Real Estate Investing Coaching - Brian Gibbons

Mortgage Short Sale - An Exit Strategy or an Investment Opportunity?

Real Estate Short Sale and Mortgage Foreclosure Investments

Buying a Home in Foreclosure: What You Need to Know

Let's get back to the nuts and bolts of buying a foreclosed home.

Land Mines

"You have to know how to do a title search," says
Velvel, "or you could end up thinking you've just bought a home by
paying off a $100,000 mortgage only to find out that was just the
second mortgage and you have to pay another $200,000 to take
ownership.

"Suddenly that great buy isn't such a good deal.


Buying a Home in Foreclosure: What You Need to Know

Grant goes to help prevent foreclosures in Denver area - The Business Review (Albany):

Grant goes to help prevent foreclosures in Denver area - The Business Review (Albany):

Technorati Tags: forclosure rescue

Foreclosurees Up - In upscale as well as downtrodden neighborhoods around Marlborough and Hudson, foreclosures have been on the rise, causing anguish for the neighbors as well as the homeowners and stressing community services.

Foreclosures rise in area
By Catherine Buday
Wed Feb 06, 2008, 06:13 PM EST
Marlborough , Massachusetts USA
http://www.wickedlocal.com/hudson/news/business/x142945507#

Marlborough -  During one frigid day last month, Code Enforcement Officer Pam Wilderman took a call from an anxious Milham Street resident, who reported that an uncontrolled flow of water was pouring out from a neighbor’s home. - Wilderman, police and firefighters rushed to the scene, and the Water Department shut off the home’s water supply.   Later, Wilderman found out that the home – purchased seven years ago for $438,000 – had been foreclosed. Its former residents had left town without shutting off the water.  Today neighbors are facing the prospect of the home being abandoned and unkempt for a long time.

“Now there’s a potential mold problem,” Wilderman said. “Nobody can live in it until it’s been properly inspected and mitigated.”

In upscale as well as downtrodden neighborhoods around Marlborough and Hudson, foreclosures have been on the rise, causing anguish for the neighbors as well as the homeowners and stressing community services. Wilderman said she and other city services visited nine foreclosed properties in November alone.

“The problem is not just in French Hill,” she said. “It’s hitting all over the city. More and more people are just walking away from their homes when they’re foreclosed.” And until a new owner takes possession, she added, “nobody pays attention to the house.”

ForeclosuresMass, a web site that tracks foreclosures by community, reports that 111 Marlborough properties started the foreclosure process over the last six months. They include properties on Lincoln Street, Boston Post Road, Leoleis Drive, Priscilla Drive, McGee Avenue, Conrad Road and many other locations. ForeclosuresMass says that only 27 Massachusetts communities have more foreclosures than Marlborough.

In Hudson, ForeclosuresMass reports 28 properties have started the foreclosure process in the last six months, ranking it 65th in the state in the number of foreclosures. The properties are on Manning Street, Richard Road, Stow Court, Davis Road and other locations.

Banker and Tradesman, a publication that tracks real estate sales and foreclosures, reports that foreclosures nearly quadrupled in Marlborough between 2005 and 2007, to 59 last year. In Hudson, the number of foreclosures went from 1 in 2005 to 23 last year.

People who are watching the process blame financial institutions who misled unsophisticated buyers, and starry-eyed homeowners who bought more than they could afford with no money down.

Marlborough Savings Bank Vice President Jeff Dale said some recent immigrants have sought refinancing help from his bank after they secured risky mortgages from other sources. The bank has a loan officer, Paula DiGregorio, dedicated to helping Spanish-speaking people who are burdened with now-unmanageable mortgages.

“A lot of people got into sub-prime mortgage situations where they financed 95 or 100 percent of their properties,” Dale said. “Now, what they owe is equivalent to 105 or 120 percent of what their property is worth, and there’s very little we can do in cases like that.”

“We help as much as we can,” said Dale. “But if people are ‘upside down’ in a loan – owing more than a home is worth – we can’t do very much.”

Dale blames unscrupulous lenders who prey on lower-income people. “You can’t sell a $300,000 loan to someone who’s making $15,000 a year,” he said.

Vince Valvo of The Warren Group, which publishes Banker and Tradesman, said that foreclosure trends in Marlborough and Hudson mirror that around the state and the country. While all types of neighborhoods are hit, Valvo said that poorer neighborhoods tend to suffer the most.

“In communities with lower income residents and neighborhoods with older homes, we tend to see more of these foreclosures,” Valvo said. “Lower income residents have tended to take out riskier loans, that later reset at rates that they can no longer afford.”

But he added that people of all income levels have lost homes that they could not afford in the first place.

“People who decided to really stretch and buy the biggest house they could afford with as little down as possible are also in trouble,” Valvo said. “It could be the guy down the street driving the Lexus. He’s got a pool and a car but he’s in debt up to his ears.”

