FINALLY HERE!! INVESTOR FHA REO PURCHASES with FHA FINANCING

This is great news - someone has come forward with some money for the investor. Call Eric for the details and to get pre-qualified.

Hi All,

Unbelievable, but true, FHA has a program for investors.

One of my lenders, MetLife, is now promoting it.

The 203b program has been around for awhile

It is just most lenders don’t promote it.

I have included some information on the program, so

Please forward this to your base of clients.

Buyers need to have an approved contract with Pemco/ HUD, to submit a deal

They are looking for seasoned investors;

However, any newbie needs a strong financial profile

Credit, assets, income, etc.

Also, this is NOT a rehab loan, just a purchase loan

Subject to FHA inspection, Minor cosmetic allowable up to 110% of purchase price



I will be available to assist you and your clients

Thank you,

Eric Reque

Mortgage Manager

Lenox Financial

E: ereque@lenoxnational.com

P: 404-601-0620

F: 678-623-8252



MetLife Home Loans

a division of MetLife Bank N.A.

INVESTOR FHA REO PURCHASES with FHA FINANCING

FHA Program

• 203b REO with Repair Escrow up to 110%LTV/ or 203b REO w/no Repair Escrow to 96.5%

• Investor purchases allowed based on acceptable approved Pemco contract


Requirements

• Investor must hold title to property for 12 months after purchase

• Minimum Fico score is 640/Minimum Investment 3.5%

• Qualifying restrictions apply

Full Documentation, Assets and 2 years tax returns


Target Audience – Investor who:

• Possibly owns more financed properties than currently allowed by Fannie and Freddie

• Wants a low interest rate, typically 5.5-6.0%

Understands how to leverage money/Seeks minimal cash investment

• Is competent and an established real estate investor

Benefits

• Investor can purchase FHA REO HUD owned foreclosures marketed by HUD PEMCO with FHA financing

• Investor’s min cash investment is 3.5%*

• No restrictions on the number of current financed properties owned

• The investor can include the cost of required repairs in the maximum mortgage amount up to 110%LTV

Terms Available

• 30 Year / 15 Year

Pricing

• No additional charge for FHA REO financing

• No additional charge for INVESTMENT PROPERTY

Exposure Limitations

• MetLife’s maximum exposure to one borrower is 3 loans to one individual – a 4th maybe available on exception basis. (Additional FHA restrictions could apply. If your client is interested in more than one loan, please discuss with me first.

Homebuyers Finding That Cash Really Is King

LOS ANGELES - Melissa Hughett and her husband set out to buy their first home in the best buyer's market in years, confident they would land a deal within a few months.

The couple put offers on several homes, but lost them all to rivals who weren't offering more money — just a lot more cash.

"Each time somebody came in and put $100,000 down in cash and scooped up the property or they had enough money to pay for the whole property in cash," said Hughett, 30. "It's agonizing."

Would-be homebuyers, armed only with financing, are competing with real estate investors with the means to pay for a home in cash. Often, the all-cash buyers are edging out everyone else, leaving many frustrated at a time when lower prices and tax incentives favor buyers.

The market scuffle is happening primarily over heavily discounted foreclosed homes and other properties typically under $300,000, or even well below $100,000 in some markets. These homes are attractive to investors seeking a good return and first-time buyers looking for an affordable home.

The trend is most pronounced in areas of California, Florida, Arizona, Nevada and elsewhere where home prices have dropped sharply and foreclosures make up a large slice of homes for sales in many metro areas. In Las Vegas and Phoenix, for example, foreclosures accounted for more than half of all home resales in December, according to MDA DataQuick.

Although getting financing for heavily damaged foreclosures can be difficult, there's still a healthy competition. Ultimately, cash is king.

"Even though a first-time buyer may be offering the same price as an investor, or a higher price, the investor has the edge," said Jed Smith, a researcher for the National Association of Realtors. "The investor may actually pay less, but it's cash, right now."

