Buyers rush to meet tax credit deadline

According to Campbell/Inside Mortgage Finance, nearly half the homes sold in March were to 1st time homebuyers (defined as a buyer who has not had an ownership interest in a home in the last 3 years).  The benefits to them were up to $8000 tax credit on the purchase, which really helped drive sales in the last few months.  What we are seeing is the normal spring into summer increase in sales, coupled with this tax credit, which is really heating up the market, especially in certain price ranges (those that are considered 1st time homebuyer neighborhoods). 

While this is all great news, and we are seeing the stock market start to come back up too, one of the things that I worry about as a Realtor is the after - effects of this.  What happens come April 30th, when the tax credit expires?  I know for a fact that a lot of the buyers in the market are going to get back on the fence and wait around again, I just have this feeling.  I hope it is not like Cash for Clunkers...which totally tanked the car market once it expired.  Only time will tell.

Until then, best regards--

Ben Blonder
Broker/Owner, Kapital Real Estate LLC
Cell 970 420 6166
ben_blonder@yahoo.com

Program Will Pay Homeowners to Sell at a Loss

Summary of an article that was just published in the New York Times:

Program will pay people and lenders to short sale.
More than 5 million households are behind on their mortgages.
Millions of potential foreclosures will totally ruin any hope of this economy turning around.
Treasury department wants to streamline and standardize the short sale process.
Servicing bank will receive $1000.  Another $1000 to a second lienholder if applicable.
Homeowners will receive $1500 in relocation expenses.
Will be much less harmful to the credit rating of the borrower than a foreclosure would be.
Lenders will use real estate agents to determine valuation of properties, which gives them a minimum amount that they would accept to sell short.
That figure would not be shared with the owner, but if the bank gets an offer that is at least that minimum amount, they would have to accept it. 

Pretty interesting stuff here, now we will just have to wait and see if the banks actually start agreeing to and using this program. 

Citigroup to help troubled homeowners

Citigroup just announced a plan that will let homeowners that cannot pay their mortgages (and don't qualify for any federal relief funds) to stay in their homes for up to 6 months before foreclosure, providing that at the end of the time period, the homeowners turn over the keys to the bank and leave the home in good condition without damage.  What banks see a lot with foreclosures (and I have seen this WAY too many times myself, especially in places like Greeley) is this: the homeowner knows they are going to lose their home on a certain day.  A couple days before the eviction, that homeowner takes all the appliances and sells them.  Sometimes they will break into the walls and grab all the copper pipe too, basically anything that has any value whatsoever.  This alone will reduce the value of the bank's asset certainly. 

What REALLY does the damage for banks is the truly vindictive people.  Sometimes what they will do is stuff all the drains and toilets with towels or what have you, grab their things, let the water run, and leave.  Most times the banks won't know this has happened for a few days at the earliest, at which point the damage is unfixable.  A lot of times these types of homes have to be stripped to the studs, and have a full mold remediation (generally by a company that specializes in such things, sometimes known environmental hygenists).  This is the last thing that any bank wants to deal with.  I saw just this situation in my neighborhood...if the home had not had mold, it would have sold for around $150k.  But since it did have mold, and the bank sold it as is, it went for $108k!   See what I am saying? 

Fannie Mae offering subsidy to buy their foreclosures

This is really exciting.  My wife and I are actually in the market for a new home right now, and we are really looking hard at Fannie Mae Homepath properties.  Fannie is offering up to 3.5% for closing costs or new appliances (partnered with Whirlpool) or a combination of the two.  This is a great incentive, especially because we all know most foreclosures need a LOT of work, so we need to save our cash for that.  Although we are also looking at Homepath Renovation Mortgage financing too, which would allow us to finance our fix-up costs and just get it all done upfront.

We put our house on the market just last week, had our first two open houses Sat and Sun, they went GREAT!  Wish us luck as we try to get this place under contract and move into something else!

Ben

Freddie Mac CEO says housing market is near bottom...what do you think?

Foreclosures are still dampening this market and will continue to do so for the near forseeable future, but overall our national housing economy is at or very near the bottom, this from Freddie Mac CEO Charles Haldeman. He also predicts that mortgage interest rates for a 30 year fixed rate will remain between 5 and 6% through the end of 2010. Our biggest concern is the glut of foreclosed properties that are hitting the market at extremely low prices. This is going to hurt values in the short run, but once these clear the market we should start to see appreciation again (but nowhere near the double digit increases we saw during the housing bubble, and that is good, because obviously those gains were smoke and mirrors, and totally unsustainable). Let’s hope for the best!!

