June 24, 2015

Another Wave of Short Sales on the Horizon?

Posted by martikilby under 2nd mortgage, Short Sale | Tags: , , , , , , |
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San Diego short sale specialist

According to Home.com’s April Local Market Index, 46% of the top U.S. markets have achieved full pricing recovery.  This would seem to indicate that short sales caused by negative equity are on the down-turn.  However, there are some new factors that might contribute to a large increase in the numbers of homeowners seeking short sales.

Between 2005 and 2008 RealtyTrac has estimated that there were 3,262,036 HELOCs originated with an estimated balance of $158 billion that are still open loans.  Those equity lines are set to re-set between 2015 and 2018, many on properties that are still underwater.  The problem however isn’t just possible negative equity; it’s dealing with potentially higher payments.

The first 10 years of a HELOC are what’s known at the draw period when the borrower can draw from the line of credit, and repay as needed.  The payments during this period are interest only.  However at 10 years, the line of credit is no longer available and the outstanding balance must start to be repaid as an amortized loan, usually over 20 years.

So for example, if a homeowner has an equity line with a balance of $125,000 at 3.4% their interest-only payment would be $354.  When that loan re-sets and the homeowner is paying principal and interest payment more than doubles to $718.54.  This could pose a real problem for households where post-recession income gains have been limited.

Need to discuss a possible short sale?  I have seven years of experience successfully negotiating short sales throughout San Diego County.

 

November 25, 2013

Is a Short Sale Right for You?

Posted by martikilby under Experienced Short Sale Realtor, foreclosure, loan modification, Short Sale | Tags: , , , , , |
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SHORT SALE BUTTON

There are many factors that go into determining if a short sale is right for you. A short sale occurs when your lender agrees to; 1) allow you to sell your home for less than what is owed and 2) accept that reduced amount as pay-off on your loan, releasing you from any further obligation.

So here are some questions to consider if you are thinking about a short sale:

Are you upside down? Do you owe more than your house is worth?
Despite the fact that there have been significant increases in home values throughout much of the country over the last year, most people who purchased a home between 2005 and mid 2007 have yet to regain the equity they thought they had acquired. To determine fair market value of your home, consult a Realtor. Do not rely on online value estimators as they can be terribly inaccurate.

Are you struggling to make your payments? If keeping your home is creating a financial hardship, and the market in your area is relatively soft, continuing to make payments on negative equity may not be a sound financial decision.

Have you been unable to obtain a loan modification? While most lenders are reluctant to reduce the principal amount that you owe, a loan modification is an option you should explore with your lender before considering a short sale.

Will you qualify? Increasingly, lenders are allowing short sales due to negative equity, but for the most part, borrowers must demonstrate a financial hardship and an inability to continue to make payments.

What are your housing plans for the future? If you are hoping to buy again, a short sale is far less damaging to your credit than a foreclosure. Many lenders will now approve a loan in as little as 1 – 2 years following a short sale.

There are some additional benefits to a short sale including the fact that the lender will generally pay all commissions and closing costs, and unlike a foreclosure, a short sale does not have as negative an impact on your credit score. Before considering whether a short sale is right for you, it is advisable to consult an attorney and your accountant.

For a confidential consultation, please don’t hesitate to give me a call. I have successfully closed many short sales throughout San Diego County and would be happy to provide references.

 

November 22, 2013

Can’t Pay Your Mortgage?

Posted by martikilby under Experienced Short Sale Realtor, Mortgage delinquency, Short Sale | Tags: , , , , , , |
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Despite the fact that home prices are on the rise, there are still thousands of people in San Diego County who owe more than their home is worth and are struggling to pay their mortgage. Have you fallen behind on your payments? Have you been unable to work out a loan modification? Just don’t know what to do?

I wrote a free guide book entitled, “What to Do When You Can’t Pay Your Mortgage” to help answer some of your questions and explore your options. Just go to http://cantpaymymortgagehelp.com to request your free, no-obligation copy.

For many, selling their home in a short sale has been a solution that immediately put an end to the harassing phone calls and sleepless nights. Did you know…?

Relocation Allowance: Though a relocation allowance cannot be guaranteed, it is not uncommon for the seller to be paid $2,000 – 3,000 by the lender at the close of escrow to help with the costs of moving. It all depends on who the investor is on the loan.

