Foreclosure

At least a few times a week I get an inquiry from a would-be-homebuyer who has found a house in foreclosure on realtytrac or some other foreclosure site, and they want to purchase the house and want to know they can do it or request my help in doing so.

A HOUSE IN FORECLOSURE IS NOT NECESSARILY A HOUSE FOR SALE!

The truth is unless the house is listed for sale or you have personally approached the owner and they have agreed to sell to you - you can't buy a house simply because it is in foreclosure.

BUT WHY CANT I WORK WITH THE BANK TO BUY THE HOUSE?

Until the lender completes the foreclosure process, they do not own the property and therefore cannot sell it. It is not theirs to sell.

BUT IF ITS ALREADY FORECLOSED BUT NOT YET LISTED CAN…

Credit events such as short sales, foreclosures, bankruptcies and deed-in-lieus present special challenges to former homeowners wanting to get back into homeownership after a home loss. While these former homeowners are generally in a better position financially after relieving themselves of an overleveraged home or excessive debt - there are usually some obstacles in the way of being able to purchase a home again, such as:

Credit score: All these events have some impact on the credit score. It will take some time of establishing good credit again to get yoru FICO scores back up to where you will considered for a new loan.

Down payment: Although there are a few programs that will loan at 100% of value, most lenders will want at least 3.5% of the…

Has Connecticut finally hit bottom and is starting to recover? Perhaps...there are some signs that we have hit an upswing in sales recently, and increases in values would reasonably follow. However, even if we have turned the corner here in CT - the massive lost equity since the boom years for purchases and refinances ensure a slow recovery as folks remain underwater in their homes for years to come. Meanwhile - short sales and sales of foreclosed property (REO) continue on. 

So far - first quarter closed short sales in 2013 are up just a tad from first quarter of the prior year (+1%), while REO sales are up 13% in the same time period. It may be too early to tell exactly where we will end up by the end of this year but a look at the past 5 years…

Sometimes short sales get complicated. Sometimes they get denied the first or even second time around. Sometimes sellers just want to give up. They figure they'll just "let it foreclose". Heres the story of one my former short sellers who decided to do just that.

In September of 2009 I listed the clients multi-family home. At this point the value of the home had dropped to about half the mortgage value and my client had decided he did not make a good landlord after all but he couldn't shake his "investment" without a short sale.

Within a month we had a strong cash buyer for the home for $110k. Within 2 months Chase had determined that was "not enough" and they turned the short sale down.

We decided to go back on market and the second time…

What a year it was!  While media reports of nationwide housing recovery abound…here in Connecticut the statistics tell a rather different story. There's some good news and some bad, but looks like we have a way to go before we hit any significant housing recovery here in the Nutmeg State. 

Let’s take a look at the overall market first. The good news: Yes, sales did increase. In fact, sales jumped 15% from a dismal 2011 up to levels we have not seen since 2009. I don't recall 2009 as any great year either...but hey…it could be worse!

 The bad news: While sales did in fact increase, values continued on their downward trend:

And onto distress sales in CT - short sales and foreclosures. Short sales in Connecticut continued to grow…

Even after losing or short selling a home, most folks will eventually want to own another home. While re-establishing credit and meeting other lending guidelines will be necessary, there are minimum waiting periods for getting new loans after significant negative credit events. Below are the timelines for new loans for  (Fannie Mae and Freddie Mac) Conventional Conforming Mortgage Loans meeting FNMA and FHMLC  guidelines, (FHA) Federal Housing Administration Insured Loans, (VA) Veterans Administration Guaranteed Loan and  (USDA) United States Department of Agriculture Rural Development Loans. Please note that extenuating circumstances may have an impact on some of these timelines, and these basic guidelines do not serve as a substitute for a…

According to Bloomberg.com Connecticut now leads the nation in home price declines. 

Contributing to the decline is Connecticut's rising unemployment rate, currently at 8.5%. Connecticut also recently posted a tremendous jump in notices of default and home repossessions. With an average of 656 days for a bank to foreclose on a Connecticut home, it seems it may be quite some time before we crawl out of this mess.

Read the full article here.

Many of my CT short sale clients plan to file bankruptcy or have been discharged from one. There seems to be significant confusion about what exactly happens to a house in bankruptcy and 90% of the time bankruptcy attorney's advice to upside down homeowners is "JUST LET THE HOME FORECLOSE"

While bankruptcy may alleviate your legal responsibility to the debt secured by the mortgage, it does nothing to the title of the home. Your lender does not "own" your home as a result of a bankruptcy and won't until they gain possession of it via a foreclosure or a deed in lieu. So until a foreclosure happens, YOU are still the legal owner of your property EVEN AFTER A BANKRUPTCY. If the home forecloses later - you still had a foreclosure happen to you, or if…

Q: Will I still owe the difference after my CT short sale?

A: It all depends on what your short sale approval letter says.

Connecticut is a deficiency state. What that means to any CT homeowner is that your lender can pursue you for a monetary loss resulting from a foreclosure or short sale of your property - unless your short sale approval letter says otherwise. Many people mistakenly believe that letting the home foreclose, walking away or simply sending in the keys absolves them of their responsibility for their mortgage - however this is absolutely not the case.

When you signed up for the loan you agreed:

• To pledge the property as collateral for the loan
• To sign a promissory note to pay back the loan

IN A FORECLOSURE the…

Almost 16 months after investigation into robo-signing began, a deal has been reached between feds and 5 of the nation’s major loan servicers: 

• Bank of America
• GMAC/Ally
• Wells Fargo
• Citi
• JP Morgan Chase 

The settlement goes down as the largest consumer financial protection settlement in US history and settles state and federal findings that servicers violated state foreclosure laws. Borrowers in 49 states (Oklahoma did not join the settlement) will be eligible for relief including: 

Principal reduction for eligible borrowers:  Homeowners behind on their payments will be eligible for loan modifications, including first and second lien principal reduction. Due to the number of borrowers affected the reduction is expected to…