Are you facing foreclosure?  Has someone advised you to do a short sale in lieu of foreclosure? Well, be careful, there could be a lot of problems down the road for you if you took out an equity loan to pay off debts or buy goods such as a car, boat, furniture or other such items.

Whereas California is a nonrecourse state, meaning lenders cannot pursue borrowers for unpaid balances on home-purchase loans. However, home loans not used for the purchase – home equity lines of credit and second loans taken out after purchase – are recourse loans, which means lenders are legally entitled to collect the unpaid balance. Depending on the type of loan, they have four to six years to pursue borrowers.

Refinanced mortgages do become recourse loans, but in California a nonjudicial foreclosure – the most common kind – eliminates the borrower’s liability to the lender that carried out the foreclosure, which is generally the main lender. A second lender for a nonpurchase loan, however, still has “recourse,” or the right to pursue the borrower.

The problem becomes that in the normal course of business, when you take out an equity loan, you sign a promissory note.  That note is a promise to pay the lender, regardless if your property is sold as a short sale or sold in foreclosure.  In short you may be stuck to pay off your note that you signed when you got your equity loan. This is what is called a recourse loan. Ouch, it can hurt.

Millions of borrowers do have recourse loans that they took out after purchase, which means lenders have a legal right to pursue them for unpaid balances.

In California during the boom real estate years – 2005 to 2007 – homeowners took out 2.88 million home equity lines of credit and 1.18 million nonpurchase second loans, according to First American CoreLogic, which tracks loan data. The total was 4 million such recourse loans totaling $485.3 billion.

Some experts think lenders may pick whom to pursue by probing defaulted borrowers’ net worth.

Rick Harper, director of housing at Consumer Credit Counseling Services of San Francisco, which staffs the federal HOPE for Homeowners hot line, said his workers tell borrowers who are considering default that their second loans could make them liable to debt collection.

“Depending on what the holder of that note wants to do, it can make their (the borrowers’) life miserable,” he said. “Most of the (lenders) do an asset test to see if there’s anything there. They can run credit reports, use investigative services, get their hands on the applications they used when they applied for a loan.” Applications for loan modifications and short sales also require disclosure of assets.

Most of this story was taken from an excellent article in the San Francisco Chronicle.

To read the full story Click Here”

John J. O’Dell GRI, SFR
Real Estate Broker
Looking for property in Nevada County? Click Here

Wofford's Home

The team from ABC’s heartwarming and popular reality series “Extreme Makeover: Home Edition” may give worthy families a whole new house. But yet another family who appeared on the show learned that they don’t guarantee you’ll keep that house forever.

 The Wofford family of Encinitas, California, got their house from the show five years ago, but now claim that after struggling for two years to pay their bills, they’re facing foreclosure . Dr. Brian Wofford, a widower and father of eight, explained the crisis, telling 10News: “A lot of people think when you get the house, you get the mortgage. Well, you don’t.”

Wofford’s wife, Theresa, died in 2000, and the new home helped the family move on.

“It’s been a great, great blessing,” said Wofford

 For the past two years, the Woffords have been fighting just to live in their home.

The family — 8 kids and dad, Dr. Brian Wofford — is still happy despite the prospect of losing their home.

However, the blessing turned into a nightmare two years ago when the mortgage crisis that crippled millions of Americans also hit the Woffords. Their mortgage adjusted and Wofford’s chiropractic clinic was not making enough. 

The Woffords aren’t the first family featured on the show to face serious financial problems after their home makeover. The Harper family of Atlanta, who received the show’s biggest house to date, along with the money to pay taxes on it for 25 years, famously faced foreclosure last year after taking out an ill-advised $450,000 loan using the house as equity. And at least four other “Extreme Makeover” recipient families have had to sell or lose the homes they won on the show. ABC is probably considering changing the show’s rules (maybe the houses don’t need to be quite so lavish, for example) to help avoid such disasters in the future.

 However, there’s still hope for the Woffords. Loan modification papers are being promised by their bank, OneWest, next week. If they don’t go through, the house will be auctioned by the bank in two weeks, but Dr. Wofford is optimistic about his family’s future: “If I have my family and I live in a tent, I’m in good shape. Better be a big tent though.

