$25 Billion Foreclosure Settlement

Latest Details on the $25B Foreclosure Settlement

Less than a month after the five largest banks in the nation settled with the federal government over alleged foreclosure mismanagement details begin to trickle out.

The settlement, first announced in February of this year,  was prompted when government officials and banks looked for an out to ‘Help the Public’ when addressing many past foreclosure issues whether policies or habits. In question… the numerous accounts of illegal or questionable foreclosures. The allegations and subsequent settlement sees 25 billion dollars being divided up amongst past and present home owners.

Some of the aid (settlement) are outlined below:

  • The settlement does not free banks from criminal action. Federal and state officials can still pursue criminal action against banks for any wrongdoing over foreclosures.
  • Banks will be required to adopt new processing standards for foreclosure. For example, banks will be unable to pursue a foreclosure when home owners are being considered for a loan modification.
  • Banks have agreed to pay $5 billion to federal and state government officials, with a portion of that money going to compensate about 750,000 Americans who have been found to be wrongfully foreclosed upon from 2008 through 2011. Affected home owners will receive $2,000 checks.
  • Banks have agreed to pay about $20 billion to help home owners avoid foreclosure. The majority of that money will be allocated to reducing the mortgage principal and modifying loans for about 1 million underwater home owners.
  • Banks must comply with the terms of the settlement or face stiff penalties. Banks are required to complete all loan relief requirements as part of the settlement within three years; 75 percent of it is to be fulfilled within two years. Any bank that violates the agreement will be fined $1 million for each violation, capped at $5 million for repeat violations.
  • The mortgage settlement only applies to mortgages held privately. It does not apply to mortgages held by Fannie Mae and Freddie Mac.

Banks that are part of the settlement include Ally Financial, Citigroup, Chase, Wells Fargo and Bank of America.

The penalties for non-compliance vary as some banks have negotiated to reduce their penalties in exchange for cutting principal amounts upon a refinance for suffering homeowners.

 

 

Foreclosure Properties – Fact & Myth

 

Don’t jump to conclusions. Foreclosure and pre-foreclosure properties have many situational variables. People have a tendency to lump them into generalized categories. That can be detrimental. Each has its own pros and cons. The best advice; don’t base any decision on the sole fact that it is or isn’t a foreclosure property. Judge rather by the individual property and its merits and/or drawbacks.

Stick to the facts. Interestingly countless articles exist pertaining to the sale of ‘distressed’ properties. Short sales, trustee sales (auctions) and REO (bank owned) properties are all the buzz. Yet in so many of the articles exists strong opinion mixed with the basic facts. From teaching you how to make a vast fortune buying them to the guilt of taking advantage of some ones misfortune. Here is how to shake it all out and differentiate. Simply go to an unbiased and qualified source; an expert with nothing to gain or lose by educating you.

Employ a specialist. For the most precise and current information seek out a Realtor possessing a CDPE (Certified Distressed Property Expert) certificate. They are specifically trained in this arena. If at all possible find a Realtor who is also a listing agent for foreclosed properties. These are the Realtors who have been and are in the forefront of the foreclosure market.

If you want the facts without sentiment give us a call or request further information through this site. Sure we have the credentials and experience but you’ll get none of the rhetoric; just the facts.

5 Tips to Buying Often Not Considered

 

There’s a huge difference between being pre-approved and pre-qualified    

Getting pre-approved and not just pre-qualified can put you in the strongest negotiating position possible. Additionally many sellers will no longer accept an offer from those merely pre-qualified.  Pre-approval can normally be obtained within just 24 hours and signifies that the information you submitted to the lender has been verified not simply reviewed and the lender fully intends to fund the requested loan amount. To the seller this often means you are serious, capable and the only conditions to be met are your purchase offer and a satisfactory appraisal. That’s powerful!  

