Realtor Coaching & Training: listing agent
Foreclosures and Loan Mods Spike.
One of the top questions we from HREU Students is…..’What should I tell my clients to do who are upside down in their homes?’. Obviously, this is the question millions of Americans are starting to ask themselves.
Read this article and share with us what you think….comment on what you would do if you were in this situation or what you are telling your real estate clients.
What you think matters…
LOS ANGELES (Reuters) – Ron Barnard is throwing in the towel. Like a growing number of the 8.3 million American homeowners who owe more on mortgages than their homes are worth, he’s ready to just walk away.
Barnard and others like him are starting to worry market experts and economists, who fret that the growing trend may deal a blow to an economy on its knees while swelling an already ample pool of bad loans.
While others persist in draining savings and running up credit card debt in a last-ditch bid to save their homes, a growing number see no point in making boom-level mortgage payments in a bust market — with no bottom in sight.
“People are hurting,” said Barnard, who includes himself in that group. “They’re scared or they’re angry,”
Realtors, clearly in this market knowing how to help people in this situation is no longer options. You know that you must know how to do short sales. Watch the FREE Agent Short Sale Secrets video now to learn how to get started in short sales.
In California’s Inland Empire east of Los Angeles, where Barnard lives and sells real estate, median home values have plunged more than 40 percent in the last year as formerly sidelined buyers snapped up foreclosed properties.
Those bank-owned homes moved at fire-sale prices that decimated the value of neighboring homes — many of which are owned by people who have limited “skin in the game” because they put little or no money down at purchase.
Learn how-to become a REO (Bank Owned Homes) listing agent. Watch the FREE Agent REO Secrets video and download the FREE Agent REO Secrets book.
Deflating home prices thus threaten to accelerate a negative feedback loop that has sent prices lower, said economist Ed Leamer, director of the UCLA Anderson Forecast.
“Should the downward spiral in home prices, neighborhood condition and equity deterioration continue, more and more mainstream borrowers are likely to walk away from their homes,” Credit Suisse said in a December report.
Barnard, who already has stopped making payments on five investment properties purchased in 2005, is on the verge of giving up on his own home that is now worth roughly half its $800,000 purchase price.
Others weigh the predictable and relatively short-term foreclosure-related hit to their credit ratings against the diminishing likelihood of breaking even on their investments or even making monthly payments on such severely “underwater” homes.
OBAMA TO THE RESCUE
Market experts say that, while lenders have the right to sue such borrowers for breach of contract, most will not pursue charges against “indigent” individuals unless they abandon mortgage payments for business interests.
Barnard and some financial planners say that, in certain cases, giving up is the only option.
It can take a year or longer for a bank to seize a home once the owner ceases payments. While a foreclosure hurts credit, owners do not have to make mortgage payments as the process unfolds and can use that saved money to start over.
A foreclosure is rarely the best option. Short sales offer the same relief with far less credit damage. Watch the FREE Agent Short Sale Secrets Video Now.
The prolonged U.S. housing slump prompted President Barack Obama to unveil a $275 billion housing rescue plan that aims to arrest a devastating fall in U.S. home prices and help as many as 9 million families stay in their homes, by reducing mortgage payments via refinancing or loan modifications.
Are you interesting in modifying your own Mortgage Home Loan? How about offering Loan Mods to everyone you know. Watch the FREE Video now to learn how to start your own loan mod business. Make money now helping others save money. Watch the FREE Loan Mod Video Now.
As lawmakers battle over legislation to help homeowners, the finance arm of Barnard’s Home Center Realty is testing a short-pay “refi” program, or short payoff refinance, which seeks to keep people in their homes by writing down mortgage principal and then refinancing the smaller outstanding debt.
But some can’t afford to wait. Take working mother Jullisa Kalish, 39.
As a realtor in the Phoenix area, she rode high on the property boom. But when the market crumbled over the past three years, she wound up her business, went through a divorce and walked away from her five-bedroom home.
Her home value peaked at $674,000 but was recently revalued at $395,000. Saddled with hundreds of thousands of dollars in negative equity, she found a two-bedroom apartment to rent for herself and her two daughters.
“It’s heartbreaking to lose $300,000 worth of equity, over $300,000 of my most valuable asset,” she said. “It will be 10 years before it even gets back to its $600,000 value.”
