Little Things Grow Into BIG THINGS...

As a real estate agent, I see many many different situations for both buyers and sellers.

It is fairly common right now that sellers in a Short Sale situation have not made their mortgage payment in a few months. That is not uncommon or in itself a significant problem. However, it can quickly GROW into a BIG problem if nothing is done about the situation.

Here are 3 possibly directions if you missed more than 1 mortgage payment:

1. Contact your lender... Don't wait for them to call you. Ask them what they can do to help you. Generally, they don't have a program that can help available. Statistics vary, but most show a 4.0 to 4.8% success rate for all loan modification programs since 2007. Commonly, the lender will attempt to get you to make some type of payment to keep revenue coming from you. They will call it a "trial mod" or some other similar name...
2. Contact a REALTOR, a CPA or a REAL ESTATE ATTORNEY... I do not recommended that you speak with a Bankruptcy Attorney 1st. Reason, I have NEVER seen one recommend anything except the BK Filing. Any of the other 3 should be able to provide you with excellent direction for FREE or for a very small sitting fee. Make a plan and move into the future with some level of control.
3. Act as if nothing is happening... I have heard many times people say, "Oh, I am just waiting to hear from the lender." Well, that thing they hear may not be very good. It may be a NOD followed by a Notice of Trustee Sale which means the road to FORECLOSURE and LOSING the home may be a short one from that point. If that happens, SEE STEP 2

For additional information, Call me at 916-751-1800 or visit www.TEAMPattersonRealty.com

Thanks for reading!

Recently SOLD - Short Sale Listings

1. 108 Amber Waves Ct - Roseville, CA; 1st and 2nd Mortgages; Liens and Full Notes Released with No Further Recourse - ZERO out of pocket for seller


2. 2103 Donovan Drive - Lincoln, CA; 1st and 2nd mortgages; Liens and Full Notes Released with No Further Recourse - $290 Cash out of pocket for Seller


3. 2919 Springburn Way - El Dorado Hills, CA; 1st and 2nd mortgages; Liens and Full Notes Released with No Further Recourse - $1240 Cash out of Pocket for Seller for 2nd release of $168,000 note.

REALITY - Mortgage Lenders/ Servicers are on the OPPOSITE SIDE

One reality the current home market should teach us all is that your mortgage lender is NOT YOUR FRIEND. They are on the OPPOSITE SIDE of the transaction. This means they are concerned about THEIR INTERESTS 1st and foremost. -- This in not an opinion. It is reality.

For those of you conducting or considering a short sale transaction and seeking to negotiate with lenders. This statement is something you should consider EVERY time you speak with anyone regarding the situation...

Too many times people get hung up on the "morals" of this or "ethics" of that when in reality a short sale is very simply one of hundreds of thousands of transactions conducted by businesses around the world each you in which a corporation CHOOSES to take a loss. Even as individuals, we CHOOSE to take losses very regularly.

Examples: You buy a stock that doesn't perform and losses value then sell it. You have chosen to take a loss. A business opens a location in an area that does not meet projections for revenue and close the location without breaking even. They have chosen to take a loss. Same company downsizes by 3000 employees and closes 4 production plants in order to survive and takes a charge off. They have again chosen to take a loss.

Why do companies and people choose to take losses? Many reasons... eliminate risk, reduce further losses, cap overall losses, require liquidity for use on another more profitable transaction... The list is endless. But ultimately what is being sought is a GAIN in from the current position through the transaction.

Make no mistake. A short sale is very simply a choice by a corporation and individual and possibly an investor (Corporation or Individual) to take a loss for their own self interests. There are NO gifts or niceties involved what-so-ever. We are NOT talking about Morals or Ethics at all so long at their is ALWAYS full disclosure. We are talking about a SIMPLE and COMMON business transaction.

The lender/ servicer is attempting to GAIN from the transaction. They are NOT doing you favor or conducting Short Sales for the good of society. It is BUSINESS and this is what makes AMERICA GREAT! A company for their own self serving interests can conduct a transaction that betters their position and as a consequence potentially improve the position of borrowers.

Opposing thoughts are always welcome!

Is there Really 7 Million Homes in "Shadow" inventory?

