Read this info and then click on the link to watch the short video from Fraddie Mac.
With the number of people facing tough decisions on how to pay for their homes increasing daily the vultures have smelled the scent of death and begun to circle looking for their prey! The average person is truly clueless how the mortgage business works, the processes and legal issues are complex to the point that even those of us who are in this business do not know all of the nuisances, so there in lies the problem....
Several scams have been around for decades and most draw very little attention from the media because let's face it if it doesn't effect us or someone we know then we do not pat attention to it as a rule. But recently with foreclosures reaching epidemic levels even the man on the street sees the problem either through a family member, co-worker, friend or worse themselves so now the media spotlight is being shown on this problem, The Don't Foreclose Scam!
Now before you start formulating your responses I will state that there are numerous people out there hat are legitimate members of our society working to help people avoid foreclosure through Loss Mitigation, Forbearance, Short Sales, Refit's and zero equity buy outs. For those people of whom I am one this is not you I am writing about. MY foe is the Deed Purchaser.
This old trick is not new it is however more sophisticated than in the past because of the Internet and the financial pain has struck so many homeowners at once. This is one of the main versions of the scam:
A person approaches a homeowner either directly via a phone call or indirectly with a letter offering to stave off the pending foreclosure. The home owner eagerly listens to the scam artist tell them how if the owner will sign over the Deed of Trust to the Investor and begin paying the Investor directly as well as change the mortgage payment address to their office address all will be OK and the can stay in their house. The Investor states to the home owner the investment company will catch up the mortgage and pay the Lender the monthly payments from this point forward. Now this sounds good to the home owner who does not want to lose their home and uproot their family so many agree to sign over the Deed.
Here comes the scam, the Investor takes out a new 2nd or possibly a 3rd mortgage and never makes any payments, continues to pocket the money paid to him by the owner for rent until the bank is ready to foreclose. The Investor signs the deed back over to the bank if they even actually registered the change with the local registrar. The mortgage is still foreclosed on and the "home-owner" is out thousands of dollars in payments never made on their mortgage and also still lose their house. The Investor moves on to the next victim and recreates the same situation...Most crimes are very simple when you have the chance to look at the motives of the criminal form an objective point of view. The problem is the emotional state of the victim clouds their judgment and they believe this is a solution
Follow this link to view the Freddie Mac Video http://www.youtube.com/AvoidFraud.
Monday, December 17, 2007
Sunday, December 16, 2007
So You Are A Real Estate Investor Who Want To Make An Offer On A Foreclosed House
I receive phone calls from real estate investors from time to time on properties I have listed on the Internet and one thing rings true about all of these Investors.... They have been sold on the disinformation being poured out by the so called real estate investment guru's who last year were selling some other form disservice to anyone who would come to their seminars and buy their materials.... So if you are an investor seasoned or novice then look at the issue from the lender's prospective....
A couple of points you need to know when truly making an offer on a foreclosed property...
•1. Cash is not king! A mortgage company does not frown on a mortgage. When you think about it that makes sense, once you look at from a mortgage company's point of view. They only care about the NET
•2. A quick decision in most cases is not possible, so do not threaten to walk if you do not get an instant response. The typical answer in anything under 10 days is good when dealing with a lender.
•3 It's all about the NET so inspections & warranties paid by the buyer increase the net and help the sales price
•4. The cost of the Buyer's agent is considered in the sales price and yes banks like you to have professional representation to protect your interest in the contract. Banks like to be covered and a Buyer's agent is a good thing!
•5. It takes time to remove all of the encumbrances and liens off of a deed so expect 21 to 30 days to close, not tomorrow!
•6.Yes in multiple offer situations a lender may consider an owner occupant over an investor. Remember that lenders usually have numerous properties in any given area or neighborhood & protecting the property value is a consideration.
•7. Repairs....not happening in 90% of any REO sale, unless the repair would prevent more or continued damage to the property. What your inspector or contractor says really does not influence the bank's decision. That information is for your decision.
•8. The first offer is rarely accepted unless it is of course for full price so be ready to counter and re-counter offers
When you take these items into consideration you will see that it is possible to buy an REO property and obtain a good deal if you work with the guidelines banks like to follow.
One other consideration; With the number of foreclosed houses on the market there is pressure to sell them but Lenders have hundreds of deals to consider ever day so keep your prospective and realize if you "Walk" if you do not have an answer by 5:00 today...they don't care.
