Renting and your landlord is facing foreclosure

Dear friends and family,

I just ran into this great article that is the worst nighmare many of renters are facing not just in the Northern Virginia area but all over this great nation.

Please take a minute to review this info and share it with anyone that you might know that is in this sad situation.  I’m also making myself and my team available to help/support anyone in this position.

Here you go!!!

You’re paying your bills, but your landlord isn’t. And you’re the one holding the eviction notice.

This is becoming an all too familiar scenario for thousands of renters nationwide who have become the unintended victims of foreclosures. Banks are booting good tenants onto the streets with little to no notice after seizing a property from a delinquent owner, ignoring tenant leases.

In the most troubling cases, some families are forced into shelters for temporary housing because they have little savings to cover moving costs, first month’s rent and a security deposit at another apartment.

Fannie Mae this month pledged to change that with its new renter policy starting in January. The plan will allow renters living in foreclosed properties to sign new leases with Fannie while the property is up for sale, or give the tenants money to relocate. Fannie has yet to establish the length of the leases, and the amount of move-out assistance will vary by state and property.

Freddie Mac says it will unveil a similar program in a few weeks.

But how does a renter know if his landlord has a Fannie- or Freddie-held mortgage? Worse yet, what about renters of landlords who don’t?

Fannie plans to reach out to tenants, says company spokesman Brian Faith.

“Most tenants don’t normally know the details of their landlord’s mortgage arrangements, but we’ll be contacting the tenants in foreclosed properties we own to make them aware of the option to stay in their home through a lease with Fannie Mae,” he said in an e-mail.

The details of Freddie’s tenant plan are still unavailable.

The pair own or guarantee about half of the $11.5 trillion in U.S. outstanding home loan debt. Fannie estimates about 4,000 tenants live in the company’s foreclosed properties and would be eligible for the plan.

Unfortunately, that’s just a fraction of renters facing the consequences of a landlord’s foreclosure. Renters in large complexes are likely safe because multifamily loan delinquencies are still very low. But 15 million renters, or about 40 percent of all renters, live in single-family homes, many of which are owned by mom-and-pop investor landlords. This is where the risk lies.

What should you do if you receive a foreclosure or eviction notice?

“Don’t panic or stick your head in the sand. Neither action will be helpful,” says Robert Baker, education coordinator at Housing and Credit Counseling Inc. in Kansas.

Call the sheriff’s department first, Baker says. Find out how long the foreclosure process takes. Is it 60 days or 90 days? Then you’ll have a timeline to work with and time to prepare for the worst-case scenario.

Next, get on the Internet. Find out the rental laws in your state. Some states, including California and Illinois, have recently passed legislation giving renters a grace period, ranging from 30 days and up, to stay in a property after it’s been sold in foreclosure. Others are considering similar legislation.

The U.S. Department of Housing and Urban Development outlines tenant rights by state on its web site.

The lender’s name or its lawyer will be on the eviction notice. Contact either one to let them know you’re in the property. Find out what your options are. Will the lender let you sign a new lease or is the bank offering some cash assistance for moving out? Don’t let the lender bully you into moving out sooner than stated by law.

If you’re nervous negotiating with the lender on your own, contact a local nonprofit housing counseling agency for help. HUD’s web site lists agencies by state or you can call its toll-free number 1-800-569-4287.

Also, call your local Better Business Bureau to see if there have been any complaints against your landlord. This can be a clue that something isn’t right.

Last, has the condition of your rental property suddenly deteriorated because of neglect? If the landlord isn’t making repairs, maybe it’s because he can’t pay for them or doesn’t want to spend money on a property he’s about to lose.

In the meantime, save your money for a rainy, forced-out-of-my-home fund.

The Associated Press

County seeks funding to help homeowners avoid foreclosure

Finally!!!! One of our local counties “Allegany County Maryland” are working toward a common goal “Help Local Resident in keeping their homes instead of doing nothing”!!!!! 

Please read this story, it’s something that we should try here in Prince William.

Grants would be awarded to middle-income Allegany residents

Kevin Spradlin
Cumberland Times-News

CUMBERLAND — The Allegany County commissioners are expected to apply for more than a half million dollars to help low- to moderate-income residents avoid foreclosure.

