Category Archives: Preforeclosures

Foreclosures on the Decline

Although Charleston SC real estate is performing better then most cities around the country, the good news is that foreclosures are on the decline.

(article by:  Ester Cho of DS News)

In June, 60,000 homes turned into completed foreclosures compared to 80,000 foreclosures a year ago, CoreLogic reported Tuesday.

 

The analytics company stated the yearly drop puts completed foreclosures at 2007 levels. Month-over-month, there was no reported change in completed foreclosures for June. Since September 2008, 3.7 million homes have been lost to foreclosure.

“The decline in the flow of completed foreclosures to pre-financial crisis levels is more welcome news pointing to an emerging housing market recovery,” said Anand Nallathambi, president and CEO of CoreLogic. “However, we believe even more can be done to reduce the inventory of foreclosures by decreasing the level of regulatory uncertainty and expanding alternatives to foreclosure.”

The number of homes in national foreclosure inventory in June stood at 1.4 million, or 3.4 percent of all homes with a mortgage. June’s figure is a slight drop from a year ago when the total was 1.5 million, or 3.5 percent. From May, the figure was unchanged. CoreLogic defines foreclosure inventory as the share of all mortgaged homes in some stage of the foreclosure process.

“While completed foreclosures and real-estate owned (REO) sales virtually offset each other over the past four months, producing static levels of foreclosure inventory for most of this year, they are beginning to diverge again,” said Mark Fleming, chief economist for CoreLogic. “Over the last two months REO sales declined while completed foreclosures leveled out. So we could see foreclosure inventory rising going forward.”

The states that saw the highest number of completed foreclosures over a one-year period since June 2012 were California, leading with 125,000, followed by Florida (91,000), Michigan (58,000), Texas (56,000) and Georgia (55,000).

The top five states accounted for 48.4 percent of all completed foreclosures nationally.

Florida (11.5 percent) led as the state with the highest share of inventory in foreclosure, with New Jersey (6.5 percent), New York (5.1 percent), Illinois (5.0 percent), and Nevada (4.8 percent) taking the next four spots.

Meanwhile Charleston SC has one of the lowest foreclosure rates in the United States.

James Schiller – Charleston SC Real Estate Agent

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Bidding on foreclosures in Charleston, County

What is a distressed sale? – The sale of a property whereby the homeowner is in financial distress and can’t afford to pay the mortgage any longer also known as a forced sale. Which is an action taken in a civil court forcing the owners of a piece of real property to sell their property and to divide the profits (usually there aren’t any). A forced sale is generally the result of a petition to partition action such as: foreclosure action or bankruptcy .

HOW TO GO ABOUT BUYING A FORECLOSURE…

Please note this is for Charleston county, SC only and that your county and state likely has its own rules and protocol so contact your local office. However I think this is the general jist of most transactions around the country as this has been going on for hundreds of years.

Thank you for your interest in foreclosure sales. This page was prepared in an effort to answer the most frequently asked questions about this process. If you have further questions, please contact me at 843.478.8061.

Court House AuctionsIf you are interested in bidding on a piece of property in Charleston County, SC, which has been foreclosed upon and is scheduled to be auctioned for sale in the near future, the following are some things you may find helpful to know:

1.) When real property is ordered to be foreclosed in Charleston County, a judge called the Master-in-Equity will issue an order directing the mortgaged premises (or part thereof as required to satisfy the claims established) be sold by or under direction of the Master.

2.) The judgment (often called a Master’s Decree of Foreclosure) will contain a legal description of the property being sold, a provision for the necessary legal advertisement, the time and location of the sale, and notice of any senior liens, taxes or other rights to which the property to be sold is subject.

Sales are held the 1st and 3rd Tuesday of each month at 11 a.m. at the front entrance of the Charleston County Judicial Center located at 100 Broad Street in downtown Charleston.

The judgment also will specify the amount of good faith deposit necessary at the time of the sale, which is usually 5% five percent of the successful bid at the sale. Compliance must be made with the bid by 4 p.m. that same day. This deposit is required to be in cash or certified funds and is not refundable. The plaintiff or any other party may be a purchaser on such sale. You have 30 days to comply with the balance of the bid with cash or certified funds.

Some Plaintiffs seek a deficiency judgment against the Defendant. This means the Plaintiff is not only foreclosing its mortgage but is seeking a money judgment too. Unless the pleadings state that no personal or deficiency judgment is demanded or any right to such judgment is expressly waived in writing, the bidding will not be closed upon the day of sale but remains open until the thirtieth day after such sale exclusive of the day of the sale. When the sale is re-opened for final bidding, the highest bid is accepted. The Plaintiff can only bid at the first sale.

Short Sale– is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan.