Kitchen in 3,800 square foot home

Outraged neighbors ratted on a Wells Fargo & Co. employee who threw lavish parties at a foreclosed home in pricey Malibu, Calif. The bank said Monday that the employee had been fired.
The Los Angeles Times first reported earlier that 39 year old Cheronda Guyton, a Wells Fargo senior vice president responsible for foreclosed commercial properties and a seventeen year veteran of the bank, spent weekends at the house, hosting parties that caught the attention of neighbors.
Wells Fargo took possession last May of a 3,800 square foot beachfront mansion. The previous owner was reportedly wiped out by the Ponzi scheme run by Bernard Madoff. It was valued at $12 million when it was taken back by the bank in May.

Instead of putting the property up for sale or letting it stand empty while the foreclosure was completed, Cheronda Guyton, senior vice president in charge of commercial foreclosed properties for the bank, apparently used the place to entertain friends, including transporting guests from a yacht moored offshore.

After neighbors cried foul, Wells Fargo investigated and identified Guyton as the culprit. Monday, the company said in a statement, “We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”

Malibu Mayor Andy Stern, who also happens to be a real estate agent, told Reuters that the house could lease for $150,000 a month.

Wells says the house was kept off the market under an agreement with the prior owners. “Our investigation concluded a single team member was responsible for violating our company policies,” Wells said in a statement. “As a result, employment of this individual has been terminated. We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”

Malibu Colony is one of the city’s first and still most exclusive neighborhoods. It has been the playpen of celebrities going back to Bing Crosby’s days

With one in every 62 housing units receiving a foreclosure filing in August, Nevada continued to document the nation’s highest state foreclosure rate despite an 8 percent decrease in foreclosure activity from the previous month.

A total of 17,902 Nevada properties received a foreclosure filing during the month, still an increase of 53 percent from August 2008.

Florida documented the nation’s second highest state foreclosure rate, with one in every 140 housing units receiving a foreclosure filing, and California documented the nation’s third highest state foreclosure rate, with one in every 144 housing units receiving a foreclosure filing.

A 10 percent month-to-month decrease in foreclosure activity helped lower Arizona’s foreclosure rate from the nation’s third highest in July to fourth highest in August.

One in every 150 Arizona housing units received a foreclosure filing in August — still more than twice the national average.

Other states with foreclosure rates ranking among the nation’s 10 highest were Michigan, Idaho, Utah, Colorado, Georgia and Illinois.

Source Real Estate Channel

Are you facing foreclosure? Call me today for a free consultation on doing a short sale instead.  John O’Dell 530-263-1091

www.youtube.com/watch?v=4WGxpQx2L6k

After seeing some homes that have been foreclosed on, I think this is a great idea. Bait the homes so if thieves want to vandalize a home, they’ll get caught. The biggest problem seems to be that some owners of foreclosed homes are the guilty ones. They trash the place, taking dishwashers, stoves, microwaves, cabinets and even the plumbing fixtures and wiring.

So it’s nice that the police in St. Louis are contemplating what they are calling “bait” houses – gussying up empty homes with steal-able stuff like flat-screen TVs and new computers in order to woo crooks to the scene.

The bait will all be wired, so when the thieves make off with it, the cops will be right behind. Hidden cameras will confirm that they got the bad guys.

The police say the program has other advantages as well. “I hope that for every person that we arrest out of a bait house, there’s another 20 who don’t decide to break into a house because they think it might be a bait house,” police department spokesman Rick Eckhard says.

However, how do you punish the former owners of foreclosed homes that strip their homes before they leave? Any ideas?

Statistics suggest some improvement in the housing market, but the good news for homeowners might be just a temporary setback for real estate investors searching for a good deal.

Decreases in the number of foreclosure filings in each state and increases in
prices in many of those same states seem to suggest good news, although the
news is still mixed in some parts of the country. In five of the top markets,
filings have decreased: California (down by nearly 5%), Michigan (down by just
over 4%), Florida (down by 8.5%), Arizona (down by 9%), and Texas (down by
more than 7%). However, Colorado has seen the largest drop in foreclosures
with a decrease of more than 13%. Unfortunately, the statistics are not so
promising for all states. West Virginia, for example, saw an increase in
foreclosures of more than 17%.

Within these and other key states, the changes in foreclosure filings in major
cities also seem to be showing improvement with only a few exceptions. In
Phoenix, the number of foreclosures dropped by over 8%, the rates in Memphis
fell by nearly 12%, the filings in Miami toppled by just over 14%. Other
states also saw a decrease: Atlanta (2%) and Houston (3.7%). However, both
Chicago and Detroit saw their rates of foreclosure increase by less than 1%
and by just over 5%, respectively.