Jim Williams, development coordinator for the county’s Department of Community Services, will provide information during a public hearing today at 9:30 a.m. at the County Office Complex about the Maryland Neighborhood Conservation Initiative.

Maryland has been awarded $26.7 million of Neighborhood Stabilization Program funding from the federal Department of Housing and Urban Development. The county is seeking $660,000 to address abandoned and foreclosed homes in neighborhoods that have been impacted by foreclosure and subprime lending.

A foreclosure activity index map shows Allegany County has fared better than much of central and metro Maryland. Still, homes in ZIP codes 21502 (Cumberland) and 21562 (McCoole) have had a “high” level of foreclosure activity between the first quarter of 2007 to third quarter 2008.

Frostburg’s 21532 ZIP code has a “moderate” activity index while the rest of the county has a “low” rating. The state Department of Housing and Community Development will administer the funds, $17.3 million of which will be grants awarded to eligible jurisdictions in a competitive process.

The grants are to be awarded to “middle-income” homeowners — those who are between 80 percent and 120 percent of the area median income based on the number of people in a household.

Eligible uses include establishing financing mechanisms for purchase and redevelopment of foreclosed-upon homes and residential properties. Those mechanisms can include soft-seconds — which increase home buyers’ purchasing power by avoiding having to pay private mortgage insurance and include lower down payments, lower closing costs and home buyer support — loan loss reserves, and shared-equity loans for low- and moderate-income home buyers.

Boston and Charleston, S.C., have similar programs. The funds also can be used to purchase and rehabilitate homes that have been abandoned or foreclosed upon in order to sell, rent or redevelop those properties. The grants also can be used to establish land banks for homes that have been foreclosed upon, demolish blighted structures, and to redevelop demolished or vacant properties.

For more information on the state Neighborhood Conservation Initiative, visit www.neighborhoodrevitalization.org.

What’s In, What’s Out with Home Buyers in 2009?

by Mark Nash

What’s IN

 

 

