Foreclosure Notices In Sacramento Continue At Alarming Rates

Foreclosure Sales, or Trustee Sales in Sacramento, the actual Trustee action or   Sacramento county trustee sale at 720 9TH ST  downtown Sacramento, held nearly every business day are still being postponed at record rates, but so are Notices of default Filings in Sacramento County.

ho long can they continue to file the default, file the notice of sale and then just postpone? Well, if they postpone for over a year, they will have to re-file the Notice of Default, as I understand

“Despite a tsunami of mortgage delinquencies we continue to see no signs of a foreclosure wave” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “Lenders and government intervention continue to delay foreclosures despite their continued failure to find a long term solution to unsustainable negative equity.”

See Foreclosureradar’s Foreclosure Report at Wereheretohelp.org

How long can this go on?

I hear through the grapevine that over 90% of the Sacramento County Trustee sales are still being postponed at courthouse steps.

But it looks as if they haven’t scheduled that many?

The entire Government, Industry and powers that be are pushing hard to get homeowners to contact their banks/servicers and get a loan modification started, yet only 4% of the trial loan modifications become permanent.

This must have a lot to do with the fact that most loan modificatrions are only for 5 years, they fix the payment problem (reductions in payment have been about $500 Ave) for a while, but there is typically no reduction in principle.  The payment terms are typically changed to a 40 or 45 year loan, with 2 or 3% interest for five years and then reverting to todays rate. So, why do that? I see many homeowners are instead just throwing in the towel even if they can now afford the payment. 

Can’t blame them. 

The negative equity problem must be addressed.

Statewide, according to Default Research Inc.

California, the country’s most populous state, saw Notice of Default and Notice of Trustee Sale recordings drop by an average of 16.8 percent in 2009, and Los Angeles County, the country’s largest county, saw foreclosures decrease by 16.5 percent. The hardest hit cities with foreclosures in the state were Los Angeles (20,256), Sacramento (13,495) and San Diego (10,745).

Understanding Foreclosure

Foreclosure– how do you mean that?

Understanding Foreclosure Timelines

Foreclosure: a process and an event…

Most of the time, Foreclosure means one of a couple of things; a process, as in “my Brother is in foreclosure”, or it can be an actual event: “that 4600 square foot home went for $243,000 at the foreclore sale the other day…”

You see, foreclosure as a process means the three steps a bank or investor goes through to take a  home or piece of property back;

The legal Foreclosure Time-Lines in California:

After you are 60 days past due on your mortgage payment, (or 90 days since your last payment), the bank can file a notice of default:

Then, 90 days after that, the Notice of Trustee Sale can be filed. No earlier than 20 days later, the Trustee Sale can be held-

So;

60 days late = Notice of default

90 days = Notice of Trustee Sale

21 days= Trustee sale

The fastest your bank can take a home back in California is 171 days late on payments or 211 days since the last payment.  Most banks and servicers are being very slow to file the initial Notice of Default- almost all wait over six months.  The Notice of Trustee Sale may take up to a year after the Notice of Default is filed.  Even after the Notice of Trustee Sale is filed, the banks/sevicers are now re-scheduling over 3/4 of the Trustee Sales, many for an additional 30, 60,or 90 days initially and then rescheduling again if they have made contact with the homeowner and there is any hope of a loan modification or short sale.  They don’t want any more foreclosures unless it is clear there is no  foreclosure solution. The writing is on the wall: Less foreclosures and more short sales for 2010 and beyond!

Tags: Foreclosure+Timelines, Understanding+Foreclosure

Loan Modification Report for December–

How many homeowners have found a long term solution through HAMP?  The numbers show catastrophic failure!

At worst 4.5% at best 13%…

I have been keeping track of the two most important numbers in the Obama Administrations HAMP Progress report that comes out every month… The number of Trial modifications folks have entered into the program, and the number of permanent modifications, or folks that have been through the three month program and then qualified for and approved their final modification offer from the bank-

According to the charts: through November: (November’s numbers included)

Number of Active Trial Modifications
697,026

Number of Permanent Modifications
31,382

So only 4.5% of these loan modification starts have actually gone on th become a long term fix for families–

Now I’m sure this percentage will increase– Almost half of the 697,000 homeowners were added in September and October, so their numbers might start showing up as permanent modifications in January and February, but what about the 250,000 that were added before September, does this really mean that at best case only 13% of people will be able to find a long term solution through a loan modification?