•1. Be agreeable and willing to work with the Lender or Asset Company
•2. Be patient with the response time and how you respond in king to the Lender
•3. Be prompt with your information even if they are not prompt
•4. Be realistic with your pricing and what your costs will be, exaggeration kills many good deals
•5. Be flexible closing dates next week is not realistic and the day after tomorrow is not being flexible
•6. Be willing to walk away and willing to re-visit their offer if is remains available
•7. Remember banks are in the business to make money not lose money so they work with people who work with them
The really good investor has patience to seek out opportunity and the ability to pounce when it arises....
A couple of points you need to know when truly making an offer on a foreclosed property...
•1. Cash is not king! A mortgage company does not frown on a mortgage. When you think about it that makes sense, once you look at from a mortgage company's point of view. They only care about the NET
•2. A quick decision in most cases is not possible, so do not threaten to walk if you do not get an instant response. The typical answer in anything under 10 days is good when dealing with a lender.
•3 It's all about the NET so inspections & warranties paid by the buyer increase the net and help the sales price
•4. The cost of the Buyer's agent is considered in the sales price and yes banks like you to have professional representation to protect your interest in the contract. Banks like to be covered and a Buyer's agent is a good thing!
•5. It takes time to remove all of the encumbrances and liens off of a deed so expect 21 to 30 days to close, not tomorrow!
•6.Yes in multiple offer situations a lender may consider an owner occupant over an investor. Remember that lenders usually have numerous properties in any given area or neighborhood & protecting the property value is a consideration.
•7. Repairs....not happening in 90% of any REO sale, unless the repair would prevent more or continued damage to the property. What your inspector or contractor says really does not influence the bank's decision. That information is for your decision.
•8. The first offer is rarely accepted unless it is of course for full price so be ready to counter and re-counter offers
When you take these items into consideration you will see that it is possible to buy an REO property and obtain a good deal if you work with the guidelines banks like to follow.
One other consideration; With the number of foreclosed houses on the market there is pressure to sell them but Lenders have hundreds of deals to consider ever day so keep your prospective and realize if you "Walk" if you do not have an answer by 5:00 today...they don't care.
•1. Be agreeable and willing to work with the Lender or Asset Company
•2. Be patient with the response time and how you respond in king to the Lender
•3. Be prompt with your information even if they are not prompt
•4. Be realistic with your pricing and what your costs will be, exaggeration kills many good deals
•5. Be flexible closing dates next week is not realistic and the day after tomorrow is not being flexible
•6. Be willing to walk away and willing to re-visit their offer if is remains available
•7. Remember banks are in the business to make money not lose money so they work with people who work with them
The really good investor has patience to seek out opportunity and the ability to pounce when it arises....
Housing Slow Down Will Have Far reaching Impact In The Coming Months
The Nashville metropolitan economy will lose about $1 billion next year because of the mortgage crisis, according to a national report just released this past weekThe report, prepared for the U.S. Conference of Mayors, found that the economic slow down caused by mortgage defaults and real estate foreclosures will cut the expected growth of the area's Gross Metropolitan Product by 0.7 percentage point, to 2.5 percent. The Gross Metropolitan Product is the measure of the total value of the goods and services produced in a community.The Nashville-Davidson County-Murfreesboro Metropolitan Statistical Area had a gross metropolitan product of $60.3 billion in 2005, ranking it 40th in the country, according to another report released by the mayors group in January.Rising home prices had fueled consumer spending, which drove economic growth, the mortgage crisis report states.Now, the reverse is happening.The report predicts economic growth of less than 2 percent next year in 128 of the 361 areas that were studied.
Other considerations are the slow down in sales tax revenues generated from the strong housing market that supported local the local economies. Unemployment triggered by the slow down reaches further than just the real estate and mortgage industries. Contractors, building product suppliers and retailers will all feel the effect.Other Tennessee metropolitan areas and their projected declines include:
Jackson, 0.7 percentage point, $77.2 million.
Clarksville, 0.8 percentage point, $13.7 million
Knoxville, 0.6 percentage point, $311.9 million.
Chattanooga, 0.5 percentage point, $166.3 million.
Memphis, 0.6 percentage point, $482 million.
Other considerations are the slow down in sales tax revenues generated from the strong housing market that supported local the local economies. Unemployment triggered by the slow down reaches further than just the real estate and mortgage industries. Contractors, building product suppliers and retailers will all feel the effect.Other Tennessee metropolitan areas and their projected declines include:
Jackson, 0.7 percentage point, $77.2 million.