 

Spent any time calling on real estate advertisements or ‘For Sale’ signs?                                           
You’re calling to ask a few questions… It sounds innocent enough. What you may not realize is that Real Estate ads and signs are designed to capture the interest of buyers and generate leads for the sale. Basically to engage a conversation for the benefit of the seller. At face value that doesn’t sound too bad, after all you may be interested in buying the property. But most people don’t stop to think about what this can really mean. Keep in mind the agent that placed the ad or posted the sign represents the SELLER not you the BUYER. Their primary fiduciary duty is to that seller and only secondarily to you if a purchase offer is written. Sounds a little one-sided doesn’t it? Ask your personal agent to do the calling for you. It’s their job and it can easily place you in the driver’s seat while protecting your best interests. They work directly for you and what makes it even better is that the seller pays their commission. A win, win!                                                            


Select your personal Realtor

Prepare to interview. Your Realtor will be an important part of your life for a while. Beginning with your home search and extending through the entire purchase process the right Realtor will be invaluable. The wrong one may lead to worse than disappointment. You can refer to our web page  ‘Choosing the Right Realtor’ for some great information at: http://www.fresno-re-group.com/choosing-the-right-realtor. 

 

Traditional, Pre-foreclosure or Foreclosure?

It’s amazing how much ‘wisdom’ and/or hearsay leads buyers to a specific type of property sale. Sadly much of the reasoning we here is ill conceived and often neglects to consider all things of pertinence. The fact is no matter what type of sale it is there will always be some great values out there. You simply need to know how and where to look for them. Each type of sale condition has it’s pros and cons. Which is right for you? Look for help from a Realtor that listens to your needs without bios. Refer to the section ‘Choosing the Right Realtor’.

 

When possible sell your current residence before you buy another

If you have a residence to sell do it before searching for another unless you can comfortably afford both. Those wishing to purchase a new property making that purchase contingent upon the sale of their current property may be setting themselves up for disaster. Firstly your offer is much more likely to be turned down because of the obvious uncertainties that lay ahead. Even worse you may choose to pay more for the property in hopes of getting your offer accepted. But the highest and most expensive liability is the potential $ loss you may be in store for. Let’s say your contingency offer were accepted. There will undoubtedly be some sale timeframe you’ll have to comply with. If for any reason there are problems with the sale of your current property you may be forced to either lower the selling price substantially to entice a hurried sale. If this doesn’t yield a closing of escrow you may have to relinquish the full deposit made toward the new property.  Play it safe, sell before you buy when possible. 

A Great Time to Buy if You Have the Right Agent

Interesting …    One of the biggest purchases made in a lifetime; often so little thought given to who can best represent you the buyer. Consider what’s at stake; your time, your money and maybe your quality of life for the foreseeable future. All things considered the selection of your Realtor could literally have a profound affect your life.

So, how do you choose the right professional to represent you? Interview and ask the right questions. Many people tell me this is a scary thing for them. There’re a little timid or simply don’t interact with strangers well. Easily solved, invite someone you know well for support. Team up on the agent.

Who should you interview? Ask your family, friends and associates about recommendations based on their personal experiences. The likelihood is that you can find a bevy of opinions by just asking a few people. Don’t rely on hearsay,  advertisement or hype. Call and talk to the selected candidates to see if you have a basic personality match.

How should you set up your interviews? Always set up your interviews during a short period of days. Maybe one each evening consecutively. Do remember to take notes, lots of notes. That way what each agent can be judged comparatively and on their own merits.  

What questions should you ask?

Do you work primarily with buyers; if so why?

Do you work full-time as an agent; if not, why not?

How long have you been a real estate agent?

How many transactions have you been responsible for and closed in the past 2 years?

How many buyers are you presently working with?

What hours do you make yourself available?

Can you give examples of your negotiation skills?

Are you well-acquainted with the area where I plan to look for a home?

Are you familiar with various financing options and have relationships with the representative lenders?

Are you educated in the different types of sale conditions (traditional, pre-foreclosure & foreclosure)?

Can you give me three references of buyers you have worked with recently?

Do you arrange for the inspections and home warranty?

Can you explain my reports such as pest, home inspection and appraisal?

At what point do you consider your responsibilities to me to be concluded?