1. Sidelined home buyers. Family or lifestyle additions or changes made in buyers households in the last three years are forcing those waiting out the market transition to finally get off the fence and say, it’s time for our family to buy the new home that suits our new needs. 
2. Home uplifts. Not a big renovation, but some new finishes that can visually holdover stay-put home sellers. Not a gut rehab to the studs new kitchen, but new flooring, countertops and appliances. 
3. Collaborative home pricing. The old days of home sellers configuring a homes price are out. What’s new is that the seller with their agent look at closed comparables, set a price, then the buyer and their agent agree or disagree, but in the end, a mortgage lender and their appraiser will set the price, as they are assuming the most risk in the transaction. 
4. Balanced reporting by real estate and personal finance journalists. Consumers learned in 2008 that the ‘doom and gloom” residential real estate market headlines don’t apply to all markets. What’s been lost in the foreclosure hype is that there are still stories of homes selling in short market times (in as little as 3 days), homes selling at full price and some selling with multiple contracts on the table. Existing home sales will be 5.02 million versus 5.652 million for 2007, a decrease of just over eleven percent, considerably less that the recent correction in the U.S. stock market, plus a realistic view that over five million people purchased a home despite the headlines in 2008. 
5. Creative home seller financing. Exhausted home sellers are turning to self-financing to move properties. Installment sale contracts and lease to own are the most popular and effective ways for sellers to begin to receive income from a property that has languished on the market in 2008. 
6. Real estate agents as a housing resource not a salesperson. New-age real estate agents help consumers through the home sale or purchase process which takes a skilled agent who is not driven by sales, but by providing resources to help the consumer determine if they should buy or sell a home. Home ownership is not for everyone. Factors such as a job move in 3 years or less, marginal credit and lack of interest in home maintenance can be reasons for a resource-driven agent to advise their client not to buy. 
7. Property tax appeals. With home prices dropping, many savvy home owners are appealing their property taxes. This is especially attractive to those looking to sell their home in 2009. With a competitive marketplace, those with the most realistic taxes are more likely to offer buyers an overall lower expense in home ownership. 
8. House therapists. Divided partners in a home are increasingly relying on an independent third party (house therapist or coach) to bring household relationships to common ground on such prickly issues such as to stay or move, how much to spend on remodeling or decorating, or spending nothing at all. Third parties can outline the benefits and pitfalls of over-spending on a new larger home or weighing in on a spouses desire to over-improve for the neighborhood. With less equity and with the financial stakes higher smart couples hire a home therapist to wrangle concessions and agreements out with their significant other instead of doing damage to their relationship by going head-to-head with them. 
9. Architectural overhead garage doors. After years of bland vanilla garage doors, the architecture has permeated the door most people look at the most. Traditional styling has arrived with mullioned windows, faux wrought iron hinges and latches that provide the original non-overhead garage door look. Contemporary looks now include the adjacent siding applied over the door for a seamless look, much like the panels installed on refrigerator doors to complement cabinets in a kitchen. 
10. Loveseats. A pair or trio is gaining acceptance as the functional way to rearrange a living or family room. Consumers appreciate the ease at which they can rearrange them, move an extra one to another room, or provide long-term furniture flexibility in future homes. Plus, they’re tired of sitting miles away from others on over-sized sectional sofas. 
11. The master bed as a throne. With consumer spending down and more nesting at home, home owners are focusing on making their bed like an at-home luxury hotel experience. Posh linens, pillows and mattresses create a getaway without leaving home. 
12. Older war-horse appliances. Collectable, working appliances form the 1940′s through the late 1980′s have found a new niche among homeowners who appreciate their rock-solid construction and durability. Harvest gold double ovens from the 1970′s have been repainted a metallic red and go from boring to bold. Cold spot refrigerators from the 1950′s refinished in sky blue perks up the butler’s pantry in suburban home. And, the early 1960′s dryer that looks like it’s from a Jet son house painted pink to match punches up the in-unit laundry room in a condominium. 
13. Dining chairs that don’t match. With consumers watching their non-essential spending closely and electing to stay home to entertain friends, many have found a quick pick-me-up for their dining room suite, mismatched pairs or single chairs. Feedback from friends or family has been favorable to this easy and cost effective way to say welcome to my cutting edge table. 
14. Obama era paint colors. President elect Barak Obama will add a fresh, younger and forward-looking feel to residential interior paint decor in the spaces at The White House where he and future First Lady Michelle have a say. Look for parchment whites, cashmere yellows, bright optimistic blues and radiant gold’s. Depressing Bush era colors such as plum, chocolate brown, rusty mustard and pale sage will gladly be replaced by more optimistic colors in American homes.

What’s OUT

 
1. Fixer-upper homes. With larger down payments required by mortgage lenders and consumer credit cards mixed out, home buyers want a home in move-in condition. The DYI days are on the wane as buyers want to inherit new kitchens and bathrooms. 
2. Foreclosure fluff. The foreclosure rate nationally in 2008 was just under 3 percent. In the Great Depression it was just over forty-percent. 
3. Home buyers endless “circling” prospective short-list properties. Overly optimistic thinking by buyers to circle a preferred property indefinitely, often for months, waiting for further price reductions or to wear out long weary sellers. This practice has backfired for buyers who practice this style of pre-negotiating. They often loose their short-list dream home and frustrate savvy price-right sellers. Ditto the bottom-feeder buyers. 
4. Real estate agents that started career in the boom. It was easy for any new real estate agent to have instant clients during the boom years. After all, they thought the business was about order (contracts) taking. Now they’ve realized they didn’t build a long-term client base during the boom or acquire knowledge about servicing client’s needs in a not-so-easy market. 
5. Home staging. A recently over-used low cost marketing band-aid for vacant or occupied homes with longer than normal market times. Buyers have said enough of the non-professional usage of assorted leftover props placed around a for-sale home to make it supposedly homey. Buyers say, market it as it is and clear out the tired silk flowers and stale potpourri. 
6. Indoor-outdoor carpet. The staples of quick-fix home sellers for basements, balconies, screened porches and lanai’s, buyers have said enough. Many have told agents that inexpensive indoor-outdoor carpet is visual pollution and often masks flaws in a home. 
7. Track lighting. Thought of by homeowners to be a quick way to get an art gallery look, many prospective buyers usually take them out and discount their appeal. As one Gen-X home buyer said to me “Why do sellers install them up when they don’t really have any interesting artwork or architectural features to spotlight? They bring undue attention to nothing.”\