Across the country, some 22 percent of all previously owned homes sold in December were purchased entirely with cash, up from 16 percent a year earlier. That's the highest level since March and April, when all-cash purchases made up 30 percent of sales, according to a survey by the trade association.

That rate jumps even higher in metro areas where foreclosures have driven home prices down sharply.

In Las Vegas, all-cash transactions accounted for nearly 46 percent of all sales in December, up from 33 percent a year earlier, according to MDA DataQuick. In Miami, they were 54 percent of sales, an 8 percent increase. While in Southern California, they accounted for a quarter of sales, an increase of 2 percent.

"I've never seen so many cash transactions in my career as I have in this market," said Stephanie Vitacco, a Coldwell Banker agent in Woodland Hills, Calif., with 20 years in the business.

Making matters worse, the inventory of homes for sale is down in many markets. That's due in part to banks delaying the foreclosure process as troubled homeowners are evaluated for loan modification assistance. It has all made the competition for the most affordable properties even fiercer.

Many of the cash buyers are groups of people who have pooled their money to buy foreclosures and flip them or turn them into rentals. Another large segment consists of homeowners looking for a vacation property. It's possible that some cash buyers will turn around and take out a mortgage later.

Sellers favor all-cash or cash-heavy deals because it speeds up the closing process and makes it more likely the transaction won't fall through. One common concern when a loan is necessary is that the property appraisal could come in too low for the bank to approve the deal. It's a pitfall that's become more common as home values have fallen.

"Even if the offers are comparable, a seller will go with all cash all of the time," said James Joseph, who owns Century 21 and Coldwell Banker real estate offices in Southern California. "They don't have to worry about an appraisal."

Hoping to circumvent competition from investors, Hughett approached family friends about buying their three-bedroom, two-bath house for $340,000. The owners had yet to put the home for sale.

"That's the only way we can get in," said Hughett. This way she and her husband are sure there won't be another buyer "coming in and dropping a large amount of cash."

Homebuyers who can't afford to pay cash are at a disadvantage. But experts say there are some steps homebuyers can take to boost the chances:

•Get a financing prequalification letter from a lender for an amount that's 20 percent higher than the price they're offering the seller.

•Come up with a large down payment in the 20 percent range.

•Look for HUD properties. Only noninvestors are allowed to make offers on HUD properties during the first five days that they hit the market. That gives buyers a head start over investors or those looking for second homes.

•Ask a real estate agent to get a list of recently repossessed properties being prepared for sale. It can take several weeks before these homes hit the market. That's because the bank's agent can't officially advertise the home until it's ready to be sold. But agents can ask for details on these foreclosures and get their clients ready to pounce.

•Write a letter to the seller or bank handling a foreclosure sale and make a case for why they should sell you the property — anything to make you stand out as a potential buyer.

Foreclosures drop in January - but don't get excited

February 19, 2010


Foreclosures drop in January - but don't get excited

NEW YORK (CNNMoney.com) -- First, the good news: Foreclosure filings dropped nearly 10% between December and January.

That's a total of 315,716 notices compared to 349,519 in December, according to RealtyTrac, which issues a monthly report on foreclosure activity.

Now, the bad news: Filings rose 15% compared to a year ago, and the number of people who actually had their homes repossessed jumped 31% to 87,648.

That year-over-year increase in bank repossessions is what Rick Sharga, a spokesman for RealtyTrac, finds most troubling. "A lot of properties that had been stalled in foreclosure are now going all the way through to auction," he said.

The repossession numbers for January indicate to Sharga that the nation will probably set a new record for homes lost this year. All that needs to happen is for repossession numbers to stay flat the rest of the year.

And the drop in filings might -- or might not -- be actual good news. The numbers followed a familiar theme: December foreclosure statistics tend to spike as households cope with increased spending preceding the holidays and end of year financial pressures.

Did you buy a foreclosure?