“It’s all part of the culture we have…that it’s our right to be living not just in a home, but a home with granite countertops, three bathrooms and tons of garage space,” Valvo said.

City Councilor Peter Juaire, whose ward includes some of Marlborough’s less wealthy neighborhoods, also agrees that the problem cuts across economic lines.

“Marlborough is a combination of white collar and blue collar, and we all know that the economy is not in the best condition,” said Juaire. “People are losing their jobs, after they bit off more than they could chew when they bought their homes. Some who bought an adjustable rate are now getting hit with a $300 a month increase. Their costs for gas and fuel are also going up. Everything’s going up except salaries.”

And both Wilderman and Juaire agree that foreclosures have led to more troubled properties and, in turn, troubled neighborhoods.

“Some people just walk away after their homes are foreclosed,” said Juaire. “If they don’t winterize, the pipes can break. Sometimes the home gets vandalized.”

Wilderman said she has seen first-hand how neighbors suffer from a neglected, foreclosed home. She took a complaint a year ago about a crowded home on Ridge Road, which she described as a “solid, middle class Cape Cod type neighborhood where everybody keeps up their yard.”

After the home changed hands, “there was suddenly a lot of traffic going in and out of it,” Wilderman said.

“I found out that the owner of the home had been able to purchase a $340,000 home with no money down,” she said. “The very next day he closed on another house on Barnard Road for $500,000, again with no money down.

“Now tell me that person didn’t know what he was doing. Both of those homes ended up in foreclosure within 18 months.”

Negotiating the path to keeping a home - When trouble arises, it’s important to know what to ask for, what your options might be

By David Fisher / The Bulletin

Paul Helikson stepped into the swirling snow on the steps of the Deschutes County Courthouse on a Thursday morning just before Christmas and barked out the legal singsong that brought an all-too-familiar end to a homeowner’s dreams.

Another day, another foreclosure auction.

As is usually the case, nobody raised a hand to bid on the little north Bend house, where the owner owed the bank more than $12,000 in unpaid mortgage payments. In fact, as is often the case, no potential bidders showed up at all.

So the house went back to the lender to join the county’s growing ranks of bank-owned houses for sale.

Helikson, a legal process server, works with most of the trustee companies that handle foreclosure operations in Central Oregon for the country’s major lenders, and business has been booming. The frequency of his legally scripted courthouse-steps auctions has gone from one every few days to about 15 a week as the real estate market has worsened, Helikson said. Still, it’s something that no one connected with the process enjoys.

“What’s worse than losing your house?” Helikson said. “Especially at this time of year.”

Losing the house is not always necessary, credit counselors say, even for people who face a temporary layoff, or a huge increase in their adjustable loan payments.

About 40 percent of the 37,000 homeowners who worked with mortgage counselors from the national Homeownership Preservation Foundation in the last three months of 2007 managed to hang onto their homes, said John Snyder, a homeownership specialist with the federally chartered NeighborWorks America program.

Still, the number of people needing help is growing.

More than 590 properties entered the earliest stages of the formal foreclosure process last year in Deschutes County, according to records on file in the Deschutes County Clerk’s Office, the highest number this decade and, even in proportion to the county’s growth, the highest rate of potential defaults per 1,000 housing units since the post-9/11 recession of 2002.

For stressed homeowners, negotiating a successful path through the arcane world of banks, defaults and debt relief can get complicated, NeighborWorks spokesman Doug Robinson said, but the first recommended steps are relatively simple.

“At 9 o’clock in the morning, you call your bank,” Robinson said. “At 9:15, you call your credit counselor.”

Doing it right

 

Katie Magana did it right.

Her husband, a Volvo mechanic who is paid only when cars are in his shop to work on, fell behind on the newlywed couple’s house payment late last year as car owners postponed their routine maintenance to save cash, and his income slid. When the bank issued a formal notice that it would foreclose — known as a pre-foreclosure notice — she didn’t hesitate.

She got on the phone. First, to the trustee who sent the notice. Then, when that bore little fruit, to the bank itself.

Magana found a bank official who agreed to waive any late payments if the Maganas use their tax refund, as planned, to bring their payments current later in the spring.

“They have a lot of people who are doing this, and it’s better for them to keep the money coming in,” Magana said. “They really don’t want the house.”

The important point to remember in any pre-foreclosure negotiation is just that, Robinson said — that it’s a negotiation.

Lenders often stand to lose money if they take a house back through a full foreclosure, either through the expense of the foreclosure process itself, or through the expense of having to sell a house that is no longer worth as much as its loan, or both, he noted, so they have an interest in keeping their borrowers in place if at all possible.

Still, the lenders want their money, so it’s important for borrowers to know what to ask for, and what their options might be.

The options

 

The options for most stressed borrowers will be a lot brighter if they contact their lender as soon as they see financial trouble ahead, Robinson said.

Lenders may be willing to negotiate a temporary suspension or reduction in payments for borrowers who have just lost a job or have suffered some other temporary setback, Robinson said, even before they have actually missed a payment. And most lenders have fairly standard and easy-to-use repayment programs for borrowers who have fallen only a payment or two behind.