No Deficiency Judgment: In California it is against the law for a bank to file a deficiency judgment against you after a short sale when the loan was a first mortgage on a property from 1-4 units.

No Cost to the Seller: In a traditional equity sale, the seller usually pays the real estate commissions to the listing and buyer’s agent, along with his/her share of the closing costs. In a short sale, the bank pays all of those costs.

Here are comments from a few of my clients about their short sale experience:

“Marti was able to quickly secure a qualified buyer for our home and smoothly handled all of the negotiation with our bank. It was a huge relief to be out from under a mortgage we could no longer afford.” Megan M.

“Our situation with both a first and second mortgage and different lenders was very stressful, and I was leery of doing a short sale… I had heard so many horror stories. But Marti patiently walked us through the process and thoroughly explained every step along the way. Despite a reluctant 2nd lien holder, Marti was able to negotiate the sale and get it done.” Amber B.

“My only regret is that we waited so long to list our home for sale. I would highly recommend Marti to anyone faced with a mortgage they just can’t pay.” Lane M.

If you can’t pay your mortgage, please don’t ignore the problem. It is okay to ask for help and advice. Just remember that time is of the essence. Acting early allows you to make the decision that is best for you. Wait too long and your choices disappear. Get your free booklet today or call me at 619-846-9249 for your confidential consultation.

 

April 10, 2013

What To Do When You Can’t Pay Your Mortgage

Posted by martikilby under mortgage, Mortgage delinquency | Tags: , , , , |
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Can’t Pay Your Mortgage?

 Image

If you find yourself waking up at 2 a.m., wondering how you’re going to pay your mortgage, you’re not alone.  Since the start of the Great Recession, thousands of people who never thought they’d be worried about money are struggling every month just to stay afloat.  Or, perhaps your home is now worth far less than what you owe and you wonder if it makes sense to continue to pay on negative equity.

Everyone’s situation is unique, and I certainly don’t profess to have all of the answers, but over the last four years I’ve been able to help many people find a solution to their mortgage woes.  I am not an accountant or a lawyer, so I certainly encourage you to consult the appropriate professional for answers to your specific questions.

I have written a short guide book that I would like to offer to you free of charge, with no obligation.  The guide book is designed to provide you with an overview of your different options so that you are in a better position to make the decision that’s right for you.  It begins with a one-page overview, followed by more in-depth discussion of the various options.  Click here to request your free guide, “What to Do When You Can’t Pay Your Mortgage”.

If you can’t pay your mortgage please don’t ignore the problem.   Chances are you won’t win the lottery, and your financial troubles are real.  As soon as you are 30 days late on your payment, the lender’s clock starts ticking.  There is help and you have several options.  Start by reviewing all of the information found at www.makinghomeaffordable.gov and call 888-995-HOPE (4673) to speak with a HUD approved housing counselor.  It is okay to ask for help and advice.  Just remember that time is of the essence.  Acting early allows you to make the decision that is best for you.  Wait too long and your choices disappear.

My real estate practice is in San Diego County.  Please don’t hesitate to contact me at 619-846-9249 if I can be of service to you.

What to Do When You Can’t Pay Your Mortgage

 

February 13, 2012

An Interesting Twist on Principal Reduction

Posted by martikilby under loan modification, Principal reduction, San Diego Home Values, Strategic Default, Underwater homes | Tags: , , , , , , , , |
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For most of the 22 million homeowners who owe an average of $40,000 – $65,000 more than their home is worth, the recent $25 billion dollar settlement with the banks will bring no relief. According to Robert Menendez, Chairman of the Senate’s housing subcommittee, “When you owe more than your house is worth, relief can be hard to come by.”   Among borrowers whose homes have dropped in value through no fault of their own, many choose to simply walk away, which according to Menendez, “Only exacerbates the problem.”

Menendez has introduced a bill that provides an interesting twist on the idea of principal reduction.  The Preserving American Homeownership Act would encourage lenders to write down principal balances by allowing them to share in the home’s appreciation at a later date.  The principal balance would be written down in increments over a three year period to 95% of the current value, so long as the homeowner remains current on their payments.

