More and more these days, it seems I’m hearing good people say, “What are my options if I’m facing foreclosure?”

In the last few years, so many people bought homes with either 100% financing or risky loans that have negative amortization and/or an interest-only payment for a couple of years which adjusts after the initial period. God forbid if your loan has all of those characteristics! Consequently, lots of those loans are now resetting to a higher interest rate and therefore a much larger payment. As home values decline in some areas, lots of people owe more than their home is worth. This can be best illustrated with a quick story.

There’s a man here in the Willow Glen area of San Jose who bought a beautiful, newer home at the end of 2005 for $940K with a 100% financing, 2 year interest-only option ARM loan. His payment, between the 1st and second mortgage, was about $6,000 per month.  “Don’t worry,” Mr. Sub-Prime Lender told him at the time, “since property values are going up at more than 20% per year, in two years you can simply refinance your house with a more stable, long-term loan and you’ll have plenty of equity to get an 80% 1st mortgage.”  Yeah right.

Fast forward to a month ago. Mr. Homeowner-Been-Screwed gives me a call and says that in December, his payment jumped from $6K per month to over $9,000 per month!  Not only that, but the house across the street from him which is the same age, about the same square footage, is of similar design, features and construction has been sitting on the market for the past 6 months at a list price of $850K. Ouch.

He tells me that he lays tile for a living, and has been working a second job over the past couple of months to try and make his new $9K mortgage payment, but he just can’t seem to make ends meet anymore and is going to miss this month’s payment, so he’s afraid that his lender is going to foreclose on him. He says he feels angry, betrayed, helpless and stuck between a rock and a hard place and doesn’t know where to turn. I tell him that he actually does have options, 11 options in fact. So I offer to sit down with him and show him a new report I just wrote entitled “11 Options for Homeowners Facing Foreclosure.” He was delighted to know that there are things he can do to avoid foreclosure.

So in this first part of a three part series, I’ll share with you the first set of options in my new report, which break them into three categories:

1. Things you can do to try and keep your home,
2. Things you can do to sell your home,
3. And finally, some “last resort” options.

Lets look at the first category and review a summary of the options.  First of all, if you want to try and stay in your home, then you need to open a dialogue with your lender. Ask them if the will do a loan modification.  This is where the terms of your loan are changed to make the mortgage payments more affordable. If you are behind in your payments, then you may be able to work out a payment plan, where the missed payments are either added to the loan balance or simply divided up and paid over time. This option will usually go in hand in hand with a forebearance agreement where the bank agrees to postpone taking further foreclosure action, particularly if you can prove that your setback is temporary.

At any time during the foreclosure process, you have every right to cure, or reinstate your loan by paying it off. This can be done with a conventional refinance, however many times, a conventional refinance is out of the question, because a new bank will require at least 10% equity in your home, and if you’ve missed payments, then your credit is likely suffering enough to prevent you from getting that new loan anyway. Another option might be an equity loan or what is know as a hard money loan. Hard money lenders don’t really care about your credit, they are just concerned that your property can secure the loan. These loans usually have incredibly high interest rates and all kinds of up-front fees, so they should only be used as a short-term solution, usually buying you enough time to stop the foreclosure and sell the home. Again, these types of lenders will need to see significant equity in your property.

If you would like more detail on each of these 6 options to stay in your home, as well as all the other options I will be discussing in part 2 & 3, you can download a full copy of my report, “11 Options for Homeowners Facing Foreclosure” right here on my Website.

In part 2 of this three part series we will examine the three options to stop the foreclosure by getting out of your property and the loan. Stay tuned!

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If you’re Eliot Spitzer, probably three feelings come to mind: panic, disorientation and regret.  But if you’re a potential home buyer in the Peninsula region of California, you have good reason to feel excited, encouraged and confident!  Why?  If you read my last post last month, you know that the conforming loan limits for many California Counties are going up and that means cheaper mortgage rates on loan amounts between $417,001 and $729,750.  Now that HUD has made it official that ALL bay Area counties qualify for the revised maximum conforming loan limit, that means potentially big savings on mortgages for qualified applicants looking to purchase single-unit properties up to $810,000 with as little as 10% down!