"January foreclosure numbers are exhibiting a pattern very similar to a year ago," said James Saccacio, RealtyTrac's CEO. "If history repeats itself, we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan-modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works."

Most industry observers also expect home prices to decline further this year before they stabilize. That will push more homeowners underwater -- meaning they owe more on their mortgages than their homes are worth -- making them less likely or able to pay off their mortgage loans.

Sharga does not think the problem is going away anytime soon. "We've settled into a plateau," he said, "with 11 straight months of 300,000-plus filings. I don't see that changing the rest of the year."

Worst-hit places

Foreclosure filings dropped 18% year-over-year in Nevada, but it still remained the nation's leading foreclosure state with one household in every 95 receiving at least one filing during the month.

Foreclosure plauge: Where it's spreading

Arizona was the second-worst performer, with a rate of one household for every 129 receiving a filing. Florida and California followed with one in every 187 households.

California, by far the nation's most populated state, had the highest volume of filings, with 71,817. Florida was second, with 47,069.

The least affected state was South Dakota, which had a total of only 14 foreclosure filings during the month, one household in nearly 26,000. Vermont also maintained a nearly pristine record with just one household in every 20,841 getting hit.

America's most overvalued cities

The hardest hit metropolitan area in January was Las Vegas, with a rate of one for every 82 households. Phoenix was next, with one in every 102.

The next six hardest-hit metro areas all are located in California, led by number three Modesto and Stockton, both with one in every 107. Two Florida places made the top 10 list: Cape Coral-Ft. Myers (one in 121) and Orlando (one in 143).

NEW LEAD BASED PAINT RULE

Many real estate investors have not heard of the new

EPA rule that will take effect on April 22, 2010. It will

affect any housing you own built prior to 1978 when doing

any repair and maintenance activities that disturb 6 sq. ft.

or more of paint per room inside, or 20 sq. ft. or more on

the exterior of a home or building.


Any work that disturbs more than these minimal areas will

be required to be done by a certified lead paint

contractor. And that will translate into much higher

costs. This can even affect electrical or plumbing work

done on the property. Think you can do it yourself or use

your own employees? Think again. The EPA considers rental

income as compensation for purposes of this rule and

therefore you will need to be certified!


So, how do we deal with this? The easy, but expensive,

answer is to hire only certified contractors for any work

on your pre-1978 buildings. In some cases, this may be

your only option. But there may be an alternative or two.

First, it appears simple painting where there is no

preparation work such as sanding, scraping or other

disturbance of the existing surfaces is not covered.

This may be fine for the interior, but often the exterior

needs prep.


A homeowner may also opt out by signing a waiver if there

are no children under age six frequently visiting the

property, no one in the home is pregnant, or the property

is not a child-occupied facility. It is not yet clear if

the owner of a rental property can use this same exemption.


Another exemption is if the house or components test lead

free by a Certified Risk Assessor, Lead Inspector, or

Certified Renovator.


More to come on this subject in the near future.

Six ways to ensure a remodeling project pays off

February 12, 2010

Just a few years ago you could count on getting the bulk of your money back for almost any home-improvement project you took on. Today merely replacing a toilet seat can feel like throwing caution, and cash, to the wind. According to a study from Remodeling magazine, the average return on value for an upgrade declined from 87% in 2005 to 64% in 2009. But these six new rules will help you maximize your return on your remodeling investment.

Rule No. 1: Repairs get the biggest returns

The smartest money now goes into "undeferring" needed maintenance. That's because while buyers might appreciate enhancements like Jacuzzis and Sub-Zeros, they won't tolerate a house with a leaky roof or antiquated plumbing. "If a property is known to have issues, today's buyers won't even look at it," says Austin real estate appraiser Jim Amorin.

And trying to keep problems a secret can cost you big-time. If buyers discover them during inspection, it's now common practice to ask sellers not only to pick up the tab for the repair but also to pay a penalty to compensate the buyer for the inconvenience of having work done.

So the $20,000 you saved by putting off a roof repair, say, could turn into a $30,000 credit to the buyers at closing, says Amorin.