“It will just take too long to recoup,” she said.
She’s not alone. More than half of Nevada’s mortgage holders now owe more on their mortgages than their homes are worth. Arizona holds second place with 32 percent of homeowners have negative equity, and Florida and California follow with 30 percent each, according to First American CoreLogic, an affiliate of property services firm First American Corp.
TALES OF GLOOM
The total value of U.S. residential properties fell to $19.1 trillion in December 2008 from $21.5 trillion a year earlier. California’s losses came to more $1.2 trillion — roughly half the nationwide decline, the firm said.
“I’m able to keep my head just above water right now,” said Russ Sweet, 61, who is now living with his son and renting out his underwater home in Temecula, California, at a loss after an injury ended his career as an electrical lineman in San Diego.
While he fights to stay afloat, Sweet says some of his neighbors in Temecula — a haven for commuters who work in more expensive coastal cities — already have walked away.
In Arizona, Phoenix electrician Alvaro Palacios, 34, called it quits on the dream home he bought at the top of the market in late 2006 for $172,000.
Palacios stopped making payments after he was laid off in December. He took a part-time job as a supermarket delivery driver to make ends meet and has been waiting for his lender, Countrywide, to foreclose. His two-bedroom home with a large yard recently was revalued at $124,000 by the city.
Until he hears from the bank, Palacios is staying put.
“It is a difficult decision, but I don’t really see any other alternative,” the father of two said. “The house is worth much less than I paid for it, and it is too much of a struggle.”
Realtors, now its your turn…tell us what you think….
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Fannie Mae just released their newest servicing guide…..there is a new rule that directly effects your real estate business…
Servicers are no longer allowed to haggle the real estate commissions provided they dont exceed 6%. Truth is, for most agents this will mean a raise in their fees collected. In SoCal for example, 5% commissions are more or less the going rate. Now, when an agent lists and sells a short sale (that is a Fannie Mae property) they will get a 1% raise!
Bottom line, listing and selling Short Sales in this market is no longer optional….and now…more profitable!
Here is the exert from the Fannie Mae release.
No Negotiation of Preforeclosure Sales Commission
Servicing Guide, Part VII, Section 504.02: Contacting Selected Borrowers
Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon a
reduction of the total commission to be paid to real estate agents to a level below what was
negotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the sales
price of the property in aggregate. Servicers are reminded that they must continue to obtain
any approvals that may be required by interested third parties in connection with preforeclosure
sales.
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How do you find loss mitigation contacts?
The simple fact is that this information should be easy to find….but, often times it is not. In this article, you will now learn how to find loss mitigation contacts. You will also learn a few short cuts to get your short sale offer accepted and closed fast.
How To Find Loss Mitigation Contacts:
1) Call the lender. Sounds easy, doesn’t it? Here is the challenge. Lenders don’t want you to easily access their loss mitigation department. They want you to speak with another department first…their Loan Modification department. Understand, the lender’s first goal is for you to stay in the home..and continue to make your mortgage payments. Lets be clear on that point. The bank is in the business to make money. Their first line of defense against losing money (short sale or foreclosure) will be a Loan Mod. Maybe a Loan Modification makes sense. Learn how to mod loans. Watch this FREE Video now how to mod your own loan…and then start your own loan modification business.
2) OPEN and read the letters from the lender: If the house is in pre-foreclosure, the lender will have mailed at least 2-3 letters to the borrower. Those letters are usually from the loss mitigation departments. OPEN THE LETTERS…..and call them. Here is an interesting statistic: 95% of all homeowners who have missed 1 payment never make any attempt to work with the lender. In other words, they think their only choice is to lose the house to foreclosure.
3) List the house with an EXPERIENCED Short Sale Realtor: It seems that nearly every agent will tell you that they know how to sell Short Sales. The simple fact is that most agents have NO education and no experience listing and selling short sales. Ask the agent you are considering these questions before you hire them to list your home:
a) How many short sales have you listed and CLOSED? Its easy to list a short sale…but, education and skills are required to get those short sales closed.
b) Where did you receive your Short Sale education? (Not bragging when I tell you this…but), HREU offers the nations top short sale educational resource for Realtors. We have had literally thousands of agents participate in our Agent Short Sale Secrets coaching program. Chances are if you are working with a Harris Real Estate University student, you are working with an agent who will successfully list and sell the home. Those experienced agents will have direct contacts with Loss Mitigation departments. Realtors: learn how to eaily list, sell and CLOSE short sales. Watch this Free Video Now.
