3 Reasons the Term “Strategic Default” Is Misleading

Wikipedia defines “Strategic Default” as the decision by a borrower to stop making mortgage payments because the property is “underwater”, or has negative equity.

In a recent study, the Chicago Booth/Kellogg School Financial Trust Index found that a full 36% of Americans would consider “strategic default”.

Now that more than one in four American homeowners is “underwater,” I feel that it’s important for the community to know the truth about strategic default.

The truth is the foreclosure process carries with it credit issues, current and future employment challenges, issues with security clearance and possible debt collections.

That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:

1. There’s nothing strategic about defaulting on purpose, especially when you have options like short sales, mortgage modifications, and refinance (just to name a few) that may keep you from foreclosure.
2. The waiting periods to apply for a new mortgage loan are at least five years less in a short sale vs. a foreclosure.
3. A foreclosure will show up on your credit report every time you apply for a home loan, car loan, new job, etc., and will affect your financial situation for many years to come.

If you are underwater and can no longer afford your mortgage payments, you need to create a genuine strategy to avoid foreclosure, helping to provide stability for you and our community.

If you have any questions about what steps you or someone you care about should take next, contact me today!

Denise Friend Foster

DeniseCanHelp@ameritech.net

IMPORTANT GOVERNMENT DISCLOSURE: You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you will not have to pay us for our services. The above brokerage is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

How to Save Money on Your Property Taxes

If you purchased a home this past year, from a bank or corporation (foreclosure) or by way of a short sale, you may qualify to have your property taxes reduced. Many times, the Auditor’s home value and taxes are based on a previous higher sale amount. If your purchase price was substantially lower than the market value shown on the County Auditor’s site, you can file an appeal to have your taxes lowered to coincide with the new purchase price. In Franklin County, the Auditor must receive your request for the current tax year before March 31st of the following tax year. You can find the necessary forms on the Auditor’s website.

To assist you in filing your appeal, I have included links to the Delaware, Franklin and Fairfield County Auditor websites.

Good luck!

            Franklin County Auditor

            Fairfield County Auditor

            Delaware County Auditor

6 Reasons to Google Your Address

We Google everything these days – so, why not Google an address?

Here are the primary reasons to Google your personal address;

1. To see if Megan’s Law registrants live nearby

2. To find Crime Reports and Date for your home and neighborhood

3. To detect scammers trying to rent or sell your house (more of this is done on Craigslist than you can imagine)

4. To see what your neighbor’s house sold for and possible make a case for tax appeal (it’s much more efficient to use a Realtor – call me)

5. To see your home’s property records (be prepared for incorrect, outdated information)

6. To see your home’s Google street views (you will see what potential buyers see) 

For more detail, visit the article on Trulia’s blog at this link

 

Options and Solutions for Home Owners in Foreclosure in Columbus Ohio

We all know that when you stop making mortgage payments in Columbus Ohio your home will go into foreclosure. However, in Columbus Ohio there are several options available to you to stop foreclosure including a Short Sale. Here is an advanced explanation of the foreclosure process and the options a home owner has to help stop foreclosure.

 Typically the foreclosure process begins once a homeowner has fallen 90 days behind on mortgage payments. The lender will file what is called a lis pendens at the local county court house. This action notifies the home owner (via certified mail) and the public that the bank intends to take the property back unless the home owner makes up the past amounts due plus including, but not limited to, late fees and attorney fees.

Once notified, the home owner usually has 28 days to respond after which the foreclosure action will proceed. Before the foreclosure sale, the Sheriff is required to obtain three appraisals and publish a notice of sale in a local newspaper (The Daily Reporter) for three (3) weeks. The Sheriff then conducts a public auction at the courthouse. The sale price must be at least two thirds (2/3) of the appraised value and the property is sold to the highest bidder. After the sale, the court reviews and files an order confirming the Sheriff’s sale. The sheriff prepares and issues a deed transferring ownership to the winning bidder.

The borrower has a right to redeem the property at any time before the sale is confirmed by paying the balance owed and associated court costs.

The entire process typically takes 10-13 months. So what can a Columbus Ohio-area home owner do when they find themselves in a foreclosure situation? The options available to Columbus-area residents are many. The following provides a brief explanation of these solutions, including their benefits and drawbacks:

Reinstatement
A reinstatement is the simplest solution to a foreclosure; however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

• Benefit: Does not require the mortgage company or lender’s approval.
• Drawback: Requires that a homeowner be able to pay all back payments, fines and fees.

Forbearance or Repayment Plan
A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

• Benefit: Allows the homeowner to make back payments over time.
• Drawback: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Some mortgage companies will require a homeowner to ‘qualify’ for forbearance.

Mortgage Modification
A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

• Benefit: Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan
• Drawback: Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

Rent the Property
A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, is able to convert their property to a rental and use the rental income to pay the mortgage.