If you want a short sale the process is very much like a traditional real estate transaction except in one way. The hassle. For you to take advantage of a short sale, you’ll definitely want a local Charleston area real estate agent on your side. Primarily because the bank is technically the seller. Even though the seller might still be the owner of record, for a short sale to occur the seller’s mortgage lender has to approve it. Unless the seller just sells the home for less than they owe and pays the difference to their lender.If the seller can’t do that then the lender with the mortgage will have to O.K the home being sold for less than is owed on it.

The largest problem with purchasing a short sale home is that the bank is not willing to work with you (the buyer) to make the purchase easy or cheap for you. Usually when putting an offer on a home that is approved for a short sale the bank will only sell the home “As Is”, and doesn’t care if there are problems with the home even if you get a home inspection. Secondly, they usually will drag their feet because if you make an offer they probably have a couple other offers on the table that they will work against you so you must make sure you have a large earnest money deposit ready, and no contingencies. Otherwise they will not consider it and/or they will contact the current offers they may already have.

When looking to buy a home that is a short sale you must keep in mind that since the home isn’t being sold for profit that there is no room for the seller to pay a buyer’s agent commission. Therefore, be prepared that you may have to pay a buyer’s commission out of your own funds. However, President Obama and HUD have instructed banks that they have to allow agents to be paid when representing a buyer in a short sale, but this isn’t always the case.

*Don’t worry. If this seems like too much of a scary proposition, there are plenty of unbelievable cheap homes on the market that are great deals for sale the traditional way.


Should YOU Sell Your Home NOW?

Now it’s Oct. of 2011… I originally posted this piece below in 2010 in response to this “expert” from the Wall St. Journal who claimed then that home prices would be increasing. Evidently this “expert” was wrong. To further update you as to my opinion I still feel that anyone considering selling should do so now because the housing market is probably only going to worsen.  Fast forward to 2012 and I was correct. There is a thing called shadow inventory that have yet to hit the market up to some say million new homes. What do you think will happen to home prices then?

If you have any concerns about selling your home in Charleston you better start to sell it sooner than later, because as the banks begin to trickle out their foreclosed homes, this will keep the market soft. Furthermore, rates are likely to increase in the next few years which will also deter those considering buying homes to get cold feet or be able to afford less.

(Below Written 05/2010)

It’s been a while since I have posted an opinionated piece because most of my posts are more geared toward news and information for the public and how it pertains to the industry of real estate. However in this case, I couldn’t shake this ludicrous idea by a writer at the Wall St. Journal. I have always respected the Wall St. Journal, but this one has me baffled.
I have been in the real estate industry for going on 14 years now-  (12 years in mortgage financing),  and 5 years as a real estate agent Considering most of my experience has been financially related I tend to follow those trends the most seeing as there wouldn’t be sales of real estate without money to finance them. Let’s face it, there aren’t that many people liquid enough to pay cash so truthfully it all revolves around money. Even insurance revolves around money and is a great indicator of overall economic health. Each property has to be insured, each business, each profession has to have insurance, and yes mortgages have insurance.

With that said, the piece from the Wall St. Journal by James Hagerty goes like this: U.S. home prices will begin a gradual recovery by next year, according to a survey of 92 economists and other housing analysts by MacroMarkets LLC.” They then go onto write; “The analysts surveyed by MacroMarkets on average expect home prices, as measured by the S&P/Case-Shiller national index, to rise about 12% in the five years ending Dec. 31, 2014. As of Dec. 31, that index was down about 28% from its peak level in mid-2006”. 

Obviously I am assuming that Mr. Hagerty is just going off research and information given to him by MacroMarkets and these 92 economists, but I can’t believe the editors of the Wall St. Journal let this go to print. I can’t lay all the blame on the Wall St. Journal because they are apparently getting their info from these economists. I am sure out of 92 economists they most likely have many more years then I analyzing data, but let’s look at the facts and you decide for yourself.

National Mortgage News (an industry news subscription service) sends me monthly emails about the latest data coming from multiple outlets such as: National Association of Mortgage Bankers, national appraisal companies, commercial finance institutions, etc. Remember financing/economics tell the facts about what’s really happening.  Of 11 articles 7 of them were negative, but a few are really telling.

I am just going to give you the blurb “gist” of the piece.

1.)    Residential delinquencies climbed to yet another new high at March 31 with 10.06% of all mortgagors behind on their payments, according to new figures released by the Mortgage Bankers AssociationThink about it… If delinquencies are on the rise, as they have been continuously for almost 3 years how are home prices going to go up? When people are having to short sale their homes, get foreclosed on or bank sales increase, then home prices will inevitably continue to fall.