Clarksville, 0.8 percentage point, $13.7 million
Knoxville, 0.6 percentage point, $311.9 million.
Chattanooga, 0.5 percentage point, $166.3 million.
Memphis, 0.6 percentage point, $482 million.
Short Sales and Loan Work Outs Nothing New Just More Popular In A Default Driven Market
The aspect of loss mitigation, short sales and loan work out is booming in popularity across the nation. As mortgage lenders look at the prospect of foreclosures doubling over the next 3 ears and remaining high for at least five years is the industry learning to be more helpful? The process of loss mitigation begins as a home owner becomes delinquent on their mortgage either by missing consecutive payments or paying habitually late or skipping months. First let me tell you that real estate agents and homeowners need to check with their home state's regulatory or consumer agencies to see if this process is an option before beginning the process. Mortgage banks and investors all want the home owner to make the payments, that's where they make their money on the investment, banks rarely if ever show any profit in a foreclosure. Recently mortgage banks have been trying to work with homeowners to keep them in the house and keep them making payments, on a timely manner. The most popular solutions are forbearance and loan modification. They both require the home owner to show why they have fallen behind and the ability to start making payment in the future so as to prevent the late payments from re-occurring. If you are a homeowner in trouble, contact your mortgage company at once, do not wait for the collection calls, get out in front, ask for help, demand help if necessary ask of the lender's loss mitigation department, but never tell yourself the problem will just work out somehow or someday; it will....that solution is called foreclosure and it is financially and mentally devastating.
In my experience working with home owners over the past 3 years I have found that there are several banks that will go above and beyond, while some of the major lenders are still working as usual & ignoring a simple solution to what is sometimes a short term problem. Home owners need to be prepared to provide lots of documentation in a clear and concise manner to show the cause & effect and the plan of action to resolve the matter. Paycheck stubs, checking account statements, proof of unemployment, disability or illness along with a budget and a written action plan are all required to begin the process. The end result however can be well worth the efforts put forward now.
In my experience working with home owners over the past 3 years I have found that there are several banks that will go above and beyond, while some of the major lenders are still working as usual & ignoring a simple solution to what is sometimes a short term problem. Home owners need to be prepared to provide lots of documentation in a clear and concise manner to show the cause & effect and the plan of action to resolve the matter. Paycheck stubs, checking account statements, proof of unemployment, disability or illness along with a budget and a written action plan are all required to begin the process. The end result however can be well worth the efforts put forward now.
Do Your Clients Have A C.L.U.E.
An earlier BLOG posted some valuable lesson learned info about buying a house without knowing the cost of insuring the property. That reminded me to tell my fellow Rainers about another valuable piece of information.
This Buyer's Agent did not inform the buyer that the cost of insuring the house was not a reason to void the contract. The property was an REO and the buyer was going to lose over $3,000 in earnest money because the buyer could not afford the premiums. The cause, they buyer had filed more than 6 claims on their renter's policies over the prior 4 years making them a "high Risk" client. They could obtain insurance but at a cost that was high. A trip to the insurance agent is as impartant as an approval letter in some cases!
Tell your clients to go get a CLUE...Have them go to their insurance agent and purchase a CLUE report on themselves and also on the property they are contracting (during the inspection phase) and they may find out a few interesting facts about themselves and the property. Choice point is an information gathering source for the insurance industry and it provides insurance companies with info on individuals and also on properties. This can be an invaluable source of information.
Below is an excerpt from the information page for Home Sellers on Choice Point's web site.
"About C.L.U.E. C.L.U.E. stands for Comprehensive Loss Underwriting Exchange, which is a database featuring loss information submitted by insurance companies. A C.L.U.E. report provides a five-year history of losses that have been filed against an insurance policy associated with a given property. The report provides information including the dates and types of losses and the amounts paid for each loss."
The value in this report for the home seller is to show any potential client information about the property...Let's say several houses were damaged in a wildfire, tornado or hurricane; the report could show that this property had minimal or no damage which is a BIG plus...or it could show that extensive repairs were done and paid for and the property is in sound condition which is still a plus if the house had suffered damage.
For first time home buyers a personal CLUE report to help them see how their previous insurance claims will affect their rates.
Do your clients have a CLUE?
This Buyer's Agent did not inform the buyer that the cost of insuring the house was not a reason to void the contract. The property was an REO and the buyer was going to lose over $3,000 in earnest money because the buyer could not afford the premiums. The cause, they buyer had filed more than 6 claims on their renter's policies over the prior 4 years making them a "high Risk" client. They could obtain insurance but at a cost that was high. A trip to the insurance agent is as impartant as an approval letter in some cases!
