon, J.P. Morgan Chase & Co. chairman and chief executive, said that no one has been "evicted out of a home who shouldn't have been."
More on Foreclosures
- Bondholders Pick a Fight With Banks
- BofA Sets Timetable for Foreclosure Review
- Ahead of the Tape: On Foreclosures, BofA Has Explaining to Do
- BofA Halts Foreclosures
- Foreclosure Mess Means Delays for Those Facing Foreclosure
- Foreclosure Problem Battering Banks
- 'Signer' Issue Raised for Wells Fargo
- Document Mess Hits Fannie, Freddie
- SmartMoney: Navigating the Foreclosure Freeze
- Heard: Foreclosure Mess Could Tax Investors
- States Launch Mortgage Probe
- J.P. Morgan Widens Mortgage Review to 41 States
- Document Questions Cloud Recovery
- Probe Targets Foreclosure Paperwork
- States to Probe Mortgage Issue
It will be hard for lenders to declare the foreclosure crisis over and get back to business as usual. Bondholders are escalating efforts to recover losses on soured mortgage-bond deals containing loans with flawed paperwork. Meanwhile, federal banking regulators are assigning additional employees to an ongoing review of large mortgage-servicing operations, according to people familiar with the situation. Officials want to make sure that documentation procedures are being followed and companies are meeting all legal foreclosure requirements.
Bank stocks surged Monday as investors reassessed last week's outlook for the cost of the foreclosure mess. Citigroup shares jumped 23 cents, or 5.8%, to $4.18 a share in New York Stock Exchange composite trading at 4 p.m., on better-than-expected earnings. Bank of America rose 36 cents, or 3%, to $12.34, while J.P. Morgan was up $1.05, or 2.8%, to $38.20.
Bank of America is the only major U.S. bank that announced a halt to all foreclosure sales while it reviewed documents for errors. Bank officials say they're readying new affidavits for 102,000 pending foreclosure actions.
A company spokesman said the largest investors in mortgages serviced by Bank of America have signed off on the new timetable. The bank will continue delaying foreclosure sales in the 27 states where court approval isn't required until a review is completed "on a state by state basis." The bank expects delays on fewer than 30,000 foreclosure sales nationwide.
"Now it may be legal, but I am not sure it's ethical," said Robert Quigley, a 68-year-old retired commercial fisherman, who received a legal notice last week that Bank of America is proceeding with foreclosure on his home in Lake City, Fla. A bank spokesman said the bank never said it would stop all foreclosure proceedings, just final sales.
GMAC, a unit of Ally Financial Inc., declined to comment on the number of foreclosures it has reviewed so far, but said they included loans with affidavits signed by employee Jeffrey Stephan. His testimony in a deposition that he signed 10,000 foreclosure affidavits a month without reviewing the underlying documentation led GMAC to halt evictions in 23 states last month while it scrutinized its procedures.
Several lawyers representing borrowers facing foreclosure by GMAC said affidavits signed by Mr. Stephan were replaced by similar filings with the signature of a different employee.
AFP/Getty Images
Bank of America and GMAC reopened more than 100,000 foreclosure actions.
Gina Proia, a spokeswoman for Ally, said on Monday: "As each case is reviewed and remediated, it moves on." None of the revised foreclosure documents being filed by the company will bear the signature of Mr. Stephan, though he still works for GMAC, she said. Mr. Stephan and Ms. Harriott couldn't be reached for comment.
Ohio Attorney General Richard Cordray, who last week filed a lawsuit against GMAC alleging hundreds of counts of fraud related to foreclosure documents, said he is suspicious of efforts to replace paperwork. "Substituting new evidence in [cases] where there's been fraud won't help prevent the court from sanctioning them for the fraud that has already been committed," he said. "It doesn't unring the bell."
Thursday, October 14, 2010
GOVERNMENT MOVES TOWARDS FORECLOSURE MORATORIUM
Despite concerns about its impact, some legislators are pushing for a nationwide moratorium on all foreclosure sales.
U.S. Rep. Edolphus Towns, a New York Democrat and chairman of the House Committee on Oversight and Government Reform, says the top 10 mortgage lenders should immediately suspend foreclosure proceedings in all states.
“The implications of ignoring the foreclosure problems are far too great to be ignored,” he said Friday.
Other legislators are moving to revive cramdown legislation, which would give judges the power to reduce mortgage principal to market value in bankruptcy cases. The controversial bill had passed the House earlier but was stuck in the Senate.