2.)    Loan applications to buy new or existing homes plummeted 27% last week, reaching a 13-year low, according to new figures released by the Mortgage Bankers Association. If loan applications plummeted on purchases by 27%… Well you don’t have to be a rocket scientist to see that home prices aren’t going to go up if there aren’t any sales.

3.) The loan buyback plague continued on unabated in the first quarter with three seller/servicers, accounting for about three-fourths of the industry’s repurchases, according to an analysis done by National Mortgage News. Here is how this works. When I loan is originated by a company, they then sell that loan to a larger institution (usually Bank of America, US Bank, Wells Fargo, just to name a few). If those loans under perform and have too many delinquencies within the first year then the originating company has to buy that loan(s) back. Another scenario is; if the purchaser audits the file after purchasing it and doesn’t like something in the file they can also force the seller to buy it back. Why is this bad? If the buy backs are due to delinquencies then that means those home owners can’t afford their payments, or lost their job, etc. Therefore, eventually their home will have to be sold and most likely for less than they paid for it. Subsequently sending home prices down.

My last bit to this post has nothing to do with the news articles written by the National Mortgage News, but about financing, FHA, VA, and FNMA. Our government is currently at a 94% debt to income ratio and can barely pay it’s bills. Meaning the U.S. really doesn’t have money to be buying mortgages from banks, and to decrease their risk of having delinquent loans they will have to increase the amount of money buyers will be required to put down, resulting in less people that qualify to buy. Secondly, the U.S. Fed recently quit buying treasury bonds (security instruments backed by mortgages), and If little to no one is buying mortgage backed securities in large quantities then  eventually mortgage rates will increase, subsequently, making it harder for people to qualify for home purchases. The less people qualify the less sales will happen therefore sending home prices down. Simple supply and demand.

Yes; there may be some tiny bits of data compared to the rock bottom days of a year or two ago that might lead economists to believe the trend is for prices to go higher, and yes home sales might have been increasing over the last couple months. However, the increase in home sales is due to one reason and one alone. The home buyer tax credit was about to expire so those people that were otherwise too afraid to purchase finally had reason to. Now that the credit is gone, so goes the buyers.

The overall picture in my opinion is not good, not good at all. As a whole the real estate market is posed to continue to slide, and as the U.S. economy continues to flounder the housing outlook is sure to follow. I am not a pessimist by nature so don’t get me wrong. Yes, everyone should stay positive and believe we can make a change for the better. Believe me I want nothing more than to be wrong, but being realistic is something I am, and the facts point me in that direction.

Follow up: Again I am not sure where the 92 economists where getting their info from..Latest from the Case-Shiller index on 05/25/2010

“The housing market may be in better shape than this time last year, but, when you look at recent trends there are signs of some renewed weakening in home prices,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover.”

A separate Case-Shiller index that is released quarterly and covers the U.S. showed home prices fell a seasonally adjusted 1.3% in the first quarter of the year compared to the fourth quarter of 2009.

If you are thinking about selling your home in Charleston, Mount Pleasant, Isle of Palms, Sullivans Island, Daniel Island, Folly Beach or the surrounding areas please contact me and I will gladly meet with you to discuss your options.

Realtor VS Real Estate Agent

Those of us in the industry as licensed real estate professionals know the difference between the two, but does the public know? That is the question. And, do they really care? Studies show the answer is no. Let me start by saying as I type this article I am a member of the NAR but that really is because it is my company’s policy that I am to sell with them. Otherwise, I wouldn’t be.

So; what is a REALTOR®? A licensed real estate agent that is a member of a national association that pays yearly dues to say they are a realtor. So in short, it is just a made up word for an organization. Period. There are benefits as a real estate agent sometimes to be a member of the NAR (National Association of Realtors), but none for the clients. They would like you to believe there are by trying to convince the public it’s better practice to do business with an agent who is a member, but it’s my opinion it makes no difference.

What is a real estate agent? (as defined by wikipedia) a person or organization whose business is to market real estate on behalf of clients.

A licensed real estate agent who has gone through the schooling and training necessary to sell real property as defined by the governing body with which gave them their license.

In the state of South Carolina, the LLR or labor licensing board is the governing body that handles the issue of real estate for SC, and the laws pertaining to it.

Does it matter if someone is a realtor? NO. A real estate agent non-member is just as qualified to sell as a realtor.

So; next question? What makes a good real estate professional?

We must first go through the qualities that best describe the duties necessary to be a great real estate agent. Since, being a real estate agent is more or less just being your own business on behalf of your client, we need to lay out the qualities of a great business or business person.

1.)    Marketing knowledge/experience

2.)    Negotiation skills

3.)    Organization

4.)    Hard work ethic

5.)    People/personality management

6.)    Technology knowledge

7.)    Business experience

Granted, these are a bit generic, but they are the fundamentals nonetheless.

