WABROKER

The value of a thing,  (this is especially  true of house values) is determined on any given day by the amount that a cash buyer is willing to pay for the thing on that same day.

When the number of things for sale exceeds the number of buyers there is usually a corresponding drop in price to attract the limited number of buyers to the limited number of properties where the sellers are motivated to sell and not merely hoping to sell.

Because the market is  over loaded with inventory ( properties for sale) and the number of buyers is decreasing this can only put downward pressure on prices.

Since all the bailout plans so far have failed to stem the tide of foreclosures this inventory is  still increasing each day.

In spite of all the bailout plans the total number of buyers is decreasing each day as more and more potential homeowners lose jobs or pay to the recession that  we are experiencing.

So if you are in a position where you have to sell,

I suggest that the safest course of action is to do it now before you see a further drop in house values.

If you are thinking of buying, then  think twice, hold your breath, and wait for the next slump in prices and you may very well be will be glad that you did.

1. The rhetoric used by the many government sources  is often  meant to give hope where this is no supporting evidence to support it.

2. The prediction abilities of the analysts is historically as accurate as a toss of the dice.

3.In large systems (such as our real estate market) at some point physics take over. There is no increasing demand for an ever increasing inventory.

Physics tells us that the activity will drop as fewer home buyers compete for more and more homes.

So then prices will likely have to drop as well.

In order to entice buyers back into the market home prices must come down.  There is little else that can be done.

Further buyers are becoming more skeptical and less motivated in general after all the false promises and inhuman treatment at the hands of the banks and our elected officials.

This cools the engine of activity,  slows it down even more, and threatens to make it grind to a halt.

Unless completely new systems of “buy and sell” are created and implemented there is only one logical outcome,  that is activity decreaes  and prices must then come down.

When the bubble first burst lenders had lots of foreclosed properties that they tried to sell at the old inflated prices. Few people decided to buy  and the activity slowed almost to nothing.

When prices dropped  then the activity increased again but only for awhile.

All the hope, help, and bail outs, since then have only served to anger and frustrate most people but have not stimulated any activity that is  sustainable in nature.

That last concept  is the key, ” sustainable”

Without new economic growth, without new sustainable businesses, without new jobs that pay a  livable income, any new blip up in activity will be temporary.

House values must fall again unless the recovery we have all been praying for shows up in the next few months.  Good luck with that.

There are solutions.

They are all “outside of the box”,  “innovative”, and “creative” .

They all involve ordinary citizens taking back control of their lives.

Want to learn more about a real estate topic.

Call 916.454.5400 to talk t the broker

Once you come to the conclusion that foreclosure is inevitable the best business decision one can make, in most cases, is to prolong the process but not to stop it. Prolonging the process is often free and stopping it usually costs something.

You may have made a plan to stop home foreclosure with a loan modification or short sale.
But if you have recently lost your home to foreclosure, you may wonder how best to become a homeowner again.
Deed in lieu of foreclosure, short sale and foreclosure will have different implications for your savings account and credit score–foreclosure affecting your score the worst.

Your credit score and ability to save for a down payment are two factors which will affect how soon you will be able to purchase property.

A mid-score of 620 is the minimum score required to qualify for a government loan.
Your credit report will give you your credit score as well as display the items which are negatively affecting your score.
You should check the report for accuracy and dispute any outdated or inaccurate items with your credit agency.
Often you can settle debts with your credit agency for less than you owe.

In addition to fixing your credit score, you should begin saving for a down payment as soon as possible.
With government insured loans, it has been the standard to require 3% of the purchase price as the down payment.
However, FHA loans now require that a buyer puts down 5% of the purchase price, so buyers will need to save even more.

If you have recently lost your house, it is important that you raise your credit score and save for a down payment simultaneously.
One way to do so is to open a secured positive trade line to show lenders you are responsible with your money and debts.

Knowing what you need to do now will help you qualify for a loan faster.
With attention to your credit score and savings for a down payment, you can be a homeowner sooner.