Typically in those cases, the lenders will waive late fees and other penalties if the borrower comes up with a doable plan to, say, add a couple hundred dollars per month to their future payments to bring the loan current.

It’s important to ask lenders specifically about their repayment plans at that stage, Robinson said — they won’t always volunteer the fact that they have one, but most do. And it’s important to take note of exactly who was contacted, and to get a direct phone number for further contact.

Generally, lenders will be willing to use an off-the-shelf repayment plan if the missed payments can be repaid within a year, Robinson said. Anything beyond that — three or four months of missed payments, for example — are likely to result in the initiation of a formal foreclosure process, and negotiations that can grow much more complicated.

Depending on the borrower’s creditworthiness and ability to pay, and on the property’s value, lenders could opt to find a way to reduce the loan’s payments, either by extending its terms to as long as 40 years or by recasting it to remove a huge uptick in its adjustable payment schedule, said Catherine Williams, a vice president for the national nonprofit credit counseling agency Money Management International.

Again depending on the situation, the lender might opt to forego some of the lost payments altogether — a process known as forebearance — Williams said. Or they might agree to add the missed payments to the underlying loan amount, just to keep the borrower in the house. Williams said.

If none of that is possible, the lender might opt to accept a “short sale” — the sale of a house for less than its loan value — to avert full foreclosure. Or they might agree to simply let the borrower sign over their deed and walk away, leaving the bank to sell the house but, again, averting a formal foreclosure.

As long as full foreclosure is avoided, borrowers might be able to negotiate with their lender to keep any black marks from appearing on their credit records, Williams said, although that can be tough to do if a forebearance is large, or the deed is returned. A full foreclosure can remain on a borrower’s credit report for up to seven years, causing about as much damage as a bankruptcy would, Williams said.

Jeff Stenman, foreclosure manager for Bellevue, Wash.-based Northwest Trustee Services, a company that handles foreclosure actions for a variety of lenders throughout the Northwest, said his company’s caseload has about tripled since last year. But lenders are entering into more loss-mitigation deals before their foreclosures ripen — everything from refinancings to short sales — in an effort to keep a wave of troubled home buyers from washing a tide of unsold homes onto their asset sheets.

“I think everybody is trying to adjust to it, to see what they can do about it,” Stenman said. “Nobody wants to see these things go to sale. That’s for sure.”

Help

 

Help is available to guide stressed borrowers through their negotiations, and more is likely on its way.

Congress appropriated $180 million through NeighborWorks America late last year to increase the availability of mortgage credit counseling throughout the country, Snyder said.

NeighborWorks already helps fund the national 888-995-HOPE hot line run by the nonprofit Homeownership Preservation Foundation. Hot line counselors can either help callers directly or refer them to local agencies, or both.

In Deschutes County, the national network refers borrowers to mortgage counselors at NeighborImpact in Redmond, where they can work in-depth with a local counselor, NeighborImpact Executive Director Sharon Miller said.

Money Management International also maintains a national hot line and refers borrowers in Deschutes County to its local arm, Consumer Credit Counseling Services, for free help, Williams said.

The national network of NeighborWorks-affiliated counselors can help their clients do everything from creating personal financial statements to help with bank negotiations to making referrals to social service agencies who can help deal with underlying problems like health issues, substance abuse, or job loss, Snyder said.

“They really take charge with the borrowers,” he said.

The aftermath

The rise in local pre-foreclosures is driven by a mix of factors.

Failed investments account for some of it. One investor went on a buying spree from September 2006 through February 2007, county records show, taking out mortgages on 17 different properties. He stopped paying on all of them last July, leaving about $23,305 per month in unpaid mortgage payments in his wake.

Other cases, like the single mother’s home that Helikson auctioned on the courthouse steps, were driven by a combination of loans that were given out too generously at the peak of the housing boom’s price spike, a borrower’s job loss, a health problem, or some other financial setback that caused their payments to fall behind.

Whatever the case, some houses are coming back to the market.

Thirty-eight Bend-area houses were designated “short sales” on the Central Oregon Multiple Listing Service Thursday, Duke Warner Realty agent Jane Flood said, out of a total of about 1,200 listed for sale.

That generally means the homes are listed for sale at asking prices that are below the lender’s loan amount, Flood said, but that doesn’t mean they are the only homes that will ultimately sell short.

Often, GoBend Realty broker Terry Denoux said, borrowers will list their homes while a foreclosure is pending, fishing for the best deal they can find to pitch to the bank. If an offer comes in that’s higher than the loan amount, everybody wins.

If not, the borrowers may have to pitch it to the bank as a short-sale option, which must be weighed and approved by the bank’s loan loss-mitigation department before a deal can go through. Either way, he said, it may not show up on the MLS as a potential short sale if the offer price is higher than the loan, but it may end up becoming a short sale anyway.