Record number of foreclosures in 2009

Quick little informative article here.  Looks like 2010 is going to be a banner year for foreclosures as well, unfortunately.

After doing a short sale, when can you buy again??

First of all let me start by saying I AM NOT AN ATTORNEY OR TAX PROFESSIONAL, and do not mistake this article as legal and/or tax advice!


Ok, disclaimer done.

I sell a LOT of short sales. Approximately 70% of my business in the past 2 years was either short sales or foreclosure. Over these past few years, I have learned a lot about the ins and outs of short sales.

One question I get a lot is: “how will completing a short sale affect my credit?” I can answer confidently that a short sale is MUCH better on your credit than a deed in lieu of foreclosure (4-7 years before a borrower can be considered for another loan) or an actual foreclosure (at least 5-7 years, sometimes up to 10 years before a borrower can qualify for another loan). Now put those two options up against a short sale: borrowers who complete a short sale can be considered for any type of loan as soon as 2 years after a short sale!

Fannie Mae wants short sellers to buy again in the future. Short sales are encouraged by the government. Obama’s Making Home Affordable plan incentivizes lenders, servicers, and borrowers to complete a short sale rather than go deed in lieu or actual foreclosure. However, unfortunately, short sales have NOT been streamlined yet. Every bank seems to treat them differently. For instance, with Bank of America, I had a short sale under contract for over 12 months. It did eventually close somehow, but imagine the frusteration.

One thing I can say is: our industry is extremely dynamic, and constantly changing. This is even more true with the short sale industry. I feel like a lot of the banks are getting their acts together. I even had a short sale that was less than a month from contract to close!

What I hope to see is more “pre-negotiated” short sales. In other words, a lender knows that the borrower will not be able to continue making payments and will want to do a short sale. Well, that lender can get the valuation of the property and give the homeowner or their realtor a “strike-off” price to short sell the property at. This would really alleviate the main objection most buyers avoid short sales for: that is the sheer amount of time it takes to get these deals approved and accepted by the lender. I have been starting to see this happen more, and I am guessing that is a trend that will continue.



Ben Blonder, Broker/Owner Kapital Real Estate LLC

Co-borrowers qualify for the $8000 tax credit too!

This VERY short article clears up this issue.  Take a look, it is from the Colorado Assoc of Realtors.

FORECLOSURES (and short sales) are hurting appraised values

Take a quick read of this article from National Assoc of Realtors.  This has been an ongoing problem, especially in such areas as Weld County where there are tons of foreclosures/short sales.  The problem is this:  appraisors are using foreclosures and REOs as comps to non-distressed properties, which just serves to bring the whole value of the neighborhood down and further our bad situation with property values.

Right now, the government is reviewing appraisal standards, and it is likely that there will be sweeping change in that industry, and soon.

Obama's incentives to speed up the short sale process

Check out this article, it is the most recent and relevant info from Washington Post.

Ben

Homeowner Affordability and Stability Plan

President Obama unveiled his plan to help stabilize the housing market and keep millions of borrowers in their homes.The Homeowner Affordability and Stability Plan includes two initiatives to help struggling homeowners. One is a refinancing program for homeowners with less than 20% equity in their homes, or who owe more than their home is worth. The second program attempts to lower monthly payments for homeowners at risk of losing their home. In addition, the plan includes a third initiative to support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.Many of the plans details are still being worked out and will not be announced until March 4, here is an overview of the plans main components.

Refinancing Initiative:
Under current rules, those families who own less than 20% equity in their homes have a difficult time refinancing and taking advantage of the historically low interest rates. Therefore, the refinancing initiative in the new plan provides refinancing help for homeowners with less than 20% equity in their homes or who owe more than their home is worth. This initiative is open to homeowners who have conforming loans which are guaranteed by Fannie Mae and Freddie Mac, and who owe up to 5% more than their home is worth. According to the plan, credit-worthy or responsible homeowners can refinance their mortgage into a 30- or 15-year, fixed-rate loan based on current market rates. The refinanced loan, however, cannot include prepayment penalties or balloon payments. For many families, this low-cost refinancing may help reduce their mortgage payments by up to thousands of dollars per year.As with the rest of the plan, details about this initiative will be released at a future date including what, if any, credit score requirements will be included.