4) Don’t give up. Once you have found the your Short Sale Listing Agent…be patient. The short sale process is unique. The process can have several landmines along the way that an experienced listing agent will will help you to avoid. Take direction from your listing agent. Their goal is the same as yours….sell the home and avoid foreclosure.
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One of the hottest topics in real estate right now is….Loan Modifications.
Agents offering loan mods is a natural extension of any real estate practice. This is a great way to subsidize your real estate sales business. Offering loan mods is the very definition of a people helping…money making business.
In this economy, in this housing market any Realtor(r) who plans on staying in business must take the time to learn what their market demands. In other words, every agents must know how they can be of the highest level of service to their community. The days of simply being a ‘listing agent’ or a ‘buyers agent’ are over. Now, every agent must possess many skills so that they can go beyond the traditional offerings. One of the nations leading agents (and a friend of HREU) is Ralph Roberts. Time Magazine featured Ralph as the nations #1 Realtor. Ralph just released this article dispelling the myths of Loan Mods.
After you read this article be sure to watch the Free video about how to start your own loan mod business. Learn Now how to mod your own mortgage payment..and then start your own mod business.
MYTH #1: My bank wants me out of my house. My bank wants my home. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions). In today’s market, there’s a good chance they’ll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.
MYTH #2: My credit score is bad so I won’t qualify. Unlike the option of refinancing out of trouble, which requires you to apply for a new loan, loan modification simply adjusts the terms and perhaps reduces the balance of a loan you already have. Your credit score is much less of a factor in determining whether you qualify for a loan modification. In addition, a successful loan modification can actually improve your credit score over time, especially if it prevents you from ending up in foreclosure or bankruptcy.
MYTH #3 I am not late on my mortgage payments so I won’t qualify. I have to miss a payment to be eligible. Early on, this was true. In fact, some early eligibility requirements stated that you had to be 61 days delinquent in order to qualify. In other words, you would have had to have missed two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders. Many lenders are now working out loan modifications with borrowers who are up to date on their payments. It’s difficult to determine whether you qualify until you actually discuss your situation with the lender or with an attorney who is knowledgeable and experienced in loan modifications.
MYTH #4: I would be better off walking away or declaring bankruptcy than modifying my loan. Walking away from the home and filing for bankruptcy are certainly two options, but they are rarely the best options when you are facing foreclosure. If you simply walk away, the lender is unlikely to pursue legal action against you, but in some jurisdictions, the lender can pursue a deficiency judgment against you to collect the difference between what the lender receives for your home at auction and what you currently owe on the balance of the mortgage. Filing for bankruptcy may be better than just walking away, but it can leave a blemish on your credit history that makes it difficult to borrow money in the future. A successful loan modification is almost always a more prudent choice.
MYTH #5: It’s too late. I have already received a foreclosure notice. As long as you still reside in the home – that is, you didn’t voluntarily abandon it, and the home hasn’t been sold at a foreclosure auction – you may still have time to work out a loan modification with your lender. The sooner you take action, the more options you have available and the more time you have to pursue the best option, but you can still negotiate late into the process. By contacting the lender or, better yet, having your attorney contact the lender on your behalf, you demonstrate a good faith effort to work out a solution and can often buy yourself extra time to negotiate a loan modification.
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Thanks again.
Real Estate Questions Or Value Analysis? Just Call or Email Me.
David Eloff, Sales Manager
Realty Executives Showcase
12345 Mountain Ave. Suite S
Chino, CA 91710
Toll Free Direct: 1-800-543-1557
Fax: (909) 465-6710
Web: www.DavidEloff.com
Email: DavidSellsRE@gmail.com
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This is from todays Business Week….
Ah, remember when Southern California stood for sunshine, the Beach Boys and eternally rising housing prices? No more.
According to research firm MDA DataQuick, the median home price fell a record breaking 35% in November versus the same month in 2007. The median price paid for all homes combined last month was $285,000, down 5% from October. Last month’s median was the lowest since it was $298,000 in April 2003, which was the last time the median was below $300,000. November’s median stood 43.6 percent below the peak $505,000 median reached in spring and summer of last year.