But the Mortgage Bankers Association of America and the Financial Services Roundtable said Friday in a joint statement that, after reviewing paperwork, nearly all bank foreclosures are legitimate.
“Calls for a blanket national moratorium on all foreclosures are a bad idea and would cause significant harm to communities at risk, the unstable housing market and the fragile economy,” the statement said.
U.S. Rep. Edolphus Towns, a New York Democrat and chairman of the House Committee on Oversight and Government Reform, says the top 10 mortgage lenders should immediately suspend foreclosure proceedings in all states.
“The implications of ignoring the foreclosure problems are far too great to be ignored,” he said Friday.
Other legislators are moving to revive cramdown legislation, which would give judges the power to reduce mortgage principal to market value in bankruptcy cases. The controversial bill had passed the House earlier but was stuck in the Senate.
But the Mortgage Bankers Association of America and the Financial Services Roundtable said Friday in a joint statement that, after reviewing paperwork, nearly all bank foreclosures are legitimate.
“Calls for a blanket national moratorium on all foreclosures are a bad idea and would cause significant harm to communities at risk, the unstable housing market and the fragile economy,” the statement said.
THE NATIONAL ASSOCIATION OF REALTORS ON THE FORECLOSURE SUSPENSION
Thousands of first-time and move-up buyers who hoped to make a foreclosed property their new home now face uncertainty, anxiety and possibly remorse as they worry that closing could be in jeopardy.
For many, the dream of homeownership could turn into agony if their home purchase is indefinitely delayed by a moratorium on foreclosures declared by some banks, the National Association of Realtors® said yesterday. The moratoriums are needed, banks say, to review all of the foreclosures in their portfolios to make sure they’re in compliance with the law and that titles are clear.
NAR warned that a prolonged review process would have a damaging impact on many communities and hinder the nation’s economic recovery.
“As the leading advocate for homeownership issues, we understand that many lenders need a time-out to review their actions to ensure that homeowners are not improperly foreclosed on and that the lenders are following regulations and state laws. After that, the foreclosure process must resume quickly to return stability to families, the housing market and the economy,” said NAR President Vicki Cox Golder.
Over the past few months NAR has met with officials of top banks to discuss market issues. NAR urged banking leaders to seek resolution quickly through loan modifications and the short-sale process rather than through foreclosure. “We stand ready to help lenders develop better short-sale procedures,” Golder said.
“There are valid foreclosures that should move ahead quickly, and we shouldn’t lump them in with mortgages that are suspect. That would cause deep problems in an already fragile market and throw many families into uncertainty,” Golder said.
Golder said that she is receiving reports from Realtors that the moratorium is already creating some anxiety among purchasers as transactions are being delayed and that some foreclosure listings are being removed from the market.
Compounding the problem is that the requirements for foreclosure vary by state, and practices to meet these requirements vary by firm. NAR is working with regulators, such as the Federal Housing Finance Agency, and encouraging them to identify and quickly address process problems.
In a letter sent yesterday to the U.S Treasury Department, the U.S Department of Housing and Urban Development, and the Federal Housing Finance Agency, NAR stated the hope that banks would complete their foreclosure review expeditiously to assure that the rights of borrowers are protected and remove doubt that buyers will receive clear title to their purchase.
“NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a ‘graceful exit’ through a short sale,” NAR wrote. “These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales.
A year ago, NAR instituted a special short sale training program for its Realtor members to work more closely with banks in expediting mortgages at risk by resolving them through short sales and loan modifications. More than 51,000 Realtors have been certified in the program.
For many, the dream of homeownership could turn into agony if their home purchase is indefinitely delayed by a moratorium on foreclosures declared by some banks, the National Association of Realtors® said yesterday. The moratoriums are needed, banks say, to review all of the foreclosures in their portfolios to make sure they’re in compliance with the law and that titles are clear.
NAR warned that a prolonged review process would have a damaging impact on many communities and hinder the nation’s economic recovery.
“As the leading advocate for homeownership issues, we understand that many lenders need a time-out to review their actions to ensure that homeowners are not improperly foreclosed on and that the lenders are following regulations and state laws. After that, the foreclosure process must resume quickly to return stability to families, the housing market and the economy,” said NAR President Vicki Cox Golder.
Over the past few months NAR has met with officials of top banks to discuss market issues. NAR urged banking leaders to seek resolution quickly through loan modifications and the short-sale process rather than through foreclosure. “We stand ready to help lenders develop better short-sale procedures,” Golder said.