For potential buyers, is it worth shopping in the foreclosure bin for bargains?

Maybe, Denoux said. But maybe not.

Some houses that were bought with 100 percent financing 12 to 18 months ago may have lost 10 percent of their market value since then, depending on where they are and what they are, Denoux said, so picking them up at auction at the lender’s asking price might be a mistake.

Homes sold through the foreclosure process come as-is, so it’s up to a potential buyer to dig through county records to make sure there are no other loans or liens that may cloud the title after a purchase, Stenman said. And then there’s the possibility that a house may come with a disgruntled tenant — the former owner — still in it. Or its maintenance might not have been the best.

“To a lot of people, the word foreclosure indicates, ‘Oh! Good deal! Fire sale!’” Denoux said. “And sometimes that’s not the case.”

Still, foreclosures or the threat of foreclosure have become an active segment of the market. Denoux, who advertises on RealtyTrac.com, a foreclosure tracking site, figures foreclosure-related activity accounts for about 15 percent to 20 percent of his business this year.

Flood, who contracted with RealtyTrac to send her sales leads last year, said she dropped that contract this year to concentrate more on relocation business, even though she still bills herself as a “foreclosure specialist.”

“I felt I knew everything I wanted to know about foreclosures,” Flood said. “And, you know, some of the people you couldn’t help — it was just depressing.”

David Fisher can be reached at 617-7862 or at dfisher@bendbulletin.com.

Foreclosures, Lenders' Preferred Fix - "delinquent borrowers were almost twice as likely to lose their homes as they were to reach an agreement with their lender that would allow them to stay put"

By Renae Merle
Washington Post Staff Writer
Friday, January 18, 2008; D01

At a time when mortgage lenders were touting efforts to help homeowners avoid foreclosure, delinquent borrowers were almost twice as likely to lose their homes as they were to reach an agreement with their lender that would allow them to stay put, according to a Mortgage Bankers Association survey released yesterday.

The survey provides insight into the third quarter last year, when the nation's foreclosure rate, 1.69 percent of outstanding loans, reached a historic high. The industry has since agreed to a Bush administration plan that will freeze rates for 600,000 homeowners with adjustable-rates loans. Consumer advocates have said that the plan does not go far enough in preventing foreclosures.

A top regulator yesterday said mortgage lenders are moving too slowly to modify subprime loans, which are among the most likely to default. "We must see a pickup in the pace, and the sooner the better," Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., said at a conference.

The Mortgage Bankers' report found that lenders began foreclosure on 62 percent of delinquent borrowers during the third quarter and that homeowners who did get help were more likely to have their lender set up a repayment plan than to lower or freeze their interest rates.

That represents progress, association officials said, noting that the industry has modified loan terms sparingly. This was the group's first formal study of the practice.

The foreclosure rate was exacerbated by speculators, borrowers who did not respond to efforts to contact them and borrowers who defaulted on a previous repayment plan or loan modification, they said.

"The mortgage industry took major steps during the third quarter to help those borrowers who could be helped," said Jay Brinkmann, vice president of research at the Mortgage Bankers Association.

For instance, California-based Countrywide Financial, the nation's biggest mortgage lender, said this week that it had helped more than 80,000 borrowers keep their homes last year, with most receiving loan modifications and long-term repayment plans.

According to the Mortgage Bankers' report, lenders modified 9 percent of all delinquent loans, or 53,573 loans, lowering or freezing the interest rates. They set up repayment plans for 29 percent, or 182,702, allowing borrowers to stay in their homes. Lenders began foreclosure procedures on the remaining 62 percent, or 384,388 loans. Of those, 29 percent were in default despite a previous repayment plan or loan modification.

Consumer advocates said the report points to the industry's misplaced priorities. For all types of mortgages, lenders established three times as many restructured repayment plans as they did modifications, which could include lowering the interest rate. For adjustable-rate subprime loans, they established seven times as many repayment plans as loan modifications.

Lenders are "focused on short-term repayment plans that don't help people in the long run," said Ellen Schloemer, director of research at the Center for Responsible Lending. Repayment plans are "great if people have short-term income disruptions but not if they need structural changes to loan terms to make it affordable long term."

Mortgage lenders have been shifting to more modifications as the economy has stumbled and as accounting rules have made it easier for servicers to change contracts, said Bill Longbrake, senior policy adviser for the Financial Services Roundtable. "Repayment plans do work quite frequently, but they are not always the right solution," he said. "Because of current [economic] circumstances, more modifications are beginning to be done."

That shift will be illustrated in a report to be released today by the industry-backed Hope Now Alliance, which will outline the types of plans that lenders provided in the last six months of 2007, Longbrake said. The Financial Services Roundtable is part of the alliance.

Never Deed (Quit Claim) Your Property To Avoid Foreclosure EVER

   

   

      

             

      

Listen folks, there are sharks in the water. Investors are coming out of the woodwork looking for people who are facing foreclosure so they can take advantage of them. There are many, many reasons you should never quit claim your property to ANYONE else EVER. Here are just a few.