Selling Your Home in a Declining Market

by Richard Daskam

Selling a home in a declining market starts with a proper attitude and finding the right Realtor® who is optimistic and knows the right sales techniques in this tough market. Even though most people and economists are down on the housing market (feel it is depressed, that the economic recovery isn’t going to happen in the next few months, and consumer confidence is down), it doesn’t mean that you can’t sell your home.

 

The truth of the matter is many people will sell their homes between now and this summer. While many sellers and real estate agents take a reactive approach to market conditions, those sellers who take a more proactive and realistic approach to the market will be the ones who sell their homes. These are the sellers who take advantage of this market and move up to their dream home! First, be honest about appraising the condition of your home.

The key to successful selling in a ‘declining market’ is pricing your home at today’s market value, having your home in tip-top condition and being able to work with a prospective buyer on financing needs and terms. Don’t let your ego or pride get in the way when determining a price for your home. Put yourself in the buyer’s shoes and walk across the street. Curb appeal to a new buyer is a very important and is many-times overlooked.

Secondly, take a leisurely walk through your home jotting down the little things you might do to spruce it up. New carpeting, a fresh coat of paint, new light fixtures, mirrors, etc., are items that will give your home more emotional appeal and does not cost too much. Put away the clutter throughout the home. Rooms free of clutter will appear bigger and the new buyer can visually ‘move into’ your home much easier. Remember, new buyers are not buying your furniture.

Finally, be patient. The real estate market has changed considerably since the last run-up where homes sold in hours or days. We are now experiencing a more “normal market” where homes take 90-120 days to sell. Remember, inventories are at an all-time high right now. Bank foreclosures are all around you and many buyers will have difficulty qualifying for a new loan. Lenders also have very strict guidelines now and consumer confidence is very low. Allowing for a normal marketing period will do a lot to alleviate your impatience when you have few showings of your home or a lack of offers to review.

A good Realtor® will keep you abreast of market changes, activity on your home and others in the neighborhood, while maintaining a “teamwork” concept that is paramount for a successful sale. Properties need ample time to be exposed to the public and finding the right buyer requires a good understanding of the market as well as sales values. In all honesty, there are no easy answers but one thing is for certain, even in the worst markets, there are people selling homes and taking their equity!

‘New IndyMac’ to continue loan mods

FDIC announces planned sale of failed bank

January 05, 2009 04:44 PM

By Inman News
Inman News

A group of investors who have agreed to put up $1.3 billion in cash to acquire IndyMac Bank are expected to continue an FDIC mortgage loan modification program that aims to help nearly 50,000 borrowers avoid foreclosure.

The FDIC said it will continue to share losses on loans made by IndyMac and provide secured financing to the new owners, who are expected to acquire the failed bank’s $16 billion loan portfolio and $6.9 billion in securities in late January or early February.

The final cost of “resolving” the July 11 failure of IndyMac Bank will be between $8.5 billion and $9.4 billion, the FDIC said in announcing its intent to sell the bank to investors led by former Goldman Sachs Group Inc. partner Steven Mnuchin, now chairman and co-CEO of Dune Capital Management.

The FDIC has agreed to share losses on a portfolio of qualifying loans with “New IndyMac,” which will consist of a retail bank headquartered in Pasadena, Calif., and 33 branches located primarily in the Los Angeles area. New IndyMac will have $6.5 billion in deposits, a loan portfolio of $16 billion, and servicing rights to an additional $157.7 billion in mortgages. The deal also includes IndyMac’s reverse mortgage platform, Financial Freedom, with $1.5 billion of reverse mortgages and servicing rights to $20.2 billion in loans.

Continued loss-sharing by FDIC is contingent on New IndyMac’s continued implementation of a streamlined loan modification program the government says has prevented $423 million in foreclosure-related losses at the bank under the government’s management.

