A new software, a fancy coffee/latte maker, or worse yet another government band-aid?! The “Administration” is supposedly all about helping the American people, but does this truly help, or just bring more hardship down the line?

First, you must not be delinquent on your mortgage. You must be able to qualify just as you would for a typical mortgage, i.e., income, credit, debts, etc. You must be asking what is the point, right? HARP 2.0 is for homeowners who meet the above, but are upside down in their home value vs. their mortgage. This sounds like a dream-come-true if you wish to keep your home and meet the eligibility criteria.

Let’s look at this example….

You owe $400K on your home and it’s presently worth $200K. Real estate values are not going to sky rocket up anytime soon, so chances are VERY HIGH that your home will still be close to $200K, okay maybe $210K, within the next couple years. So, why wouldn’t you liquidate now via short sale, wait two years (that’s right…just two) to qualify for a new loan, buy a new home (or perhaps a better home) similar to your previous house at current value? Doesn’t this seem like a “no brainer” idea? Or, is it just me?

This is a business decision, no doubt. Some will have an “A ha” moment and others will prefer to stay in their home for many different reasons, or may not qualify for HARP 2.0.

However, let’s look at another example, as in values. If you owe $400K, but it’s worth $200K or even $300K, how long will it take for the market to come up to that value, in order to justify staying in the home? Well, my crystal ball is cloudy today, but I’d say you can plan on 10+ years. WHAT?! Yes, 10 or more years….maybe 15. However, your neighbor decided against the HARP 2.0 program and chose to short sale his home, buy 2 years later and is sitting back watching his value rise. He is going to be much happier with the increase in values because while your home may take 10-15 years to reach what you owe, his will have a lower balance, but a higher value….which equals a much better investment and a greater return should he decide to sell.

Let’s also look at what type of loan this will become should you choose it. When you originally purchased your home your loan is considered a “purchase money loan” which has no recourse in the state of California. However, when you choose to refinance, even through the HARP 2.0 program, that new loan is now considered a recourse loan. This means that if you have financial difficulty in the future and wish to short sale or you unfortunately lose your home to foreclosure, the lender can come after you for the difference!!!  (see this link for more info and next week’s topic: http://www.irs.gov/individuals/article/0,,id=179414,00.html)

While I certainly can’t walk in your shoes and tell what you “should” do, I can give you the pros and cons so that you can make an “informed” decision. Better yet….speak to your CPA/Accountant/Attorney before making ANY decisions, so that you can truly decide…

HARP Schmarp….where’s The Beef, or is it a Real Deal?

Having trouble keeping your head above water?  Can’t make your house payment?  Need help, but don’t know where to turn and who to trust?  Feeling guilty and shameful about your current financial meltdown?  If you said YES to any of these questions, please

don’t feel alone!  Okay, so you’re probably thinking… sure, she’s just a Realtor fishing for clients!  But wait, there’s more…  I have a foreclosure on my credit too!  I know the shame game first hand!  I know EXACTLY what it feels like to lose my home to foreclosure.  I know that I should have tried a short sale.  Why didn’t I?  Because I was filled with shame and felt incredibly guilty about the financial mess I found myself in.  I knew what I was signing when I signed my loan papers.  At the time, I wasn’t in over my head.  Life was good!  Life was sweet!  My husband and I were living “The American Dream”!  Didn’t you feel like you were living the dream too?

Then, my husband lost his job and life as we knew it came crashing down!

I was embarrassed to admit to my family and friends, let alone my peers, that we couldn’t manage our money…that we couldn’t make our house payment…that we were in default!  I tried repeatedly to work with the mortgage company on a loan modification, but this was 2007 and loan mods were few and far between.  Often times, my frequent phone calls to the mortgage company ended with the shame game; in tears and slamming the phone down in frustration, shame and guilt!

