What is foreclsoure? What does it mean to buy a “foreclosure”?-Utah

Foreclosure Utah

Foreclosure is the legal process by which a lender can terminate an owner’s rights to a property and sell it in order to satisfy a debt that is in default. Foreclosure is a process. The word foreclosure is used interchangeably by many people to describe many different types of real estate sales. Some are  more correct than others.

1. Short Sale- A short sale may be considered a “pre-foreclosure” sale if a notice of default has been filed and the foreclosure process is in the works at the time of the sale. This however is does not mean you are buying a foreclosure, but a short sale.

2. Distressed sale- Many other real estate sales take place when the foreclosure process is in the works. These may be considered “pre-foreclosure” deals but still should not be considered “foreclosure deals”.

3. Trustee Sale- This is the very act of foreclosure. If you buy a property at a trustee sale auction you are technically buying a trustee sale. This however is probably the most accurate definition of purchasing a “foreclosure” IMO. Most people however when they refer to buying a foreclosure are usually NOT referring to a trustee sale.

4. Bank Owned, REO, Corp Owned or Investor Owned-After the trustee sale takes place and the property has either sold to a 3rd party or the foreclosing lender, the trust deed has been foreclosed, a trustees deed has been issued, (the legal evidence of foreclosure) and the foreclosure is complete. This property IMO is now most commonly referred to as a “foreclosed home”. Or when some one says they bought a foreclosure this is what they are referring to. This is probably more accurately described as purchasing a bank owned home or “Corp owned” property. Many times after the foreclosure the company selling the property is not technically a “bank” but a subsidiary or affiliate of the bank or private party. Or even a separate entity controlled by an investor or bank,  IMO purchasing this type of sale could be considered “buying a foreclosure” up until the time property is purchased by an owner occupant.

If you are interested in purchasing a foreclosed home please contact me for a free list of foreclosures. If you have a home that is anywhere in the foreclosure process and you live in Utah please  contact me to discuss your options.

*this is not legal advise.

How long do I have to wait to buy a home after a short sale, foreclosure, or bankruptcy in Utah?

How long you will have to wait to qualify for a mortgage after a negative credit event, such as short sale, foreclosure or bankruptcy in Utah will depend on the what the current lender guidelines are at the time you apply. These guidelines are always changing.  In the below 2 samples, 2 Utah local lenders have outlined the waiting periods for short sale, foreclosure, bankruptcy, and deed in lou of foreclosure for originating  new FHA loans or Conventional loans at the time of their writing. There are some lenders, such as local banks and credit unions that will “portfolio” the loan and not sell it off on the secondary market. These types of lenders will NOT HAVE to conform to the FHA or conventional guidelines, but will have their own guidelines that may be more or less stringent.

http://investutah.com/wp-content/uploads/2011/11/Credit-Events-Matthias.pdf

http://investutah.com/wp-content/uploads/2011/11/Mauer_short-sale-recovery.pdf

If you are considering short selling your house and live in Alpine, Highland, Cedar Hills, Utah County, or Salt Lake County please call me for a free consultation. I will most likely have experience with you bank, can help you stay in your home longer and help you settle your mortgage debt. Steve Marx 801-471-7276

Inverview with CHASE BANK loss mitigation specialist! (ex-employee)

Last Year I interviewed a family member of my neighbor who worked for Chase bank Loss mitigation/collections in Arizona. He told me story after story about the “dirty tricks” “management” of the loss mitigation/collection department had pulled on customers on a day to day basis. I have been meaning to do a call with him and post it, but I will have to just write one of his stories for now.

He said that when people would call in and request a loan modification, they would first request the customer fill out the “loan modification paperwork” and fax it to “loss mitigation” which at this point was really “collections”. They would do whatever they could just to get people to send in money and were not concerned at all with the “loan modification”. In fact he said that when people would fax in their paperwork, the managers (24 year old punk kids in *his *description) would look over the paperwork, criticizing the amount of car payments and expenses, and then TEAR UP THE APPLICATIONS AND THROUGH THEM IN THE TRASH! He said all day long they had phone calls from borrowers wondering why their fax wasn’t received yet and they continued to re-fax paperwork day after day after day. In my opinion, from my experience, banks commit acts similar to this every singe day! If you live in Utah and need to stop foreclosure and short sale you house, please call me for a free consultation. You need an expert on your side who has experience negotiating with your bank.

