What Happens If You Are In Foreclosure?

Recently, California has experienced an increase in property owners who cannot seem to make payments. If you are one of those people who has received a Notice of Default from your lender, please read this.

You still have time to find solutions and avoid losing your property. Maybe your property isn't a mansion, but to you, it is. You should consult with your attorney for complete information on the foreclosure process, and your accountant for tax advice.

A non-judicial foreclosure under California Civil Code section 2924 allows lenders to foreclose upon real property without going to court. It takes approximately four months from start to finish. Once the sale auction is completed, it is final, but an IRS tax lien can cause a delay in the finality of the sale. The borrower must then vacate.

1. Your trust deed functions as the lender's security device for its loan. Lenders may hire a new trustee to replace the trustee named in the trust deed and then instruct the new trustee to issue a Notice of Default, and "NOD", in which you, the borrower, are warned to act or face the consequences. The NOD is recorded at the County recorder's office, and sends copies to the borrower and to any party who requested a Notice of Default form, to holders of junior trust deeds, to the borrower's successor in interest, and anyone else legally entitled, no later than one month following the recordation of the NOD.

2. You have the right to reinstate the loan by tendering to the lender or trustee your delinquent loan payments, plus the trustee's fees and costs. Upon receipt of that payment, the trustee is obligated to rescind the NOD, and the loan is reinstated to normal status, as long as it is reinstated until five business days before the scheduled foreclosure sale. Otherwise, the lender is not required to stop the sale, and the lender may demand the borrower pay-in-full the total outstanding principal balance and accrued interest on the loan, plus trustee's fees, right up until the moment before the sale is completed.

3. If three months pass following recordation and the borrower does not reinstate the loan, the trustee is instructed by the lender to set a time, date and place for the sale, usually three to four weeks from that time, hence, the total time of about four months.

4. The borrower will receive a Notice of Trustee's Sale, along with other entitled parties. The NOS must be mailed, posted in a public place, published in a newspaper of general circulation in your property city--all 20 days before the sale date-- and recorded at the County recorder at least 14 days prior to the sale date.

5. At the appointed time, the trustee conducts the sale at public auction.

You may have time to refinance (there are hard money lenders who will loan even though an NOD has been recorded) and even if at a higher rate, that is better than losing your home. When your situation has improved, you may be able to obtain a better loan. You may also contact your lender for arranging a "short sale". Lenders don't really want to take back properties, and are often willing to make an arrangement with the borrower who might otherwise be able to sell the property rather than going into foreclosure.

Above all, you should not ignore your situation, as difficult as it is at the time.

Please know that this is one of my most frequently read posts. Many people are facing this issue. If that could be you, or it is you, please know that (1) you may be able to refinance your way out of your situation, (2) you may be able to negotiate a short sale with your bank. If you need immediate loan qualification, or are considering negotiating a short sale, PLEASE CALL ME.
If you would like a market analysis of your property to try to sell it, please call me at 562-896-2609 or e-mail me ocean@surfside.net immediately.


Long Beach, CA, Foreclosure

Something to Think About: Future Homeownership

Comments by the CEO of Freddie Mac, Richard Syron, on February 8, 2007:

The driving force in housing is going to shift dramatically in coming decades, from the Baby Boom generation to minorities and immigrants. Demographic projections indicate about 15 million new households in the United States in the next decade, and some 10 million of them will be minorities. Recent immigrants will likely account for 5 million of these new households, and many will be unfamiliar with U.S. banking and mortgage finance.

America will need 20 million additional homes, about 2 million a year. Today, total homeownership in the U.S. is 69 percent, the highest it's ever been (sometimes we forget to think about the positive while we're totally engrossed in solving tomorrow's issues). "Today, 76 percent of white non-Hispanic families own their homes, but only half of minority families are homeowners."

About 200,000 loans entered foreclosure proceedings during the third quarter of 2006. Based on our experience, about 60,000 of these families will ultimately lose their homes. If that rate continues, nearly a quarter-million families will lose their homes to foreclosure during the coming year. This is an issue we are quite concerned about.

Our gains in homeownership should be protected, but not at the cost of giving risky loans to those who can't fulfill them. Every buyer needs to understand the terms of the loan they are being given.