Rule No. 2: Remodeling beats adding on

McMansions have gone the way of the SUV -- and large additions don't pay off either. "There's been a fundamental shift toward quality over quantity," says Warwick, R.I., real estate agent Ron Phipps.

Having a big, formal living room plus an everyday family room is less desirable than having one multi-use common space. So rather than adding on, you're better off repurposing existing square footage by reconfiguring the floor plan or capturing unused basement or attic space.

Want an eat-in kitchen? Knock down the wall between the kitchen and dining room ($2,000 to $8,000, depending on whether it's load-bearing or contains plumbing). That will instantly create a large eat-in kitchen and give the whole house a more open feel -- without a huge investment to make up at resale.

Rule No. 3: Eco-friendly upgrades can save cash

Some green improvements pay you back long before you sell your house. Install energy-efficient features, such as EnergyStar appliances and extra wall insulation, and you'll see lower energy bills every month.

Add in the federal tax credit of up to $1,500 that lasts through 2010, plus many local rebates and tax incentives (see dsireusa.org), and the work may pay for itself in just five years. Green features are also increasingly a selling point, says Phipps. "Most people in the market right now are first-time homebuyers in their thirties, and they've been raised to care about carbon footprints and being ecofriendly," he says.

The best way to go green is with a while-you're-at-it job: When it's time to replace your furnace, for example, upgrading to super-efficiency might add only $500 (after tax credits), compared with standard new equipment, but it will save you -- and your buyers someday -- $150 or more in annual heating costs.

Rule No. 4: Tech infrastructure trumps cool gadgets

Home electronics seem like a deal, since prices have fallen about 50% over the past three years and continue to drop, according to Stephen Baker, president of industry analysis at NPD Group, a market research firm.

Still, that doesn't change the fundamental problem with expensive built-in technology: Put in a $10,000-plus dedicated home theater today, and something better will come along tomorrow and make your system look as if it's from the Mesozoic Era. With buyers seeking any excuse to low-ball their offers, they're not going to reward you for an out-of-date system.
When to refinance your home

Tech infrastructure is different, however. Anytime you're opening up walls for a construction project, have cabling and Ethernet ports installed. At about $80 a room, it's a low-cost way to provide the capability for whatever technologies come along.

Rule No. 5: Let the Joneses be your guide

During the boom, you could be the first on your block to have a luxury kitchen, spa bathroom, or in-ground pool and count on others following suit. And even if the neighbors never took your lead, there was plenty of equity growth to cover your costs.

Nowadays that fudge factor is gone. "You really have to keep your house's amenities in line with the neighborhood now," says Kermit Baker, director of the remodeling futures program at Harvard University's Joint Center for Housing Studies.

If other houses on the block have real marble countertops, by all means add one to your house, but if everyone still has faux blue-marble Formica from the '70s, you're not getting your money back.

Also, keep your projects design-neutral so they'll appeal to the greatest number of people. Choose neutral colors and traditional electrical and plumbing fixtures unless your house has a modern architectural style.

Rule No. 6: The new payback time is five years

As with any volatile investment, the longer your time frame, the lower the risk. Don't take on a big project if you're likely to move in less than three to five years. There's just too much chance that any money you put in -- aside from necessary repairs or superficial cosmetic work -- could be lost while the housing market continues to meander.

But if you plan to stay awhile, don't delay starting a project. Home improvements are a bargain right now, with contractors bidding 10%, 20%, even 40% lower for the same work than just a year or two ago, says Bernie Markstein, senior economist for the National Association of Home Builders.

Grab them while they're hungry for work and make it clear that you'll be getting multiple bids so they'll be motivated to undercut one another's prices. You'll fulfill the first rule of investing: Buy low. Then hope that when you're ready to move, you can sell high.

