New Initiative In NJ for Home Owners in Foreclosure

New Jersey has implemented a new initiative called the NJ Judiciary Foreclosure Mediation Program for home owners who are in foreclosure.  NJ is trying to help prevent as many foreclosures in the state as possible.  Foreclosures are not a winning solution for any of the parties in today’s economy.  The home owners don’t want to lose their homes, the banks don’t want any more asset on their books that will take months to dispose of (at a substantial loss, probably), and the municipalities don’t want the vacancies and loss of property tax revenues.

So, if you’re one of the NJ home owners currently facing foreclosure, check out our web site that outlines the different options you have (the sale of your home is NOT the only option you have) besides waiting for foreclosure.  We also have details on the NJ Judiciary Foreclosure Mediation Program.

Tags: foreclosure, Foreclosures, new jersey foreclosures, stopping foreclosures

Use Bankruptcy to Stop Mortgage Foreclosure

It is sad but true that bankruptcy is a sure-fire way to stop mortgage foreclosure on your home. That being said, you do need to know what you are doing and you do need competent legal help to make it happen. Not everyone qualifies for bankruptcy and you have to file the right kind of bankruptcy in order to stop mortgage foreclosure on your home.

Chapter 13 bankruptcy involves coming up with a three to five year plan to pay back everyone that you owe. This kind of bankruptcy is essentially a way to restructure your debt. You will still need to pay everyone at least a portion of what you owe but it gives you longer to pay them and within terms that work for you. In order to stop mortgage foreclosure with this kind of bankruptcy, you will need to make sure that your mortgage is part of this debt restructuring. A good bankruptcy attorney will make sure that everything is handled correctly to make that happen. This is the only kind of bankruptcy that can stop mortgage foreclosure on your home and allow you to keep your home.

Filing Chapter 7 bankruptcy can delay the sale of your home but you will not be able to keep your home if you file this kind of bankruptcy. This kind of bankruptcy essentially erases all of your debt. If you are willing to give up your home, need to buy some time to find another place to live, and will not be able to pay any of your debt, this may be a good option for you. Again, a good bankruptcy attorney will be able to advise you as to the best option for you.

If you decide to declare bankruptcy to stop mortgage foreclosure on your home, you will need to inform your lender that you have declared bankruptcy. They cannot stop mortgage foreclosure on your home unless they know that you have declared bankruptcy. Bankruptcy is also not a painless solution. It stays on your credit record and will affect any loan that you try to get for the next 7 to 10 years. While bankruptcy can be a good option in order to stop mortgage foreclosure, it is one that has a price. Be sure that you understand what that price is before you decide.

You can stop mortgage foreclosure on your home by filing bankruptcy. A good bankruptcy attorney will be able to tell you what kind of bankruptcy you need to file and how it will affect your financial future. Be sure you understand all of the risks and costs involved before deciding. Be sure to seek legal advice from a professional attorney before making any moves in this direction.

Tags: bankrupcy, Foreclosures, stopping foreclosures

Renters Can Stay in Foreclosed Home According To Fannie Mae

On Tuesday, Fannie Mae announced that it would allow qualified renters of foreclosed properties owned by a government-controlled mortgage company to stay in their homes.

Under the National Real Estate Owned (REO) Rental Policy, renters of homes acquired by Fannie Mae will be offered a new monthly lease at market-rate rent or if they desire, financial aid to help them move.  Fannie Mae stated that it will hire real estate practitioners or property management companies to manage the properties while the units are for sale.

The properties must still meet all state, local building, and safety codes.

Tags: Fannie Mae, Foreclosures, foreclosures for sale, National REO Rental Policy, renters

Some Tips for Buying at a Foreclosure/Sheriff’s Auction

If you’re thinking about purchasing property (for either your own use or as an investment) at a sheriff’s sale or foreclosure auction, below is some advice given by some experienced auction buyers/investors.