“There are valid foreclosures that should move ahead quickly, and we shouldn’t lump them in with mortgages that are suspect. That would cause deep problems in an already fragile market and throw many families into uncertainty,” Golder said.
Golder said that she is receiving reports from Realtors that the moratorium is already creating some anxiety among purchasers as transactions are being delayed and that some foreclosure listings are being removed from the market.
Compounding the problem is that the requirements for foreclosure vary by state, and practices to meet these requirements vary by firm. NAR is working with regulators, such as the Federal Housing Finance Agency, and encouraging them to identify and quickly address process problems.
In a letter sent yesterday to the U.S Treasury Department, the U.S Department of Housing and Urban Development, and the Federal Housing Finance Agency, NAR stated the hope that banks would complete their foreclosure review expeditiously to assure that the rights of borrowers are protected and remove doubt that buyers will receive clear title to their purchase.
“NAR has long urged the lending industry to take every feasible action to keep families in their homes with a loan modification and, if that is not possible, to give them a ‘graceful exit’ through a short sale,” NAR wrote. “These options are far better than a foreclosure, and nothing has driven this point home more clearly than the questions being raised about foreclosures. Lenders should place additional resources into processing loan modifications and short sales.
A year ago, NAR instituted a special short sale training program for its Realtor members to work more closely with banks in expediting mortgages at risk by resolving them through short sales and loan modifications. More than 51,000 Realtors have been certified in the program.
UPDATE ON FORECLOSURES TAKEN OFF MARKET
At this point, the experts do not know for sure how long it will take for banks to review the foreclosure documents or how this will impact our South Florida real estate market in the end, but we do know that already 1,154 foreclosures (REOs) in the past two weeks have been cancelled, withdrawn, terminated or temporary taken off the market according to Southeast Florida Shared MLS Database. In the two-week period immediately preceeding the announcement, only 225 were removed.
This affects buyers by having less houses to choose from, thus, there will likely be more offers on each house. And, as you know more competition means your offer has to be a good one. So, if you're thinking of buying, I recommend doing so as soon as possible before things get worse and keep in mind that the market has changed so you may need to put in a better offer than you would have say a month ago.
This affects sellers in a very positive way. If you are going to sell your house through a short sale or regular sale, more buyers will be looking at your house. So, you will likely get a better offer than you would have a month ago. If you're thinking of selling, now's the time.
A nationwide foreclosure moratorium (possibly being considered by Congress) would devastate our recovery efforts. In an effort to keep you informed of the latest information, we will update you as new news comes in.
Tuesday, October 12, 2010
GET THE BEST REFINANCING OFFER
With interest rates hitting historic lows, you may be thinking that it's time to look for your best deal. But how do you go about getting the lowest rate possible with the least amount of cost upfront?
Friday, October 8, 2010
Wednesday, October 6, 2010
HOW TO BUY A FORECLOSURE
Anthony Jackson, a second-grade teacher in Chicago's metro area, says the key to buying a foreclosure is to "strike early once you see the listing" and "don't bid too low."
Jackson bought a bank-owned three-bedroom, single-family home with one-and-a-half baths in the Chatham neighborhood of Chicago.
"I made an offer the second day after it went on the market," says Jackson, who was working with a real estate agent. "There were a couple of bids thrown in the day after I contacted the bank. Another day of waiting -- I probably would not have gotten it."
Jackson didn't know much about buying foreclosures before putting in a contract for this home. He'd spent the previous five months reading online articles about how to buy a foreclosure and asking questions of his agent before bidding on this one. He ultimately put in an offer that was 15 percent under the $57,000 list price and the bank countered two days later around 10 percent under. He bought the move-in-ready home for about $52,000, closing two-and-a-half months later.
"The home only needed minor cosmetic upgrades," he says. "I got lucky with this one by bidding reasonably."
Buying a foreclosed home may seem to some like a scary process, but as was the case with Jackson and many others, it's similar to buying any other home, especially if your offer is on a bank-owned property versus one sold at auction (which can be a tricky process for the inexperienced).
There are, however, many nuances that any potential buyer has to be aware of when dealing with foreclosures, such as checking for liens against the title, or knowing that on a foreclosure "even something as simple as cracked paint can make an FHA loan impossible," says Twin Cities foreclosure expert Tim Kindem, a Keller Williams realty agent.
Here are some other very important basics about buying properties in foreclosure.