In exchange for the write-down, the lender would receive a fixed percentage of any future appreciation when the home is either sold or re-financed.  That share could not exceed 50%.  So if a principal balance was reduced by 25%, the bank would receive 25% of any future appreciation.

The Act would apply to primary residences only, but any homeowner could apply.  Borrowers who are in default or even in foreclosure could qualify, but would be required to make their reduced mortgage payment on time in order to remain in the program.

The article in DSNews where I read about the bill did not indicate if the Act would apply to all types of loans or whether or not the modified loans would be re-written at today’s lower interest rates. Presuming so, this Act could provide enough incentive to many underwater homeowners to persuade them to stay in their home versus initiating a strategic default.

As a fan of principal reduction, I like this idea as it seems to be a win-win situation for both homeowners and the banks.  Banks don’t take as big a hit as they would with a short sale or foreclosure, and the write-down is taken over a three year period, AND homeowners get to keep their homes with reduced payments and principal.  Even the opponents of principal reduction might find something to like about this plan!

 

February 6, 2012

Before You Call Your Lender, Be Prepared!

Posted by martikilby under Experienced Short Sale Realtor, loan modification, Short Sale, Underwater homes | Tags: , , , , , |
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If you owe more than your home is worth, and are having difficulty making your payments, you may be a good candidate for a loan modification or a short sale.  The important thing to realize is that this problem won’t go away on its own and the sooner you attempt to deal with it, the better your opportunity for a positive outcome.

However, before you pick-up the phone to call your lender, be prepared!  The person on the other end of the call is going to do a phone interview during which they will ask very detailed questions about your income and expenses.   In order to be ready you will need the following items:

  • A completed financial worksheet which outlines ALL of your income and monthly expenses. Make sure that the income you state matches the deposits to your bank accounts!
  • Last 2 months pay stubs or year-to-date profit and loss statement if self-employed.
  • 2 most recent bank statements for all accounts
  • Hardship letter
  • Last 2 years federal tax returns

This initial interview is a sort of triage, where they try to determine, what program, (if any), might work for your situation.  The more information you have available, the quicker you will be able to move to the next step.  Even if the interview doesn’t include questions related to your tax returns, these are the items they will want you to send to them so it’s best to gather everything before you get started.  When you do send or fax, make sure that your name, phone number, email and loan number are on a cover sheet with a list of the items included.  For the initial packet of information it may be best to send with a delivery confirmation so that you have proof of mailing and delivery.

Your hardship letter should clearly explain why you can no longer afford your mortgage payments.  You obviously could afford them at the time the loan was originated, what happened to change that?  Job loss?  Death of a spouse? Divorce?  This should be a heart-felt letter addressed To Whom It May Concern and be no longer than a couple of paragraphs.  Just state the facts.  It is helpful to write the letter before you call so that you have an answer ready when the interviewer asks.

On this initial interview, and all subsequent phone conversations keep a log, noting the date, time, who you spoke with and the key points of your conversation.  Always ask about the time frame for the next steps and be prepared to follow-up!  Never assume that something is happening….chances are good that your paperwork may become lost, so be ready to re-send it.  And if you don’t feel like you’re getting anywhere, ask to speak to a supervisor.  But remember that the folks working in the loan workout department are probably over-worked, and a nice comment and a polite “thank you” will make the process less stressful for everyone involved. 

Best of luck! Don’t hesitate to call or email with any questions. I also have a great Excel Financial Worksheet that I’m happy to share.  Just send me a request to marti@kilby.com.

 

 

January 27, 2012

Much Needed Changes to HAMP Announced Today

Posted by martikilby under HAMP, loan modification, Underwater homes | Tags: , , , , , |
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It was just announced that the Obama Administration is making some significant changes to the Home Affordable Modification Program (HAMP). I noted 3 key points:

1. Homeowners who are struggling financially will be eligible for a 2nd evaluation with a less stringent debt-to-income ratio.
2. The program will be extended to include investor owned properties that are used as rentals.

And ….(drum roll)…

3. The  Administration will triple incentives for lenders who write down principal balances for underwater homeowners, AND they are extending this principal reduction incentive to Fannie Mae and Freddie Mac!