I have been in Sacramento Real Estate since 1995, and was licensed in 1997…which was also a ‘down market’.  I knew what a short sale was, but I just couldn’t believe I was now losing my home.  I wanted to keep my home…..more than anything I thought I ever wanted in my entire life.  Then, I met a local Bankruptcy attorney who asked me some tough questions; what was the current value of the home, how much did I owe, how long would it take the market to recoup a loss of $350,000, was I willing to stay in the house beyond that time making payments that didn’t make good financial sense….and on and on he went…with all the right questions to which I honestly didn’t like the answers.

The answer was glaringly obvious….get out NOW!  Short sale the house and move on!  However, I was paralyzed by the shame game.  I just couldn’t do it…. sadly, the bank foreclosed.  I was a dollar sign and it was negative.

Don’t fall into my infamous footsteps too!  Preserve your dignity and your credit!  Short sales are the way to go…  they allow you out with NO RECOURSE!  That’s right… participating banks are forbidden by law (this year only…2012!) not to come after you for the difference.

Call me (916-806-HOME) for more Sacramento Real Estate info and no shame game!

Let’s talk about this for a minute…  I think that the general public probably gets confused with “realtor-eese” because we clearly do speak a different language.  I’ll attempt to enlighten you on this set of initials (also known as ‘bragging rights’), especially since they directly apply to short sale and/or foreclosure knowledge and hopefully experience.

First…. the capitalized initials CDPE, stand for Certified Distressed Property Expert.  Suggesting that the Realtor has completed approximately 16 hours of education via a 2 day live workshop studying Alex Charfen’s method of understanding and completing short sales.  Alex and his wife Cadey began marketing themselves a few years ago as masters of short sales and were so profitable that they now teach their ‘method’ to Realtors all over the U.S.  Their website is www.cdpe.com.  This designation allows a Realtor to set themselves above the rest of the proverbial short sale pack because this is the only designation available to Realtors to show their short sale savvy.  Is it a marketing gimmick?  No, and it’s nice to have something to set you above your competition.  The flip-side of course is that you don’t need the designation to know how to successfully complete a short sale (I was successfully completing them long before the Charfens came along).  However, experience (as well as education) is ALWAYS key to understanding, negotiating and closing a short sale.  Frankly, many Realtors are just not sharp enough to handle these complex transactions and unfortunately their ineptitude causes their clients to lose their home to foreclosure.  Gads!….as my Mother would say!

In summary, if you need short sale and/or foreclosure advice or assistance of that nature, PLEASE speak to a Realtor with the CDPE designation behind their name. And yes, that would be me~

Happy Wednesday~

Shelly Long, CDPE
Sacramento Real Estate Foreclosure Prevention

CDPE Foreclosure Prevention

Information a homeowner needs in order to determine short sale or loan modification

As a professional in the Sacramento Real Estate industry, I’m frequently asked; is it better to do a loan modification or a short sale?  The answer is complex and varies according to each situation;

1. Do you have verifiable hardship?  Examples would be divorce, disability, death, job loss, medical issues, living check to check with no reserves.  The key here is “verifiable” so keep that in mind because whether or not you choose loan modification or short sale doesn’t matter as all banks, large and small, will verify your hardship as well as your financial documentation supporting your hardship.
2. Documentation typically required for both a loan modification and a short sale is:  most recent two years federal tax returns with signatures, most recent two months bank statements for all banks/accounts and including all pages even if blank, most recent two pay stubs for all borrowers on the loan.  In addition, you must include a hardship letter describing your hardship.
3. Do you have the financial means to make a house payment?  This will help determine if you should attempt a loan modification or a short sale.  Your debt to income ratio will be a large factor in determining your ability to pay.
4. Are there additional mortgages against the home?  Typically, it is difficult to modify additional mortgages, so this is yet another factor.
5. And finally, what is the reason for staying in a mortgage that the present value of the home will NOT support?  For example, if the present estimated value of your home is $200,000, but you owe $300,000 or more, what is the reason you must stay in that home?  Principal balance reductions are VERY RARE, so it’s likely that you’d be paying what you currently owe over 40 years (typical for a loan modification), but if you short sale then you cut your losses entirely.