1. Pay cash. Most auctions require you to close in fewer than 30 days. In many cases, that will not be enough time to get a bank loan. Even though hard money loans are an option, the going rate is usually 15 percent plus points and immediately refinancing may not be a viable option.
2. Check the place out. Most auction companies working for banks will let you get in with an inspector a week or so before the sale.
3. Get a separate appraisal. Hiring an experienced and knowledgeable appraiser can keep you from getting caught up in the auction frenzy and over-paying.
4. Look for short/distress sales. Don’t wait for the property to end up at a sheriff’s sale or foreclosure auction, try to negotiate a short sale prior to foreclosure of the property. A warning, though, buying properties short takes patience, but if you have time on your hands you are likely to get a very good deal.

The last thing you need to be sure you have is a professional real estate agent working on your side. You’ll need someone who knows the ins and outs of the housing market and the specific areas that the property is located in. An appraiser can give you the current value of the property, but a professional real estate agent can give you insight into the neighborhood market, trends in the area, and issues that they are aware of. After all, the professional real estate agent works with those factors on a day-to-day basis.

Tags: auction sales, foreclosure auctions, Foreclosures, foreclosures for sale, real estate for sale, sheriff sales, short sales

Banks Not Allowing Exceptions for Short Sales?

There seems to be a new game in town.  Sellers who are seeking short sales are encountering a new twist to the approvals from banks and lenders.  The lenders are agreeing to let some short sales go through, however, they want the home owners to sign a note promising to pay some or all of the balance due.  These debts that could burden borrowers for the rest of their lives in terms of their credit and financial viability to rent currently or buy another home in the future.

Moody’s Economy.com estimates that about 10 million home owners have negative equity, a condition known colloquially as being upside down or underwater. By next June, the forecasting company expects the total to rise to 12.7 million; this is a quarter of all home owners who have mortgages.

“The first wave of foreclosures involved a lot of investors who just disappeared,” says Lance Churchill of Frontline Seminars, which teaches real estate practitioners how to negotiate with lenders on short sales. “Now, home owners with jobs and assets are underwater and want to sell. The banks want as much as they can get, today or in the future, and the owners want to get away clean.”

Now comes the conundrum.  If the lender does a short sale without extracting anything from the seller, everyone in the country who is upside down could try to wiggle out from under and banks will take a fresh wave of hits. But if the lender pushes too hard, the borrower will default, leaving the bank in worse shape.  It’s a extremely difficult balancing act to find a mutually acceptable solution.

The real estates agents are the primary solution to this issue.  The real estate agents have to stop using the short sales as a gimick to drive business to themselves.  Since we expanded into the pre-foreclosure market we have heard some real horrendous stories from home owners about some of the agents that they have spoken to or have dealt with.  It seems that a large majority of the real estate agents in our market are using the short sale as a gimick to entice home owners to sign a listing agreement with them by either touting themselves as experts in that field or guaranteeing the short sale will go through fast.  Both of these advertisings are WRONG.  Every single short sale is unique becuase each bank and each case worker has their own set of guidelines and rules they use.  Additionally, with so many agents pushing short sales onto unsuspecting home owners, and those home owners being led to believe that they will be getting something (a clean slate) for nothing, the lenders are being overwhelmed with short sale applications.  This results in thre lenders taking more time to make a decision.

So, it does not come as a surprise that the lenders are now pushing back and not going to allow that many debt forgivenesses.  Lenders are also pushing back on the listing agent by trimming the commission that they will allow.   The agent who proposed the short sale and listed the property under those conditions now attempts to short the agent who represents the buyer. 

The listing agent (LA) is told by the lender that they will only pay a 3% commission on the sale.  The LA then tells the buyers agent (BA) that the lender will only allow the BA to get 1% commision, thus keeping the lion’s share for himself.  The LA also tells the BA that if they don’t accept this 1% then the deal is off and they can explain to their buyer why they allowed the deal to collapse. 