It’s this last item that has me excited as I’ve been a proponent of principal reduction for a long time, as noted in my blog post back in 2010. What impact all of this will have of course depends on how quickly the new rules can be put into effect and how well all participating lenders adhere to the new guidelines.

All that being said, I’ll take any good loan modification news that we can get!

 

October 24, 2011

San Diego Home Sales Statistics

Posted by martikilby under San Diego Home Values, Underwater homes | Tags: , , , , |
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Check out the latest San Diego County home sale and value statistics. How well has your neighborhood fared in 2011? Just give me a call for specific information about your home.

 

October 19, 2011

The Harvard Professor And I Agree…..What Do You Think?

Posted by martikilby under loan modification, Principal reduction, Underwater homes | Tags: , , , , , , |
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As I’ve mentioned more than once, I’m no Economics genius. So I was pleasantly surprised to read the October 12th NY Times article by Martin S Feldstein, a Harvard professor of Economics and former chairman of the Council of Economic Advisors. It appears that Professor Feldstein and I agree that the only way to stop the drop in home values is by principal reduction.

The professor points out that for most Americans, their homes are their primary source of wealth. Since the housing bubble burst in 2006, Americans have lost $9 trillion or 40% of their wealth. This sharp decline in wealth means less consumer spending, fewer jobs and a stalled economic recovery.

Today, nearly 15 million homeowners owe more than their homes are worth and of this group about half of the mortgages exceed the value by more than 30%. The professor maintains that housing prices continue to fall because millions of homeowners are defaulting on their mortgages and the sale of the foreclosed properties drive down prices. Because most mortgages are non recourse loans, underwater borrowers have a strong incentive to simply walk away.

Professor Feldstein suggests that instead of throwing tax dollars at ineffective programs aimed at reducing interest rates, the government should address the real problem which is that the amount of the mortgage debt exceeds the value of the home.

Here is a summary of his idea: The government would reduce mortgage principal to 110% of the home value. The cost for doing this would be split between the government and the banks. This would help about 11 million of the 15 million underwater homes at a cost of under $350 billion. Considering the millions of mortgages held by Fannie and Freddie, the government would in essence be paying itself.

This would of course be a voluntary program. In exchange for the principal write-down, the borrower would agree that the new mortgage was a full recourse loan and the government could go after other assets if he defaulted on the loan.

I think it sounds fair, as everyone makes a sacrifice and we put the brakes on strategic default. It is a huge one-time cost, but continuing to allow housing prices to fall could risk another, even more costly recession. And speaking for my short sale clients, I know that most would have gladly signed up for a principal reduction if it meant saving their home.

What do you think?

 

August 3, 2011

Principal Reductions Finally on the Table?

Posted by martikilby under Bank of America, foreclosure, loan modification | Tags: , , , , , |
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If I’ve sounded a bit like a broken record over the last 10 months, it’s because I strongly believe that principal reductions are an import key to ending the housing crisis.  People who are struggling to make payments on an upside down mortgage are more likely to avoid default if they are paying on a mortgage based on 2011 home values.  Fewer defaults mean more stable values and ultimately an end to the real estate crash.  And apparently some of the banks now agree.

According to the Wall Street Journal, Bank of America is finally bringing principal reduction modifications to the bargaining table.  For months now, B of A and the nation’s other four largest servicers have been in discussion with state and federal officials in an attempt to settle charges of inappropriate activities in connection with foreclosure proceedings.  Investigations last September revealed that several servicers used illegal affidavits and faulty paperwork in their foreclosure practices, and the banks are now hoping to settle and avoid any further liability.

The state attorneys general have pushed for principal reduction as part of the settlement, but until recently the banks have refused.  The private negotiations have been going on for months, and the June 15th target for resolution has come and gone.  As a means of kicking the discussion into high gear, B of A has now offered principal reductions as a bargaining chip, and the other banks are expected to follow.

Of course, Bank of America is not offering principal reductions because they actually care about keeping people in their homes, but rather because they hope to make the problems caused by sloppy and illegal foreclosure practices go away.  But in any case, the end result could be the answer to the prayers of many homeowners facing default.

To follow this story subscribe below, drop me an email, or leave a comment.

 

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