Foreclosures and short sales will be the only solution for the other 87%?

I’ll keep you posted and revisit this on the 10th of January, when the December numbers come out…

December Sacramento Trustee Sale Report 

November California Notice of Default and Notice of Trustee Sale Numbers…

Graph of California Notice of Defaults/Trustee Sales

Courtesy dr.housingbubble.com

Sacramento Trustee Sales Continue to be Re-Scheduled on nearly 90% of trustee sales at 720 9TH ST  downtown Sacramento most days. Imperfect foreclosure, and/or new policies under the HAMP/TARP guidelines are usually blamed.

The whole state of California has been experiencing this too, lately, even though Fannie Mae said on Dec. 15^th that they were not going to re-schedule or postpone any more Trustee Sales.

According to Sean O’tooles blog on ForeclosureRadar (www.foreclosureradar.com), the only website that tracks every California foreclosure and provides daily auction updates, issued its monthly California Foreclosure Report for for November 2009. Despite apparent headline month-over-month declines in foreclosure activity, the real story requires looking at changes in the average daily activity. November had only 18 days on which filings could be recorded or trustee sales held because of fewer days in the month, Veterans Day and the Thanksgiving Holiday, while October had 22 recording days, and 21 trustee sale days. After adjusting for this difference in days we find little month-over-month change in the statistics, with the exception of Notices of Trustee Sale which declined 13.4 percent, Cancellations which rose 40.0 percent and Sales to 3rd Parties which rose 8.0 percent on a daily average basis.

“We’ve been waiting to see some impact from the Home Affordable Modification Program,” says Sean O’Toole, Founder and CEO of ForeclosureRadar.com. “The 40 percent increase in cancellations this month is likely just the beginning of what we expect will be a wave of cancellations under this program”.

Foreclosure Filings

It is important to recognize that the decline in Foreclosure Filings is primarily due to a difference in the number of days documents can be recorded month-over-month and not fewer filings each day. With just 18 recording days in November versus 22 in October, average daily filings of Notices of Default only declined 1 percent, while Notices of Trustee Sale declined 13.4 percent from the prior month.

Buying a Sacramento short sale will definitely become easier and easier in the next several months and the process will continue to evolve, change, and morph into a more traditional transaction for years to come.

Buying A Short Sale

Contact a Certified Short Sale Agent about buying a short sale.

However; your Buyers Agent- if they are at all experienced with with todays market- will know that there are some short sales will never close!Secondary Mortgages (any Junior Liens) that have been added after the purchase or have been refinanced (any non purchase money loans) are full recourse in California– the first will go away with the house– no matter what; if it goes to foreclosure, closes as a short sale, whatever… but non-purchase money seconds may stay intact and become non-secured debt… just like credit card debt.Short Sale qualifying is just asking questions; the right questions will allow yor agent to find shortsales that have a high chance of being approved: Your Short Sale Specialist will find out things like:1) The Kind of loans involved; recourse or non-recourse.2) If recourse; the sellers (think homeowners) financial situation, hardship status and/or their willingness/ability to make a contribution, sign a note, or otherwise pay off any secondary note holders demand (which may be full recourse).3) Which banks are involved and their policies regarding first liens, secondary liens, recourse debt, hardship rules etc.4) Know the market, the absolute market value of the home– (banks don’t like to leave money on the table) what the Broker’s Price Opinion, or Appraised value of the home will be and the amount of money the first will be short; and the policies of each bank involved–If you don’t know these things gong in, you will find them out during the process, usually weeks or months into the short sale process… Contact a Certified Short Sale Agent about buying a short sale right here.  Many, many times, the short sale you have fallen in love with and cannot live without may very well become an REO.There is also the chance that your short sale will, at the eleventh hour, not be approved because the banks or servicers suddenly want to include language stating the seller agrees that the lender has the right to pursue a deficiency judgment or the balance unpaid on the promissory note… Many homeowners, when they realize this problem is not going away, file bankruptcy– again, at the eleventh hour- after you and your family have been waiting months for the home of your dreams.Make sure your Buyer’s agent is also a Sacramento short sale listing agent and a Sacramento Short Sale Specialist and works with a team that specializes in these complicated and ever-changing transactions!Short sale negotiating is definitely a moving target– it is nearly a full-time job just to stay on top of educated of all the different banks, servicers, secondary investors rules of procedure and the institutional/political policy changes.Some short sales will never close! Find out why!By the way…here’s where I remind everyone that I am NOT a lawyer, and that if you have any questions or concerns about your legal situation– get an attorney! I have several great Real Estate Law, Mortgage Law, Contract Law and Bankruptcy Law specialists that I can refer you to!