**This is a story that was relayed to me first hand from an ex Chase bank employee and his experience working at chase bank. It is his opinion and relayed here as such.**

http://investutah.com/contact/

What is a time “Time Clause” in a real estate purchase contract?

A time clause is a clause that may be contained in a real estate purchase contract that allows a party to invoke a time period in which a condition precedent must be removed. Failure to remove the condition precedent within the time period (72 hours for example) would result in the contract being canceled. If you are working with a real estate agent  it is recommended that you use the state approved forms for UAR agents. This form specifies which contingencies must be removed in order to keep the contract alive in the event the seller sends the buyer a notice that the seller has accepted another offer. The terms of the contingencies are set forth in the real estate purchase contract itself and which contingencies are included in the time clause are specified in the time clause itself.  It also should be clear that it is not the “time clause” itself that needs to be removed, but the conditions precedent that are set forth in the REPC and specified in the time clause that specifically need to be removed to comply with the terms of the time clause. Removing the time clause itself would most likely still leave the buyers with all the contingencies in place set forth in the original contract which would have been the reason that the seller would have wanted the time clause to exist in the first place.

For example, a time clause would be useful when a buyer brings an offer to a seller that is mostly acceptable but has some contingency in place that is not completely acceptable to the seller. An example would be a 60 or 90 day closing, or the purchase being subject to the sale of the buyers residence. The seller agrees to let the buyers move forward but wants to continue to market the property to additional buyers to see if something better will come along. The buyers are OK with this because they are not currently in a position to close on the property, but now have a right to close on the property subject to their conditions (and the time clause) at a future time. If the seller does accept an additional offer the seller can give the buyers 72 hours to remove the condition(s) precedent, IE subject to sale of buyers residence, due diligence, loan denial etc, (whatever contingencies have been specified in the time clause) and have earnest money go non-refundable subject to the terms set forth in the purchase contract and in the time clause. The buyer can still buy the property, but they must agree to step up and remove the contingencies they agreed to if they want to purchase the property. In the UAR form it is very clear that if the buyers do not respond by removing said contingencies within the time frame that is outlined the contract is automatically cancelled.

A time clause is used more frequently in our current market where it is taking buyers longer to sell their current residence.

If you live in Salt lake or Utah county and are looking to purchase or sell your property, please call me for a free consultation.

**This information is not legal advise and is not specific to your situation. Please do not rely on it in any way.**

Can a Homeowners Association (HOA) foreclose on my house in Utah?

Yes. But the real question is why would they?

I was contacted today by a homeowner in Traverse Mountain Lehi Utah who had an HOA who had appointed a trustee who was instructed to foreclose on the property and force the sale of the property at public auction.

One of the issues with this is that the home owner owes about 35K more than the property is worth. So if the trustee continues with the trustee sale and auctions the property for the $1800 they are owed, and there are no bidders they will end up taking title to the property subject to all SR liens. IE first mortgage, second mortgage etc…The end result would be the HOA would end up owning a property that is underwater 35K. They could then wait fore one of the SR liens to foreclose them out and they would be right back where they started.

How does this benefit the HOA? Well as in most cases the foreclosure process is an attempt to collect a debt. They are hoping to scare/force the homeowner into bringing the balance current. My understanding is that using the law to scare/force/bully others is against the professional code of conduct for attorneys in Utah, but it doesn’t seem to stop them. If this home owner had significant equity it would make more financial sense for the HOA to pursue this option, however in this case it doesn’t make much sense at all. Unless the HOA wants to take title, just to have to evict the home owner, to try and rent the property out short term, to just be foreclosed out by a SR lien a few months later. Seems like a lot a work to collect $1500 if anything.

If you have a notice of trustee sale in Utah and need to stop foreclosure please contact me for a free consultation to discuss your options.

