The Phoenix Real Estate Advisor

Many people don’t realize that if they have taken a home equity loan / line of credit (second mortgage) and they need to sell their home because of a hardship, that both the first and second mortgage banks must approve a short sale. 

In some cases, the bank holding the second mortgage are not giving approval.  If they are, they are conditional approvals which require a promissory note at closing, or a cash payment (sometimes partial, sometimes in full) at closing.  We are seeing this mostly for second mortgages which were not used as purchase money mortgage.  In other words, if you didn’t use the second to buy the home, but used it to buy furniture, pay bills, buy a car, or anything else besides being part of the mortgage at time of purchase.

However, we are also seeing some of these same banks - with a little bit of persistance on our part - willing to negotiate after they have sent these conditional approvals or outright denials.  No gaurantees, but it does happen.

This is why it is so important to use an agent to help you with your short sale that is well trained and knowledgeable about your options with short sale listings.  Knowing who to call and what to say is vital in this process.

So if there is anything I can do to help, please let me know.  If you do not live in the Phoenix area, that’s okay, I will gladly help you find an agent in your area that is skilled in this process. Just give me a call…

I am here to help…

Lynn Otlewski, CDPE
RE/MAX Integrity, REALTORS®
623.238.3875
lynn@ValleyREadvisor.com

This weekend I received a call from a family member living outside Arizona, who was trying to get information for one of their in-laws about selling a home that is worth less than they owe.  I asked him a few questions to get an idea of whether or not this homeowner would qualify for a short sale or if they just want to sell their home and know they can’t get what they owe.  There is a difference.

To be eligable for a short sale on your home, you MUST be able to show the bank a hardship.  These might include loss of a job, substancial loss of income, large involuntary increase in expenses (such as major unexpected medical expenses) are the most common causes of a hardship.  In other words, you need to become “unqualified” for your mortgage.  Each bank determines hardship on a case by case basis.

I explained all this to my family member.  He said that his in-law had a huge drop in income, which in and of itself does not create a hardship.  It depends on what her expenses are.  They are not behind on their mortgage payments at this time, but has been advised to stop making payments.  I would NEVER advise that a homeowner just stop making payments.  There are other steps you can take.  She has also been advised to just move and walk away from her home.  NEVER would I advise this either!  There are other steps you can take.

I told my family member to have his in-law call me and I would refer a CDPE (Certified Distressed property Expert) agent to them in their area. 

Your home is probably the most valuable investment you have.  It is important to trust your asset to someone who knows what they are doing.   Your credit rating is just as valuable.  Your insurance rates are based on credit scores, your interest rates on your credit cards are based on credit scores.  Your ability to buy a car, buy a home, rent an apartment even changing jobs are all based on credit scores.  A forclosure on a credit report is worse than a bankruptcy.  It stays on your report for more than 7 years.  It follows you for a long time.  A short sale stays on your credit report, but in most cases only prevents you from purchasing a home for 2 years as long as everything else is paid on time.

This is why it is so important to entrust this investment to an agent who understands the process, the qualification standards and the best way to proceed for your circumstance.    

The latest statistics show that 1 out of 8 homeowners are either in default, or about to default on their home mortgage.  There is a very good chance that you or someone you know is experiencing a hardship.  Please let them know that there is help available.  In most cases, we can avoid foreclosure.   Sometimes, depending on circumstances, we can even find a way for you to keep your home. 

Give me a call.  If you, or someone you know, are out of state or out of my area, I can refer  a CDPE agent to you.  If you, or someone you know, are in my market area, I would love to help.    

Lynn Otlewski, CDPE

623.238.3875

lynn@valleyreadvisor.com

Times have really changed, and this economy and real estate market bring many challenges to many of you.  You or someone you know may need help.  You, or someone you know may feel overwhelmed and not sure of what to do next.  Maybe you know someone who is on the verge of not being able to meet their mortgage obligations.  Perhaps they aren’t aware that there is help available to them. They may be afraid that they may lose their home - but it is important that they look for help sooner than later. 

I have intensive training in the distressed property area.  In fact I have earned the CDPE Real Estate Designation.  The CDPE (Certified Distressed Property Expert) agent is well versed in helping homeowners who may be in danger of defaulting on their mortgage, or who have defaulted on their mortgage find the help they need.  In some cases, enabling them to stay in their home.  Some cases require a “short sale” which is where the bank will approve a sale for less than what is owed on the property.  This situation is much easier on the credit score than a foreclosure but is a very complicated process.  As a CDPE agent, I am very well versed in the process and what it takes to work with the bank on a short sale.

Please, if you know of anyone that is in this situation, have them contact me.  They may be surprised to learn that there are programs available that may help them:

1. stay in their home
2. avoid forclosure
3. save their credit score

Please pass along my contact information and ensure them that any information they share with me will be held in the strictest confidence.   Time is of the essence!  Waiting too long to take action could lead to a foreclosure which is the worst possible consequence of a hardship.

Lynn Otlewski, CDPE

623.238.3875

lynn@valleyreadvisor.com

We’ve heard a lot fromm people that “Investors” is what started this housing crisis. Most of us that work with short sales and foreclosure know this to not be true. We’ve understood that the vast majority are people like me and you that simply can not afford their home. Here’s an article from AZ Central that speaks to this subject: 

A group that works with people who “walk away” from homes instead of fighting to keep them out of foreclosure has released its first data. Almost 30 percent of the homeowners who contacted it from Arizona have other mailing addresses or own other homes, according to Carlsbad, Calif. You Walk Away. . That signals they are most likely investors. The figures, which have been compiled since the beginning of the year, show almost 50 percent of the people who are “walking away” in Florida are investors.  The top state for residents who contacted the firm is California. Then it was Florida, Nevada and Arizona at no.4. Those four states have much in common - the biggest speculator-driven home price run ups in 2004-05, and the fastest rising foreclosure rates now.

The firm tracking the trend says the figures show the majority of people considering walking away are primary homeowners, so the trend isn’t being fueled by speculators. However, the data is only from the beginning of the year. Some housing analysts believe speculators were the first to ”walk away” in Arizona when foreclosures started to really climb last summer. http://www.azcentral.com/members/Blog/CatherineReagor/26985

This means that 66% of the homes are owned by people that need help because they’ve gotten in over their head either by risky loans or loss of employement. This is why I’ve formed the group www.PhoenixHomeRescue.org, call us if you have questions 623.271.4234.

OK, what’s going on with the market? Over the last few weeks I’ve noticed an increase in the number of homes selling here in Phoenix, Arizona. Does this signal the Phoenix market is changing or just a spring sale blitz?

I think the market is on it’s way to making a come back. When homes in Surprise and Maricopa sell in a few weeks (sometimes days) this means either the buyers are finally coming back or the home prices are finally catching up with the market.

I’ve had buyers in the Surprise area looking for a single story home, 4 bedrooms, 3 baths and under $260,000. A couple of months ago this would have been easy but now the homes are receiving 2 and 3 offers over a weekend. Most of these homes are forclosures so the bank will look at all offers over a few days and make a decision which one to accept.

I’ve been on both sides of the decision so I’m telling my buyers it’s time to get real with their home purchase. As a buyers agent, I want to make sure my buyers get in while the prices are low so they can see the greatest equity gains over the next couple of years.

Right now buyers need to start thinking, is this the bottom? Should I be out looking for a home right now? And most important, if I wait until the print media starts talking about this will I be too late?