Category Archives: Real Estate

Real Estate

How Not to Face Foreclosure!

The house being foreclosed
The house being foreclosed

From a scene that could have come out of a movie, a husband and wife loaded up with guns, ammunition, and homemade bombs and fought off Otero County, New Mexico, Sheriff Deputies that initially tried to serve the foreclosure notice.

Then they got into a battle with the New Mexico State Police SWAT team comprised of nearly 100 officers. At the end, the wife was dragged out of the home by a bomb robot and the husband was found dead with a rifle at his side.

According to Alamogordon Daily News

“Sgt. Andrew Tingwall said the woman, whom police would not identify, was heavily armed and wearing a bulletproof vest. She was arrested and charged with assault with intent to commit a violent felony on a police officer.

He said officers decided to use the robot to grasp her ankle and pull her out of the house.

Officers pulled her away from where she was lying face down,” Tingwall said. “She had two pistols in her pockets and (was) lying on a shotgun.” Police medical members rendered first aid to the woman. Tingwall said she was taken immediately to a hospital.

“At approximately 2 a.m., SWAT officers made an approach of the residence behind a Dona Ana County bomb robot. The approaching officers discovered that there was a male subject with a rifle lying deceased behind a vehicle.”

The wife is facing felony charges with assault with intent to commit a violent felony on a police officer. She may face additional charges according to the police.

So the score, husband dead, wife in jail, house foreclosed. Facing foreclosure is not easy, but this is not the way to go!

Real Estate

California Sales and Other News

sold

Well, the latest news from the California Association of REALTORS® (C.A.R.) states that sales in December of 2008 increased 84.9 percent compared with the same period last year. On the other hand, median home prices fell 41.5 percent during the same period. The median price in December was $281,100 compared to $480,820 in December 2007 according to C.A.R. By the way, in my previous blog I stated that DataQuick’s figures showed a 48 percent increase in sales from a year ago. Maybe we should average the two figures! I think what C.A.R. is comparing is the month of December 2007 to the month of December 2008. You have to be careful to about news stories, no?

“Sales have continued to be strong, exceeding 500,000 units for the fourth consecutive month and year-to-date sales are nearly 27percent above last year” said C.A.R. President James Liptak. (More percentages)

Several things have helped to bring buyers into the market. Declining interest rates have dropped along with declining home prices. In addition home building has dropped to a 17 year low which, while it hurts the economy, it also slows the flow of new homes into the market. First time home buyers are now able to afford a home. Investors are flooding into the market place, knowing that this is a buying opportunity of a lifetime.

By the way, I ranted in an earlier blog about banks being bailed out and how they used the money to help their own bottom line instead of you and I. Here’s an example of what we helped bail out with our money. Bank of America bought Merrill Lynch because it seemed to the bank to be a way to expand their holdings. John Thain was CEO of Merrill Lynch at that time and was allowed to continue as a one of Bank of America’s managers He has since been fired when B of A found out that he had given billions (not millions) of dollars in bonuses to Merrill Lynch employees in his last days as CEO there, while his company was going under and had to be rescued.

You know of course, that the government has given Bank of America 20 billion dollars in rescue monies and another 118 billion is sitting there, if they need it. They need the money because of their acquisitions of FleetBoston Financial, Countrywide and Merrill Lynch. So continuing with the saga of John Thain, John then spent 1.2 million dollars remodeling his office, including $1,450 for a parchment wastebasket. So this is where part of our rescue monies have gone, to pay for a $1,450 parchment waste basket! Read the full story of John Thain at MSNBC

Real Estate

Beware of Foreclosure Scams

Signs of Foreclosure
Signs of Foreclosure

It seems when people are distressed, there is always someone to help out and someone to take advantage of them. Now there are a lot of swindlers out there trying to take advantage of people who are on the verge of losing their home. If you are like me, I tend to trust people which is a good thing, but can also be bad, so be careful.

If you happen to fall into their trap, you can lose your money, ruin your credit and in most cases have no hope to avoid foreclosure. If you think you are facing foreclosure, be careful and be sure to read the following article from the Los Angeles Times. Here is part of the article.

“The scams typically work like this: Swindlers target homeowners who are behind on their payments, promising to help them renegotiate their mortgages and avoid foreclosure in exchange for a fee. Then, typically, the swindlers take the money and disappear leaving the homeowners in worse straits than when they begun.

The scammers have popped up everywhere in the last year as the real estate market has spiraled down.

From the ubiquitous orange signs on freeway off-ramps that blare “Modify Your Payment” to men impersonating bank executives going door to door, homeowners in trouble are being targeted relentlessly.”