As Foreclosure Prevention Consultants we never recommend that a financially distressed home owner entertain a short sale as a primary alternative.  Why do other agents do so?  Because many other alternatives do not put any money in their pockets, even though they would be of more benefit to the home owner.  Our recommendations are always to avoid foreclosure, first and foremost, then to try to stay away from marketing the home as a short sale.  Always, and we do mean ALWAYS, try to work out a mutually agreeable solution with the lender.  They don’t want the house and they don’t want to lose any money, either.  It is to their benefit to keep the home owner in the house, making some type of payment, and allowing the market forces to increase the value of the home at a normal rate and over the long-term.

With this new revelation of lenders not alolowing as many forgivenesses the only people to gain from using a short sale as a primary solution is the real estate agent and everyone else who will charge a fee for the transaction.

Terry Iwaniw
Foreclosure Prevention Consultant
REALTOR Associate
RE/MAX Home Team
609-417-1086

Tags: Foreclosures, mortgages, real estate sales, short sales

What’s The Story on Short Sales and Foreclosures?

In April of 2008 the NATIONAL ASSOCIATION OF REALTORS® conducted an on-line survey of members on issues related to the credit crunch, foreclosures, and short sales. They released approximately 5,800 responses. Below is a summary of the results of that survey.

Short Sales
What is a short sale? A short sale is usually defined as a case in which a bank or other mortgage lender “discounts” the balance of the loan, usually due to a borrower’s financial or other economic hardship. The property owner/borrower then sells the property at that lower price and the proceeds from the sale are turned over to the lender. Typically, short sales are done in order to prevent foreclosure.

In the national NAR survey, REALTORS® indicated that overall 40 percent of their clients have been involved in a short sale. And of those REALTORS® that participated in short sales, 55% of them reported that they had assisted the buyers and 45% had assisted the sellers.

We are always being asked about short sales because buyers in New Jersey, based on what they are reading in the news media, belive that a large portion of the homes being marketed are short sales. To clear up any misconceptions that anyone gets from reading the mainstream news media, the top states in terms of the percentage of REALTORS® involved in short sales were

• Nevada (65%)
• Rhode Island (52%)
• California (52%)
• Florida (50%)
• Arizona (47%)

The states with the lowest percentage of REALTORS® involved in short sales were:

• Vermont (less than 1 percent)
• Wyoming (11%)
• Mississippi (17%)
• Alaska (17%)
• Delaware (18%).

Since short sales involve some write-down by the lender of the amount owed, the survey asked REALTORS® about the extent of write-downs. More than a quarter of respondents who participated in short sales, approximately 26.7 %, stated that the short sales involved more than 20 percent debt forgiveness. Only a small percentage, about 4.4 %, said that the short sales involved less than five percent debt forgiveness.

Foreclosures
REALTORS® were also asked about the share of active listings in their market (or in their multiple listing service) were foreclosed properties. The median percentage of “foreclosure” listings was
6%. More than a 1/3 of respondents didn’t know the number of active listings were foreclosed properties. Also, some MLS’s do not list foreclosed homes. Almost 15% of the REALTORS® indicated that one to five percent of their market listings were foreclosed properties. Overall, this is an extremely low number as compared to what the news media’s articles would lead you to believe.

Credit
In addition to asking the participants about short sales and foreclosures, REALTORS® were also asked about recent availability of credit and what percent of their clientele were having difficulties/challenges
in obtaining approval for mortgage loans. Over a third of respondents indicated that all or nearly all of their their clients/customers encountered no problems in getting a loan.

But there were differences in some states. Fully two thirds of the participating REALTORS® from Alaska reported that their clients had no problems obtaining approval for a loan. Similar trends were reported in New Jersey (59%), Montana (48%), Wisconsin (47%), and the District of Columbia (46%).

Postponing the Homebuying Decision
Some potential homebuyers have been “on the fence” – perhaps waiting for prices to dip further, for interest rates to decline, or for their personal financial/economic situations to improve. In a difficult housing market, it is sometimes challenging to determine the factors that are influencing a buyer’s decision whether or not to purchase a home.