By Josh Garskof, Money Magazine contributing writer - Money Magazine

Mortgage rates edge up slightly

February 13, 2010

Mortgage rates edge up slightly

Rates on 30-year fixed mortgages rose slightly this week, inching above 5 percent, Freddie Mac said Thursday.

The average rate on a 30-year fixed mortgage was 5.01 percent this week, up from 4.98 percent last week. Last year at this time, the average rate for a 30-year fixed mortgage was 5.25 percent.

Rates fell to a record low of 4.71 percent set in early December. They've been held around 5 percent by a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable. That program is set to end March 31.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.

The average rate on 15-year fixed-rate mortgages rose slightly to 4.40 percent from 4.39 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.27 percent, up from 4.25 percent a week earlier. Rates on one-year, adjustable-rate mortgages dropped to 4.22 percent from 4.29 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year and 15-year mortgages. It averaged 0.6 point for five-year loans and 0.5 point for one-year loans.

The Next Wave - Vacant Lots Become Hot Property

Vacant residential lots are looking better and better to real estate investors.

The cost of a finished, ready to build lot, can cost a developer about 25 percent of the finished home price. There are a number of these ready-to-go lots on the market at about half what they actually cost to prepare. Investor groups are snapping them up, figuring that the time will come soon when they will be in demand.

"The country needs 1.2 million new units for the next 10 years just because of population growth," says Scott Clark, president of American Development Partners, which has bought thousands of vacant lots all over the West. "[U.S. builders] built about 500,000 units in 2009 and 600,000 units in 2008, so there eventually will be pent-up demand. We want to get as many of those finished lots as we can because as demand begins to rise, the need for housing will become painfully obvious. The delta (ratio of change to value of underlying asset) in this investment will be significant."

Source: Inman News, Scott Bergsman (02/12/2010)

As of Feb 10, 2010 - 15 Best Retirement Cities

Boomers are willing to move farther than previous generations when they retire, and they are choosing places unlike stereotypical retirement hotspots, says Tom Brokaw in his report on Boomer retirement, airing on CNBC, Thursday, March 4 at 9 p.m. ET.

 

The top places listed by AARP and explored on the show are:

 

• Loveland/Fort Collins, Colo.
•  
• Las Cruces, N.M
•  
• Rehoboth Beach, Del.
•  
• Portland, Ore.
•  Greenville, S.C.
•  
• Sarasota, Florida
•  
• Ann Arbor, Mich.
•  
• Tucson, Ariz.
•  
• Montpelier, Vt.
•  
• Honolulu
•  
• Santa Fe, N.M
•  
• Atlanta
•  
• Charleston, S.C
•  
• Northampton, Mass.
•  
• San Diego, Calif.

 

 

Source: CNBC, Paul Toscano (02/05/2010)

 

When Is It Worth The $$$ To Remodel???

A Project's Worthiness

When buyers love a neighborhood, a home's curb appeal, and the price, but strongly dislike its kitchen, number of bathrooms, or basement, should they purchase it and embark on an overhaul? Or should they keep looking for a more perfect union?

The rules of the remodeling and decorating game are different, given the tougher economy. There’s no guarantee that a costly chef-inspired kitchen, luxurious master bathroom, or landscaped deck will offer the financial payback most home owners historically have come to expect.

The amount of dollars and effort invested now needs to be carefully considered, particularly because of today’s surplus of inventory at reduced prices. Your job is to listen closely to buyers’ priorities, serve as a sounding board, and help them weigh pros and cons.

Sometimes another resource—a design pro—should be called in once buyers have narrowed their choices. Depending on the type of work needed, they may find it helpful to hire an architect, decorator, landscape architect, contractor, or other specialist. Many won’t charge because they hope to win the job if a purchase is made. Architect Michael J. Malone, AIA, of WKMC Architects in Dallas offers his help gratis for an initial meeting and estimate, but charges once plans are requested so work can be bid out to contractors.

