Terry (not her real name) called our office in tears.  Her home was going on the county steps, the following day, to be sold to the highest bidder in a trustee sale.

She did have a little cash in the house in the form of equity.  Not Fair!

Not a fun call by any measure.    After living there for 25 years and raising her family, the lender was foreclosing.   Not a rare story…I know.

This put the whole office in a buzz to solve Terry’s problem.  I called my cash investors, others called attorneys.    My ‘ace in the hole’ investor was in Europe the other was unable to put it all together in such a short time.

It was looking dire by the end of the day.

The only solution turned out to be bankruptcy…according to legal council!  That’s not what this story is about though.  This was the only way to halt the foreclosure and allow Terry some time to get a grip.  After all, she raised her kids in this home, had no job prospects and was on the verge of a serious breakdown.

She needed to hit pause.

Terry was not devoid of responsibility and I won’t defend her position.   She just needed help.

So, the only alternative was bankruptcy.  The search began for an attorney to embrace Terry and get the ball rolling.   This was done in an attempt stop the snowballing effect!  One found,  we began to focus on solutions.

Move ahead a few days….

Terry hired us to meet the required ‘sale of the home‘ that the Trustee ordered.   This is where it went haywire AGAIN!  The Trustee said he had the legal authority to choose and hire a Realtor.  Well, his Realtor was preparing to sell the home for a ridiculously low price (about $100K low).   Leaving Terry with nothing!  The Trustee’s agent claimed his price was based on his ‘expert opinion‘, the current market and the home’s condition.

Not so fast mister!  We appealed to the Judge that this agent was out of his gourd.  Providing some strong fact based data, we were granted the job to sell Terry’s home.  Sorry Mr. Trustee‘s agent (and Mr. Trustee)!

The home was in bad shape, for sure.  The kitchen cabinet doors were falling off, the Master Bath was in need of a Hazardous Materials Team and the yard more resembled a Jungle than a forest meadow with curb appeal.

We jumped in with both feet.  Providing labor, guidance, advice and, in some cases, a late night shoulder for Terry to cry on.

The home sold in 10 days.  The offer was great and provided Terry with $90,000.00 dollars after expenses.

We make money doing this, right?  In this case there was little money left over after all the hours and effort.   It wasn’t what I earned that was rewarding, it’s what I learned…..

I work with the best group of ‘people’ in the world!  They’re not your typical, robotic, scripted salespeople who only look out for themselves…they’re real people – that care!

I almost  forgot the best part.    Once Terry began to see the light at the end of the tunnel she gained enough confidence and piece of mind to secure a great job!

Terry has a bright future on the horizon!

note:  this solution is not for everyone there are short sale and other options to consider

131 Millrich Dr.  this Los Gatos house sold for nearly 1% less than the asking and 411 Clearview Dr., a townhome, sold for nearly 5% over the listing price !

A reminder that ‘sweet spotting’ your asking price will always pay off.

The good news….neither property was a short sale.

2 Los Gatos Houses sold this week,

131 MILLRICH DR, Los Gatos 95030 (Los Gatos)Single Family Home 3 bed(s) Baths: 4|1 bath(s)   SqFt: 2,593  Lot: 9,100 sq ft

List Price: $1,449,000     Sold Price $1,332,000.00

______________________________________________________

411 CLEARVIEW DR, Los Gatos 95032 (Los Gatos)Townhouse  3 Beds, 2|1 Baths:  SqFt: 2,122 Lot: 2,220 sq ft

List Price: $749,000 Sale Price: $780,000

Assoc. Fee: $428

We see a crossroads ahead…one where the buyers in the Los Gatos Real Estate Market aren’t in the driver’s seat.    Could this mean the homes for sale are in a Seller’s market?

Remember…

Spring is coming and the end of the $8000 First time buyer’s credit is there waiting.   I wonder if will  lead to more vigorous sales?…bidding?

Rismedia reported this weekend…

The Department of Housing and Urban Development (HUD) said it’s taking a closer look at 15 mortgage companies to determine why they had such high rates of problems with FHA insured mortgages.