Do you have any professional designations and/or awards? If so please elaborate.

 

If you follow these simple guidelines the chances are good your transition will be an easy one. Good luck.

Fresno Area Real Estate; A year In Review

Here it is… The good, bad and the ugly.  Time to close out another interesting year in Fresno Area real estate and reign in another. After you read this article tell me if you think the glass half full, half empty or are we half way to nowhere.

 

 To date trending has been a mixed bag overall. It seems the buyers are taking full advantage of the plentiful inventory, low prices and great interest rates. The less qualified are standing by the sidelines as lenders scrutinize more than in recent years and FHA raises their fees. Property owners are still realizing the pain of a local economy headed in an uncertain direction.     

 

The Data: Total sales top all of the last 10 years except 2009 at 8428 homes sold year to date. That should come as no surprise with the median sales price at its lowest since 2002 at only $140,000. That equates to just 90% of what it was this time last year. That’s a whopping 9.5% decrease overall. A considerable drop indeed. Some indicators predict a bottoming of values sometime late next year. However, the looming predictions of a 2012 dumping of toxic assets grow stronger. The foreclosure moratoriums and hesitations due to litigation may be at an end. With that we conceivably could see a large influx of REO’s coming onto the market soon. If that’s the case, don’t look for any kind of stabilization until at least 2014 – 2015. Pre-foreclosure sales have been on a slow and steady increase now topping out at 18.5%, traditional sales remained steady at 42% and REO sales declined 1.5% to 39.5% of market sales. Average home values are now 48 +/-% of the peak in 2006.

 

In a Nut Shell: Financing buyers, don’t sit on the fence waiting too long for prices to drop further. Apparent government intervention, stricter lending guidelines and FHA fee hikes may all be making loan qualification more difficult for some of you in the future. Cash investors, don’t be a hurry. Only grab up the very best for now. Wait to see what the spring may bring for the REO market. Sellers, no changes; there is some great opportunity to upsize but the future is strewn with uncertainty.     

 

*Statistics and figures are based on currently available data from 2011; January through November. For comparative purposes all pertaining years’ data is similarly based. Source – Fresno MLS.

Time to buy your next investment property?

 – Don’t cut corners or rely on others to do your homework –

 Let’s assume you’ve found a property you wish to buy. You know by now what you can afford, that your agent will manage your contracts and disclosures, escrow will handle your transactional affairs and the title company will make sure your chain of title is not clouded. Sounds like things are all taken care of doesn’t it? Not necessarily. I’ll give you an example of someone I know that thought so.

The scenario: An investor, savvy to the marketplace, buys a small apartment complex.  A great price, a nice building and easily rentable with little repair. Escrow closed fast as this was a cash transaction. 20 days to be exact. Two weeks later it was refurbished and ready for rent. Complete occupancy took only two and a half weeks. Gross monthly returns minus expenses and vacancy rate showed a complete return on investment in about four years. Four years, give or take, to repay the total amount invested and reap a fine profit yield from there on. Add to it the fact that current market value was about 40% higher than his original investment. A great investment indeed!

Here’s the glitch, in wanting to free up some cash for future investment he wished to finance this property to obtain a cash-out loan. He arranged for the property to be appraised prior to applying for the loan as this would be inevitable anyway. It seems a formal appraisal revealed something unbeknownst to him. You see, when purchasing the property, as a way of determining actual value, he ordered a cost saving Broker Price Opinion. Not a full appraisal. The unexpected surprise…  there had been a zoning change some years before his acquisition. Though the building was ‘Grandfathered in’ as a legal non-conforming property (acceptable as it was), it could not be replaced in the event of a 100% loss. If a catastrophic fire occurred it couldn’t be rebuilt. No lender would finance this property without written assurance from the local planning department that it could be. This would take a Conditional Use Permit. The cost; over $3800 in application fees and no guarantee the permit would be issued. Oops…

In this case the added financial burden is minimal. However, there are any number of things that can crop up to spoil your day. Don’t cut corners or rely on others to do your homework.