Although fewer foreclosures can help reduce the supply of available homes on
the market, the prices are also important. In four out of the five top real
estate markets, prices have increased. In both California and Florida, the
price increase is less than 1% bringing the average costs to $347,878 and
$222,950, respectively. Michigan’s home prices went up by 1.4% to $91,614
while the prices in Texas increased by 4.8% to $116,016. Prices actually
decreased in Georgia: falling 2.6% to $126,914. The lowest average price for
homes, according to ForeclosureListings.com, is $60,940 in Ohio.

Smart investors are continuing to take advantage of the present foreclosure market. I don’t have an exact figure of how many foreclosures there are in Nevada County, but I just had one of my investors open escrow on two foreclosed homes in Nevada County. With some existing home prices under $200,000 in the county, there are some buying opportunities that are hard to pass up if you have the money to invest and willing to ride out the present downturn in real estate.

As a further example of what’s happening in the real estate market, a real estate development company has formed a $6 million fund to buy bank-owned homes in Antioch, Pittsburg and Bay Point. The company intends to spend about $100,000 per home, including rehab and than renting them out for $1,200 to $1,500 per month. They hope to turn around and sell them within five years and doubling their money.

According to SF Gate

“Some investors quickly flip the distressed homes. For instance, St. John’s Capital Group, a real estate investment firm in San Jose, bought about 115 foreclosed California homes in recent months, fixed them up and immediately sold them to first-time buyers for returns of about 10 percent.

St. John’s gets deep discounts by buying delinquent mortgages from lenders and finishing the foreclosure process, or by bidding at courthouse-step foreclosure auctions.

“We think the market is still going down, so we are against holding for an extended time,” said CEO Edwin Yeh. He is raising a $50 million fund to invest in foreclosures.”

So there you have it, some investors want to flip and others want to rent and hold until the market changes. Want to join the investors, let me know, I can help you.

The White House has asked mortgage executives to come up with the manpower to stop precarious loans from becoming foreclosures, but a New York Times story says finance experts say a lack of bodies isn’t the problem. It’s greed.

Mortgage companies collect fees for appraisals, insurance, legal services and other administrative busywork when homes go into foreclosure, and many make more on delinquent loans than they do on those in good standing. So unless homeowners’ loans are through businesses that values their ability to keep roofs over their heads above the bottom line, they’re out of luck:

“It frustrates me when I see the government looking to the servicer for the solution, because it will never ever happen,” said Margery Golant, a Florida lawyer who defends homeowners against foreclosure and who worked in the law department of a major mortgage company, Ocwen Financial. “I don’t think they’re motivated to do modifications at all. They keep hitting the loan all the way through for junk fees. It’s a license to do whatever they want.”

Until legislators give mortgage servicers a reason to help those in trouble, expect the foreclosures to keep piling up.

Source, Lets Stop Foreclosure.com, Sarah O’Neal

Former NBA star Vick Baker's home lost to foreclosure

It seems like no matter how much money some people make, some of them don’t seem to be able to manage their money.

It’s not like a person who has worked hard all their life, suddenly loses their job and is forced to sell their home. But making millions of dollars and not preparing for an economic downturn seems ludicrous compared to someone just getting by.

 For example here is slide show of 20 Rich & Famous people who have recently been through foreclosure. Apparently glamorous celebs can and do fall back on mortgage payments, taxes, and (occasional) alimoney? 

Click Here To Watch A Slide Show Detailing The Foreclosures Of The Rich & Famous

As part of a consumer alert, Attorney General Jerry Brown’s office issued the following tips for homeowners to avoid becoming a victim:

DON’T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant. (My experience is that this statement is partially true However, they will listen to an attorney before they will listen to you. Some of the original mortgage contracts that consumers signed are fraudulant)

DON’T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON’T transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called “rescuers” use to evict homeowners and steal all or most of the home’s equity.

DON’T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON’T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer.”

I am a partner with Sarah O’Neal, an attorney and we can help you with your loan modification or short sale. We do not take upfront fees. You are asked to fill out an application to determine if you might qualify for a loan modification. After reviewing your application, Sarah can advise you if you might qualify for a loan modification. See our website for more information Lets Stop Foreclosure