The Phoenix Area Foreclosure Experts

House stripping -- it's for everyone!

I've seen my share of houses that have been stripped by angry owners losing their home to foreclosure. I saw another today, but it was a little different than your average home. Check the picture of this 3,895 sq ft home built in 2002 with 4 bedrooms, 4 bathrooms, and a 3 car garage ... then read the sales history that follows:

• 2/13/02 - sold for $545,736
• 8/11/04 - trustee's deed of sale for $527,209
• 1/24/05 - sold for $645,000
• 1/24/05 - sold again for $710,000
• 12/13/05 - sold for $1,150,000
• 9/13/07 - trustee's deed of sale for $940,454

Anyone want to bet this a case of "loan fraud?" Sheesh ... and the neighborhood isn't that great. Perhaps the appraiser is wearing a black and white, stripped uniform in the county penitentiary at the time of this post.

Anyway, back to the title of this post. It wasn't enough that the former owner of this foreclosure made off with some huge cash, but the kitchen was completely stripped of all cabinets and appliances -- down to bare walls. The rest of the house wasn't in very good shape either. It just goes to prove: house stripping is an equal opportunity employer. We were in a hurry to leave the house and I forgot to take a picture of the "waste land" ...formerly called the kitchen. I borrowed the above photo from the MLS.

So here is the recent MLS listing activity:

11/26/07 - listed as REO for $630,000

2/13/2008 - reduced to $599,900

6/16/2008 - reduced to $551,500

I'm pulling for $450,000.

Here's one way to reduce foreclosures

You are about to read how Maryland went from number 6 on the foreclosure list to number 22 by changing how they classify a foreclosure.

On one hand, you might say this reclassification is a road paved with good intentions designed to give homeowners more time to work out their problems. On the other hand, you might say it is only delaying the inevitable and heaping more losses on  lenders -- while making Maryland look like they have a handle on foreclosures. I tend to agree with the latter.

Well, you decide. I tried to summarize this article but thought it better in the full form. It comes courtesy of Peter Miller at RealtyTrac:

B of A and Wells Fargo say loan modifications rising

Bloomberg recently reported B of A  and Wells Fargo have upped their efforts to curb foreclosures. Both have hired staff and contacted homeowners to reduce loan rates or to arrange repayment plans to cut monthly payments.

B of A reportedly has doubled it's loan modifications in the first half of this year compared to the 2nd half of last year. It claims to have completed 117,000 loan  modifications  from January to June of 2008. The article didn't say if B of A counted any loan modifications from recently acquired Countrywide as part of it's total. The article also said Wells Fargo has increased staffing fivefold: from 200 in 2005 to 1,000 currently.

B of A said it plans to modify at least $40 billion in troubled mortgages by the end of 2009 to help more than 250,000 borrowers keep their homes. In response to these claims here are some direct quotes from the article:

Voluntary efforts so far "have not ramped up'' fast enough to curb foreclosures, said Julia Gordon, policy counsel at the Center for Responsible Lending, a Durham, North Carolina-based consumer group. 

"We have heard wildly different things about how much modification is going on,'' said Representative Brad Miller, a North Carolina Democrat. "We have heard from the industry that they are modifying like crazy. And we've heard from consumer advocates that they are hardly modifying at all.'' 

"The assessment sounds better than it is,'' said Representative Barney Frank, the committee's chairman and a Massachusetts Democrat, who plans another hearing in September. "There needs to be a sense of urgency,'' he said. "Yes, I'm glad you're doing what you're doing, but please don't take any comfort from it because we've got problems.''

Almost 1.7 million homeowners averted foreclosure through loan modifications from July 2007 to May 2008, Faith Schwartz, executive director of the Hope Now Alliance, said at the hearing. 

I would have to agree that not enough is being done. Foreclosures and REO's have been increasing for over 1-year now. We will find a bottom to this market when foreclosures and REO's start to dry up. 

Another Top 10 list -- this one from HomeVestors

HomeVestors has 230 franchises in 35 states and has bought more than 35,000 homes in the past 12 years. They just released their Top 10 markets for the 2nd quarter of 2008. How do they choose those markets?

Mark Hagen, a vice president of HomeVestors, said the top markets share certain common characteristics. "We call them rational markets," said Hagen. "Real estate fundamentals make sense in these areas." 