Long Beach, Demographics

Pros and Cons to Calculating Your Home's Value Online

This article is straight from The Wall Street Journal's real estate section. Right off, it makes the point the property owners have come to see their home like it's a stock, with an equity value to use as a pool for more acquisitions. Read on to see how the author tested out several online systems for arriving at a value, to find out that a very broad range was quoted instead of one specific price. A single price, however, was quoted through the Zillow.com and Realestateabc.com sites. (Through my own experience, I can tell you that Zillow may quote a price not agreed with by me in my own market analysis, whether too hight or too low.) An offsite appraiser was finally contacted, and the appraiser's opinion lowered drastically after he visited the home to a range that approximated that of Zillow.com's and Realestateabc.com's estimate. Be aware though, that even though sites that use property tax sales as the basis for their database, and which would be the same one's a Realtor would use, do not include other important condition information--the sale amount alone does not tell all, just as the appraiser's estimate changed after he saw the house.
Oneline estimates are great tools, but should be almost always considered as a preliminary ballpark figure at best, as sometimes the value of your home could be very greatly overestimated or underestimated.

Good News for Loan Financing--Mortgage Insurance is Tax Deductible in 2007

Buyers have always been faced with certain loan condition when making less than a 20 percent down payment on a home. To avoid paying that extra non-tax deductible mortgage insurance premium -- or a higher interest rate factored into some 10 percent down loan programs -- buyers frequently chose "piggyback" seconds whose interest was tax deductible. But, Congress recently passed legislation that provides for an itemized deduction on federal tax returns for the cost of private mortgage insurance paid by eligible borrowers. Previously, borrowers could not deduct the cost of their mortgage insurance payments. Now, a new federal law allows qualified borrowers with adjusted gross incomes up to $100,000 to deduct 100% of their 2007 MI premiums on their federal tax returns. The legislation is effective for mortgage insurance certificates issued in 2007.

Individual savings will vary depending on the size of the loan and a borrower’s adjusted gross income and tax bracket. According to an analysis by Bankrate, a leading source of consumer financial information, a homeowner with a $180,000 mortgage would save about $351 in taxes a year.

This new deductability allows buyers to now reconsider whether to choose lender seconds--where the interest has always been tax deductible but higher interest rates now apply--or go with deductible mortage insurance which may have extremely competitive ratios compared to the current interest rates on many piggyback loans.

The legislation specifies that the tax deduction applies to mortgage insurance contracts issued between January 1 and December 31, 2007, so it would include purchases and refinances within that year. However, Congress has the power to extend the tax deduction to future years, or even to make it permanent. This currently does not apply to investor purchases.

Currently, this MI tax-deductibility legislation only applies to eligible borrowers with adjusted gross incomes of $109,000 or less who purchase or refinance a home between January 1 and December 31, 2007 and pay mortgage insurance premiums. Mortgage insurance premiums allocable to 2007 will be fully deductible for eligible taxpayers earning up to $100,000. The amount of the deduction incrementally phases out for those who have adjusted gross incomes between $100,000 and $109,000 annually. For more specific information, please visit www.pmi-us.com/tax.

Income Tax, tax deductions, Mortgage Insurance

If More Information About Teeth Became Publicly Available, Would You Fire Your Dentist?

Something that a lot of internet users have a misconception about is that property listings that are available for public viewing on the internet are not in the public record, as some people actually have told me they believe, i.e., they won't be found at the court house as a recorded property deed is. Furthermore, they don't seem to realize that sellers have a choice as to whether or not to put their listing into internet sites or just keep it within the local MLS of their agent, as advantageous as wider internet exposure may be for them.

The proliferance of sites that supply listings, i.e., Trulia and Zillow, just to mention two out of what are probably hundreds if not thousands, are not necessarily a complete databsse of REALTOR-listed properties through an MLS system. Again, they can be a viable source of information for everyone, but they depend on property tax records, which ARE public records and therefore available to anyone, and manual entry of listings by owners or agents. MLS's cooperate with various sites to allow their listings to be shown on other internet sites, and brokers may have an opt-out capacity. Why? Because a listing agreement belongs to the listing broker and is a contract between a seller and his/her listing broker/agent, not a public document to be found in the public record. That is what is behind every REALTOR's representation of a property. With the spectacular rise in real estate values and internet use came many others who wished to be a part of the REALTORs' business of representing their clients like never before. This leads into the current debate going on about MLS's and control of them, as housing values and sales are currently a huge factor, if not a driving force, of the economy.