The survey asked REALTORS® if their recent clients had postponed the home buying decision. More than half indicated that their clients did actually purchase a property. But more than a 1/5 reported that buyers wanted to wait for home prices to decline even more before purchasing. Almost 8% said that their buyers were not able to purchase a home because they needed to sell their current home in order to use the proceeds on their next home purchase. But only 3.9 percent participants reported that buyers postponed a home purchase for personal reasons.

Some Positive Signs for the Future
Now, for some good news! Mortgage purchase applications are up according to recently released data from the Mortgage Bankers Association. The purchase portion of the MBA’s Mortgage Applications Index increased by 6.4%, from 349.0 to 371.5 for the week ending September 5, 2008. That is a fourth consecutive weekly increase. What this means is that buyers are returning to the market, it may be at a moderate pace but it’s still in numbers that can be measured. It may take some time for customers to absorb the recent positive housing news, the affordable home prices, a large selection of existing inventory, and the still historic low mortgage rates, these factors are already attracting the fence sitters.

Tags: Foreclosures, foreclosures for sale, home buyers, mortgages, real estate market, short sales

The I-Team Attempts to Help Families in Pre-Foreclosure Crisis

Laurel Springs, New Jersey – September, 02 2008 – After speaking to numerous homeowners about their real estate experience with the so-called “experts” in short sales and pre-foreclosure home selling situations, Linda and Terry Iwaniw of RE/MAX Home Team have decided to expand their business into the pre-foreclosure market so that more home owners facing foreclosure have an opportunity to prevent their homes from being foreclosed on.

Linda and Terry Iwaniw can sympathize with those homeowners that are facing foreclosure because they have been where these homeowners currently are. Years ago, The Iwaniw’s were facing foreclosure due to a job loss and they seeked the advice of professionals for help. One of those professionals was a real estate agent. Unfortunately for the Iwaniw’s, the real estate agent was not putting their best interests ahead of his. Looking back to that time, the real estate agent that The Iwaniw’s attorney recommended did little more than trot his investor friends and broker friends through their house looking it over before the Sheriff sale to see if the house was worth their bid. In over six months the agent did not bring one legitimate buyer in to look at the house, just investors and other brokers “previewing” the property. He did nothing to help Linda & Terry. Linda and Terry have been very reluctant to service this market because of their own horrendous experience. However, after speaking with many former homeowners who lost their homes because the “experts” dropped the ball, they felt compelled to do what they can do to help others who find themselves in similar circumstances that they themselves experienced.

The fact of the matter is there are no “experts” when it comes to these pre-foreclosure situations unless you have experienced for yourself, first hand. Every circumstance is different; every bank or mortgage company has different requirements. With such a diversity of circumstances and companies it is impossible to be an “expert”. Another fact is most of these “experts” only able to close 1 in 10 short sale properties. That leaves 9 homeowners out in the cold. You can contact them at http://www.i-teamhomes.com/foreclosure.htm or call them directly at either 609-417-1084 (Linda) or 609-417-1086 (Terry).

Linda and Terry Iwaniw are REALTOR Associates with RE/MAX Home Team, and are known as The I-Team. They pride themselves on their focus on customer service and the fact that they treat their customers as real people not just a transaction; and unlike most real estate agents, they don’t treat the pre-foreclosure market as a gimmick to get more leads.  When you hire Linda and Terry you deal with them, directly. They do not pass you to some underling like so many others do. You can reach them at their web site at http://www.i-teamhomes.com/.

Tags: distress, Finances, Foreclosures, home sales, homeowners, mortgages

The Latest Foreclosure News – Or What’s Happening to NJ Foreclosures?

Essentially, nothing newsworthy is happening on the foreclosure front in the New Jersey Market. In the latest from the news media the headlines read Nation’s foreclosure plague widens. Well this can’t be good news for those of us in the real estate marketing business. this will bring out all of those buyers that think that the market in New Jersey is a prime market to get a home for almost nothing. That the home owners will be dropping to their knees in glee in being able to sell their home for almost nothing. To be happy that these buyers will be able to brag to their friends about the great deal they made.