Others may bill from the get-go with an hourly rate or flat fee if they think the consultation will entail considerable time. St. Louis designer Caryn Burstein of CLB Interiors charges because she visits possible purchases and asks potential clients to fill out and go over a detailed questionnaire. Kitchen designer Jennifer Gilmer of Jennifer Gilmer Designs in Washington, D.C., also charges because of the time needed to view and measure a space and estimate costs. “Most home owners underestimate labor,” she says.

Below are six questions that design pros recommend asking. Home owners waffling on whether to stay put and make changes or look for another home can use the same analysis:

Who should you call?

Allan J. Grant, AIA, of Grant Architects in Chicago advises calling in an architect when an addition is being considered or major interior work is to be tackled, such as moving walls, stairs, or windows. He and Malone find it useful to have a contractor offer input regarding materials and labor costs for these major undertakings. A designer may be the best person to call if the work is more cosmetic, such as changing wall colors, tiles, or countertops, Grant says. A specialist such as a structural engineer might be best for advice relating to specific problems like a cracked foundation, Malone says. The most reputable design pros will also advise home owners when it’s smart not to proceed, even though that may mean no job. Sometimes, they still get the work. Malone discouraged a couple from adding on to their existing home because he felt it would take 10 years or longer for neighboring houses to play catch up to the home’s increased value. “They loved the neighborhood, and proceeded,” he says. He did the work.

How much will the project cost?

Most pros have done enough projects to estimate the final price tag, based on square footage, materials, appliances, level of finish, custom cabinets or stock, and labor, says architect Stuart Cohen, AIA, with Cohen & Hacker in Evanston, Ill. The best experts also know to tell home buyers to set aside funds for unforeseen problems such as decaying joists, which Gilmer recently found in an old house.

How long will they stay?

The cost of changes becomes more sensible if they’re amortized over a longer time frame, and buyers stay at least five years. One of Burstein’s clients was willing to spend $100,000 but wanted to remain just two to three years. “I advised them that that wasn’t long enough to recoup their money, especially since they weren’t putting it into spaces that appeal to most buyers—a kitchen and master bathroom—but spending on lower-level and third-floor changes. I urged them to ask their salesperson for guidance. They’re now looking for another home,” she says.

Are the costs justified in terms of the area?

Here’s where your expertise as a salesperson knowledgeable about comps is invaluable. Buyers need to know that the improvements they make are warranted for the house because of the value of neighboring homes. Salesperson Jennifer Ames of Coldwell Banker Residential Brokerage in Chicago says she often advises buyers on which enhancements will add the most value because of neighborhood prices. Investments also should be made only when area prices are stable or appreciating, says Cohen.

How much are buyers willing to be inconvenienced?

Camping out and using a makeshift kitchen in a basement is fun only for so long. Buyers should decide how willing they are to be inconvenienced if they plan to stay put during construction, says William Bronchick, a Denver attorney and author of How to Sell a House Fast in a Slow Real Estate Market (Wiley, 2008), who has flipped dozens of homes.

Is the project the best use of funds?

Before buyers proceed, suggest they be honest about whether the changes are where they truly want to invest their funds, or if they’d rather buy the house, avoid changes, and spend discretionary dollars on vacations or squirrel them away for retirement, Bronchick says.

----------------------------------------------------------------------------------------

LEARN MORE

Good design books can help buyers visualize changes:

•Creating Your Architectural Style by George D. Hopkins (Pelican Publishing Co., 2009);

•Not So Big Remodeling by Sarah Susanka and Marc Vassallo (The Taunton Press, 2009);

Get Your House Right: Architectural Elements to Use & Avoid by Marianne Cusato and Ben Pentreath (Sterling, 2007)

You lost your house - but you still have to pay!

February 03, 2010

As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right?

Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes.

It can even happen to people who got their bank to approve them selling their home for less than it is worth.

Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.

"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."

Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called "liar loans" where they didn't have to verify their income.

Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances -- like unemployment or a job transfer -- can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney.

Lenders mostly declined comment. Although Corey's lender, BB&T did indicate it was pursuing more deficiency judgments.