• Benefit: Allows homeowner to keep property indefinitely.
• Drawback: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance.

Deed in Lieu of Foreclosure
Also known as a ‘friendly foreclosure’, a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

• Benefit: Many times in a successful deed in lieu, the lender will forego their right to a deficiency judgment.
• Drawback: Requires that a homeowner vacate the property, and a deed in lieu may be reported to credit bureaus as a foreclosure.

Bankruptcy
Many have considered and marketed bankruptcy as a ‘foreclosure solution,’ but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

• Benefit: Does not require lender approval.
• Drawback: If a homeowner cannot afford their mortgage payment, a bankruptcy will only stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven years.

Refinance
If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

• Benefit: In some cases, this will lower payments.
• Drawback: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process.

Service Members Civil Relief Act (military personnel only)
If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Service Members Civil Relief Act. The American Bar Association has a network of attorneys that will work with service members in relation to qualifying for this relief.

• Benefit: If qualified, this will lower payments on all consumer debt in addition to mortgage payments.
• Drawback: Must be active military to qualify.

Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

• Benefit: Allows homeowner to avoid foreclosure and harvest some of their equity.
• Drawback: In many cases today, homeowners do not have sufficient equity to sell their property without negotiating a short sale (see next solution).

Short Sale
If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

• Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s public record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure).
• Drawback: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way.

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please call me today for a free confidential evaluation of your individual situation, property value, and possible options.

 

Denise Friend Foster, Certified Short Sale Expert

DeniseCanHelp@ameritech.net

614-239-5788

 

Routine Maintenance Prevents Expensive Repairs

Making the following tasks a part of your routine maintenance can prevent expensive future repairs and in some case, even a catastrophe!

-          Clean refrigerator coils (to improve efficiency of motor)

-          Clean dryer exhaust vent (the one that vents to the exterior of your home)

-          Clean dryer filter after every load

-          Clean range hood filter and vent

-          Check for leaks in all water appliances (water heater, ice maker, washer, dishwasher, etc) and plumbing fixtures

Contact me for all of your REAL ESTATE needs!

Denise Friend Foster, REALTOR®, Short Sale Specialist

Columbus, Ohio

614-239-5788

DSellzHomes@ameritech.net

Bidding on Foreclosed Properties

Most of what you will find on the market these days is Foreclosed (Bank-owned) and Short Sale properties. While purchasing one of these properties can be a great bargain, all buyers should be prepared to “expect the unexpected”.  Purchasing one of these properties is NOT like purchasing a typical property. The buyers should expect delayed response times, and possibly delayed closing timelines.

However, in order to better your chances of winning a bid on these properties, there are certain requirements you must meet in order for your bid to be seriously considered by the bank.

 1). Verification/Proof of Funds (VOF/POF). For CASH offers, the lender (bank) wants to see a recent financial statement (e.g. dated within the past 30 days) with the buyer’s name as account owner, and sufficient funds to qualify the purchase. The account number or any other identifiers (social security number or tax ID number) can be redacted.

2). Pre-Approval Letter.  If your purchase is being FINANCED, the lender will want to see a Pre-Approval Letter. This letter must indicate the buyer is qualified to purchase a property at the contract price and is able to close within 30 days and should be current (less than 60 days old.

3). Earnest Money Deposit. Earnest Money Deposit is defined as a small advance payment given to the seller by a potential buyer indicating the buyer’s intent to complete the purchase of the property.  The financial institution will want to see a check, dated the same date of the purchase offer.  Some listings indicate a minimum earnest money deposit.  If the property you are bidding on indicates a minimum payment, the check should indicate at least that amount.

 4). Property Inspection. The Camelot Real Estate Group strongly recommends that buyers have ANY property they are purchasing inspected by a property inspector of their choice. When purchasing a bank-owned property, more emphasis is placed on the property inspection.

 When purchasing a traditional property, the Inspection and Request-to-Remedy timelines are more flexible. However, when purchasing a bank-owned property, their timelines are very stringent, so as a buyer you will need to be prepared to move quickly on all inspections.

 The Camelot Real Estate Group and I represent both buyers and sellers.  I have extensive experience in listing and purchasing Bank-Owned and Short Sale properties.

 Denise Friend Foster, REALTOR®, Certified Distressed Property Expert (CDPE)

Fire – Fireplace Safety

It’s that time of the year when you think of sitting in front of the fireplace or around the fire pit and sipping on hot cocoa or just enjoying the warmth of the fire.

 Heed the following precautions to avoid a disaster!

Never burn these items in a fireplace

Painted wood - Paint contains heavy metals, such as lead, chromium and titanium, which are used to make the different colors. These metals especially lead, can be toxic even in small quantities if inhaled.