The FDIC says 46,500 IndyMac mortgage loans are eligible the program, which is designed to get borrowers’ monthly payments down to as little as 31 percent of income through interest-rate reductions, extension of loan terms, and principal forbearance.

So far, the FDIC says it’s mailed out 32,274 mortgage modification offers, completed 8,512 loan modifications, and received verbal acceptances on another 9,480 offers.

IndyMac got into trouble making stated-income and other “aggressively underwritten” loans in areas with rapidly escalating home prices, particularly in California and Florida, the FDIC said.

Losses at IndyMac were also driven by the bank’s reliance on higher-cost brokered deposits and secured borrowing. The FDIC said losses to its Deposit Insurance Fund include $341.4 million in prepayment fees to the Federal Home Loan Bank of San Francisco — the price tag for paying off $6.3 billion in FHLB advances to IndyMac.

Many of the 25 banks that failed last year had a “heavy reliance” on Federal Home Loan Bank advances, the FDIC said, and those secured borrowings and their associated prepayment penalties increase the costs of failure to the FDIC and uninsured depositors.

Expect Fed to take more giant steps

By Lou Barnes
Inman News

Offer “Happy New Year!” to a friend, and you’ll get, “Same to you,” followed by an unprintable reference to 2008. Inquire about plans for 2009 — corporate or personal — and replies go like this:

“Ummm … I was thinking about adding another layer of sandbags to the bunker, maybe some wire, and … Hey, have you seen my helmet around here, anywhere?”

2009 will not be a matter of civilians regaining confidence, as so many hope. Our national paralysis is beyond self-restoration. We need — and will get — truly extraordinary intervention by government.

Yes, I know that I’m the guy who insisted since the Lehman disaster that cavalry was on the way. Apologies. It did not occur to me that Henry Paulson, ex-chair of Goldman, would do for finance what Michael “Brownie” Brown did for Katrina. The weird thing: Hapless Paulson did the right stuff, but in every case was late, inadequate and stopped short.

This time, I know that intervention will be quick and massive because it has already started. For accuracy, nothing beats predicting the present. On New Year’s Eve, the Fed made one of the two or three most extraordinary announcements in its history — the bigger, the more it should be buffered by a holiday for markets to think it over.

The Fed will be buying $500 billion in agency mortgage-backed securities, the purchase to be complete by June. Not finance MBS, not sell Treasurys to raise cash and then buy, just buy — with intent to drive mortgage rates down enough to rescue housing.

No one knows how fast or how far rates may go down. The Fed’s initial announcement at Thanksgiving knocked rates down here, into the low fives, but waves of refis impede further declines. However, the Fed’s style says it means business: It will buy in its own name, not through blind brokers, every purchase engraving in the market mind the strongest wisdom in finance: Don’t fight the Fed.

Where will it get the $500 billion? The Fed’s frequently asked questions posting: “Purchases will be financed through the creation of additional bank reserves.”

Hah. Ho ho. Permission granted for discreet giggling. Stifle guffaws, please. The Fed will pay for MBS by making a credit entry on the ledger of the selling dealer, inventing the money credited. “Printing” money is so … so yesterday. Today, we kite electrons.

This event will tip into hysteria all of the inflation worrywarts, hard-money freaks, Austrian schoolists, Ron Paul crackpots, gold bugs, dollar fidgets, and a lot of good and solid citizens in their backyard foxholes.

It will be OK. Honest. This step is the first of perhaps several the Fed will take to escape the post-September “liquidity trap” — pushing on a monetary string — and to end this deadly credit-default spiral, in which the fact and fear of default further diminish the supply of credit. The MBS buy will be the Fed’s first-ever “quantitative easing,” bypassing a broken system and injecting credit directly into the economy until the credit markets begin to function on their own. The Fed is not close to the end of its resources; in many ways it is just beginning emergency operations.

Enough certainty. From probables to maybes. Markets fear a cascade of credit defaults and bankruptcies, not deflation — that’s why Treasury yields are so low. The fear is justified. Rates will go lower as the great many “last war” inflationists give up.