They all have: 

• Moderate home prices relative to the national average, and never participated in the wild inflationary spirals of the boom years….or the rapid deflation after 2006. 
• Solid local economies, producing new jobs, even in the face of a national slowdown. 
• Strong local demand for both single family rental units and "starter" homes for renters looking to buy. 
• Prevailing rent levels strong enough to produce positive cash flows for investors.

OK, so their first rule alone means the Top 10 foreclosure areas would never make it onto their lists. They want stable areas where prices remain steady (predictable). This allows them to buy distressed properties from people who lose jobs, get divorces, or face foreclosure at very low prices ... but still have an excellent chance of flipping the property for profit. So what are these markets? 

1. Dallas, Texas 
2. Houston, Texas 
3. Atlanta, Georgia 
4. Denver, Colorado 
5. Fort Worth, Texas 
6. San Antonio, Texas 
7. Charlotte, South Carolina 
8. St. Louis, Missouri 
9. Milwaukee, Wisconsin 
10. Chicago, Illinois; Kansas City, Kansas (two cities tied for tenth place)

Short Sale – good! Foreclosure – bad!

On June 25, 2008 FannieMae introduced new policies defining the manual underwriting guidelines for borrowers with a credit history that includes a Deed in Lieu, Short Sale or Foreclosure. 

The new guidelines prevent a borrower from obtaining a FannieMae home loan for 5 years after a “Trustee Sale” (commonly known as a foreclosure). Without 10% down or a credit score of 680 or more a FannieMae home loan can not be obtained for 7 years.

If the home is given back to the bank with a bank approved “Deed in Lieu” a new FannieMae home loan can be obtained after 4 years. An owner can’t just send back the keys to the bank because the bank will generally foreclose upon the property anyway. In the industry this is now labeled “jingle mail” because mail “jingles” from the keys in the envelope. Deed in Lieu must be approved by the bank. Due to title and lien issues the bank usually does not take this option.

A “Short Sale” will allow a borrower to be a homeowner again much sooner. After a Short Sale a FannieMae home loan can be obtained after 2 years.

A “Short Sale” is a sale of your home for less than you owe to the bank. Short Sales are being approved by the bank every day, however they are complicated and often fail unless handled by a Professional Short Sale Transaction Manager. At Reliable Property Solutions we have been facilitating Short Sales for 6 years and have a 90+% success rate on foreclosure related sales.

Short selling while you are current on your mortgage is possible and we have one closing this month. This will minimize the damage to your credit score.

It is best to begin your Short Sale before you have missed your first payment, however they are very successful if you begin the process before the “Notice of Trustee Sale” has been filed (about 90 days after you quit paying your mortgage).

Our services are NO CHARGE TO THE SELLER. Our fee is paid by the listing agent or your bank and we do not get paid if your home goes into foreclosure. We require no upfront fees, however your cooperation is required. 

Let us work with your bank to facilitate your short sale now!

Call Georgi Stratton from Reliable Property Solutions

Direct: 480.695.6565, Fax: 480-699-8853, Email: georgi@reliablepropertysolutions.com

Tempe REO for sale at low foreclosure price of $96 per-sq ft

The average price per-sq ft in Tempe, even in this market, is $154 per-sq ft. Anytime a house comes in significantly lower it peaks my interest, and in this case, the interest of a client. Here is a home that was built in 1979, has 2,336 sq ft, 5 bedrooms, 3 bathrooms, a pool, two-sided fireplace, and a 13,395 sq ft lot (.31 acres)!

Here are the financials:

• bought on 12/27/05 for $319,900
• Listed for sale on 11/06/2007 for $390,000 (what were they thinking?)
• claimed by the US Bank at the trustee's sale on 7/14/2008 for $217,520
• listed as a REO property for $224,900

We were there on the 2nd day of the REO listing. My buyer was impressed with the house and took many pictures. Of course it needs paint, carpet, minor repairs, and the poorly installed wood laminate floors ripped out -- but it looks to be a great buy in this foreclosure market.

Mr. Client is out of town on a business trip so Mrs. Client will be sending him the pictures. If they really want this house a quick decision will be necessary.