Stability Initiative:
This initiative aims at providing help to individual families as well as entire neighborhoods by helping reduce foreclosures and stabilize home prices. It is intended to help homeowners who are struggling to afford their mortgage payments, but cannot sell their homes because prices have fallen significantly. The goal of this initiative is simple: reduce the amount homeowners owe per month to sustainable levels. To accomplish this, lenders are encouraged to lower homeowners' payments to 31 percent of their income by lowering their interest rate to as low as 2% or by extending the terms of the loan. In addition, lenders can also lower the principal owed by the borrower, with Treasury sharing in the costs. Homeowners who are current on their mortgages but are struggling can still apply for this program. As such, this is one of the few programs designed to help homeowners who may face delinquency soon, but are current at the moment.Since the focus of this initiative is on helping families and neighborhoods, investment properties do not qualify. This initiative also includes a number of additional elements and incentives that benefit homeowners and lenders alike, including:

Incentives to Help Borrowers Stay Current:
To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

Reaching Borrowers Early:
To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind. Supporting Low Mortgage RatesAs part of the Homeowner Affordability and Stability Plan, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market and to help maintain mortgage affordability. This portion of the plan will use using funds already authorized in 2008 by Congress for this purpose.The increased funding will enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners, and provide forward-looking confidence in the mortgage market.Again, the government plans to unveil the final details of the plan on March 4, 2009. For now, you can download a sheet of common Questions and Answers produced by the government at: www.treas.gov/initiatives/eesa/homeowner-affordability-plan/ConsumerQA.pdf

I will continue monitoring the plan as new information becomes available. If you have any questions or would like to discuss how this may specifically impact you, Id be happy to sit down with you. Just call or email me to set up an appointment.

Ben Blonder
Coldwell Banker
Cell 970 420 6166
Email ben_blonder@yahoo.com

SHORT SALE LISTINGS, some good deals here!

Alright...so first go to:

www.coloproperty.com

Click "Input MLS #"

Then put in the following numbers, and check them out. If you are interested in seeing any of these homes, please let me know by email (ben_blonder@yahoo.com) or cell (970 420 6166)

MLS#s:

586796
585704
584642
588894
589404 ****** this is the best of the bunch

MY experience, as a short sale BUYER

So I was under contract for over 2 months on a short sale with a partner that I invest with. We were very hopeful and excited that we were going to get the property, at a screamin deal. We had our offer submitted for quite a while.

It was a property that I had listed myself, and it was scheduled to go to foreclosure auction on Jan 7th of this year. Well, we thought that since we had an offer that was reasonable, not just some stupid lowball, that the bank (Suntrust, 1st and 2nd loan) would be willing to extend the foreclosure sale date and give us time to negotiate with them. The reason I thought this was because I have worked with Suntrust, as recent as last November which is only 2 months ago. I had a deal with them that I was the listing agent, and the buyers DID lowball, and Suntrust extended the foreclosure sale date (I didn't get this listing until 1 week before the foreclosure sale) and we closed the short sale, for WAY less than the seller owed.

So I was going off of a past experience.

Well, it turns out they rejected our offer. We found this out the day before the foreclosure sale. So my partner and I hit the phones...desperately trying to get them to extend the sale date. I told them that if they just let me know what the 1st lien needed to net---because we knew what the 2nd needed to net for them to sign off on the deal---that we could fill in the blanks and list it at the right price to get them what they needed.

For some reason, Suntrust totally denied us and foreclosed on the property. You can imagine the despair. It was HORRIBLE! Because they didn't give us a chance. We found out, about 10 minutes before the sale happened, that Suntrust was only SERVICING the loan for Wells Fargo, so Wells Fargo was who was calling the shots. They DIDNT TELL US THIS!!! If we had known that, we have worked with Wells before, and we have contacts in their loss mitigation department that we could have called on, etc. We feel like Suntrust really dropped the ball on this deal.

The funny thing is....we KNOW exactly how much was owed, we know that the 2nd lien was wiped away because of the foreclosure sale, we know all the costs associated with foreclosing, AND WE KNOW IF THEY WOULD HAVE TAKEN OUR OFFER THEY WOULD HAVE MADE BACK WAY MORE MONEY THAN THEY WILL NOW. I am going to follow this property and watch to see what happens....I bet it is listed for about $140k. I bet they end up with an offer of $130k...which was what our offer was. But then Wells has to pay a realtor 6% to list, they have to pay the foreclosing attorney, they have to pay insurance, utilities, cost of money/time, clean out costs, etc. My guess it that they will net about $15k less than if they would have just taken our offer.

It goes to show that not all banks are rational...in my humble opinion. The short sale industry is extremely dynamic, constantly changing, etc. Especially with the "bail-out" money not all spent yet...we have no idea what is really going to happen.

I will update this blog with the list price and sale price of this property when it hits the market. I cannot wait to see how dumb Suntrust/Wells Fargo was by not accepting our offer.