So I ask again, does being accredited by a made up organization created for profit really make you more qualified to sell real estate? No.  In my opinion having business experience is much more important to me. You can go to real estate school, and take a one day class put on by the NAR and can be 18 years old with no professional or business experience whatsoever to be a member. Do you think that person is going to be better qualified then someone who has ran their own company, worked in some sort of professional environment for years? Most likely; not.

James Schiller is Charleston’s best Real Estate Agent

Saving Your Home From a Foreclosure

Well it goes without saying that we are in tough times economically as a country, and even more so as it pertains to real estate. With all the bad news we hear about real estate and the economy there is some good news to report. Even though our government is has made many mistakes with our money recently it appears as if those in the white house are doing their best to help homeowners.

There is a new program to help those who can’t afford their homes any longer quickly sell their homes (that’s relative) without being forced into foreclosure. It’s called (HAFA) or Home Affordable Foreclosure Alternatives program.

You can read the pasted details of the program from RISmedia.com website:

HAFA is designed to simplify and streamline the use of short sales and deeds-in-lieu of foreclosure by improving the process. Specifically, HAFA will:

• Complement HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Use borrower financial and hardship information already collected in connection with consideration of a loan modification under HAMP.
• Allow borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Prohibit the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%). This is to ensure the seller/borrower can still utilize the expertise of a real estate agent.
• Require borrowers to be fully released from future liability for the first mortgage debt and if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).
• Use standard processes, documents, and timeframes/deadlines.
• Provide financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis; up to 3% of the unpaid principal balance of each subordinate loan).

HAFA is a complex program with 43 pages of guidelines and forms. To help everyone better understand the process, below are some frequently asked questions that address the basics.

What is HAFA?

Initially announced on May 14, 2009, with guidance and standard forms issued on November 30, 2009, the program will help owners (referred to below as borrowers) who are unable to retain their home under the Home Affordable Modification Program (HAMP). A borrower (the current owner) may be able to avoid a foreclosure by completing a short sale or a deed-in-lieu of foreclosure (DIL) under HAFA. The guidance and forms released on November 30 do not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac. Those enterprises will issue their own HAFA guidance and forms.

Who is eligible for HAFA?
The borrower must meet the basic eligibility criteria for HAMP:
• Principal residence.
• First lien originated before 2009.
• Mortgage delinquent or default is reasonably foreseeable.
• Unpaid principal balance no more than $729,750 (higher limits for 2 to 4 unit dwellings).
• Borrower’s total monthly payment exceeds 31% of gross income.

How is the program being implemented?
Supplemental Directive 09-09 (November 30, 2009) gives servicers (those who process payments) guidance for carrying out the program. All servicers participating in HAMP must also implement HAFA in accordance with their own written policy, consistent with investor (lender) guidelines. The policy may include such factors as the severity of the loss involved, local market conditions, the timing of pending foreclosure actions, and borrower motivation and cooperation.

A short sale agreement (SSA) will be sent by the servicer to the borrower after determining the borrower is interested in a short sale and the property qualifies. It informs the borrower how the program works and the conditions that apply. After the borrower contracts to sell the property, the borrower submits a “request for approval of short sale” (RASS) to the servicer within 3 business days for approval. If the borrower already has an executed sales contract and asks the servicer to approve it before an SSA is executed, the Alternative RASS is used instead. The Servicer must still consider the borrower for a loan modification.

What are the steps for evaluating a loan to see if it is a candidate for HAFA?
1. Borrower solicitation and response.
2. Assess expected recovery through foreclosure and disposition compared to a HAFA short sale or DIF.
3. Use of borrower financial information from HAMP. (May require updates or documentation.)
4. Property valuation.
5. Review of title.
6. Borrower notice if short sale or DIL not available (to borrowers that have expressed interest in HAFA).

What are the HAFA rules regarding real estate commissions?
The guidance states that a servicer may not require a reduction in the real estate commission below the amount stated in the SSA. The SSA states that the servicer will pay the commission as stated in the listing agreement, up to 6%. If the servicer has retained a vendor to assist the listing broker, the vendor must be paid a specified amount from the commission. Neither buyers not sellers may earn a commission in connection with the short sale, even if they are licensed real estate brokers or agents. They may not have any side deals to receive commission indirectly.

What else should I know?
• The deal must be “arms length.” Borrowers can’t list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship.
• The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, the tax may not apply. Forgiven debt will not be taxed if the amount of forgiven debt does not exceed the debt that was used to acquire, construct, or rehabilitate a principal residence. Check with a tax advisor.
• The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment. There will be a negative effect on credit scores.
• Buyers may not reconvey the property within 90 days after closing.

When does the program end?
Short Sale Agreements must be executed and returned to the servicer no later than December 31, 2012

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