Top 10 highest Foreclosure Rates

According to RealtyTrac.com, here are the states with the highest foreclosure rates in the 2nd quarter of 2008: 

1. Nevada: 1 filing per 146 households 

2. California: 1 filing per 204 households 

3. Arizona: 1 filing per 224 households 

4. Florida: 1 filing per 242 households 

5. Colorado: 1 filing per 349 households 

6. Maryland: 1 filing per 380 households 

7. Georgia: 1 filing per 422 households 

8. Ohio: 1 filing per 432 households 

9. Michigan: 1 filing per 440 households 

10. Massachusetts: 1 filing per 539 households

Since I live in Tempe, AZ, number three was of particular importance to me. I tried to get my brain wrapped around that number. What does "1 filing in 224 households" really mean to me. I did some limited research on the "tax records" section of MLS and survey 20 subdivisions at random. What I found is 224 is pretty close to the average number of homes within those randomly polled subdivisions. 

O.K., so now that creates a pretty good picture for me. On the average -- in every subdivision I enter -- one home is in foreclosure. Granted, some subdivisions have a much greater rate than that. However, now that stat has a concrete meaning instead of being just a number.

PROTECT YOUR CREDIT! Successful short sales are possible

by Georgi

Due to its’ complexity, many agents, buyers and sellers are afraid of a Short Sale. They can be successful when properly managed. FannieMae issued policies on June, 25, 2008 that can allow you to purchase a home 3 to 5 years sooner if you dispose of your property by short sale rather than by foreclosure.

A boatload of bad advice is being offered to people who are in trouble with their home loans. In order to cure some of the more common mistakes we offer the following observations:

1. In Arizona it is called a “Trustee Sale” (commonly referred to as a foreclosure) when the bank sells your home for non-payment.
2. You can short sale your home while you are current on your payments. Your credit report will show no late mortgage payments and after the sale they will report “Mortgage paid in full for less than agreed”.
3. It is best to call your bank and list your home before you quit making payments and move into foreclosure. The sooner we talk to the bank the better.
4. NEVER move out of your home or have your tenant move during the short sale or foreclosure process. The banks do not want the property vacant during the short sale process. Vacant properties can get vandalized.
5. Take good care of your home, it will allow it to sell quicker and keep your home out of foreclosure.
6. An agent can list their own home as long as they are not paid a commission.
7. The bank will not throw you out of your home until after they give you a 90 day notice in writing called a “Notice of Trustee sale”.
8. If you have a viable offer and someone working with the bank a “Trustee sale date” can be postponed.
9. “Buy and Bail” where you buy a new home, then go into foreclosure on your old home usually involves fraud that can be prosecuted with up to 3 years in jail. Agents and lenders who engineer “buy and bail” scams can be prosecuted for recommending this type of activity to their customers.
10. We will Professionally Transaction Manage your Short Sale for no cost to you. We are paid by the bank or the listing agent.

Prevent foreclosure – save your credit

Call Georgi Stratton from Reliable Property Solutions

Direct: 480.695.6565, Fax: 480-699-8853, Email: georgi@reliablepropertysolutions.com

Picture Sunday in July

Sunday's are days of relaxation, meditation, family, gratitude, and worship (if you are so inclined). I like to share my favorite photos on Sundays. I hope you enjoy this one.

This a a picture of the Niagara River and the Grand Island Bridge. It was taken on a recent vacation to Niagara Falls from our hotel room. You can see some reflection from the hotel window because it was taken from inside our room. What I like about it is A.) the panoramic view my camera "stitched" together from 2 separate photos and B.) the light shining through the stormy clouds. Niagara Falls is about 3 miles down river. Click on the photo to enlarge it:

Neighbors pitch in to maintain Chandler, AZ bank-owned home

I went to a bank-owned (REO) house Friday to take pictures for the virtual tour, measure room dimensions, and assess any needs before I listed the property. It was a fairly typical Chandler foreclosure listing in that it had 2 foot weeds in the front and back yards and needed some serious attention to pest control.

What was not typical was that the neighbors approached me to say they were going to cut down the front yard weeds to maintain the appearance of the neighborhood. Now that's not something I see everyday.

They were tired of the "un-kept" appearance, and although they were hopeful to get some new neighbors soon, they weren't about to wait. The family was going to attack the weeds on Saturday.

I thanked them, we exchanged phone numbers, and I assured them I would do everything I could do to get them neighbors ASAP. I also told them I would see if the bank was willing to maintain the REO property during the selling cycle.

Anyone need a 3,100 sq ft, 6 bedroom, 3 bath, 3 car-garage custom home on a 3/4 acre lot in Chandler?