Contact a Certified Short Sale Agent about buying a short sale.

Tags: Buying+a+short+sale, Sacramento+short+sale+listing+agent, Short+sale+negotiating, Short+sales, Sacramento+short+sale, Short+Sale+Specialist, short+sale+process, Sacramento+Short+Sale+Specialist

The Sacramento Short Sale “Mirage”

Many of my Sacramento short sale home buyers have waited 4 to 6 months to close on a short sale, sometimes longer.

Foreclosure Solutions Report

Stop Foreclosure With A Short Sale

Straight out of Wikipedia:

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrower.

 Click Here For Sacramento Short Sale News

Process

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is “doing the other a favor;” a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than foreclosure or continued non-payment would entail. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion (abbreviated BPO or BOV).

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the 2009 foreclosure crisis, they are now more willing to accept short sales than ever before. This presents an opportunity for “under-water” borrowers who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure as a result.

Additional parties

Multiple levels of approvals and conditions are very common with short sales. Junior lien-holders – such as second mortgages, HELOC lenders, and HOA (special assessment liens) – may need to approve the short sale. Frequent objectors to short sales include tax lien holders (income, estate or corporate franchise tax – as opposed to real property taxes, which have priority even when unrecorded) and mechanic’s lien holders. It is possible for junior lien holders to prevent the short sale. If the lender required mortgage insurance on the loan, the insurer will likely also be party to negotiations as they may be asked to pay out a claim to offset the lender’s loss in the short sale. The wide array of parties, parameters and processes involved in a short sale makes it a relatively complex and highly specialized type of real estate transaction. Unsurprisingly, short sale deals have a high failure rate and often do not close in time to prevent foreclosure when they are not handled by a knowledgeable and experienced professional. 

The best sources of knowledge and expertise in short sales are short sale negotiators, loss mitigation specialists, and real estate lawyers who specialize in short sale.

 Consent

Short sales are different from foreclosures in that a foreclosure is forced by a lender, whereas both lender and borrower consent to a short sale. However, this consent may change at any time, and negotiations may be ongoing between the lender and borrower even while the short sale is on the market. The borrower may decide to remain and refinance their house, or become obstinate and force foreclosure. The bank may renege as well if they decide to stick with the current borrower, or if they disapprove of the sale price. Any short sale contract includes a contingency where the bank must approve the sale.

Changing consent can present a perilous situation for potential buyers. It can waste considerable time and money for a prospective buyer who anticipated a sale. Typically, deposits with the bank will be refunded but money for paid inspections or other services cannot be.

There are several defenses against this. If the seller has moved out of a property, that is a clue that they have no intention of staying or negotiating further with the bank. “Bank Approved Short Sales” are advertised by real estate advertisements, indicating that a real estate broker has verified the selling bank’s position. This still does not guarantee acceptance, and it often does not take junior lien-holders into account, but it is better than situations where the bank holding the mortgage has only been lightly involved in the borrower’s decision.

 Credit implications

Short sales are a type of settlement, and they adversely affect a person’s credit report, though the negative impact is typically less than a foreclosure. Like all entries except for bankruptcy, short sales remain on a credit report for seven years. Depending upon other credit information, it is typically possible to obtain another mortgage 1-3 years after a short sale.

While lenders sometimes forgive the remaining loan balance, other lien-holders likely will not. Further, it is common for a lender to omit updating mortgage balances zero balance after a short sale. However, willfully misrepresenting information on a credit report can constitute libel in some jurisdictions, and lenders may be sued in civil court for engaging in this behavior.

 Business

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults.