The final question will ultimately reveal whether or not it’s to your advantage to apply for a loan modification or a short sale, but whichever you choose make sure you choose to work with a professional who is experienced and does NOT charge any upfront fees!  SB 94 (passed Oct 2009) prohibits anyone, including attorneys, from collecting upfront fees for a loan modification.

http://www.dre.ca.gov/cons_adv_fees_alert.html

In addition, Realtors do not charge upfront fees for short sales, so do your homework and make sure you don’t pay in advance for anything!

I am a longtime licensed Realtor, specializing in Sacramento Real Estate, Short Sales and Loan Modifications.  Please contact me anytime for FREE advice~

Happy Monday~!

Short Sales vs. Loan Mods

Real Information For People Buying & Selling Homes In This Distressed Housing Market

If you are planning a real estate transaction in the next five years, tune in now!
Welcome to my new blog regarding real estate issues, trends and information that affect Sacramento area real estate. As we enter 2012, people are wondering what, if any changes will happen to the real estate market in Sacramento. The most current data shows some trends that suggest the bumpy road we are on is slightly less bumpy. 

Looking at Sacramento Real Estate Trends up to January 7, 2012, A few things are clear, overall prices remain under pressure. In the four county region, (Sacramento, Yolo, El Dorado and Placer), the average asking price per square foot of single family home is around $110. This is down from $118 from January 2011 and $123 in 2009. Average asking price is down at $185,000 a drop of about 5% year to year.

What might be a positive number is that the inventory of homes for sale has declined 1.1%. Inventory of homes for sale typically declines in the winter. In September 2007 Sacramento housing inventory peaked at 25,800 units. January 2012 finds the area with it’s lowest inventory levels since at 12,514. Beyond seasonal swings, fewer homes for sale could be due to many factors including streamlined mortgage refinancing which gives more homeowners incentive to stay in their homes. Regardless the reason, fewer homes for sale is key to stabilizing prices which are somewhere between stalled and still trending slightly downward,  Unfortunately these statistics and a drive down community streets do not reflect a few realities such as homes banks are sitting on and homeowners in trouble.

There are some trends that suggest plenty of challenges ahead. In particular, I think the most disturbing statistic is that the majority of foreclosure filings are on homes with a market value from $0-200k. Far less impacted by foreclosure in the Sacramento region are homes in the $200k-400k range. Homeowners in the Sacramento area in houses with market values above $400k are far less likely to be distressed or facing foreclosure.

This news suggests those in Sacramento selling homes with prices around the average median price in the region will face the most challenges due to that is where the most distressed inventory is. Conversely, this also suggests if you are looking to buy a home with a market value near Sacramento’s median price of $185K, there are plenty of deals.

In Sacramento the business of selling and buying homes slows in the winter and the inventory typically reflects this. It will be interesting if the statistics continue to trend in a manner that suggest lower inventory which will bode well for sellers. Having said that, buyers need to be prepared to buy when the home that suits them becomes available, regardless if they don’t like doing so in the winter. One reason this is important is because investors are starting to build their property portfolios up.

Think about this, if you were in the business of renting homes, this would be a great time to increase your portfolio of rental homes. Not only are prices still trending lower, but former homeowners need places to live. Remember, not everyone walks away or allows their home to foreclose because they can’t afford their mortgage. Many walk away because they don’t want to keep paying on an upside down mortgage. In many cases, former homeowners can move down the block and rent a similar house for far less than their previous mortgage payment. Investing in rental properties is also increasing because due to tighter lending practices, fewer will be able to buy homes.

Finally, I have a tip. If you drive streets looking for “For Sale” yard signs, slow down and look carefully! This tip has more to do with what is for sale than traffic safety. In particular, many banks do not post “For Sale” signs on bank owned property. The reason is that too many “For Sale” signs tends to have a negative impact on the price of homes in the vicinity. There are also some security issues that crop up if half the houses on a block have “For Sale” signs on them. In many cases you can tell if a home is occupied. Tell-tale signs of an unoccupied house include a lock box, weeds in the garden, faded community fliers on the door knob or no lights on in the evening.