Where to find foreclosures
Finding foreclosure deals in your area can be simple, and worth a try for first-time homebuyers or those wanting to get into real estate investing. Here are some ways of locating foreclosures:
Determining the right price
After finding a foreclosure that you want, a key step is negotiating the right price. In most cases, foreclosed homes are already discounted from their appraised value, but you can still negotiate down from list price as you would with any home.
When there are a variety of foreclosures on the market, buyers can sometimes get a below-market price as much as 50 percent less than it would normally sell for, although a typical price is usually only 5 percent less.
In order to estimate a potential discount that you can get on a foreclosed house, you have to know its market value as well as the amount of any loans or liens that the property may have against it, as this will give you an idea of how much the bank will make or lose by selling the property.
The discount means built-in equity, but also it should help make up for any repairs and maintenance that may need to be done if the house has been vacant for a while or otherwise not properly maintained.
Negotiating the contract
"Consumers have the ability to negotiate repairs even if they agreed to buy the property 'as is,' " says Rebecca Gallardo-Serrano of Portelo Realty in San Jose. "When REO brokers post 'no repairs,' including no water heater strapping or smoke detectors," they could be in violation of the law.
"Some banks are willing to shell out thousands of dollars to make repairs to help get a home sold," says Kindem, but only if the buyer asks. "The agent listing a bank-owned home isn't likely to fight for these repairs for you, so consider having your own skilled buyer's agent represent you."
Make sure that your real estate agent is skilled with the REO foreclosure process. A way to find out is to ask agents how many successful offers they have written for foreclosures, advises Minneapolis-area mortgage specialist Jay Dacey. But don't take their word for it, he says. "Ask for a list of past transactions that they have completed, otherwise you could waste months of your time waiting to hear if your offer was accepted, only to find out that the agent didn't submit the proper documentation to the bank."
Financing a foreclosure
"Many popular loans first-time buyers use, like FHA loans, can't be used because they require the home to be in a certain condition," says Kindem.
"Fannie Mae offers certain streamlined mortgage options, often requiring lower down payments and even waiving the need for an appraisal," says Dacey. Find a local mortgage expert who is approved to offer products like Fannie Mae's "Homepath." A good mortgage broker, in conjunction with your agent, should be able to help point you to down-payment assistance programs and city or county loan programs for rehabbing fixer-uppers.
Author: Sheree Curry
Jackson bought a bank-owned three-bedroom, single-family home with one-and-a-half baths in the Chatham neighborhood of Chicago.
"I made an offer the second day after it went on the market," says Jackson, who was working with a real estate agent. "There were a couple of bids thrown in the day after I contacted the bank. Another day of waiting -- I probably would not have gotten it."
Jackson didn't know much about buying foreclosures before putting in a contract for this home. He'd spent the previous five months reading online articles about how to buy a foreclosure and asking questions of his agent before bidding on this one. He ultimately put in an offer that was 15 percent under the $57,000 list price and the bank countered two days later around 10 percent under. He bought the move-in-ready home for about $52,000, closing two-and-a-half months later.
"The home only needed minor cosmetic upgrades," he says. "I got lucky with this one by bidding reasonably."
Buying a foreclosed home may seem to some like a scary process, but as was the case with Jackson and many others, it's similar to buying any other home, especially if your offer is on a bank-owned property versus one sold at auction (which can be a tricky process for the inexperienced).
There are, however, many nuances that any potential buyer has to be aware of when dealing with foreclosures, such as checking for liens against the title, or knowing that on a foreclosure "even something as simple as cracked paint can make an FHA loan impossible," says Twin Cities foreclosure expert Tim Kindem, a Keller Williams realty agent.
Here are some other very important basics about buying properties in foreclosure.
Where to find foreclosures
Finding foreclosure deals in your area can be simple, and worth a try for first-time homebuyers or those wanting to get into real estate investing. Here are some ways of locating foreclosures:
- Leading real estate portals like AOL Real Estate have local foreclosure listings.
- Bank websites sometimes list properties in their possession that are for sale.
- Asset management companies hired by lenders to handle foreclosures offer a list of available properties.
- Auction companies often hold auctions in which they sell huge volumes of foreclosure homes on a single day.
- Real estate agents can point to foreclosed homes in your area.
- "For sale" signs in yards that say "foreclosure," "REO property" (Real Estate Owned property) or "bank owned," indicate foreclosed homes.
Determining the right price
After finding a foreclosure that you want, a key step is negotiating the right price. In most cases, foreclosed homes are already discounted from their appraised value, but you can still negotiate down from list price as you would with any home.
When there are a variety of foreclosures on the market, buyers can sometimes get a below-market price as much as 50 percent less than it would normally sell for, although a typical price is usually only 5 percent less.