"They follow the rise and fall of foreclosures," said the spokeswoman, who would not discuss Corey's account.

Can they come after you?

Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.

"Once they have a judgment, they can pursue you anywhere," said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail."

In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.

Some states, such as California, are "non-recourse" and don't allow deficiency judgments. But, even there, if the if the original loan was refinanced, some or all of it may be subject to claims.

Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.

But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.

"People shouldn't have a false sense of security that a deficiency judgment may not be later sought," Zaretsky said.

He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.
"The parties who bought those notes wouldn't have paid money for them unless they had the intention of acting," Zaretsky said.

The Ticking time bomb

What can be scary is that the judgments don't have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn't have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.

It wasn't until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.

"I told them, 'Hey, you guys released the title,'" he said. "As far as I know, I'm off the hook."

He wasn't. Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.

"He had no idea what he was doing," said Zaretsky. "All the lender had to do was go to court to convert the confession into a deficiency judgment."

Lenders are also very inconsistent. One of Zaretsky's short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.

Strategic defaults

Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

"Banks are pulling credit reports to see if it's a strategic default," he said. "If you're behind on all your other payments, you're okay. But if you're not, they'll come after you."

If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.

"We don't favor any short-sale contracts that leave any deficiency that can be pursued," he said.

Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.


NEW YORK (CNNMoney.com)

New Wave of The Future: Container Home?

Have you ever thought about living in a container? Yes, you heard me right! No, I’m not talking about being forced into due to the economy, but rather living in one by choice, thanks to the ingenuity of local entrepreneurs.

The other day, a colleague and I made our way to a site on the outskirts of the city to meet with ‘container gurus’ Bryan McCrea and Channing McCorriston to have a peek at a “container home” demo unit. The two (along with Evan Willoughby, who was not present) are the founders of 3twenty Solutions – a company looking to produce affordable dwellings based on containers, right here in Saskatoon.

Their award-winning business concept of recycling and renovating shipping containers for purposes such as office space, sleeping quarters, and housing units has been raising eyebrows and taking heed from a number of industries and property seekers.

The two were kind enough to give us the grand tour of a renovated container – and let me say, I foresee myself wanting one…or three!

The great thing about them – they come standard sizes, which means the dimensions are the same throughout the container. No need for endless measuring, you know exactly what you are getting. Containers are also made of Corten (the strongest steel out there), and have the ability to withstand just about any weather condition.

While this concept might seem revolutionary to North Americans, the truth is that containers have been re-purposed in other parts of the world for quite some time. Containers have been found & reused in parts of China, Australia, and Western Europe – but the trend is just now starting to catch on domestically.
In fact, even some of Google’s Data Centers reside in a complex made of shipping containers. But, thanks to local companies like 3twenty Solutions, these units are on their way to becoming one of the hottest trends in urban living – and perhaps one of the next ’styles’ of real estate.

With over 700,000 idle containers in North America alone, this recycling initiative couldn’t be a greener one. Now the real question is, how would you market this type of home to buyers?

Watch the CNN News report on Shipping Container Homes: http://www.youtube.com/watch?v=UvcUe_yPHdg&feature=player_embedded

FHA Relaxes Anti-Flipping Rule

Beginning Feb. 1, the Federal Housing Administration will provide mortgage insurance for some purchases in which the seller bought the property and held it for fewer than 90 days.

The agency is changing what is known as the “anti-flipping rule” to speed up sales of renovated homes in communities with too many bank-owned and foreclosed homes, says FHA Commissioner David H. Stevens.

Waiving the 90-day rule will encourage private investors to buy vacant properties, fix them up, and quickly sell them to buyers who will be eligible to buy them using FHA financing.

FHA's change "is going to be absolutely terrific" for first-time home buyers hoping to take advantage of the tax credit, says Bobby Taylor, an associate with Coldwell Banker Mountain West Real Estate in Salem, Ore.


Source: Washington Post (01/30/2010)