Pressure-treated wood - Wood is commonly made resistant to fungus and insects by adding copper, chromate and arsenic, in a process known as CCA treatment. CCA treatment places roughly 27 grams of arsenic in every 12-foot 2×6, which is enough to kill about 250 adults.

Plywood, particle board, chipboard or OSB - These manmade woods release formaldehyde, and potentially hydrochloric acid or dioxin, when burned.

Rotted, diseased or moldy wood - This wood will not burn as long as normal wood, may produce bad smells when burned, and could bring insects into the house.

Damp wood - Wood that has a moisture content higher than 20% will burn inefficiently and will contribute to a greater accumulation of creosote in the chimney, as well as air pollution.

Allergenic plants - Urushiol, the chemical that induces the typically minor allergic reaction when skin is exposed to poison ivy, poison sumac or poison oak, is far more dangerous when inhaled. Urushiol is not destroyed by fire and can quickly cause life-threatening respiratory distress if any of these plants are burned.

Dryer lint - While it’s often used effectively as a fire-starter, lint can contain a wide array of dangerous chemicals that come from your clothes and fabric softener.

Trash - Never burn household garbage, as it contains a range of potentially hazardous materials and chemicals,  each of which is unpredictable when burned together. Newspaper ink, plastics, aluminum foil, plastic bags, and whatever else constitutes your particular trash can create a deadly chemical cocktail.

Courtesy of Camelot Home Inspections

Foreclosure Actions Stalled

You can’t miss the latest real estate news: Major Lenders are Investigating Issues in Their Foreclosure Processes.  Ally Financial (formerly GMAC), JPMorgan Chase and Bank of America have announced a halt to all foreclosure actionsto review how their companies are handling the process. While most lenders have halted foreclosure procedures in roughly half the nation, Bank of America has extended their halt to all 50 states.

While these lenders review and evaluate their foreclosure processes, delinquent and seriously delinquent homeowners now have more time to evaluate their alternatives to foreclosure.

It’s important to note that time may be short in these foreclosure freezes. Some lenders have indicated their halt could extend through the end of the year, but may be as short as a few weeks. All homeowners should take this oppoprtunity to review their options with a real estate professional specialzing in distressed properties. The actions they take could make a huge difference in their future credit rating.

Contact me at DSellzhomes@ameritech.net to discuss your alternatives to foreclosure.

Don’t Miss Out on the $8000 Tax Credit

To all FIRST-TIME HOMEBUYERS who have been sitting on the fence, it’s time to get up and move. You have an opportunity to change your life for the better and I know you are planning to do that, soon.

 But, your soon may not be soon enough! By now, you know the tax credit program expires on December 1^st. And I know you are thinking, “What’s the rush, I have time.” Well, you need to know that…

 December 1^st is the wrong date!

To be eligible for the credit, you have to take possession of your new home by December 1st. In normal situations, it takes about 30 days to close on a home purchase. But there is nothing normal about the market or any real estate transaction these days. Because this is such a great opportunity, the closer it gets to December 1^st, there is a high probablity that the closing time will increase to possibly 45 days. With that in mind,

October 16th is the real drop-dead date.

So hop off of the fence and get moving… TODAY!!!

Visit http://www.camelotrealestategroup.com/mlssearchpage.html to find available properties

 

Short Sale Scuttlebutt

byHomeFinder4U
With all of the controversy and news reporting of the real estate market and the number of foreclosures, I am sure you have heard of or read about real estate short sales. You may even know someone who has gone through a short sale.
Today, lenders may accept short sale offers or requests for short sales even if a Notice of Foreclosure has not been issued or recorded with the locality where the property is located. Because of the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the current foreclosure crisis, they are now more willing to accept short sales than ever before. This is great news for borrowers who are “upside down” or in other words, owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure because of this.
By definition, a real estate short sale is the sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan(s) secured by the property. The mortgage lender or bank agrees to discount the loan balance due to an economic of financial hardship on the part of the borrower. A short sale is typically conducted to prevent a home foreclosure.
The negotiation of a short sale is done through communication with a bank’s loss mitigation department. Because a third party (the lender) has final approval/disapproval of the submitted purchase contract, the response to the purchase offer can take 30 days or more. In all instances, the lender has final approval, or disapproval, of the proposed sale of the property. The homeowner sells the property for less than the outstanding loan balance and relinquishes ALL proceeds of the sale to the lender as full satisfaction of the debt. While all proceeds from the sale are turned over to the lender and accepted by the lender as full satisfaction of the debt, the borrower still has a deficiency balance, which will remain as a potential liability for that borrower. The lender’s opportunity of pursuit of a deficiency judgment varies from state to state.
For more information about Short Sale Transactions or if you believe your situation is amenable to a Short Sale Transaction and your property is located in a Central Ohio community, please contact Denise Friend Foster today via email at Denise@CamelotRealEstateGroup.com or by calling me at 614-329-4033.