We’ve all heard the cliche, “the devil’s in the details”, so what are the latest requirements to obtain a conforming loans between $417,001 and $729, 750?  Since I’ll provide you with a link to Fannie Mae website and announcement , I’ll provide you with some highlights that I think are most relevant and let you read further at your leisure:

1. Single-unit properties only

2. Purchase and “limited cash out” transactions only (i.e. no greater than $2,000 going into your pocket upon settlement)

3. If primary residence purchase, up to 90% loan-to-value (”LTV”) allowed if fixed-rate program is selected–700 minimum FICO(R) required; 80% LTV if an adjustable-rate loan is selected–660 minimum FICO(R) required; if refinance

4. If second home or investment property purchase, maximum 60% LTV allowed with minimum 660 FICO(R) regardless of eligible loan program selected

5. If refinance, regardless of type of eligible mortgage program, up to 75% LTV allowed, plus subordinate financing allowed in addition up to 20% LTV–660 minimum FICO(R) required

     a. SPECIAL NOTE, consolidating existing first mortgage and subordinate mortgage into one loan NOT eligible AND six  months of “seasoning” (six payments made on existing mortgage) required to refinance!

6. Loans are eligible for origination NOW 

7. Eligible programs include 30-year fixed, 15-year fixed, LIBOR-based 5/1 ARM (amortized and interest-only payments allowed for this program)– more programs may become available

8. Sufficient employment, income and assets must be verified and each file will require manual underwriting– automated underwriting engines not allowed at this time

Again, I do encourage you to read the Fannie Mae announcement from the 6th of March for all the details, but the above are the top highlights.

So what will pricing look like on these “new” conforming mortgages?  Well, pricing has just recently been released by only a few institutions, but it looks like the 30-year fixed is running at about 6.375% and the 15-year fixed is running at about 6.25%.  The 5/1 ARM pricing is expected to be released next month.  What I do think is that pricing may actually get a little better in the short term as more institutions post pricing and auctions are successful with Fannie Mae and Freddie Mac. 

What’s right for you as a would be home buyer on the Peninsula?  That depends of course on your specific situation, and I do encourage you to consult with your trusted mortgage and financial consultant before placing an offer on a home or refinancing your mortgage.  What I can say is that the majority of our clients who are buying or refinancing today are selecting a jumbo 5-year ARM in the mid-5% range due to its balance of savings, security and flexibility.

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Unlike Hollywood, sex scandal is not a career launcher for politicians like Eliot Spitzer, now former New York Governor and someone who had single-handedly tanked his own career.

First of all, he is no Paris Hilton. People don’t want to link him with a sex scandal. Second of all, there is a drastic difference between his political image & persona comparing to his exposed image, unlike Paris Hilton who has at least been very consistent in her image as a party girl. So it was not a huge shock that Paris made a sex tape somewhere.

Eliot Spitzer, right, apologised to his family for “private failings” [AFP]

What does Spitzer have to do with Real Estate & Listing Photos?

Like someone in the limelight, your listing needs to present a consistent image front and back, inside and out. In a competitive market, your buyers are critical and they will be picking your listing apart. Also with the ease of internet shopping, it is very easy to overlook your listing while someone else’s looks much nicer and easier on the eye.

I see many MLS photos that present an inconsistent story that does not tell the story of the house.

Let’s look at some real MLS photos I recently pulled off the web:

It’s too dark to see anything. How big is the room, what is the purpose of this room, can you see? The room also has the “Titanic Effect” where everything is tilted to one side.
What’s the selling point of this kitchen? More importantly, where is the counter? Does this image say “I am a good seller who takes care of my house?”
Ah I get it, your listing has a floor.

What an interesting splash pattern on the floor, was there a dead body?

Am I looking at your floral arrangements or at your house?

Are you trying to sell me this house or this giant cabinet? I see I can fit, oh just about 1/3 of the bed into the room.

Are you advertising for your listings or its neighborhood vendors? Shockingly I see this very often in MLS photos where people show signs of local shops, etc. where there are less than 10 pictures of the home itself. In real estate photos, quantity does NOT equal to quality. As buyers, we want to see quality photos that represent the home well.
Are we selling the seller’s interesting collections or the house?

Now you see why photos are important? The MLS photos is a tool for you to tell the story of the house that you are selling. Leverage it well will bring you success in driving traffic to the open house and showing. We all know a photo is worth a 1,000 words, so let your pictures do the talking.

As the listing agent, you have a tremendous power and control over how you can present and market your listing in the best light. After all, presenting a listing is like presenting your single friend to the dating market — your single friend is gotta look good out there! So let’s make a pack together: us stagers will provide the nice staged home effects ready for show and you the agents will present wonderful and well-shot photographs on the MLS!

Happy selling,

Cindy

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I’m delighted to announce that local stager Cindy Lin has graciously agreed to become a 3 Oceans contributor.  She runs Staged4More and its accompanying blog.  Talented, opinionated, humorous, a little sassy and irreverent  … what more could you want in a contributor — or a stager?

Her inaugural post gives us an Elliot Spitzer object lesson…

Take it away Cindy!

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…now I know why!

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