NEW GOVERNMENT SHORT SALE GUIDELINES:

Loan Mod Fails? Stop Foreclosure with Short Sale/Deed-in-Lieu!

Foreclosure Alternatives for Borrowers Eligible for MHA but Unable to Sustain a Modification

Government

Making Home Affordable

, they (the Administration) published details of a program that authorized servicers to begin modifications and refinancings under the plan immediately. On April 28th, the Administration announced additional details related to the Second Lien Program and strengthening Hope for Homeowners. Fourteen servicers, including the five largest, have now signed contracts and begun modifications and refinancings under MHA. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75 percent of all loans in the country are now covered by the MHA program.

• Short Sales/Deeds-In-Lieu Program to Facilitate Foreclosure Alternatives o

Incentives for servicers to pursue alternatives to foreclosures o

Borrower incentives to cover relocation expenses to homes that are affordable o

Streamlined process combining short sales and deed-in-lieu transactions

o Provides incentives for modifications by providing payments based on recent declines in home prices to reduce the risk of loss to lenders from modifications compared to alternatives that could result in the loss of homeownership 　

Weekly Sacramento Short Sale Foreclosure Report

Many Sacramento home buyers want to hit the jackpot and buy that Sacramento REO foreclosed home, or a Sacramento Short Sale, many of which are often under-priced by the bank or seller. When asset managers (working for banks to unload their foreclosed homes)  or a distressed homeowner price  REOs or short sales under the market, multiple offers are usually the response . This means as a buyer vying for a Sacramento Home, you could be up against stiff competition for that bank-owned home, short sale or foreclosure.

Especially now that the Sacramento Real Estate Market is short of  inventory and it’s hard to find a home that interests you,  it’s not unusual for some REO (bank owned homes) or Sacramento short sale homes in  to receive 15 or 20 offers or more. Sometimes the bank or homeowner will only respond to two or three offers by asking the selected buyers’ agents to resubmit for their buyer what is called their “Highest and Best” offer.  Sometimes the bank or homeowner simply accepts the best offer at inception. Sacramento foreclosures that enter the market as bank owned or REO, or short sales and are priced under the market or below comparable sales are usually gone in days.

If you’re wondering how you can make your offer shine above all the rest and be the winning offer, For either Short Sales or Bank Owned Foreclosures here are a few tips to help you select the right price and terms:

1) Learn the Property History

If it is an REO: ask your buyer’s agent to find out the bank’s purchase price on the Trustee’s Deed or Sheriff’s Deed. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.

Look at the amount of loans that were once secured to the property. Somewhere between the original mortgage balance(s) and the foreclosure sale price is the amount the bank will accept, if the home is under-priced.

If it is a Short-sale, have your Buyer’s agent ask the listing agent what the mortgages are- how many banks, which banks and what the balances of those loans are. It is important to see how much is currently mortgaged on the home. This information can also be deemed from tax records, is usually pretty easy to figure: If the home was purchased in 2004 for $400,000 and mortgaged for $320,000, there is probably still well over $300,000 owed.

2) Study the Situation

If it is a Bank Owned Sacramento Foreclosure: How long has the bank owned the property? How long was  it been in the “pre-list”  stage?  Were the past owners evicted? Was it vacant when the bank took over? Are their outstanding utility bills and HOA liens or Code Enforcement fines that may need to be dealt with at the eleventh hour of escrow? Ask your buyers agent to contact the listing agent if possible, many Sacramento REO listing agents are notorious about being “untouchable” or hard to contact- be persistent. Most Sacramento bank-owned agents have staff that will answer your questions.  Know about the property before you write an offer.

If it is a Sacramento Short Sale, find out about Recourse on the Second Mortgage,  if there is one. Were all loans “purchase money loans?” Make sure your buyer’s agent knows what this is and what the ramifications could be.  Be sure you are working with an agent who is a hort Sale Specialist and a Short Sale Listing Agent.  When most Sacramento Short sales will be multiple  offer competitive situations, you only want to write offers on short-sales that have a decent chance of being successful.