The foreclosure plague will defy all solutions and persist into economic recovery; there is no way to save inherently weak households. The foreclosures will be localized, micro-regional, and do far less macroeconomic harm than feared. Outside those overbuilt zones, super-low rates will encourage some home prices to rise in 2009. Recovery in the bubble zones, and for builders? Years. Several.

Energy and commodity prices have overshot on the downside, but the rebound will be modest. The U.S. has been first into this global wreck, almost a year ahead of the world, and will enjoy a low slope but low-inflation recovery. Beginning late this year.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

Real Estate Brief

January 05, 2009 04:40 PM

By Inman News
Inman News

A monthly home-price index that tracks price changes in 20 U.S. metro areas dropped 18 percent in October compared to the same month last year, with the largest declines in Phoenix (32.7 percent), Las Vegas (31.7 percent) and San Francisco (31 percent).

The year-over-year decline was the largest on record for the Standard & Poor’s/Case-Shiller 20-metro area price index, which dates back over two decades, and all 20 metro areas experienced index drops from October 2007 to October 2007.

The index measures price changes by comparing repeat sales of resale single-family homes over time.

The slightest year-over-year index drops were in Dallas (3 percent), Charlotte (4.4 percent) and Denver (5.2 percent), according to the report.

Detroit had the largest monthly decline among the 20 metro areas, falling 4.5 percent from September 2008 to October 2008. Next on the list was San Francisco, down 4.2 percent. Tampa, Fla., and Minneapolis both dropped 3.4 percent from September 2008 to October 2008. The New York City metro area had the slightest monthly drop in October, down 0.9 percent.

Metro area	Oct. ’07-Oct. ’08 change
Atlanta	-10.5%
Boston	-6.0%
Charlotte	-4.4%
Chicago	-10.8%
Cleveland	-6.2%
Dallas	-3.0%
Denver	-5.2%
Detroit	-20.4%
Las Vegas	-31.7%
Los Angeles	-27.9%
Miami	-29.0%
Minneapolis	-16.3%
New York	-7.5%
Phoenix	-32.7%
Portland	-10.1%
San Diego	-26.7%
San Francisco	-31.0%
Seattle	-10.2%
Tampa	-19.8%
Washington	-18.7%
20 Metro Area Composite	-18.0%

Foreclosures hit all-time high

Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments.

By Les Christie, CNNMoney.com staff writer

Last Updated: March 6, 2008: 2:25 PM EST

NEW YORK (CNNMoney.com) — More home owners than ever are losing the battle to make their monthly mortgage payments.

 Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report’s quarterly, 36-year history.

Another 381,000 households, or 0.83% of borrowers, saw the foreclosure process started during the quarter, which was also a record.

Additionally, the number of mortgage borrowers who were over 30 days late on a payment in the last three months of 2007 is at its highest rate since 1985.

“Boy, that was ugly,” said Jared Bernstein, an Economic Policy Institute economist of the data.

“It’s another reminder that anyone who thought we had hit bottom was wrong. This was a huge bubble, and when a bubble of this magnitude breaks, it creates a huge mess,” he said.” It could take a lot longer for the correction to work through the system.”

Housing rescue: What you need to know

One reason it may take so long is that there seems to be no end in sight for falling home prices.

“Declining prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state,” said Doug Duncan, MBA’s Chief Economist said in a prepared statement.

The foreclosure rates for prime and subprime adjustable rate mortgages both more than doubled compared with a year ago, from 0.41% for prime ARMs to 1.06% and from 2.70% for subprime ARMs to 5.29%.

But it was subprime ARMs that contributed most heavily to the nation’s soaring foreclosure rates. Many of these loans come with low introductory rates that reset higher, often to unaffordable levels, in two or three years. Although they represent only 7% of all outstanding mortgage loans, they accounted for 42% of foreclosure starts during the quarter.

Delinquencies stood at 5.82% of outstanding mortgages, up from 5.59% during the three months ended September 30, 2007, according to the MBA. In the last quarter of 2006, the rate was 4.95%.

Home price plunge accelerates

“In states like Ohio and Michigan, declines in the demand for homes due to job losses and out-migration have left those looking to sell their homes with fewer potential buyers, particularly with the much tighter credit restrictions borrowers now face,” said Duncan.