Tell your clients to go get a CLUE...Have them go to their insurance agent and purchase a CLUE report on themselves and also on the property they are contracting (during the inspection phase) and they may find out a few interesting facts about themselves and the property. Choice point is an information gathering source for the insurance industry and it provides insurance companies with info on individuals and also on properties. This can be an invaluable source of information.
Below is an excerpt from the information page for Home Sellers on Choice Point's web site.
"About C.L.U.E. C.L.U.E. stands for Comprehensive Loss Underwriting Exchange, which is a database featuring loss information submitted by insurance companies. A C.L.U.E. report provides a five-year history of losses that have been filed against an insurance policy associated with a given property. The report provides information including the dates and types of losses and the amounts paid for each loss."
The value in this report for the home seller is to show any potential client information about the property...Let's say several houses were damaged in a wildfire, tornado or hurricane; the report could show that this property had minimal or no damage which is a BIG plus...or it could show that extensive repairs were done and paid for and the property is in sound condition which is still a plus if the house had suffered damage.
For first time home buyers a personal CLUE report to help them see how their previous insurance claims will affect their rates.
Do your clients have a CLUE?
Senate Looks To Change The Banruptcy Law Again!?
The US Senate is looking at the fact that in the 2005 rewrite of the nations bankruptcy laws that was designed to help protect credit card companies may have in fact injured the housing / mortgage credit market. The Senate Finance sub committee is looking to allow home owners more wiggle room when it comes to filing for Chapter 13 Bankruptcy protection. Here is my blog from last summer on this very issue;
I continue to see a lot of BLOG posts about the sub prime market, ARM's and greed being the cause of some of the housing woes and I agree with some parts and disagree with a larger portion of those claims. The advent of the bankruptcy law change 2 years ago has forced the homeowner to make a completely different set of decisions once they hit financial hardship. Gone are the days of having their credit card debt and medical bills wiped clean and continue to live in their house without recourse. Today when a homeowner faces the tough decisions on bankruptcy and foreclosure the options are completely different. Under the new rules a homeowner just can't wipe their slate clean and keep the spoils of their creditor's losses. If the house is to remain then so shall some or all of the other debts & now we have a whole different set of circumstances. Even with reduced balances and no accrued interest on the debts the repayment plan has to fit the budget of the homeowner and there in lies the problem. The homeowner is now seeing that through the conference with a bankruptcy attorney that the cause of the financial downfall; layoffs, job loss, divorce, illness, injury or death in most cases can not be overcome in a manner as to relieve the problems in the foreseeable future taking bankruptcy protection off of the table.
Now many of you are saying then why do you not agree that the current sub prime and ARM issues are the cause and my answer is that this issue has always existed but now the proverbial EXIT RAMP (bankruptcy) has been closed and we have a new phenomenon moving into the forefront of our business, Short Sales. Short selling s not new, neither is loan modification or forbearance but it is something that agents are more exposed to in light of these legal changes in the bankruptcy code. The fact that people buy too much house, do not live within their budgets, make poor financial decision and place their future in harms way is not new, the problems with ARM's has been known for years, the fact that people who do not pay their bills on time has never changed when they become home owners instead of renters and people have always tried to keep up with the Jones'. When you examine the numbers of personal bankruptcies over the past 10 years there is no surprise here those numbers are numbing and now the numbers are down due to the legal change but the effects of bad financial decisions has shifted not dropped
I continue to see a lot of BLOG posts about the sub prime market, ARM's and greed being the cause of some of the housing woes and I agree with some parts and disagree with a larger portion of those claims. The advent of the bankruptcy law change 2 years ago has forced the homeowner to make a completely different set of decisions once they hit financial hardship. Gone are the days of having their credit card debt and medical bills wiped clean and continue to live in their house without recourse. Today when a homeowner faces the tough decisions on bankruptcy and foreclosure the options are completely different. Under the new rules a homeowner just can't wipe their slate clean and keep the spoils of their creditor's losses. If the house is to remain then so shall some or all of the other debts & now we have a whole different set of circumstances. Even with reduced balances and no accrued interest on the debts the repayment plan has to fit the budget of the homeowner and there in lies the problem. The homeowner is now seeing that through the conference with a bankruptcy attorney that the cause of the financial downfall; layoffs, job loss, divorce, illness, injury or death in most cases can not be overcome in a manner as to relieve the problems in the foreseeable future taking bankruptcy protection off of the table.