 3) Study Comparable Sales

Here in our market, Sacramento shortsales and Sacramento bank owned foreclosures make up to 85% of the market in the last six months or more…  so that means that every home in a radius search of the Bank Owned Property you are interested in may also be bank owned or short sales. In many cases, the list price has little bearing on the value of the home. The market value will always prevail-  If you are up against competing offers, many times other buyers will offer more than list price, they will do their homework to see what they belie market price to be and coffer that price.

• Look at the last three months of comparable sales, a mini CMA, for that neighborhood to determine how much this REO or short sale  is worth. Try to use only those homes that most closely match regarding square footage, number of bedrooms, baths, amenities and condition.
• Look at the pending sales. Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. Sometimes a Sacramento Short Sale Listing Agent will share that information and some will not.
• Look at the active listings. Those are most likely the listings other buyers will use to formulate a price because they are the only homes those buyers actually tour.

4) Review Listing Agent’s REO and Short Sales  Solds History

Most Sacramento REO agents work for one or two banks. Some listing agents are exclusive listing agents for REOs, and they do not list any other type of property. Some agents will do Elusively Short Sales, some will do a combination.  Since most Sacramento REO  and  Sacramento Short Sale agent will deal in volume, they typically apply the same pricing principles to all their foreclosure listings.

• Ask your buyer’s agent to look up the listing agent in MLS.
• Run a search using that listing agent’s name to find the last three to six months of that agent’s listings.
• Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.

5) Ask Listing Agent About Number of Offers

 If there are no offers on the Sacramento Foreclosure REO or Sacramento short sale home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.

If there are multiple offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. Short sale sellers don’t really care and the bank that is being shorted sees no benefit in a cash offer- it’s going to get cash at the close of escrow whether the buyer gets a loan or not, and a homeowner is probably going to counter for a longer escrow time, so a cash offer is really no benefit. 

If you are obtaining financing for a bank owned, then you may need to increase the price on your offer to be considered.

5) Submit Preapproval Letter

You do not want a prequal letter. You want a preapproval letter. Get preapproved from a  lender in advance. both Bank owned transactions and short sale transactions require the buyer to be fully approved.

Moreover, if it is a bank owned, get pre approved by the lender who owns the property. Do not expect to use this lender for your loan, but submit the prepproval letter from this lender, along with the letter from your own lender. Banks don’t trust other lender pre approvals but trust their own departments.

6) Don’t Ask for Repairs / Inspections up from

Make a squeaky clean offer…

On an REO or Bank Owned, sometimes banks will pay for repairs, but usually will not agree to do so at the offer stage.  Besides, remember, you are probably in multiple offer competition here in the Sacramento bank owned foreclosure market. If there are problems found during a home inspection, renegotiate after your offer has been accepted.

On a Short Sale it is very hard to negotiate repairs any time after the initial offer has been approved by the bank- if you absolutely love the house you may want to have your inspections done outside of the contract offer, getting your offer accepted and then approved by the bank is the most critical and hardest part of the process.  You may want to do your own inspections just for your information, but don’t ask the bank to pay for anything other than a pest report, if that (remember you may be in competition for the best offer). It will cost some up front money but will keep the deal clean. 

7) Shorten the Inspection Period

If other buyers ask for 17 days, for example, to conduct inspections, and you ask for 10, you will be deemed the more serious buyer.

Offer to Split Fees

On REO’s some banks will not pay transfer taxes, for example. If the you as a buyer offer to split those fees, the bank will feel more amenable to accepting the offer. Same thing for escrow and title fees– remember, this is just business .

On short sales, the most important thing to remember is that it is all about net to the bank- how much money are they going to net from your offer- do whatever has to be done to get your offer accepted by the seller and then approved by the bank.

Many banks negotiate discount fees for title insurance. If the bank will pay for the owner’s policy, the ALTA policy might cost a bit more. But it’s still a good idea to let the bank choose title if you want your offer accepted.

9) Consider the Appraisal Consequences

If you offer over list price on a Sacramento Foreclosure Bank Owned or Sacramento Short Sale, bear in mind that the appraisal will need to substantiate that price, if you are going to obtain financing for your foreclosure purchase. If you find yourself dealing with a low appraisal, you have options; so don’t despair. Remember, the new appraised value will be disclosed to the next buyer and. Most times the bank (either as the seller or the montage lender/investor of a short sale) will agree to sell at the appraised value.