1. The reason you are facing foreclosure is probably because you haven't called your lender to ask for help. Not the servicer - that's a collection agency. Call the LENDER. Can't find the lender? Call a TITLE AGENT in your area and ask them to find the lender for you. Trust me, with all the negative press about how crappy lenders are the ones who are remaining are going to do anything reasonable to help.

2. Investors want EQUITY. Investors who aren't buying equity or futures are really bad investors. Chances are you have little or no equity in your property. The only way an investor can get your property with any equity in it is to purchase it on a SHORT SALE. You can initiate the short sale even though the investor will want to control the deal - DON'T LET THEM! It's YOUR house, YOUR credit and YOUR future. Get yourself a LISTING AGENT who has experience in short sales - do NOT get into further trouble.

3. Once you sign a quit claim deed it doesn't matter what the investor told you or promised you the house is now theirs. If they tell you to get the hell out you have no choice but to leave.  They can throw you out and put a renter in there at any time. Just because they were nice doesn't mean anything now.

4. An investor NEVER has your best interests at heart - investors have one goal: profit. If you are not profitable you're just in the way. Investors who aren't profiting aren't investors - they are fools.

5. Read your mortgage agreement. There is a paragraph in there called the DUE ON TRANSFER, DUE ON SALE, or ACCELERATION CLAUSE. One of the many things it says is that if you transfer the property to another person or entity (including investment trusts, LLC's, LLP's, and anything other than YOUR NAME) you are violating the DOS clause and now the lender doesn't even have to wait for due process that accompanies a foreclosure.

Theft By Quit Claim * Michigan Taking On Equity Strippers * US Bank v. Angela Price * Don't Be A Fool (AR Post)

It took less than five minutes to find those posts using Google. There are thousands more. So let me say it one more time NEVER SIGN A DEED, CONTRACT, PROMISSORY, or ANY DOCUMENT when the ownership of your home is in question.

There are some very kind looking, friendly acting, smiling investors out there who would LOVE to have you sign your home over to them. They will promise to bring your loan current and get the heat off your back (and they will) but you tell them this, "No, Ken Cook says that's the dumbest thing I can ever do. Here's what I will do: I will sell you the house and the closing attorney can get you to sign the QCD at the closing table. There is no other way you're getting this property." Now they will act like you're just over-reacting or assure you they aren't one of those kinds of investors. Pick up your phone, dial 678-946-0101 and get me on the phone. Then hand the phone to the investor.

DO NOT LET ANYONE PRESSURE YOU JUST BECAUSE YOU ARE IN A DIFFICULT SITUATION!!!

Foreclosure resources for consumers from recommended agencies.

Foreclosure Rescue Scams *  WE BUY HOUSES! * Home Owners Warned * Grand Theft Home

Okay, so you need help. I understand and hopefully you can find help from these HUD Tips For Avoiding Foreclosure.

You should also download my newest book "Can I Keep My Curtains? Facing Foreclosure in Uncertain Times".

      

 

   

Distressed Property Sales

Now that banks are having to repossess homes from delinquent
mortgagors, some buyers are asking, "should I buy a bank owned
property"? Even with years of real estate experience and knowledge,
the best answer here is still: "It depends." Shopping around and
knowing the particulars of each sale are still vital as they can vary
widely from one house to the next. Arming yourself with some basic
information on these types of transactions should also help to give
you an idea of the risks and potential gains involved.

SHOP AROUND

Bank-owned or REO (real estate owned) properties can vary in
condition from damaged to excellent, and be priced properly (at
market) or be a great value. You just need to shop around. I have
some clients that have found absolute gems priced 10% to 20% below
market.
Always do due diligence.  That is the one key to success  in real estate.  Know what you are getting, how much it costs, and what you will do with it once you have it.'  Banks, S&L's & C.U.'s don't want to own property because it eats up their margin, which greatly limits what they have to loan.  You won't have the same luck with commercial loan companies, as many of them actually make their money by foreclosers.
Even after you shop around though, there's still a fair amount of
risk involved in buying this kind of property. Most of the homes in
this category are sold in "AS-IS" condition. In some cases, you won't
even be able to inspect the house before you buy it. Banks won't make
repairs or be held liable for damages, mold or the like so be
prepared to sign lots of addendums exonerating them from any
responsibility after the sale. Also the bank tends to place a per
diem clause that may cost you $100 per day if you're late in closing.
Always control the situation, no matter who you are dealing with.  If you go to the bank with an offer for a short sale or REO, have all your papers in order, use a mentor/partner who knows exactly what they are doing to be sure, and let the bank know that you will close and you do have the money.  They will RESPECT you.  Don't try a short sale without an experienced partner.  Some realtors can do them, a few investors and even a few lawyers, but not many of any of those catatgories can do a short sale.  Always use YOUR title company and make sure they know exactly what YOU are doing.
If you're prepared to accept these conditions, I say "Make an offer"
and see what happens. Basically, there are three types of foreclosure
sales:

AUCTION
This is the riskiest way to purchase bank-owned property, but can
also net the greatest financial gain. Some estimates say 25% off the
original purchase price is common. If you want to play the auction
game, you'll have to pay cash and you'll have to forego any kind of
inspection. Auctioned homes are truly "AS-IS." There is also no way
to avoid the fact that you are profiting from someone else's
misfortune with this option. People who are losing their homes may
refuse to move out or may damage the property in anger
Virtually every auction allows some time to preview the property.  Use it!  If the preview does not include interior inspection, make the most of your tour of the outside.
SHORT SALE
This isn't really a foreclosure sale, but a sale the homeowner makes
in order to ward off foreclosure and do some damage control. Also
known as pre-foreclosure, this is when you buy from a homeowner
before the bank intervenes. You can inspect the house before you buy
when you go this route, but be warned - many of these deals are
stalled or squashed by the banks before they're closed.
In a short sale, always preview, get an estimate from a licensed contractor for all the repaids needed.  That will be a key to negotiating your short sale.  If you aren't using a realtor  be sure to point out to the bank that you expect that 6% extra for saving them the expense.
REO
This is when you buy a foreclosure from a real estate company. REO
presents the least risk of all three options. You have clear title,
right to inspect and can get your financing in line first. You won't
get as great a deal as you could by buying at an auction but for many
buyers, the reduced headache is well worth it.
Same as above.  Inspect, get estimates, and go in with all your papers in order.  Don't expect an answer immediately, but insist on working only with their loss mitigation person.  That person may have to sell the deal to his boss or the board.
One thing I can say for certain: banks NEVER want to own these REO
properties, they just want to lend money and collect mortgage
payments. When a property becomes bank owned, it's because the
borrower has forced the bank to foreclose, that is it. What this
usually means for buyers is a clear chance to purchase a home from a
very willing seller.

Article Source: http://moreonrealestate.com

Now I would like to mention the two main ways to get distressed property cheap, Probate & Tax Sale:

 

Probate:  These can be found by watching the Obits, but the best way is to let all the probate attorneys in your county know that you are willing to cash out any of their clients.  They will refer those motivated ones to you as long as you produce and bid on any referred.

 

Tax Sales:  These may be at auction as above, but the mortgages have already been expunged.  They also may be by virtue of having a tax lien mature so that a deed can be requested.  In either case, this is often the least expensive way to acquire real estate.

 

The above is why I set up an REIT, got it registered with the SEC, and now offer it to you, the investor.  My fund only invests in tax liens and deeds.  Therefore, it will reap the benefits of '08, which will be the best year ever for tax sales.

 

You may get details at:  www.sunriseholdingtrust.com  I'll be happy to answer any questions you may have.

 

Larry Fosgate, Fund Administrator

Ohio - Attorney general's office sues six foreclosure rescue companies

                           

Attorney general's office sues six foreclosure rescue companies 6 foreclosure rescue companies accused of not helping borrowers Thursday, August 09, 2007 Sheryl Harris Plain Dealer Columnist Ohio Attorney General Marc Dann took aim Wednesday at foreclosure rescue companies that siphon money from people who are in danger of losing their homes. Dann's office sued six companies - two of them based in foreclosure-ridden Cuyahoga County - that solicited money from consumers with promises they could save their homes from foreclosure. Dann said the companies didn't contact lenders or do much else to prevent the homes from being sold, even though they accepted advance payment, ranging from $450 to $10,000. "This may be the 'last chance' money these people have," Dann said. The lawsuits, filed in courts across the state, accused the companies of violating the Consumer Sales Practices Act, but also took the new tack of insisting practitioners of foreclosure rescue must comply with the Debt Adjuster Act, which requires them to have insurance, limit consulting fees, undergo annual audits and keep separate trust accounts for clients. "I believe it's important to take all the arrows in our quiver to attack a business as sleazy as this one," Dann said. Ohio and Cuyahoga County, in particular, are ripe markets for foreclosure rescue companies. Both have frequently topped lists of the most foreclos- ure-ridden places in the country, and Cuyahoga County's foreclosure rates run triple the national average, giving it the dubious distinction of being, as County Treasurer Jim Rokakis often notes, "first and worst." On Wednesday, the attorney general sued: Cary Lavensky, doing business as Home Restoration Services, located in Cleveland. Richard Pinnix, dba Pinnix Business Services, of Shaker Heights. United Foreclosure Managers LLC of Youngstown. American Housing Authority Inc. of Newport Beach, Calif., and a related company, American Housing Financial Inc. of Phoenix. F.A.S., dba Foreclosure Assistance Solutions and Mortgage Second Chance, of Clearwater, Fla. Foreclosure Solutions of Cincinnati. Lavensky said he has been out of the foreclosure rescue business for a year. He said he could recall only one instance in which he had a dispute with a homeowner and, in that case, the family interfered with a planned sale of the home and then demanded a refund. He said he is certain his company complied with Ohio law. "I assure you, all our paperwork was drawn up by an attorney," he said. "This is the first I'm hearing of any of this." Pinnix said that while the attorney general is right in saying he didn't have insurance or separate accounts for clients, "I have saved a lot of people's homes through refinancing and hard-money lending . . . I work 17 hours a day to help my clients. At the end of the day, the truth will come out." Officials of United Foreclosure did not return a phone message left at the company. The suits seek restitution for consumers, fines and an order barring the companies from doing further business until they comply with applicable state laws. To reach this Plain Dealer reporter: sherylharris@plaind.com, 216-999-4409 © 2007 The Plain Dealer                   © 2007 cleveland.com All Rights Reserved.