Real Estate

Home Sales Up 48%

Custom home built by O'Dell Construction
Custom home built by O'Dell Construction

In a flash of good news in an otherwise depressing economy, residential sales have increased locally and in most of the State to forty eight percent over this time last year. Although there doesn’t seem to be an end to foreclosures, it has resulted in making home purchases attractive to investors and affordable to first time home buyers.

An article from the Appealdemocrat.com states in part:

“Foreclosures and a three-year price plunge continue to drive a rise in home sales in the Mid-Valley and elsewhere in recession-wracked California.

Yuba and Sutter counties more than doubled the number of freestanding houses sold in December compared to a year earlier, according to a report Wednesday from MDA DataQuick of San Diego.

*****
A glut of foreclosed homes has slashed median home prices in Yuba-Sutter and throughout the Central Valley, as defaults have mounted on high-risk mortgage loans that linked artificially low early payments to much larger ones later. DataQuick reported an 48 percent jump in home sales across California from a year earlier, to 38,000 houses and condominiums”

Real Estate

Banks Help Themselves Not Borrowers

Bank of America Nevada City, CA
Bank of America Nevada City, CA

So why am I so mad at banks? Because they have gotten federal bailout monies to start the lending process for borrowers who are distressed and to create new loans. Instead, they have used the money to fatten their bottom line. Have you tried to get a loan for a home lately? Even if you want an equity loan, you need to have a credit score in the upper 700’s, full documentation of your assets and income.
Now how does this grab you for arrogance? A direct quote from a the chairman of Whitney National Bank of New Orleans, quoted from the New York Times:

“At the Palm Beach Ritz-Carlton last November, John C. Hope III, the chairman of Whitney National Bank in New Orleans, stood before a ballroom full of Wall Street analysts and explained how his bank intended to use its $300 million in federal bailout money.

Make more loans?” Mr. Hope said. “We’re not going to change our business model or our credit policies to accommodate the needs of the public sector as they see it to have us make more loans.”

I’ve talked to several people with good credit scores and good income and the banks seem to just put off the loans. In short, the banks do not want to make loans, they want to buy assets. For example, Bank of America has recently bought Countryside, Merrill Lynch and in 2002 they bought FleetBoston Financial for $48 billion. Now, they have received $20 billion to shore up its purchase. Here’s a quote from the BBC News:

“The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings and retirement security,” the US Treasury said.

In addition to the $20bn cash injection, the Treasury will “provide protection against the possibility of unusually large losses on an asset pool of approximately $118bn of loans”.

If that dosn’t make you mad, let’s start a bank.

Real Estate

Foreign Investors Confident In U.S. Real Estate

A home is a good investment
A home is a good investment

We may be all doom and gloom about our real estate market, but foreign investors aren’t. It’s good to remember that real estate always has it’s up and downs. I can remember paying $19,000 for my first house I had built when I moved to Nevada County. It had hardwood floors, a real fire place, custom cabinets and it was 1,900 square feet. Now it’s worth much, much more then that. Like I’ve said many times, when times are good, people think it will be good forever, and when its bad, its bad forever.

So anyhow, here’s a quote from The Dallas Morning News

“Foreign investors are more confident about the U.S. real estate market and expect to spend significantly more this year than in 2008, according to survey results released this week by the Association of Foreign Investors in Real Estate.

Foreign lenders plan to increase real estate loans by 54 percent globally and 58 percent in the United States based on transactions completed as of October, the report found. Foreign equity investors plan to increase their investment activity by 40 percent globally and 73 percent in the United States.”

If you have time, read the full article, foreign investors know the United States is a great place to buy real estate. I do too.

Real Estate

Update Nevada County Real Estate

Well, I wish I could say prices are going up, but they are not, they’re going down. There have been 141 price changes this month so far, including 24 today.  Price reductions vary, but some have reductions of  $225,000.  A further example of price reductions is a home in Alta Sierra listed at  $250,000.  The shock is that the bank has a first of $400,000 and they have agreed to a short sale, taking the loss of $150,000!

The positive signs are that the interest rates are at an all time low.  As a consequence, mortgage applications have increased as indicated by an article in Realtors Magazine 

Here is an excerpt from their article today.

“The Mortgage Bankers Association weekly index of application volume rose to 1,324.8, an increase on a seasonally adjusted basis from 1,143.8 last week.  On an unadjusted basis, the index rose 95.7 percent compared to the previous week and was up 52.4 percent compared with the same a week a year ago”

In more good news, the credit market seems to be loosing up. Companies are selling bonds at a pace not seen since last spring. It’s getting easier for companies to issue commercial paper, the short-term loans necessary for quick access to cash. For a full report, see the San Francisco Chronicle article.