In order to estimate a potential discount that you can get on a foreclosed house, you have to know its market value as well as the amount of any loans or liens that the property may have against it, as this will give you an idea of how much the bank will make or lose by selling the property.
The discount means built-in equity, but also it should help make up for any repairs and maintenance that may need to be done if the house has been vacant for a while or otherwise not properly maintained.
Negotiating the contract
"Consumers have the ability to negotiate repairs even if they agreed to buy the property 'as is,' " says Rebecca Gallardo-Serrano of Portelo Realty in San Jose. "When REO brokers post 'no repairs,' including no water heater strapping or smoke detectors," they could be in violation of the law.
"Some banks are willing to shell out thousands of dollars to make repairs to help get a home sold," says Kindem, but only if the buyer asks. "The agent listing a bank-owned home isn't likely to fight for these repairs for you, so consider having your own skilled buyer's agent represent you."
Make sure that your real estate agent is skilled with the REO foreclosure process. A way to find out is to ask agents how many successful offers they have written for foreclosures, advises Minneapolis-area mortgage specialist Jay Dacey. But don't take their word for it, he says. "Ask for a list of past transactions that they have completed, otherwise you could waste months of your time waiting to hear if your offer was accepted, only to find out that the agent didn't submit the proper documentation to the bank."
Financing a foreclosure
"Many popular loans first-time buyers use, like FHA loans, can't be used because they require the home to be in a certain condition," says Kindem.
"Fannie Mae offers certain streamlined mortgage options, often requiring lower down payments and even waiving the need for an appraisal," says Dacey. Find a local mortgage expert who is approved to offer products like Fannie Mae's "Homepath." A good mortgage broker, in conjunction with your agent, should be able to help point you to down-payment assistance programs and city or county loan programs for rehabbing fixer-uppers.
Author: Sheree Curry
FORECLOSURE-WHAT IT MEANS TO A RENTER
Renters now have legal rights against eviction due to foreclosure, but not necessarily housing security.
New laws give renters a reasonable 90-day notice of foreclosure eviction and, in most cases, protect their lease agreement. However, both of these safeguards still can be circumvented.
While the foreclosure laws (which took effect May 2009 and expire Dec. 31, 2012) look good on paper, Columbia, S.C., real estate lawyer Fred Shipley warns renters, "Most landlords facing financial trouble will not send a foreclosure notice to their tenants but will continue to collect rent instead."
While banks are supposed to honor a legal lease on a foreclosed property, renters should be aware that:
So how can renters protect themselves, especially when 1 in 348 homes is in foreclosure?
Our industry experts explain smart, practical moves that renters can take to protect themselves from foreclosure before and after signing a lease. Here's their advice on how to either avoid a foreclosed property or negotiate to stay in one:
1. Search county records. "If you're looking for a rental, make sure the property is not in pre-foreclosure." says Lynn Madison, a short sale and foreclosure resource specialist for the National Association of Realtors. She advises renters to check property records at the County Clerk's office before signing a lease.
2. Request mortgage statements. Madison, who also specializes in risk management, suggests that renters evaluate a landlord's financial stability as well. "Ask to see recent mortgage statements or receipts for the rental property," says Madison. "You want proof that the owner is current on payments." Imagine searching for an apartment, moving, unpacking and then having to start that whole process over just six months later because the property went into foreclosure.
3. Record your lease. To make sure that legal notices are received in the event a rental property goes into pre-foreclosure, Shipley advises renters to record their lease with the county office. "It costs about $10 to do and guarantees that the county will mail legal notices to the address on the lease." By doing this, renters are no longer dependent on the landlord to disclose foreclosure notices.
4. Initiate contact. "If the home you're renting is in foreclosure," says Shipley, "don't just sit there if you want to stay in the place, be proactive." He advises tenants to reach out to the bank or lawyer involved in the foreclosure. "Let them know you have a good payment history and have taken care of the property and would like to stay." Instead of reselling the property immediately, which could terminate the lease with a live-in buyer, the bank may be persuaded to rent. "We are starting to see banks working with tenants," Morgan confirms. She, too, believes tenants must work with the banks to achieve their best outcome.
5. Become an asset. Banks can and will advertise good tenants to attract real estate investors. In these situations, renters are a valuable asset, offering stability and minimizing the investment risk. In a recent property transaction handled by Shipley's firm, the tenants were the reason the property sold so quickly. "The buyer felt so good about the way the tenants had taken care of the place; that was one of the main reasons the investor purchased that property over other options."