The happier side of foreclosure - Thousands of foreclosures in metro Atlanta are creating plenty of opportunities for buyers seeking investment properties or homes for themselves.

 
   
By LORI JOHNSTON
For the Journal-Constitution
Published on: 10/21/07

Thousands of foreclosures in metro Atlanta are creating plenty of opportunities for buyers seeking investment properties or homes for themselves.

But visions of purchasing a place for a song need to be balanced with a realistic view of what it actually takes to buy a foreclosure: caution, patience and flexibility.

Margie Smith, Harry Norman Realtors (ENLARGE)

Margie Smith, Harry Norman Realtors

Bruce Ailion, ReMax Communities (ENLARGE)

Christopher Oquendo/Special (ENLARGE)

Spencer Curtis started investing as a way to sock away money for his kids' education.

"What you stand to gain is getting a house at a heavy discount, and I'll be honest with you, I have bought homes for less than 50 cents on the dollar in this situation," said John Adams, an Atlanta real estate expert and consultant. "Now, was it easy? No. Did I have to basically beat the bank over the head with the house until they were a bloody pulp? Yes."

There are three times to buy a foreclosure: pre-foreclosure, at the courthouse auction and post-foreclosure, also known as REO (real estate owned), when the property is in the hands of the lenders.

If you're successful, you often can get a discounted property, gain instant equity, and save cash on upfront costs, said Craig Christie, a real estate agent with Jenny Pruitt & Associates. But before you jump on a foreclosure, it's important to be financially prepared and have a strategy for closing the deal.

"You can expect to find good deals, but, as in anything, you have to be a prudent shopper," said John Williams, an agent with Coldwell Banker The Condo Store.

Real estate agents, experts and buyers shared their strategies for buying a foreclosure and how to avoid being taken for a ride.

The buying process

Bypass the auction if new to buying foreclosures or not engaged in real estate investing, Adams said. Risks include title problems, liens and inheriting other problems and unknown repairs. Also, cash is required to buy the house.

"The auction is a much more advanced technique, and quite frankly, it is almost impossible to fully protect yourself against some of the threats that are out there," he said.

The two other options are friendlier to the novice.

Pre-foreclosure

This involves buying the house from the property owners, who understand they're in danger of losing their house, their credit and any equity they may have built up.

"It's a difficult transaction and a lot of times it doesn't work out," said Cindy Simpson, a real estate agent with Prudential Georgia Realty. "We try very hard, but the problem is the clock is ticking before it goes to the (courthouse) steps, and there are a lot of hoops you have to go through. The bank has to approve it; you have to find out who is actually handling that property. That bank may have sold the loan to somebody else."

Adams said the good news is that folks in this situation sometimes hire an agent to try to sell the home before the courthouse auction. The agent can help set up the sale and prepare the owners for what to expect.

Most of the time, the owners can expect to gain nothing on the sale of their home. Often the loan amount still owed is greater than the value of the house. That creates a "short sale" situation in which some banks will negotiate a price less than what is owed on the mortgage in order to get some return, Williams said. But the transaction usually must happen very quickly to make it worthwhile for the bank to agree to the sale.

"That time frame is very short, and people have to be ready to move quickly when that happens. You can't have 30 days to get financing or 20 days to do an inspection. Pretty much the bank's going to foreclose in two weeks, and you've got a week," he said.

Post-foreclosure

These are homes that weren't sold during the auction, often because the loan amount was equal to or greater than the value of the house, Adams said.

The banks will hire a local real estate broker who will plant a sign in the front yard, list the home for sale and basically say, "Bring all offers," Adams said.

A lot of people are scared because when they hear the term foreclosure, they think the house is falling apart, Simpson said.

"That's really not the case with the inventory we're seeing in metro Atlanta," she said.

Instead, some of the banks she works with are making some repairs on homes while trying to sell them.

"They want to help keep the neighborhood values in order, and they want to get owner occupants in there. They really don't want to have a lot of 'as is' fixer-uppers out there [attracting] another cycle of investors," Simpson said.