It would be great for me if there were a ton more inventory coming. But, I look at these types of articles saying doom is around the corner as hearsay because there is no hard data to support their position. They could be right. They could be wrong. The inventory levels here are at 3 year lows. That is a fact I know based on real data. The post office did a vacant home study in May saying there were 24,000 vacant homes in the greater Sac area all the way from here to Stockton to Truckee to Yuba City. The definition of vacant was 90 days or more without picking up mail. That is another factual data reference. In placer county, 87% of all Trustee sales scheduled were postponed in August. In Sac County, 92% of all Trustee sales scheduled were postponed in August. Both of these, factual data points that are telling. In Placer County, 221 Trustee Sales were schedule for the month of August. In Sac County, 1224 Trustee Sales were set for the month of August. Total available inventory on August 31st was 8995 properties in the Tri County Area. That is down over 71% year over year. My investment group is in the middle of a study to find out exactly what the trends are from new inventory coming to market and will keep a running tally of that data.

My point, I hear a lot opinions given in the media without real data. Most of the chatter is broad stroke based on national data if any at all. It is also meant to keep the ratings up for the particular media outlet with the “story”.

I do my best to study the market here locally. It is impacted to an extent by national issues, but does not correlate to every national trend. Yes, there are vacant homes. How many exactly? Who knows. Are all of those already foreclosed on and waiting to hit the market? Doubtful. Even the 24,000 number in May does not break out bank owned or any property for sale at the time. Bottom line, it is more cost effective for the banks to slowly inject inventory in whatever manner they choose to do it (foreclosure or short sale). It is also more cost effective for them to NOT take in hard asset inventory.

What does it mean in my opinion… We will not see huge spikes in available inventory even if we see spikes in the default rate. We will and are seeing banks encouraging short sales because it keeps the homes occupied. Occupied homes are generally in better repair and have less chance of vandalism than non-occupied. Etc, etc… I hear all the terms of “shadow inventory” and over 7 million homes that the banks have in hold pens waiting to release onto the market and on and on, but where is the data? Where exactly are those homes? Which banks have them? It is all questionable info at best. It may be true, but there is more than an off chance that it may be inflated for a sensational impact. Either way, the banks will not do anything that they do not see as in their own best interest. A massive release of inventory or wave of foreclosures just doesn’t seem to me to be a strategic move that would be in their best interests today or in the near future.

I know, I did not address the broader economy and jobs and so on. It could all get worse. It could all stay the same. It could all get better. It is not relevant to whether or not banks have or do not have a huge amount of inventory. It is also not relevant as to whether or not it is in the banking sector’s best interest to release a huge wave of inventory even if they had it… Am I way off the reservation?

Short Sale vs. Foreclosure - Making an Informed Decision

What you need to know to make an informed decision

SHORT-SALE vs.FORECLOSURE

Ever wondered what difference it makes whether a home is sold as a short sale or if it is foreclosed on by the bank? Well, here are a few main points that will help answer the question for you. If you or anyone you know needs to list their home for sale, has further questions or would like to talk about the listings my team currently has on market -- Please call me at 916-580-6031. Thanks for reading my BLOG!! - Ken


Fannie Mae Guidelines Primary Residence
Short Sale:
Eligible for a Fannie Mae insured loan after 2 years, no restrictions.
Foreclosure:
Eligible with restrictions after 5 years, no restrictions after 7 years.

Fannie Mae Guidelines Non Primary Residence
Short Sale:
An investor who has done a short-sale is eligible for a Fannie Mae backed mortgage after 2 years.
Foreclosure:
An investor who has had a property foreclosed cannot get a Fannie Mae backed loan for 7 years.

Credit Score
Short Sale:
Late payments on mortgage will show after completion of the short-sale. The effect can be as short as 12 to 18 months. Depending on how the lender reports it, credit scores affected negatively 50 to 100 points.
ForeClosure:
Typically will affect credit score for at least three years. Scores will be negatively affected between 200 and 300 points.

Credit Application Questions (Form 1003)
Short Sale:
No questions regarding a short sale.
Foreclosure:
Question C, Section VIII: Have you had property foreclosured upon or given title or deed in lieu thereof in the last 7 years?

Credit History
Short Sale:
Depending on how lender reports, short-sales may not be reported on a credit history.
Foreclosure:
Remains as a public record for 10 years or more.

Security Clearance
Short Sale:
A short-sale does not usually raise red flags regarding security clearance.
Foreclosure:
Security clearances will usually be revoked, often times resulting in loss of employment.