(September 11, 2009)

Because of a temporary financial hardship, my wife and I decided to apply for a loan modification from our lender, GMAC, to help stop foreclosure.

At first, we received a letter rejecting us from President Obama’s loan modification program due to insufficient income (although we had never missed a payment up until July when this process began).

Today GMAC called to inform us again that we had been turned down for President Obama’s loan modification program.

The terms of the loan modification would have reduced the principle on our loan by 30%, dropping our $400k mortgage below $300k. In addition, it would have dropped our interest rate from 6.125% to 3.125%.

Yet I was told that we do not qualify for loan modification.

I have been making my mortgage payments for the past 6 years, how could I not afford to pay the mortgage if it was cheaper?

Many Americans are saying help stop foreclosure on my home now!
They believe that a loan modification will prevent their property from going into foreclosure.
The truth is that many homeowners who apply for loan modification are eventually rejected, leaving them closer to foreclosure than ever.

Here are some reasons why applying for home loan modification could lead you closer to foreclosure.

When you first apply for loan modification, your lender will request a packet of financial information from you including a stop foreclosure letter of hardship.
Based on the information in your financial documents, your mortgage company may decide to grant you a temporary loan modification.

During this trial period, you will have “lower payments.”
Although you may be required to pay less for these few months, you are not saving any money in the long run, just extending the length of the loan.

The difference between the modified payments and the regular payments accrues with interest.
So you will actually end up owing more than if you had made the original payments.
In addition, your lender will report to the credit agencies that you are behind on your payments.
Even if you have been granted a temporary loan modification, this will adversely affect your credit score.

A loan modification also requires an escrow account for taxes and insurance.
So you will have to pay a portion of these costs each month in addition to the mortgage payment.
However, the lender will not release the escrow until the following year, so you will have to pay taxes and insurance out of pocket.
Essentially, you end up paying for these expenses twice in one year.

Remember that loan modification is based on the financial documents that you submit to your lender.
Your lender will most likely request the same information from you again and again.
Any missing piece of information will result in the denial of your loan modification.
This is why you must call your lender regularly to check the status of your application.
Otherwise you will be denied a loan modification, and you will lose your house to foreclosure.

(September 2, 2009)

When my wife and I requested a temporary forbearance from our mortgage back in July, GMAC suggested that we apply for President Obama’s loan modification program to stop home foreclosure.

Although we have never had trouble paying our mortgage in the past, extreme financial hardships made it temporarily difficult for us to make the payments for July and August.
We did not originally request a loan modification because we knew we would be able to resume paying the mortgage once our temporary cash flow problem had been resolved.

However, we submitted the required financial documents to GMAC to apply for loan modification.
Today we received a letter from GMAC which stated that they were unable to approve our request for loan modification because of insufficient income.
The letter also recommended that we consider selling our property.

Aside from the temporary financial hardship that my wife and I have been experiencing this summer, we have been and still are capable of paying our mortgage.
Instead of asking for a temporary forbearance, I could have borrowed a small amount of money to get me through the summer.
Before this all started, my wife and I had never missed a payment.

Now we are two months behind on our mortgage, and we have been turned down for a loan modification.
We could actually lose our home to foreclosure, if we don’t pay GMAC $8317.87.

If you have recently lost your income or your mortgage payments have increased, you may already be receiving foreclosure notices from your lender. If you cannot afford to make your mortgage payments, most of the alternatives to foreclosure still require that you give up your residence.

Many foreclosure alternatives will be less damaging to your credit score than a foreclosure. A higher credit score will allow you purchase property in the future.

Instead of arguing with your lender over missed payments and suffering while the bank harasses you about foreclosure, give them what they want. If your property is heading toward foreclosure anyway, give your house back to the bank before they take it from you.

When you voluntarily sign over the deed to your lender, the agreement is called a deed in lieu of foreclosure. A deed in lieu of foreclosure can be beneficial to both you and your lender.