6. Investigate "cash for keys." If the bank intends to vacate the property and re-list it on the market, a representative or the bank's real estate agent may offer "cash for keys," a legal way to pay tenants to leave by a certain date. The offer also requires tenants to legally release all rights to the property and claims against the bank. A good deal for the renter would cover basic moving expenses and any lost security deposit. (Also see "Get Your Apartment Rental Deposit Back.")
7. Check state and local laws. The "Protecting Tenants at Foreclosure Act of 2009" states that local foreclosure-tenant laws take precedence over federal laws when the local laws provide better protection to tenants. Be sure to look up state and local laws for your area.
If renters find themselves in a hostile situation or unable to resolve a foreclosure eviction matter, they should contact the agent initially involved with the lease, a real estate lawyer or the National Law Center on Homelessness and Poverty
Author: Cindy Schwalb
New laws give renters a reasonable 90-day notice of foreclosure eviction and, in most cases, protect their lease agreement. However, both of these safeguards still can be circumvented.
While the foreclosure laws (which took effect May 2009 and expire Dec. 31, 2012) look good on paper, Columbia, S.C., real estate lawyer Fred Shipley warns renters, "Most landlords facing financial trouble will not send a foreclosure notice to their tenants but will continue to collect rent instead."
While banks are supposed to honor a legal lease on a foreclosed property, renters should be aware that:
- There's no law that prevents the bank from re-selling the foreclosure.
- A new owner would not have to honor the lease if he or she intended to live in the property.
- A lease does not have to be honored if the rent is below fair-market value or the tenants are related to the owner in default.
So how can renters protect themselves, especially when 1 in 348 homes is in foreclosure?
Our industry experts explain smart, practical moves that renters can take to protect themselves from foreclosure before and after signing a lease. Here's their advice on how to either avoid a foreclosed property or negotiate to stay in one:
1. Search county records. "If you're looking for a rental, make sure the property is not in pre-foreclosure." says Lynn Madison, a short sale and foreclosure resource specialist for the National Association of Realtors. She advises renters to check property records at the County Clerk's office before signing a lease.
2. Request mortgage statements. Madison, who also specializes in risk management, suggests that renters evaluate a landlord's financial stability as well. "Ask to see recent mortgage statements or receipts for the rental property," says Madison. "You want proof that the owner is current on payments." Imagine searching for an apartment, moving, unpacking and then having to start that whole process over just six months later because the property went into foreclosure.
3. Record your lease. To make sure that legal notices are received in the event a rental property goes into pre-foreclosure, Shipley advises renters to record their lease with the county office. "It costs about $10 to do and guarantees that the county will mail legal notices to the address on the lease." By doing this, renters are no longer dependent on the landlord to disclose foreclosure notices.
4. Initiate contact. "If the home you're renting is in foreclosure," says Shipley, "don't just sit there if you want to stay in the place, be proactive." He advises tenants to reach out to the bank or lawyer involved in the foreclosure. "Let them know you have a good payment history and have taken care of the property and would like to stay." Instead of reselling the property immediately, which could terminate the lease with a live-in buyer, the bank may be persuaded to rent. "We are starting to see banks working with tenants," Morgan confirms. She, too, believes tenants must work with the banks to achieve their best outcome.
5. Become an asset. Banks can and will advertise good tenants to attract real estate investors. In these situations, renters are a valuable asset, offering stability and minimizing the investment risk. In a recent property transaction handled by Shipley's firm, the tenants were the reason the property sold so quickly. "The buyer felt so good about the way the tenants had taken care of the place; that was one of the main reasons the investor purchased that property over other options."
6. Investigate "cash for keys." If the bank intends to vacate the property and re-list it on the market, a representative or the bank's real estate agent may offer "cash for keys," a legal way to pay tenants to leave by a certain date. The offer also requires tenants to legally release all rights to the property and claims against the bank. A good deal for the renter would cover basic moving expenses and any lost security deposit. (Also see "Get Your Apartment Rental Deposit Back.")
7. Check state and local laws. The "Protecting Tenants at Foreclosure Act of 2009" states that local foreclosure-tenant laws take precedence over federal laws when the local laws provide better protection to tenants. Be sure to look up state and local laws for your area.
If renters find themselves in a hostile situation or unable to resolve a foreclosure eviction matter, they should contact the agent initially involved with the lease, a real estate lawyer or the National Law Center on Homelessness and Poverty
Author: Cindy Schwalb
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