*this is not legal advise. Please call for a consultation or seek legal advise regarding you specific situation from an attorney.*

Why is a short sale a “distressed sale”?

A short sale is a distressed sale much like other distressed sales. A short sale has a problem with the title just like other homes have problems with mold, water damage, fire damage, termites etc. These problems can be fixed but they take time and money. This is why most “retail” buyers are NOT suited for a short sale. They do not have the time or money to fix the problem with the debt that will allow the title to transfer free and clear to the new buyer. Dont get me wrong, a short sale can be a fantastic buy, for the the right buyer.

Some short sales have less issues then others depending on how many liens are on the property and who they are with. If you are looking to buy a short sale and live in Utah county please call me for a free consultation on how to qualify a short sale to make sure it is suitable for you. Don’t wast time and energy chasing deals that will never close. If you are selling your home in Utah and need to stop a foreclosure or settle your mortgage please contact me. When you are short selling your house as a seller make sure you select the right buyer who can address the needs of your short sale specifically. If you need an offer for your short sale please call me for a free no obligation cash offer for your house.

How to settle a HELOC durring a short sale (example)

From all the (seemingly reliable) sources I could find, the national average for short sales actually completed to short sales initiated is somewhere between 8% and 15%. That is a very telling statistic about the banks, the process and the agents attempting the short sales.

I have not been able to find any statistics about how many of those completed short sales were full mortgage settlements,  or just lien releases (home owners having to repay the deficiency balance). But I would be willing to bet that for homes with 2nd mortgages or HELOC’s, much less than 1% of completed short sales are completed with a full settlement of the HELOC.

This is simply because most agents and home owners do not know the difference between a full settlement and a lien release only of the HELOC and are not prepared to satisfy the discrepancy at closing. I am still reading on broker blogs everyday agents who are “shocked” to find out that the HELOC is wanting “more money than the first (mortgage) is willing to pay”.

Very simply put, the HELOC will probably release the lien on the property for the nominal figure (usually 3K) that the first mortgage is willing to allow them from the proceeds of the sale, but the home owner will be required to repay the full balance. HELOC’s always try to collect the full balance unlike a first mortgages who will usually issue a clean full settlement letter, (except for BOA, grr..)

The listing agent needs to need to anticipate this “HELOC settlement discrepancy” at the onset and plan for is accordingly. For example, if you have a;

1.200K first mortgage with GMAC and a

2.75K HELOC with Chase bank,

you should anticipate that Chase bank will issue a lien release for 3K and a full settlement for around 10K (10% to 20% of the balance depending on loan status). That leaves a 7K difference that either the seller or the buyer will have to pay (for a full settlement of the mortgage). If the seller does not have any money then the buyer should be aware that if they are expecting to pay a total of say 150K for a property, they need to take the additional funds of 7K in to account when writing the offer. So in this example they would write the offer for 143K or less. 143K plus 7K equals 150K. If the buyer writes his/her highest and best of 150K and then is asked just before closing to contribute the 7K to make the deal work for the seller it will most likely be a deal breaker at that point. This settlement figure must be fully disclosed to all parties on the settlement statement usually marked (POC) in the appropriate section.

Below is an example recent Chase approval letter. 86K Lien release for 3K.

http://investutah.com/wp-content/uploads/2010/11/chase-heloc-lien-release-only-approval-letter.pdf

Below is the same approval letter after negotiating the FULL SETTLEMENT of the HELOC for 10K.

http://investutah.com/wp-content/uploads/2010/11/chase-heloc-full-settlement-letter.pdf

When there are 3 liens or more, HOA liens tax liens or credit card judgments it takes a little more planning but still very doable.  You can see why it is important to work with someone who specializes in this area and familiar with each banks individual policy’s.  If you have a HELOC and want to settle it through a short sale and live in Utah County, Apline, Highland, Pleasant Grove, Park City, Sundance, Cedar Hills or Draper, Please call me for a free short sale consultation or Cash Offer for your house.