Well, here’s a reality check. Not in New Jersey. If you read the whole article and not just the headline, you’ll soon learn that if you are looking for such leverage in the State of New Jersey that you’re living in the wrong state. New Jersey isn’t even in the Top 5 of states with high foreclosure rates. Sorry. Houses are still being sold by provide owners who are looking to sell their homes at the market rate. Their neighborhoods have NOT been devistated by a high number of homes having been foreclosed on and then being sold by banks and mortgage lenders at lower then prevelant market prices, thus causing a further decrease in home prices. More and more home owners are either withdrawing their homes form the market or allowing their home’s listing agreement to expire and not
relisting. They’d rather do this then sell their home for either less then what they owe on it or leave themselves no money for their next home purchase.

One of the key factors that many of the buyers seem to forget is that the home owners who are not financially distressed will need funds from the sale of their current home to purchase the next one. If they don’t get enough money for their next purchase, they won’t be selling their current home. In the vast majority of cases in New Jersey, that is the way it is…simple and straightforward.

So, what states are leading in foreclosures? Which are the Top 5 states? Where can you have a large amount of choices of foreclosure homes? Well, pack up you bags! You’re going to have to move to one of the following states -

1. Nevada – has the highest number of foreclosure homes with 1 out of 106 homes.
2. California – is second with 1 out of 182 homes.
3. Florida – is right behind California with 1 out of 186 homes.
4. Arizona – is next with 1 out of 195 homes.
5. Ohio – is a distant 5th at 1 out of 375.

Notice that New Jersey is not even listed? According to market research information from the NJ Association of Realtors, while other states have seen home prices plummet, homes in New Jersey have generally maintained their value. Specifically, as an example, Atlantic City, NJ homes sales prices were $264,600 in the first quarter of 2007 while they were $277,400 in the first quarter of 2008, this is a +4.8 increase from a year ago. According to the article from CNN, foreclosures drive prices down. Overall, the market areas where we conduct the majority of our business (Camden, Gloucester, and Salem Counties) is still strong, as shown on the chart below.

Click Image to Enlarge

If you’re a first time home buyer, work with us and we work to eliminate the possibility that you could end up in the same situation as the current home owners facing foreclosure. If you are a current home owner who is financially distressed and need help and advice with your home, call us…we’ve been where you are and have learned much through trial and error. We work so that YOU don’t make the same mistakes we did.

Terry Iwaniw
REALTOR Associate
RE/MAX Home Team
http://www.snewjerseyhomes.com/
http://www.i-teamhomes.com/
http://www.terryi.com/
609-417-1086

Tags: 2008, Association of REALTORS, first time buyers, Foreclosures, home owners.real estate sales, homes sales, housing market, NJ Association of Realtors, NJAR, real estate market, realtors

HUD Owned Homes – Gems in the Rough

Are you looking for a bargain in your new homes?  Have you ever considered buying a HUD Owned home?  What are HUD Owned Homes?  A HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim. These are homes that had an FHA-insured mortgage and the homeowners defaulted. The lender then deeded the home to the Secretary of HUD in exchange for an insurance claim payment.

So, you may want to check out some HUD Owned homes and see if they meet your needs.  Please remember that these homes may have been neglected by their original owners due to being in financial trouble and the lender may have done some amount of clean up after foreclosing on the property.  HUD will have only some basic clean up done on them after they receive the deed from the lender.  If you would like us to try to help you find the right HUD home for you, complete the form that you will find here.

Tags: Foreclosures, homes for sale, HUD, HUD homes, reals estate for sale

Do We Cheer or Do We Panic?

As many of you have read, the US Government has enacted the new Housing and Economic Recovery Act of 2008 this past week.  The basic summary of this new law can be read here .  The NAR has sent out announcements about how this is something that will help the home owners and boost the housing industry.  If there is something to help distressed home owners, I am mostly for it.  There was an announcement recently about rule changes in the way lenders must process foreclosures in the State of Maryland.  I welcome this because the mortgage industry has the clout to demand that borrowers are investigated to insure that they didn’t acquire their mortgage funds through fraud.  However, who is making sure that mortgage lenders didn’t use predatory practices to sell their financial instruments?  The State of Maryland is enacted some rules that slows the process down a bit and  puts the burden of proof on certain aspects of the mortgage on the lender.  But…that’s for another blog entry.  You can read about the Maryland rule changes here.