Can I answer that?  Lending to anyone who could fog a mirror tends to do that.    I told you Fannie Mae was getting a spanking before this new investigation.

“Each loan on this list will be thoroughly examined and we will track down the reasons why it failed. Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted, we are watching very carefully and that we are poised to take action against bad performers,” Donohue said.

I wonder if this has anything to do with the fact Fannie Mae is approving foreclosure without notifying banks.

I don’t think Ken Donahue has tried to actually apply for a Home Purchase loan lately.  In our local Los Gatos and Santa Clara County Real Estate market it is very difficult.  The symptoms have passed.

I am glad to see someone is checking up, but if it does not relieve distressed markets,  DON’T BOTHER!  It’s  glaringly obvious focus on future Real Estate recovery measures, rather than looking back,  is the best medicine.

Below are the companies that received subpoenas from HUD’s Office of Inspector General:

-First Tennessee Bank N.A., Memphis, Tenn.
-Alethes LLC, Lakeway, Texas
-Security Atlantic Mortgage Co., Edison, N.J.
-Pine State Mortgage Corporation, Atlanta.
-Birmingham Bancorp Mortgage Corporation, West Bloomfield, Mich.
-Alacrity Financial Services, LLC, Southlake, Texas
-Assurity Financial Services, LLC, Englewood, Colo.
-D and R Mortgage Corporation, Farmington, Mich.
-Webster Bank, Cheshire, Conn.
-Mac-Clair Mortgage Corporation, Flint, Mich.
-Americare Investment Group, Inc., Arlington, Texas
-1st Advantage Mortgage, Lombard, Ill.
-American Sterling Bank, Independence, Mo.
-Sterling National Mortgage Company Inc., Great Neck, N.Y.
-Dell Franklin Financial LLC, Columbia, Md.

I bet these companies end up walking away from the testimony with more bailout money.  Want to bet?

Create a Quip Contest!  Choose One of the Perils and Create a Quip Contest.

Pick a Peril from the list below, create a quip and post it as a comment below.  We will take a community vote at the end of the month.

The winner will have a $100.00 donation made, in their name, to their favorite charity helping the Haitian earthquake victims!

David Letterman announced where donations can be made directly.

You can text to 90999 and enter Haiti  to make a $10 donationtoo.

2 silly Contest Examples:

Why do transactions fail?

8. Applicant makes large purchase on credit before closing.

Quip: At least the store was still open.

9. Illness, injury, divorce or other financial setback during escrow.

Quip: You should know better! Mom warned you about escrowing!

Help others! Choose one of the 88 snags -below the video – and create a quip then post it in the comment section below.   It’s Easy and will help someone in need.  Do It Now!  Please.

Pick Your comment to create a quip…

Tait Ave Home Sold In Los Gatos

You can do a detailed search for homes available for  sale in the  the Los Gatos Real Estate market here.

If you have been reading my Los Gatos Real Estate musings you already know that since the program was announced in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people, but has largely failed to provide lasting relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes.

As a result, desperate homeowners have sent payments to banks in often-futile efforts to keep their homes, which some see as wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some borrowers have seen their credit tarnished while falsely assuming that loan modifications involved no negative reports to credit agencies.

This fact that credit scores are affected by modifications boils my brain!  The program was meant to help!   In fact, it is hurting too many people.   How are you going to rent or lease a new home if your credit is injured?

How does renting become a component of the problem?   Selling the subject property will become the only option if the modification does not become permanent.   Where is one supposed to live?

In a rental probably.

This introduces a troubling fact of reality for troubled homeowners.  Having to sell their home.  Most will find they are going to have to apply for a short sale approval, some will be confronted with foreclosure or submitting a deed in lieu of foreclosure.   All very unattractive options and all very real.