To view other short sale approval letters that will further illustrate the difference between a short sale and a short sale with loan settlement you can read the post below.

http://investutah.com/2009/11/02/sample-short-sale-approval-letters/

*results not guaranteed. Do not rely on this information regarding your specific situation. This is my opinion based on my experience with Chase bank and other banks in general.

Do you have an Ethical and Moral Obligation to pay your mortgage?

Short Sale Utah

Short Sale Utah

This a question that has come under some scrutiny over the last few years. The answer in my opinion is quite simple. Yes, a mortgagee does have a responsibility (ethical and moral) to repay a mortgage agreement, HOWEVER, this obligation does not come at ANY cost. First and foremost an individual has an unprecedented obligation (ethically and morally) to do what is in his/her individual or families best interest.

If at any time an individuals or families needs are called into question because of an outstanding debt obligation, it is in my opinion the head of the families obligation to do whatever is necessary to settle and defeat that debt. This is called negotiating. It is what reasonable and responsible people do when they are faced with something that is not manageable.

When viewing this in terms of a mortgage this should be viewed in both short and long term perspectives. Suppose someone is 200K upside own on their mortgage and just getting by. The equity in their home IS REQUIRED for retirement and will not recover for 10-20 years. If they choose to get out of the debt and into a new home they will be in an equitable position in just 2 years. What is in the individual/families best interest?

When the mortgage trust agreement was put together, all parties understood and agreed to the perceived risk, including the lender. And the lender was out to make a profit. Almost all banks have “short sold” their debt to the federal government or other private investors. So when you “short sale” your house the price you payoff your mortgage may actually be MORE than what your current investor PAID FOR YOUR LOAN! If you have a home that is in foreclosure in Highland Utah, Alpine Utah, Draper, Utah or Cedar Hills Utah, or any where in Utah county or South Salt lake county, call me for a free consultation about your options to stop foreclosure, short sale your home and settle your mortgage.

http://investutah.com/contact/

How to get a principle reduction on your mortgage

One way to get a principle reduction on your mortgage is to be the lucky winner of the Selene Residential Mortgage Opportunity Fund.

One of the best in depth articles on the fund can be found on the link below.

http://money.cnn.com/2009/12/08/real_estate/lewie_ranieri_mortgages.fortune/index.htm

This fund is a 900+million dollar fund buys mortgages that are under water at a discount, contacts the home owners and helps them stay in there home! They buy the mortgages at enough of a discount that they can lower the home owners principle and interest and help them stay in there homes and refinance or sell the preforming loans at a profit.

This is a fund that is truly providing value to the marketplace. Other banks could provide this same service but they choose not to. The only mainstream options most banks give for lowering principle requires the home owner to sell the home and move out after a short sale.

If you own a home in Utah County and are facing a foreclosure and are in need of a short sale or loan modification, please contact me for a free consultation regarding your options. Stopping foreclosure is easier sometimes that you might think. It is important you talk with someone who specializes in short sale, foreclosure and loan modification and is familiar with the local Utah market.

Why Realtors should NOT be allowed to “short sale” houses

Good real estate agents know how to sell houses, NOT negotiated debt.

When a homeowner needs to sell their house, and they owe more than it is worth (short sale), the primary problem is a DEBT PROBLEM.  Therefore, they should seek someone who is competent in and specializes in negotiating debt. More specifically, SETTLING DEBT.

What a homeowner really needs is someone who will represent them to try and reach a FULL SETTLEMENT of both or all mortgages and liens that encumber their house. The “selling the house” part of a short sale is the easy part.

Ask any real estate agent in your listing interview this question;

“What is your strategy to attempt reaching a full settlement of both my first mortgage, second mortgage, HOA and unpaid taxes?”

Most real estate agents wont have a clue what you are talking about.

Of course no one will guarantee a full loan settlement on every singe deal.

But when you begin with the end in mind, and start the short sale process with multiple contingencies in place to reach a full settlement with you lender, you are miles ahead of anyone else.

If you need to stop foreclosure and short sale your house and live in Highland Utah, Alpine Utah or Cedar Hills Utah, please call me for a free consultation and I will give you multiple successful strategies that will give you the highest possible chance of settling your mortgages and selling you house at the same time.