“In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through.”

California and Florida are the states hardest hit by foreclosures. They accounted for 30% of all foreclosure starts in the United States last quarter, despite representing only 21% of the mortgage market.

Florida’s foreclosure start rate more than tripled during the last three months of the year compared with a year ago, and they more than doubled in California.

Both states still have a sizable over-supply of inventory, according to Duncan, due to over-building during the speculative boom that lasted through mid-2006. That will continue to depress home prices and add to mortgage delinquencies in those states.

“We expect to see home price declines to last there through the end of 2008,” he said, “after the rest of the country is in recovery.”

As prices plummet — already some California and Florida areas have seen price drops of 25% or more, according to Duncan — defaults will soar.

And falling prices and growing foreclosures create a vicious cycle; the more prices fall the less likely it is that borrowers can use home equity to refinance into more affordable loans, which leads to more defaults. And as foreclosures rise housing inventory increases, further depressing prices.

At the same time, these trends have lead to a contraction the construction industry, hurting overall U.S. economic activity and increasing the chances that the economy will fall into recession.  

First Published: March 6, 2008: 10:13 AM EST

Virginia Supreme Court Ruling: Congestive Relief Fee (Additional Grantor Tax)

Finally we received the news from the Virginia Supreme Court!!!

The Virginia Supreme Court issued its opinion today in the joined cases involving the Northern Virginia Transportation Authority, finding that the law authorizing the Congestive Relief Fee (Additional Grantor Tax) – as well as the other fees and taxes created in the bill last year granting authority to NVTA to raise money for its projects – is unconstitutional. It declares that all “such taxes and fees that NVTA has already imposed are null and void.”

The Governor has issued a statement, along with the Attorney General, expressing disappointment but indicating that their clients will advise appropriately based on the ruling. We do not know for certain yet how soon the clerks of court will be responding but presumably they will stop collecting the additional tax immediately or very soon.

There is also no indication yet how the state will handle refunds of taxes already paid, we at The Mateo Team are committed to keep you informed.

Nelson Mateo

Short Sales in Real Estate – How to Handle Real Estate Short Sales

How To Do Short Sales

There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a “short sale.”

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

If you are considering buying a short sale, there could be drawbacks.For your protection, I suggest that all borrowers:

• Obtain legal advice from a competent real estate lawyer
• Call an accountant to discuss short sale tax ramifications

As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. will consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

Call the Lender
You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the “real estate short sale” or “work out” department, you want the supervisor’s name, the name of the individual capable of making a decision.

Submit Letter of Authorization
Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:

• Property Address
• Loan Reference Number
• Your Name
• The Date
• Your Agent’s Name & Contact Information

Preliminary Net Sheet
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.

Hardship Letter
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.

Proof of Income and Assets
It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.

Copies of Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it’s probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.

Comparative Market Analysis
Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:

Active on the market

Pending sales

Solds from the past six months.

Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to allow payment of certain items such as home protection plans or termite inspections.

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.

Buyers pursue short sales to get a good deal. So when you see a price listed for a home that you think is too low for the neighborhood, before you jump on that price like hot fudge on a sundae, ask your agent to call the listing agent to find out if the home is a short sale.

Because you might want to think twice about making an offer on a pre-foreclosure, short sale home. It’s not as simple as you may believe, and very few can close in 30 days or less.

What is a Short Sale?

A short sale means the seller’s lender is accepting a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.Be aware that the seller will need to be in default, to have stopped making mortgage payments, before a lender will consider a short sale. Also, the seller might have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

Basics of Short Sales

What is a Foreclosure?

Buying at a Trustee’s Sale

Check the Public Records

Do your research before making an offer to purchase. Your agent can find out who is in title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer.If there are two loans, you will probably deal with the second mortgage lender. The first mortgage lender’s position is protected by the second lender unless the second lender does not want to foreclose. For example, if a seller owes $160,000 to the first lender and $40,000 to the second lender, you cannot offer $160,000 because it will wipe out the second lender.

This article was written by Elizabeth Weintraub,