San Francisco Chronicle
 
These are hopeful signs that we are approaching the light at the end of the tunnel, hopefully, that’s not a train!

Real Estate

Cram Down On Your Primary Mortgage

The Federal Government is modifying the bankruptcy code to allow cram downs for primary home mortgages. After meeting with lawmakers, Citigroup has agreed to back legislation that would allow bankruptcy judges to alter the amount due on primary mortgage principals, so called cram-downs. (I guess if we want banks to change we have to cram it down their throats)

Quoting Buiness Week

“As it stands, Durbin’s Bill (SB 61) would essentially give judges the authority to rewrite the terms of a home mortgage — a so-called “cramdown,” something possible already for every other kind of debt, mortgages on vacation homes and any real-estate other than a primary residence. It would also extend Truth in Lending Act protections to bankruptcy court, meaning predatory loans — made in violation of TILA — would be wiped.”

If the bill passes, a home owner who is facing foreclosure would have the option of filing for bankruptcy and have the mortgage reduced to a level where future payments would be manageable. As we said, every other kind of mortgage can be reduced except for a person’s personal residence. Doesn’t make sense, but the banks have fought this change forever

This would help save millions of homes from foreclosure, which some people may not agree with, but somehow we have to stop the foreclosure rate. Until we do that, the economy is not going to come back and more unemployment will result.

Of course, the rest of the mortgage industry opposes this, since it feels that it would hurt their bottom line.

Real Estate

Short Sale, How Short, Read On

As foreclosure rates hit record levels, more sellers are asking their banks or mortgage companies to do a short sale. How does that work? In a short sale, the seller arranges for a mortgage lender to accept a price that is less than the amount they owe on the property. In most cases, the lender typically agrees to forgive the rest of the loan. As a result, the seller doesn’t have to go through a foreclosure, and although the seller’s credit rating will drop, it may be a little less then a foreclosure.

Buying a home in a short sale usually means that the bank will not pay for any inspections. Therefore it is imperative that a buyer obtain a whole house inspection, termite report and carefully review a title report for easements and liens that may affect the property. If the house is in the country, then the well should be checked for production and possible harmful minerals. The septic system should also be checked out and boundary lines verified by a licensed land surveyor

Speaking of title reports, if you are a buyer; remember that there could be two loans on the property, a first senior loan and a second junior loan. If you are buying the home for $125,000 to pay off the first loan and there is a $75,000 second on the property, then you have just bought a home for $200,000.

For a very good example of what I’m saying go to

Rocklin & Roseville Today article

That is a real horror story of Bank of America refusing to work with the seller to the extent that (according to the story) it may kill the short sale.

As a buyer, you may have to wait anywhere from six weeks to six months to finally complete the sale. Banks work by committees and we all know how committees work, slowly. Of course while you are waiting, someone else might submit a larger offer and you are out of the picture with your purchase and the short sale turned out to be very long indeed!

Questions? Email John O’Dell
Real estate broker, civil engineer and general contractor

Real Estate

Short Sale Horror

1 Comment

What is a person to do? I recently talked to a client who’s daughter wants Countrywide Mortgage (now owned by Bank of America) to refinance her home to a lower interest rate. She has an excellent credit rating. But because she lost one of the three jobs she was holding, she wanted a loan modification. At this point in the market, she still has equity in the home, which is great; at least she’d not upside down on loan to value.

In keeping with current banking mentally, she was told “Why should we refinance?.. You are making your payments now. If you stop making your payments, we will sit down and talk to you.” Now this woman has a credit score in the upper 700’s. So the question is, should she stop making payments, ruin her credit score and THEN maybe Countrywide will renegotiate her loan?

My advice was to go somewhere else and get another loan. Rates have now fallen below 5% for a thirty year fixed loan and it’s a great time to refinance. With a good credit score, equity in her home, she has a good chance to get a new loan at a lower interest rate.

By the way, there were an average 3,100 foreclosures per day in the U.S. in November, according to RealtyTrac Inc., an Irvine, California real estate data company. That’s triple the 1,000 per day average in 1933, the worst year of the Great Depression, according to the Federal Reserve Bank of St. Louis. So my question is, when are the banks going to learn that they have to work with home owners to stabilize the housing market and help their bottom line?

Here’s some photos of the Great Depression from the Federal Reserve Bank of St. Louis:

The Great Depression Photography

Questions? Email John O’Dell
Real estate broker, civil engineer and general contractor