In the United States, but not necessarily in all other countries, we no longer live in a world where showing a property means driving over to a listing broker's office to get their list of properties, and then driving on to another broker's office to get theirs. That's why the multiple listing services came about as far back as the 1930's--before an internet was even conceived of by the average person. The merging of MLS's, even if there is one national MLS, will still not eliminate the need for professional assistance in viewing, buying and selling homes. Or I may as well start drilling my own teeth and fire my dentist.

Long Beach, MLS

It used to be we had the book, and they had to come to us for information.”

That quote from Rob Levy, a real estate broker in Portland, Oregon refers to the MLS book, an artifact from ancient past history as long ago as the late '90's, a piece of history that by now is probably little known to younger prospective buyers entering the market for the first time who are used to quick access to information. That was back when a trusted Realtor was considered the major source of information about homebuying and selling. Fast forward now to a time when real estate information is everywhere in print and on the internet, it's so much everywhere from so many sources, that choosing the right information from the right source takes labor, time and a lot of self-education for the buyer. It's becoming important to know where to look.

Like the buyers in the article, "Buyers Who Go It Alone" by Buck Wargo, REALTOR® Magazine Online, they may think it's easy because maybe their first transaction was smooth. But different real estate cyles have a tendency to change situations, plus new laws in real estate impose additional requirements and disclosures, which may leave both buyers and sellers in quandry in the middle of a transaction if they decided to leave a qualified REALTOR® out of the mix.

Internet tools, such as MLS searches on REALTOR® websites and other online media article, are great resources not available in the past, and a non-pressured way of looking. But I'm also finding in this market that there are those who have done very little prior research and would rather come into the open house and talk personally with a Realtor, and I'm wondering if there isn't so much universal information to be sifted through, that despite media publications to the contrary, most prospective buyers and sellers want "local, up close and live" talk from a professional whose business it is to provide specialized expertise and knowledge accumulated from experience and competence.

Long Beach, CA, open house, homebuyer

Future Reminders

I just saw this on another site, it's a great idea for reminders and planning. Send yourself an e-mail you write today and get in the future to find out if you really did do the things you said you would, or planned on, or wanted to do--your annual business goals, the trip you wanted to take, a relationship, selling your home--anything at all. Try it.

Long Beach, CA

Talking to Your Realtor

With so much focus right now on housing affordability and on the financial capacity of the buyer to buy, you would think the only thing holding someone back is whether they have money, or access to it. But in fact there are other reasons why a buyer may have to wait.

Most recently, I met a man and woman who seemed very ready to buy together and told me they were pre-approved for a loan, and that they could get the letter of pre-approval I asked for. After getting them to a table where we could talk, and presumably write the offer on a house they seemed most interested in, it turned out there was more information not previously revealed. Buyers, first of all, please realize that when a Realtor asks certain questions, they’re not just prying. There’s a reason for finding out, for example, what your marital status is. Just know that California is one of the several community property states in this country, and if you’re still married—that means your divorce decree is not yet finally granted by the court—that new property you’re going into escrow with will also be owned by your current spouse.

See this Marital Status flyer from North American Title.

If you’re planning on buying with your new partner, that could complicate things. If your current spouse is not willing to quitclaim his/her interest in your new purchase, and you don’t want him/her on title with you, that could completely prevent the transaction from going forward, and might have certain consequences to you depending on the terms of the contract—losing your deposit (in this market often at least about $10,000-$12,000) could be one of them.

So please, disclose information concerning taking title to all parties at the outset of your working relationship. It will save everyone, including you, from transaction problems which might actually be negotiated in some way if known up front.


Long Beach, CA, community property, divorce

2236 San Vicente

Contact Julia at 562-896-2609 about this property and open house dates or to view this property. Current asking price is $687,500.
LA: Re/Max Real Estate Specialists

Long Beach, CA

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