The same day that I received an e-mail announcement from NAR about the new law, the same day numerous mortgage reps sent me their summaries of the key points of the law, I received another e-mail message telling me that because of certain provisions of this new law that home ownership was going to plummet, that the housing market was never going to recover.  The e-mail message urged me to take drastic action and contact my representative, to sign petitions, to do whatever I had to do to get this provision changed/reversed.  What was this provision?  It’s one of the key points in the summary of this new law…it is point # 5:

“Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.”

OK.  On the surface someone reading the law could interpret to believe that people can’t get (as gifts) their downpayments.  However, the provisions in the law state that if funds are provided from a NON-PROFIT source, that it would be allowed.  So, who sent me the e-mail message that the law was going to reduce home ownership?  If you guess ed one of the Downpayment Assistance Companies (those that do so for a fee/profit), you are absolutely correct!  The e-mail message didn’t bother me nor did I rush to the phone to call my Congressman to get the provision removed.  Wow!  Strange coming from a real estate professional, isn’t it?  Not really, when you think about it logically.  First of all, the e-mail from the downpayment assistance company was purely self-serving, they weren’t concerned about the housing market, they weren’t concerned about future home owners, they were concerned about their profits and the viability of their business surviving.  After all, their business model is to provide downpayments for home buyers…for a fee.  They aren’t a charity.  But I don’t see that the provision is going to impact my business as much as the downpayment assistance company says it will.  Again, think about it logically.

1.  When a buyers’ downpayment is gifted to them by a family member, thier employer, or churches without a profit motive then the buyer is less likely to walk away from their mortgage obligation or the home because even though the  downpayment was not their money directly, they will need to face those that gifted them the money in some way, shape, or form.  If the downpayment is gifted to them by some anonymous source, why would they care what that entity/source thinks of their actions.  They’re never going to see them.  They have no ties of any sort to the anonymous source.  They won’t feel the same way if the downpayment was gifted by Mom and Dad, or Uncle Bill and Aunt Sue, or a brother or sister.  Imagine being responsible for the family being ostrasized by the church group that gifted the buyers their downpayment.  Big difference!

2.  Now I’ve had to deal with enough buyers and negotiate on their behalf and equally on the seller’s behalf to know that the current norm is that most buyers need help with their closing costs.  Majority of the time the buyers offer includes some amount of seller concessions toward closing costs.  So, now the buyer makes an offer to purchase the seller’s home, maybe at some lesser amount then full price, they ask for seller concessions and then, on top of all that….they want to seller to “donate” the downpayment amount to the Downpayment Assistance Company PLUS a fee so that the downpayment shows as not coming from the seller?  This is definitely a hard sell to the home owner.  I haven’t come across any seller that was THAT deperate to sell their house to give away their gains on their house (which they will probably need ot buy their next home).  Yes, there may be cases where the seller is moving to a rental or something, but it’s still a hard sell to try to keep “picking” the seller’s pocket.

3.  Essentially, I have to agree completely with the provision of the law regrarding the source of the downpayment funds.  Maybe, just maybe, if you can’t get a hold of the downpayment you may NOT be ready for home ownership.  It’s just not fiscally responsible to do so at this time.  Did we forget already the outcome from the sub-prime mortgage fiasco?  You cannot prop up people who cannot normally afford to buy a home with any type of artificial means.  If they can’t get the downpayment, they shouldn’t be buying a home.

There should be some other type of consequences to buyers actions.  Giving them funds from any anonymous source is not benefitial to anyone other then the entity that is acting as the go-between to provide it…for a fee.

Tags: donwpayment assistance, downpayment gifts, downpayment sources, downpayments, Foreclosures, genesis, gifting, nehamiah