One reason why buyers who plan to occupy the home have an advantage when competing with an investor is because a resident owner is required to have substantially less equity at the time he buys than an investor would. As a result, his offer is generally 75 percent to 90 percent better than one by an investor, Christie said.

How fast banks respond to offers varies from 24 hours to within one week.

Banks generally hold firm on their pricing for the first 25-30 days, said Williams. The longer the house is on the market, the more willing banks are to negotiate. He recently sold a foreclosure in Norcross originally listed at $900,000 for $600,000.

"They won't let you steal it, but if it comes down to a few thousand dollars, they'll usually go with a good offer," Christie said. "They don't have any attachment to that house."

THE INVESTOR

Who: Spencer Curtis, 35, who works in medical sales

Why he does it: The single parent has twin 16-year-old daughters. He started investing when he was trying to figure out how to pay for their education. A strategy has been buying foreclosures. He's also planning ahead, and expects that one of the foreclosures he picks up is going to be his house some day.

How many he's bought: about five in the past year

When he buys: After the courthouse auction

His requirement: "Typically if I can't get it for 60 cents on a dollar, I won't touch it." Most of his purchases are less than $150,000, and he often turns them into rental properties.

Curb appeal – or not: Some houses are not visible from the road because the yard is so overgrown. "But you know the thing is, to me, what some people see as a mess, I see an opportunity," he said.

Best advice for buying a foreclosure: Focus on a couple of ZIP codes and become an expert on sales of properties in the area. Before you make the offer, determine how much work needs to be done inside or out, Curtis said. "Typically I won't buy a house that needs more than cosmetic work," he said.

Negotiating tip: Be willing to go back and forth with the bank – it likely will work out in your favor. "It's happened on every house I've bid on," he said.

ONE ON THE MARKET

Asking price: $1.279 million

Address: 1678 Windsor Parkway, Atlanta 30319

County: DeKalb

Subdivision: Lanier Court

Features: 5 bedrooms, 5 1/2 baths

The story: This new construction foreclosure is slated to be completed, with a state-of-the-art kitchen and a master suite with a sitting room, fireplace and morning bar.

ONE THAT'S SOLD 

The property: Three-bedroom, 2 1/2-bath Smyrna townhome in Westchester Commons with a master on the main and a two-car garage, approximately 2,900 square feet.

Original price: $261,900, sold new by Pulte Homes in December 2000

When foreclosed: May 2007

Appraisal: $270,820, as of 2007

Sale price: $285,000 in August 2007 (seller paid $5,400 in closing costs). That's the cheapest sale in Westchester Commons in the past couple of years, with others selling in the high $200,000s-low $300,000s.

Notes: Property needed approximately $20,000 to bring it to excellent condition.

How it happened: The foreclosure sold in 16 days and received three offers close in price, said Bruce Ailion, a real estate agent with RE/MAX Communities who represents banks. He doesn't believe the former owner hired a Realtor before the foreclosure. "It always surprises me how few owners took the appropriate steps that would have prevented foreclosure and perhaps generated equity," he said.

Agent: Margie Smith, Harry Norman, Realtors, 770-365-8886

THE OWNER-OCCUPANT

Who: Dave and Andria Weikel, and their two boys

What they bought: A four-bedroom, 2 1/2-bath home with a basement in Ball Ground, on 41/2 acres, this summer. "We looked at so many houses, and when I walked into this one, I knew immediately it was the one," Andria said. "It was very homey. They built it to look like an old home, but it's only 13 years old." The family moved from Sugar Hill, where they lived for 15 years.

How they found it: Listed for sale online. They didn't know it was a foreclosure until they pulled up with their agent and the sign said it was corporate owned. It was listed for $274,900.

How much they got it for: $259,000, and the bank paid the closing costs. They originally offered $255,000. "They did not accept it. But (they) encouraged us to make another offer," Andria said. "We did put in such a low offer that we saw that they were going to give it to us, but we had to go a little higher."

Big surprise: The home and yard were in good condition. But they had to pump the septic tank a week and a half after moving in. "That was a yucky surprise," she said.

Best advice for buying a foreclosure: Take advantage of public records to check out the history of the home. "The bank doesn't tell you anything," she said.

Negotiating tip: Prepare a list justifying the difference between your bid amount and the amount the bank is asking. Theirs included things like the cost of the termite bond and minor repairs to the deck and other areas. "We knew we would have to do things right up front. Even though it was in good shape, we knew there were going to be additional expenses," Andria said.

HOW TO FIND FORECLOSURES

Look for these key words in the advertisement to find homes for sale pre- or post-auction:

Foreclosure

No disclosure

As is

Short sale

REO (real estate owned)

Special stipulations required

PREPARATION CHECKLIST

1. Get a pre-approval letter from a lender.

2. Examine home sales in the surrounding area to determine your offer.

3. Do an inspection. It will need to be done on a tight deadline.

4. Determine potential repairs and the costs.

5. Prepare an offer that includes extras, like the bank covering closing costs.