To those of you in the midst of this debacle I would suggest you speak with a Realtor or a Property Manager as soon as possible and make inquiries as to how you may secure a property before this ridiculous negative credit reporting causes a new layer of frustration for you.

related article…

Loan modification document links

Buying a home means you need to understand your credit score better and how it weighs in and out of your favor.

With all the misguided information flying around about loan modifications understanding these myths will prevent some misteps.

“Many Americans hold mistaken beliefs about credit scores,” cautioned  Ethan Ewing, who heads the free online consumer portal at Bills.com. “Misinformation on television and in hearsay from friends and neighbors only compounds the problem.”

Here are the top 10 commonly held myths surrounding credit scores:

Myth #1: A credit score is a credit report. The credit report is a detailed listing of all debts and payments, going back throughout an individual’s entire payment history, Ewing explained. For each entry, it shows the creditor’s name, amount owed, the highest balance owed, the available credit, whether the account is open or closed (and who closed it), the number of late payments and whether the account is in default. A credit score is a number between 300 and 850 that is based on complex formulas incorporating all the data in the credit report.   Most homes for sale in Los Gatos yield many offers so, you need to have the best credit score.

Myth #2: Those who are not in default do not need to check their credit report. Everyone should check his or her credit report at least once a year (quarterly is not a bad idea in today’s market) to be sure the report contains no erroneous information. Visit www.annualcreditreport.com for a free, no-obligation copy of the report.

Myth #3: Checking a credit report damages credit. Reviewing your own credit information has no effect on a credit score, Ewing said. Neither does a credit report review by a prospective landlord or employer.  Lenders will look, unfavorably, if you have had more than 3 credit reviews by lenders in recent weeks.  Try to do online research for a lender before you apply.

Myth #4: Everyone has one credit score. Credit score calculations are compiled using data from three different credit scoring agencies (Equifax, Experian and TransUnion). The resulting scores might vary slightly among the three agencies if they have slightly different information, but they will be similar.

Myth #5: Married couples share a credit score. If all of a couple’s accounts are joint, their scores will likely be similar, but each individual maintains a unique credit record and credit score. On the flip side, after a divorce, ex-spouses need to follow protocol to have creditors remove either party from a joint account.

Myth #6: Shopping for a loan destroys credit. It is true that “hard inquiries” – examinations of a credit score in preparation for extending credit can have a small negative impact on credit. However, credit bureaus take into account that consumers might inquire about a loan from multiple mortgage companies or auto lenders.

“If multiple inquiries are received from the same type of lender within a 14-day period, the credit scoring companies do not count each inquiry against the borrower,” Ewing explained. But credit card account inquiries to open new accounts are counted individually.

Myth #7: To improve a score, close unused accounts. An important component of a credit score is available credit, or the unused credit that has been offered (on a credit card, for instance) but not used. Closing unused cards removes those available balances from the equation and can actually lower a credit score. Today, some banks are automatically lowering limits or closing accounts to reduce their own credit exposure. Individuals whose debt load is manageable should not experience an extreme effect on their scores.

Myth #8: To boost credit quickly, just pay off bills. Credit scores reflect performance over time. Scores will not change overnight.  This is the worst myth of them all.   One of my clients did just that, without conferring with me, and dropped their score by nearly 60 points.   They failed to qualify for the FHA mortgage they applied for.    Working together we will get them in the front door of their new home sometime in the next few months.

Myth #9: For a fee, vendors can fix a bad score. Again, credit scores show historic behavior. Be cautious about companies that claim to “fix” or “repair” credit.

“You yourself can remove inaccurate information,” Ewing said. “Beyond that, be aware that some companies send credit scorers a deluge of letters asking that they verify – and in the process, remove all past negative information. If and when truthful finance information is verified, however, it will quickly return to the credit report.”

Myth #10: Never get help – it is too hard on credit. It is true that credit counseling, debt settlement and bankruptcy all can cause significant black marks on a credit report.