The median price has eroded consistently over the past 16 months as price depreciation swept the region, discounted foreclosures ballooned in inland markets and sales stagnated in higher-end neighborhoods. The latter have suffered from, among other things, a difficult financing environment for large mortgages.
“Bargains and bargain hunters have kept this market alive through some of the bleakest financial news in memory. There’s this renewed sense that you can score a ‘deal’ – something that had been missing for many years. Last month’s Southland sales weren’t great, given they were the second-lowest for any November in 16 years. But they could have been a lot worse,” said John Walsh, DataQuick president.
Foreclosures have accounted for about half of all Southland resales during the past three months. In November, they reached 55%.
Realtors, you must learn how to list and sell REOs. Become and REO Listing Agent Now. Download your Free Agent REO Secrets Guide Book.
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As predicted, expect to see more foreclosure moratoriums…typically for 90 days. California tried this and..it didn’t have any sort of significant effect. Expect to see a massive number of foreclosures hit the market after this artificial reprise….
Mortgage finance companies Fannie Mae and Freddie Mac are suspending foreclosures for about 16,000 households during the holiday season.
The two companies said Thursday that they will halt foreclosure sales between Nov. 26 and Jan. 9, while they evaluate whether borrowers qualify for a new loan modification program announced last week.
As you may recall when the government seized Indymac back the FDIC implemented their own “Mortgage Loan Modification” program. Overall, very few loans were actually modified as a percent of the whole. Now we are seeing that even after the homeowners have had their mortgages modified they are still missing payments. Loan Mods are a great solution in theory. But, the newest research about what happens post loan modification isn’t encouraging. Clearly, simply massive numbers of homes will become REO listings. Learn now how to become a REO, Bank Owned Homes Listing Agent. Instant Free Agent REO Secrets book.
Fannie Mae said about 10,000 households would be affected, while Freddie Mac said the changes would affect about 6,000 borrowers who are facing foreclosure. The change does not apply to vacant homes.
Realtors, read that again….only 16,000 borrowers would be ‘affected’….that’s assuming they want to do a loan modification. Remember, a loan modification temporarily makes the payment lower….rarely, are there any principle reductions. In other words, they are still upside down in their homes. If they want to sell..and they don’t want a foreclosure on their credit one of their best options is doing a short sale. Realtors, learn how to offer these extremely motivated Sellers the option Short Selling their homes. Download the Free Agent Short Sale Secrets book now.
OK, you will love this next part…..in order to qualify for this new initiative a borrower has to miss 3 mortgage payment….
Fannie and Freddie’s loan modification plan aims to help abate the foreclosure crisis by aiding homeowners who have fallen at least three months behind on their payments, but only if their loans are held by the two companies.
More fun facts….when I first read this next point a week or so ago I thought it was a misprint. Can we all agree that one of the (many) reasons we are in this immense real estate mess is because lenders gave mortgages to people who didn’t qualify? Assuming we are in agreement…then WHY the heck is it that the FHA is now allowing people to have mortgages with a 38% housing ratio? Get this, the actual housing debt to income ratio that the FHA uses is………..28%. So, the FHA is now becoming the worlds largest….SUB-PRIME lender!
Under the program, the new primary mortgage payments — including taxes and insurance _shouldn’t total more than 38 percent of homeowners’ pretax monthly income.
It very important that you read and clearly understand the next point…THIS year…2008…the NAR is estimating that there will be around 5 million home sales….the FDIC is expecting that by the end of THIS year…2008 there will be 4.4 MILLION borrowers who are deliquent on their mortgages. If you are a HREU Coaching Student you know that the best opportunities for helping the millions (and millions) of homeowners is still ahead of us. Start now by learning how to become a REO (bank owned homes) listing agent. If the government predictions are correct nearly 50% of ALL sales in 2009 will be REOs and Shortsales.
Download the Free Agent REO Secrets guide book Now. Instant Free Download.
Fannie and Freddie are the dominant players in the U.S. mortgage market but hold only 20 percent of delinquent loans. Ultimately about 400,000 households are likely to qualify for the loan modification program, according to Priya Misra, a mortgage analyst with Barclays Capital.
By contrast, the Federal Deposit Insurance Corp. estimates that more than 4.4 million borrowers will become delinquent by the end of next year, not including loans backed by Fannie and Freddie.
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