Attention all investors: As foreclosures continue to mount to record numbers, there are any number of opportunities for investors to acquire foreclosed properties relatively inexpensively. One of these that is seeing more and more use with the rising tide of foreclosed properties is the auction. Frequently, large lenders will bundle chunks of their REO portfolio of properties together and have a professional real estate auction firm dispose of the properties by public auction. Advertised in advance, they usually provide catalogs of the properties to be sold at a given auction, along with times and dates of not only the auction, but also when the properties can be viewed by prospective buyers before the auction date.

These can be very worthwhile ways to obtain real estate below market prices. As an example, I listed a foreclosure in northern California for $575,000. Only a year earlier it had been purchased by the folks who lost it to foreclosure for $605,000. After three months with only minimal interest from potential buyers and their agents, the owning bank added it to an auction. It sold there to its present owner for $416,000! That's not a misprint! Roughly 1.5 years after going for $605,000, it was purchased by an investor for nearly one third less than its former price. There are many other similar opportunities in some of the auctions now happening. Check on-line for info.

This is for those facing possible foreclosure and still able to obtain a new loan. Usually, if you fall into this group of defaulting owners, this is your first time in these straits, and your credit is, with the exception of your present circumstances, still fairly good. You can still qualify for a loan, although the new loan will likely be higher than the rate would be for someone not in your situation. Having said all of that, as rates continue to come down into the high 5's for 30 year fixed rate loans, this is definitely the time to seek a new loan to pay off the one that is currently causing you problems. Assuming you are employed and have resolved whatever issues led to your current default, you should immediately get in touch with your lender to see about replacing the existing loan with a new one at a lower rate than your current rate. You may be pleasantly surprised.

Are YOU in Trouble?

As the foreclosure tsunami continues to roll forward, many folks are unaware of the fact that they CAN do something to stall or avoid completely the potential loss of their home by foreclosure. The MOST IMPORTANT THING TO DO: As soon as you miss a payment, or think you're going to have problems keeping up with the payments for whatever reason, CALL YOUR LENDER!! Put them on notice of your problems and ask to speak to whomever oversees such situations. It is in the bank's interest to help you avoid losing the house to them. If they foreclose, they lose money, have more regulatory scrutiny and the problem of selling your home, none of which they want.
Although it varies by state, once you miss a payment, the bank must formally record a notice of default to actually start the foreclosure process. Once that is done, they have about three month and change that must pass before they can actually have the house sold at public foreclosure auction. So, the sooner you take control and call them, the better your chances will be at keeping your home. They may agree to change the type or terms of your loan; they may agree to defer some of your payments--but you MUST MAKE THE CALL!

Just a quickie! For those of you facing default and/or foreclosure in the state of Colorado, a new state law has just been passed that may give you a small breather. It extends the time you are permitted from when you are initially declared in default until the time the lender holding your note can foreclose. It also allows you a little easier time on reinstating your loan--you may not have to pay the not in full to avoid foreclosure under the new terms. Interested? Contact your attorney in Colorado or drop us a line.
Most important of all--Have a Happy and Healthy New Year!!

When one examines the foreclosure market, all too often an area that is ignored is that of purchaser fraud. There are, as with any situation when large numbers of people are at risk, a number of nefarious individuals who get pleasure, as well as money, from preying on the unfortunate. In this case, those being preyed upon are the homeowners facing foreclosure. There are many ways for someone planning to take unfair advantage to do so, but many of the schemes involve the schemer offering to solve the homeowner's problem by new financing for the property or by taking title on a "purely temporary" basis in exchange for the schemer's supposed plan to "help" the homeowner. Unfortunately, "purely temporary" becomes 'permanently', and the only one helped is the slimy individual who just pocketed the ownership of the property.

If you are a property owner facing default or a possible foreclosure, remember a few things:
1.) If it seems to good to be true, it probably is.
2.) Some offers to buy may, in fact, be legitimate and fair--just enlist the aid of a Realtor to represent you and protect your interests.

For the legitimate investor reading this, there is nothing at all wrong with buying the property that may be at risk of being foreclosed upon. Just do it for a fair price relative to the market where the property is located. Also, before you proceed on this type of property, do your homework. Is the foreclosing mortgage the first or a subordinate loan? Which one it is can make a huge difference. Also, check with your Realtor and your attorney on the law on buying a defaulted or foreclosure-endangered property. A number of states are working on legislation to place limits on exactly what can be done by buyers trying to take what the state legislators perceive as unfair advantage of the homeowner in such circumstances. If such a law exists where you are, it may limit your options on buying such property or severely limit your desired upside for the investment.

'Short' Sales

Welcome back! We took a few days off for the holidays: visit with family and friends, celebrate, yada yada...


Anyway, another thing one hears more and more these days is the 'short sale'. This is another variant of the default/foreclosure crisis that is sweeping the nation these days. What the term means is that the homeowner who is having trouble meeting the terms of the mortgage decides to sell the property. There is only one problem--the value of the house is less than the amount for the mortgage(s). In order to accomplish the sale, the seller has to persuade the lender(s) to accept less than the amount owed on the debt at close of the sale. The lender will thus end up 'short', hence the name. This is somewhat troubling to the homeowner, but may be the only way to avoid foreclosure in some cases.



However, a few things that you should be aware of before proceeding on a 'short':

1.) Doing a short sale will not salvage your credit rating. It'll still be less than pristine when you are done--but not as bad as if you hang on until the lender actually forecloses;

2.) By doing a short, you will have an extra hit on your income taxes for the year; this is because the amount that the bank agrees to accept as a short and final payment means that it has forgiven the money it's not going to receive as part of the payoff. The IRS regards forgiven debt as normal income and it taxes it as normal income in the year it is forgiven. So, after you've removed yourself from your pending foreclosure by going short, you can expect to receive a Form 1099 at year end from the bank to include with your income tax return. Not great, but at least you can now move on from your foreclosure worries until you're back on your feet again.

Hello, again! I hope you're all finding this blog on foreclosures helpful. I wanted to provide some info to anyone who MAY be facing problems with their mortgage, but till has a little time before they actually face foreclosure. There are a number of credit counseling services, private and government that can offer advice and assistance in situations where you may be in default or worried about the possibility of foreclosure. As of December 6, 2007 there is a new government service that you can call at (888) 995-HOPE. It is supposed to assist homeowners who may find thewmselves in financial difficulty with their mortgage. It's new, so it may be too soon to tell how well it works.
Separately, both the National Foundation for Credit Counseling and the Association of Independent Consumer Credit Counseling Agencies both have housing counselors to help you evaluate your situation and options that may exist. The Housing and Urban Development (HUD) also has a number of counselling agencies it will recommend if yhou call: (800) 569-4287. If your loan is a VA loan, call (800) 827-1000.
Some private counseling or assistance agedncies are: ACORN [check them online for your own state's contact info]; Neighborhood Assistance Corporation of America (also online;they do both counseling and can arrange low cost loans in some cases); and contact your own state government's housing deparftment, as many have similar state-supported programs.
Good luck and we'll talk again soon!