“If you are in real trouble, however, you can and should seek help,” Ewing urged. “Which option you choose will depend on the severity of your situation. Credit counseling can help to manage bills, and lower interest rates and monthly payments to creditors. Debt settlement firms can negotiate to lower the principal amount of your debts, typically providing a faster path to debt freedom than credit counseling. Bankruptcy, an even more serious alternative, should be discussed with a bankruptcy attorney.”

“Credit is important, but knowing the truth about credit might be even more important,” Ewing concluded. “Before taking action that might hurt or help your score, check your facts to be sure your actions will help your financial picture.”

]]> http://michaelrobertshomes.com/2010/01/07/home-buying-credit-myths-debunked/feed/ 1 http://michaelrobertshomes.com/2010/01/06/los-gatos-benefit-event/ http://michaelrobertshomes.com/2010/01/06/los-gatos-benefit-event/#comments Wed, 06 Jan 2010 21:41:23 +0000 Michael Roberts /?p=1209

A cat sculpture by artist Jolene Anderson that was auctioned off at the 2003 Touch My HeART gala.

Los Gatos-

Hand-painted cat sculptures by 21 award-winning local artists will go on display throughout downtown Los Gatos on Jan. 5, as part of the upcoming Touch My HeART 2010 fundraiser for the Museums of Los Gatos.
Families are encouraged to bring their children to tour the feline figures, who’ve been adopted by local businesses, to find the hidden heart on each sculpture. The cats will then be auctioned off at the “Cats Night Out” gala on Feb. 27 at the Toll House Hotel.
“Cats Night Out is sure to be one of the most exciting events to be held in Los Gatos this year, and we look forward to a fabulous turnout,” said Museums of Los Gatos Executive Director Elke Groves in a press release.
Launching the art season in Los Gatos for the past nine years, Touch My HeART is the major fundraiser for the Museums.
The ninth annual gala will feature fine food, wine and musical entertainment, all benefiting the 501(c) 3 non-profit that aims to promote local history and fine arts throughout the town. Also up for auction at the event will be a weekend of golf at Carmel Valley Ranch, a week’s stay at a vacation home in Truckee and a dinner for eight at La Estancia.
“This gala has become a tradition that brings together the community’s most enthusiastic and generous individuals in support of the Museums of Los Gatos” said Touch My HeART president Sandy Decker in a press release.
The Cats Night Out gala will take place from 6pm to 9pm. Tickets are $120 per person.  Visit http://www.museumsoflogatos.org for more information.

Guest Post Written by Jessica Fromm

Loan servicers may be required to reimburse Fannie Mae for a loss if it turns out the original mortgage on the home did not meet its eligibility or underwriting requirements.

Fannie Mae previously allowed servicers 15 days to turn over loan files for review if there was a question over whether a mortgage on a repossessed property met Fannie Mae’s requirements. Loan servicers then had the option of trying to find a better offer for the property or buy it themselves rather than reimburse Fannie Mae for any loss.

To speed up sales of foreclosed properties, Fannie Mae says after beginning the property disposition process by obtaining opinions on the market value of a repossessed home and listing it with a real estate broker, it may now accept a purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review.

“If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the lender will be required to fully reimburse Fannie Mae for its loss,” the company said in a bulletin to loan servicers.

In its most recent quarterly report, Fannie Mae said it had 72,275 REO properties on its books at the end of September, up 7 percent from a year ago. The company acquired 98,428 homes through foreclosure during first nine months of 2009 — 40,959 in the third quarter alone — and sold 89,691.

Fannie Mae’s sister company, Freddie Mac, reported REO inventory totalling 41,140 homes at end of September, up 46 percent from a year ago. The company acquired 24,375 home during the quarter, and sold 17,941.

In its most recent monthly summary, Fannie Mae said the serious delinquency rate (loans three or more months behind in payments or in the foreclosure process) on single family home loans it owns or guarantees jumped to 4.98 percent in October, up from 1.89 percent the same time a year ago.

Additionally, Freddie Mac’s single-family portfolio delinquency rate rose to 3.72 percent in November, up from 1.52 percent in November, 2008.

This may increase foreclosure activity in the near term and help get this housing issue off the news block.