Deficiency Judgment
Short Sale:
This is a negotiable issue between the Seller and the lending institution.
Foreclosure:
No negotiations between Homeowner and lending institution. It is up to the lender(s) whether to file a deficiency judgment.

Deficiency Judgment Amounts
Short Sale:
If there is a deficiency judgment, the amount is usually lower if the property has been sold through a short sale.
Foreclosure:
The foreclosure process usually will cost the lending institution more, hence resulting in a larger deficiency judgment if the judgment is filed.

Information obtained from sources that are deemed accurate, but have not been verified by Author. Information is subject to change. Individual effects may vary. All interested Persons should independently verify accuracy of the above information and seeking legal counsel is recommended.

What is going on?? --- in Real Estate?

My Perspective by Ken Patterson

This edition of the post is going to be the simplest yet. With so much white noise going on these days it is hard to know what is real and what is misinformation or a flat out con by someone looking to take advantage of the tough economic times.

Have you seen those flyers or gotten a letter in the mail from some company claiming they will get your property taxes adjusted for a fee? I have gotten several of them. My favorites are those that tell me it is my “Last Chance to Act” or some other message used to make me feel compelled to send a check before I miss out. Well, please do not send any money. Your property taxes will be reassessed automatically regardless. If you are in doubt, call the county assessor to find out. (Sacramento County (916) 875-0700; Placer County (530) 889-4300) Live in a different county? Just go to Google.com and type in your county name followed by assessor.

How about those signs talking about “Prevent Foreclosure” or “Call for a Loan Modification”? - seen those? Or maybe you are considering “walking away” because you’ve heard that banks are not interested in loan modifications and you heard foreclosure is better than a bankruptcy. How about Short Selling your home? Or maybe buying a home that is a Short Sale? Do you know the facts regarding 1st time buyer incentives from the federal and state government?
Whatever your situation, please ask a trustworthy professional if you are in doubt about a life decision. A tax accountant, an attorney, a Realtor, a mortgage lender, a credit counselor are all resources that usually have at least a free 1st consultation. All have a fiduciary responsibility to give accurate answers and direction that is in YOUR best interest.

If you would like more facts about any of the topics above, please contact me ASAP.

The President's Speech Last Night - Highs and Lows

Well, everyone has an opinion about our newest President it seems. Everyone also seems to have an opinion about the current economic situation too. The facts regarding either can be fairly unclear considering most every "NEWS" channel or "NEWS" report is chuck full of opinions and comments. Sometimes I wonder how much more qualified the "Hosts" and "Reporters" are than anyone one of us to be on the television. Does anyone else feel a bit dismayed at what is being said and by whom?

Well, I watched most of the speech last night and can say that I AM PROUD of MY COUNTRY! Though I do not agree with everything the President said or wants to do and did not vote for him, I think he did very well.

What I liked from his speech is that he gave me a few bits of "Assurance" that the United States of America can and will come out of this and any other hard time even strong than before. He also said that he was going to hold folks accountable inside both government and the private sector. Lack of accountability or a relative few is what started our recent economic tumble in my opinion which has in many cases created hardships for those who have been responsible as well as accountable. I also liked that he referenced times in our past where government did positive things by spending money during hard times that did result in sustainable advantages for the country. Two examples I remember are the transcontinental railroad and the system of high schools around the country. Sometimes people like me who do not like even saying the words "Bigger Government" forget about some of the focused projects that led to very good things.

What I did not like was that I don't believe that his friends or foes in government will be held accountable for anything. The voters have not held them accountable as proven by the huge percentage of incumbents continuously being re-elected. So, it is difficult to believe that he will. As for the private sector, it seems they are very cozy with the elected and appointed officials tasked with holding them accountable. Tough to see how this type of situation could result in anything other than rampant self enrichment and the ethical low road we've seen to be the norm on Wall Street as well as in the Board Room. Call it the "Old Boys Network" or "Cronyism" or whatever you like, but it seems the result is CEO's and board members don't need to perform to be paid which makes losers out of shareholders and employees. Lastly, I do not like generalizations of people such as the one heard all the time, "All the people who bought homes they knew they couldn't afford". I feel that there are so many different personnal situations in the real world that exist.

All the rest, we will see how things go! Stay positive out there! It will get better for us all soon! Take that to the bank!