Happy New Year

Welcome to 2009. It should be a VERY interesting year in all things financial. Banks are still failing, people are still losing their homes and jobs, the stock market is in turmoil, and we have a new president about to be installed. Enough already!!!

Does anyone have ANY idea how this is all going to shake out? I mean, we are definitely in a recession, there is no doubt about that. Now, can an economic stimulus package help save our economy? I am pretty sure that will be one of the first things on Obama's desk.

How about distressed mortgages? Can the government take the necessary steps to offer a 4.5% interest rate to all homeowners? Wouldnt that go a long way towards reducing foreclosures? That is one of many options.

One thing is certain, and that is UNCERTAINTY. We just do not know where our economy, real estate market, job market, etc is going to be even one year from now. It is very tough to predict the future, especially when the present is so chaotic. There has never been such a dynamic, constantly changing financial environment. All we can do is to try and keep up with it and realize how it will affect us in the future.

Ben Blonder
Coldwell Banker
Cell 970 420 6166

Where to go to find listings

www.coloproperty.com
www.coldwellbanker.com

Both of these sites will allow you to see all the active listings.

Again, if you want any listings emailed to you or any short sales/foreclosures, just let me know.

I would love to help!

Ben Blonder
Coldwell Banker
Cell 970 420 6166

A cool commercial

My partner's son created this commercial for us...and we sent it out to all the Realtors in town. You see, a lot of real estate agents do not know about short sales or do not like to work them because of all the extra work entailed. So we sent out this commercial to see if any of them have deals they are sick of working or if they knew anyone that needed help.

By the way, if you want a professional looking commercial like the one below, my partner's son created this and he can make one for you too--

http://animoto.com/play/e18OkCVCq4VzsIorjDixsQ

List of resources for you

Larimer County Public Trustee:
Address: 315 West Oak Street Room 400
Fort Collins, CO 80521
Phone (970) 498-7453 (970) 498-7455 Fax
Office Hours 8:00 a.m. - 4:30 p.m.Monday - Friday

Weld County Public Trustee:
Susie Velasquez 809 9th Street
Greeley, CO 80631
(p) 970.352.4365 (f) 970.352.5091
Office Hours: Monday - Friday 8:00 am - 4:30 pm

Foreclosing Attorney:
Castle Meinhold & Stawiarski
999 18th Street, Suite 2201Bin 1
Denver, CO 80202Phone:
(303) 285-2222Fax: (303) 285-2223

Colorado Foreclosure Prevention Hotline Website:
http://www.coloradoforeclosurehotline.org/index.cfm
Phone: 1-877-601-HOPE

Foreclosure lists

If anyone wants a list of properties that are in foreclosure or going into foreclosure, please let me know and I will send if your way.

You can request it by emailing me (ben_blonder@yahoo.com) or call 970 420 6166 which is my cell.

Ben Blonder
Coldwell Banker

Links to articles about short sales

Explains the Mortgage Debt Forgiveness Act of 2007:
http://en.wikipedia.org/wiki/Mortgage_Forgiveness_Debt_Relief_Act_of_2007

Great article that goes over the good and the bad of a short sale for all parties:
http://www.bankrate.com/brm/news/realestateguide2008/buying-short-sales-a1.asp

Realtor.org page of short sale articles and links:
http://www.realtor.org/library/library/fg335

IRS site:
http://www.irs.ustreas.gov/



Please note that I am NOT an attorney, nor a tax professional. I am not attempting to give legal or tax advise.

Transcript of article I wrote that was published in the Fort Collins Coloradoan real estate section

Facing Foreclosure? There is a Solution

Homeowners fall behind on mortgage payments for any number of reasons. The mail may go unopened and the phone may go unanswered, and these people may not know where to turn. Being foreclosed on is one of the most stressful, upsetting, and potentially damaging things that can occur to a household or family. It can be devastating.

But there is hope to those in this seemingly helpless situation. It is called a short sale. In essence, a short sale is a lender accepting less than what is owed on a loan instead of taking the property as a foreclosure. With all the subprime loans out there, and the ARMs ever adjusting upwards, many people ultimately will not be able to afford their mortgages. Once they miss a few payments, the bank sends the notice of foreclosure sale (NED, or Notice of Election and Demand for Sale). A lot of folks just give up and assume there would be no way to make up the missed payments, sell the property (which may not even be worth what they owe on it) or pay a Realtor. It is a dark time for these people, and they don't know that they have options.
Short sale negotiation is an arduous task for a realtor; requiring persistence, diligence and the unwavering vision of success, but a successful outcome is well worth the effort as it can help save the credit of the homeowner and avoid a foreclosure on their credit report.