Your lender might agree to a deed in lieu of foreclosure because it can be very expensive for them to complete the foreclosure process. When you voluntarily sign over the deed to your lender, they do not have to spend the time and money to legally remove you from the property.

A deed in lieu of foreclosure can be beneficial to you as well. First of all, you will not have to suffer for months while the bank harasses you with notices of foreclosure and sends collection agents to your house. You can save money with a deed in lieu of foreclosure because you will not be forced to empty your savings in order to stay in your home while the foreclosure process unfolds.

Finally, a deed in lieu of foreclosure can be less detrimental to your credit score, which can get you into a new property faster. Before you think that foreclosure is your only option, get some stop foreclosure help.

Knowing what your options are will help you make an informed decision about your unique situation.

(August 30, 2009)

Since falling behind on or mortgage payment last month, GMAC has been contacting us constantly about the missed payment.

One day I came home to find a note on my front door which read–YOU’RE LATE, PAY UP!

A few days later, someone dropped a similar note adressed to my wife on my neighbor’s porch. How embarrassing.

I have also had a number of phone calls with representatives from GMAC. Today, however, the representative from GMAC on the phone seemed like a somewhat logical person so I decided to ask him a question that has been bothering me.

I know that GMAC records all of their phone calls for “quality assurance purposes.”

I asked the man on the phone why he could not play back the conversation that my wife had with GMAC on July 9, 2009.

A recording of this conversation would explain why we thought we were granted a two month forbearance from our loan yet GMAC has no record of the agreement.

The representative stated that he could not play back the recording.

He then asked if I had any kind of documentation from the GMAC representative that my wife spoke to. I said that I did not have any written documentation.

Later in the conversation he stated that GMAC still needed one additional document to complete our loan modification package so we could get stop foreclosure help.

I asked him to send me some written documentation that only one more financial document was needed.

He replied that he had no way to send me any written conformation of this statement.

Then how could I have gotten something in writing from the operator who granted us a forbearance?

To obtain a mortgage short sale, it helps to understand the process.

First clearly defined only a few years ago, the job description for “loss mitigator” or “sale negotiator” continues to undergo constant revision. Currently, banks are struggling to process huge amounts of paperwork for all types of foreclosure and short sale situations.

Unfortunately, each short sale lender processes information in a unique way. To add to the complexity of the transaction, most real estate agents have their own understanding of how the process works.

However, some things remain the same no matter who is handling the transaction.
1. Have an agent list the property for sale–Lenders want to see that you are trying to sell the property on the open market to get the best deal possible.

2. Find a willing and able buyer—Buyers with cash are preferable, but at least a strong loan package is necessary.

3. Short Sale Package—This set of financial worksheets must be completely and properly filled out.

Ideally, you should find a team of professionals who have access to current lender policies on short sales. This team should be able to collect and assemble all of the necessary information for you. With a skilled negotiator working hand-in-hand with a willing and able Real Estate professional, short sales will most often be completed.

Remember, a short sale does not mean that the process will happen quickly. These transactions often take longer than typical Real Estate sales because of the added bureaucracy during the beginning stages of the process. A short sale escrow can potentially last 60, 90, 120 days or even longer.

(August 20, 2009)

Today I spoke on the phone to a particularly informative representative from my lender, GMAC.

Since requesting a forbearance from our July and August mortgage payment, I have spoken to many, many GMAC representatives who have called and visited my property to discuss our allegedly past due account.

Today Lance, from GMAC, assured me that operator number 02318 failed to create any record of the agreement made with my wife on July 9, 2009.

According to Lance, the GMAC representative who granted us a two month forbearance did not have the ability or authority to do so.

When this all began we were instructed to submit loan modification documents to help stop foreclosure on our house. Lance also informed me that our loan modification package had been received by GMAC, but they were requesting a Profit and Loss statement for my wife’s business.

My wife and I do not want or need a loan modification. We simply requested a forbearance on our mortgage for two months to help us get through a temporary cash flow problem.

Now that we have been informed that GMAC does not grant forbearance, we are behind on our mortgage and facing severe credit implications.