Now many of you are saying then why do you not agree that the current sub prime and ARM issues are the cause and my answer is that this issue has always existed but now the proverbial EXIT RAMP (bankruptcy) has been closed and we have a new phenomenon moving into the forefront of our business, Short Sales. Short selling s not new, neither is loan modification or forbearance but it is something that agents are more exposed to in light of these legal changes in the bankruptcy code. The fact that people buy too much house, do not live within their budgets, make poor financial decision and place their future in harms way is not new, the problems with ARM's has been known for years, the fact that people who do not pay their bills on time has never changed when they become home owners instead of renters and people have always tried to keep up with the Jones'. When you examine the numbers of personal bankruptcies over the past 10 years there is no surprise here those numbers are numbing and now the numbers are down due to the legal change but the effects of bad financial decisions has shifted not dropped
Tuesday, December 11, 2007
Williamson County Tennessee November Home Sales Information
Williamson County Association of Realtors® Announces November 2007 Home Sales
Williamson County Association of REALTORS® Announces November Housing Numbers
December 10, 2007 (Franklin, TN)-The Williamson County Association of REALTORS® today announces the sale of homes statistics for Williamson County, Tn. for the month of November 2007. There were 278 residential and condominium closings reported for the month of November, according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS® in the Middle-Tennessee area.
Compared to November of 2006, the single family residential closings decreased 20 percent and the median price decreased by 9 percent. Condominiums closings have increased by 30 percent and the median price increased by 16 percent. The decrease in the median price appears to be tied to a decrease in the number of homes in the over $1 million range closing in November. The average days on the market (DOM) for residential homes have increased by 14 days and condominiums have increased by 17 days. Days on the market have been consistent since the onset of 2007, with the days ranging from 58 - 68 days. Median prices have remained consistent since January 2007, ranging from $365,000 to $391,200. The median is a typical market price where half of the homes sold for more and half sold for less.
November 2007
Closings
Median Price
Average Price
DOM
Residential
247
$ 365,000
$ 427,205
69
Condominium
31
$ 219,990
$ 227,241
40
November 2006
Closings
Median Price
Average Price
DOM
Residential
308
$ 401,700
$ 466,644
55
Condominium
24
$ 189,890
$ 219,234
23
November 2005
Closings
Median Price
Average Price
DOM
Residential
398
$ 296,072
$ 370,150
50
Condominium
52
$ 152,920
$ 167,229
27
"The National subprime mortgage crisis peaked in September when many of the sales closed in November were being negotiated, which may explain some of the market change. Dr. Lawrence Yun, chief economist with the National Association of Realtors recently predicated that high-cost markets with many jumbo loans would show a slow down due to the mortgage crisis.
Williamson County Association of REALTORS® Announces November Housing Numbers
December 10, 2007 (Franklin, TN)-The Williamson County Association of REALTORS® today announces the sale of homes statistics for Williamson County, Tn. for the month of November 2007. There were 278 residential and condominium closings reported for the month of November, according to figures provided by RealTracs Solutions, the multiple listing service used by REALTORS® in the Middle-Tennessee area.
Compared to November of 2006, the single family residential closings decreased 20 percent and the median price decreased by 9 percent. Condominiums closings have increased by 30 percent and the median price increased by 16 percent. The decrease in the median price appears to be tied to a decrease in the number of homes in the over $1 million range closing in November. The average days on the market (DOM) for residential homes have increased by 14 days and condominiums have increased by 17 days. Days on the market have been consistent since the onset of 2007, with the days ranging from 58 - 68 days. Median prices have remained consistent since January 2007, ranging from $365,000 to $391,200. The median is a typical market price where half of the homes sold for more and half sold for less.
November 2007
Closings
Median Price
Average Price
DOM
Residential
247
$ 365,000
$ 427,205
69
Condominium
31
$ 219,990
$ 227,241
40
November 2006
Closings
Median Price
Average Price
DOM
Residential
308
$ 401,700
$ 466,644
55
Condominium
24
$ 189,890
$ 219,234
23
November 2005
Closings
Median Price
Average Price
DOM
Residential
398
$ 296,072
$ 370,150
50
Condominium
52
$ 152,920
$ 167,229
27
"The National subprime mortgage crisis peaked in September when many of the sales closed in November were being negotiated, which may explain some of the market change. Dr. Lawrence Yun, chief economist with the National Association of Realtors recently predicated that high-cost markets with many jumbo loans would show a slow down due to the mortgage crisis.
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