A successful short sale has many benefits. Not only is a foreclosure sale avoided, but the Sellers' actions help guide them back on the road toward credit restoration and positive self-worth. Also, since the Mortgage Debt Forgiveness Act of 2007 was passed, the amount of money forgiven by the bank is no longer treated as taxable income for primary residences. Finally, most people do not realize that the seller pays no commission. The realtor’s commission comes out of the proceeds of the sale, so effectively the bank pays it.

There are many reasons that lenders are willing to dispose of a property via short sale: for one, the average foreclosure costs a lender around $60,000. Also, they do not have to take yet another property (which is a non-liquid asset) on their books, they do not have to worry about trying to sell the home, they avoid future headaches such as debt service, hazard liability, attorney fees, property neglect, etc. All a lender really cares about are hard numbers, sad but true, so they look at it as a cost/benefit analysis…in other words, will it cost them less to foreclose or to allow the short sale? In most cases the short sale makes the most sense.
You can sell your home via short sale if you are behind on payments but the foreclosure notice (NED) has not been issued, or if the NED has been filed and there is an actual date on which your home will be auctioned at the foreclosure sale. Let me detail the steps involved in conducting a short sale. 1) Property is listed on the MLS. 2) An offer to purchase the home is received (the foreclosure sale is postponed during the negotiation process—so even if your foreclosure sale date is next week, quick action can delay the sale). 3) Listing agent, having received Seller authorization to speak with lender, negotiates with the loss mitigation team at the bank holding the mortgage. 4) Lender approves the sale and issues a “short sale acceptance letter” which details the terms of the sale. 5) Deal closes.

Now depending on the lender, it may take months to get acceptance. Each lender has their own guidelines. An appraisal may be ordered to determine true market value; a negotiator is assigned to the file; and the file may have to be approved by the investors holding the loan. This can take anywhere from one month up to six months or more, depending on who the lender and investor is.

The time table is often a source of frustration to the buyer, who must wait, usually impatiently, for the deal to be approved. However, for that buyer, there are no better deals on the market if they have the luxury of time. Lenders are in a tough spot right now, and in this unique market, buyers can present aggressively low offers and often get an even better deal than they could on an actual bank-owned foreclosure.

Selling a home via short sale does not generally cost the homeowner a penny, but by the same token, they cannot receive any proceeds from the sale. Sometimes the lender will ask the homeowner to sign an unsecured promissory note for a portion of the debt, but generally we have only seen that apply to situations where the home is not owner-occupied (an investment property). What happens most often is the bad debt is written off by the lender and the short sale acceptance becomes full satisfaction of the amount owed. The seller will always be allowed to review the terms of the deal before signing off on it. Short sales can result in negative credit reporting, because of the missed payments and forgiven debt, but again, a foreclosure is much worse and stays on credit much longer. Any loan can be a candidate for short sale; there are no limits that we have seen. Anyone in a hardship situation should consider this type of deal as an alternative to foreclosure. We highly recommend speaking with a CPA or tax attorney before pursuing this type of sale if you have questions about legal and tax liability.


BIO: Ben Blonder has been a licensed Realtor for over 3 years, is originally from Chicago IL, and has a Bachelor’s degree from the Univ of Illinois. Millie Mitchell has been selling real estate for 9 years, and selling short sales for 5 years. She has 3 kids and is originally from Louisiana. Both work at Coldwell Banker Residential Brokerage, 702 W Drake Rd Bldg A, Fort Collins, 80526, Ben’s cell 970 420 6166 Millie’s cell 970 391 8356, Ben’s email ben_blonder@yahoo.com, Millie's email milliemitchell58@gmail.com

Short Sale Defined

Thanks for coming to this blog. The first thing I am going to do is define a short sale:

Short Sale: A sale where the lender will agree to accept less than the full amount of the mortgage. This allows you to sell the house to an investor or other buyer for a good price, while the lender recovers the bulk of the amount due without having to pursue foreclosure proceedings.

That is the long and short of it.

A short sale may work for you if:

1) you are behind in your mortgage payments
2) your house is not worth as much as you owe
3) bank has started the foreclosure proceeding
4) you foresee yourself having a financial hardship in the near future that may cause you to miss payments.

All of these deals have to be looked at on a case-by-case basis to determine the likelihood of success. My success rate with short sales has been over 90% (over 90% of short sales I list end up closing and NOT being foreclosed on).

Call me to discuss your unique situation...it depends on how much you owe, how many loans, what lenders, etc.

Ben Blonder
Coldwell Banker Residential
Cell 970 420 6166
Email ben_blonder@yahoo.com