Are you Nearing Foreclosure?

By Mike Greaves

Has your financial situation turned topsy- turvy due to one of the following reasons?
1) Divorce
2) Loss of Job
3) Unexpected Medical Expenses
4) Increase in Tax
Is paying your monthly bills becoming a Herculean task?

Then you should first know how gradually this process of foreclosure takes place before moving on to the tips to protection foreclosure:

Step 1: When the first month payment is missed, the lender contacts you through a letter or a telephone call. A house counselor can help in this situation.

Step 2: Second month, you receive continuous calls from the lender. Try not to avoid the calls, instead explain your situation to the lender. The house counselor might still be able to help.

Step 3: After the third month, you receive a demand letter stating how much balance you will have to pay in a specified period. It is better to somehow manage and pay the amount within that period. Else it means that you’re nearing the danger zone where the foreclosure steps would start very soon.

Avoiding foreclosure is not an impossible scenario. It can be achieved from little effort on your side. First of all, learn to respond to all calls and letters of the lender. Facing the problem can solve half your worries than running away from it. There are many websites that help in keeping you updated about your rights as a borrower. Know every one of them to protect your property. This is termed as ??~loss mitigation’. It’s important to be updated with your loan contract. Learn what is written in it. Contact the Government office of your state handling such issues to know the time frame in your particular state as it varies. There are bodies appointed by the government that offers housing counselors at free or very low cost. They help you understand the laws and work sincerely on how avoid foreclosure.

Your assets can come handy in this situation. Jewels, cars, lands, insurance policies, bonds etc can be converted into cash, so that you can avoid losing your most important property.

You could also talk to your lender about adding a back up amount to your existing loan and adding the missed out payments to that. If your contract allows that, then it could be a good solution.

You could also spread the entire amount of missed payment to the whole loan term by dividing it equally and promise to pay regularly there after. For this you need to be sure that you would be able to get sufficient income.

Be on guard for foreclosure scams. Be sure that your property is not being lost for no reason. If you have any doubts regarding this possibility, do not be hesitant to immediately consult a legal authority to clarify them.

It is always better to prioritize and plan your spending so that such mishaps do not occur. However if they do occur, take the right steps and solve the problem with the confidence that this too shall pass.

About the Author:
Mike Greaves is a self-made entrepreneur, a well known travel consultant and internet marketer. His areas of writing include travel experiences including reviews of best beach vacations and he has also gained expertise in area of protection foreclosure, legal foreclosure and how avoid foreclosure.

Real Estate Bad Guys: A Day in the Life of a Foreclosure Specialist

By Butch Grimes

The view from the other side of the foreclosure door

Walking up to a person’s home to evict them is never an easy job. Even though those of us in the foreclosure field are not the ones who have made the bad choices, or caused the bad luck, leading to this terrible moment, we are still regarded as the bad guys. It is definitely one of those cases when just by being the messenger, you take the brunt of emotions the people you are dealing with are feeling. The typical day for a foreclosure specialist is filled with bargaining, tears, threats and sadness.

How it all begins

Here is how it all starts. Homeowners have defaulted on their mortgage, they are no longer able to make their monthly payments and haven’t for a while. The bank with the home loan contacts a foreclosure specialist in the area and hands over the case. The ball is in our court. We must now run an analysis on the property in question. Next, we contact the homeowner and give a choice of two options. The homeowner can take us up on a cash for key incentive, meaning they have an offer like two weeks to be out of the home in exchange for $1000. The alternative is that we will bring the local sheriff to assist with evicting the former owners.

I’ve experiences the gamut of the human race in this field. I’ve see a range of emotions pass the faces of those who are losing their homes. There are the ones who appear strong, who hold it in and regard you impassively as you deliver the spirit-breaking news. Yet, so many of those I face with the news will break before my eyes. I seen tears from men you wouldn’t think were capable of crying. One of my worst experiences was evicting a family during the Christmas season, while their Christmas tree was still up, lights and all. The worst can be the fact that you know there are children losing the only home they have ever known.

You Can’t Take it With You

On occasion, former homeowners refuse the cash for key offer, but take everything else. When we, the foreclosure specialists, check the house on the pre-set eviction day, we find that they have taken everything that is not bolted down: water heaters, light fixtures, stoves and refrigerators. To show even more anger they will knock holes in the walls and turn water on to warp the floors. There have even been cases where upset individuals left a gift of feces in the middle of the living room floor. The only thing I can do is photograph the evidence and send it to the bank.

Of course my first response is OLD SHIT”

Foreclosure is unpleasant for all concerned. Even those of us who work in the industry are just trying to survive the economic downturn, like everyone else. The U.S. housing market has been on a downward spiral for quite a while and it has taken many casualties with it. The only honest answer to this situation is education and participation by all. It is essential to focus on educating the home owning public, and especially minority homeowners and those who live in the inner city. This is what will ultimately make the most difference in our economy. Education is essential to turning around the lives of those otherwise destined to foreclosure. Participation of all parties; Real estate Brokers, lenders, mortgage brokers; non-profits, title companies, attorneys, escrows, many others in the business sector will move this issue on.

The real estate foreclosure specialist is not the bad guy, we are just working to feed our family.

About the Author:
I offer education and information on real estate and foreclosures. For more information visit my Web site at www.wetalkrealestate.com. For comments or questions you can listen to Butch Grimes on radio stations KTYM every Monday evening at 6:00pm or on-line (internet) PODCASTED at WWW.wetalkrealestate.com.

Tax Sales, Tax Certificates, Tax Deeds: Due Diligence Matters!

By: Darius M. Barazandeh, Attorney at Law / M.B.A.

We have all heard the ‘infomercial’ and the Internet claims regarding tax foreclosed property: 

 

• “You will own the property FREE and CLEAR!”
• “All other liens and interests are WIPED OUT!”
• “You will hold the FIRST PRIORITY security interest!”
• “The Government Guarantees these properties!”
• “All liens, interests, and encumbrances are ERASED!”
• “You can do this part-time with nothing down!”
• “You don’t need to set up a company…just get out there and make a deal!”

While this can make great marketing material it is not in accord with the reality of tax foreclosure purchases.  As an attorney, I learned in law school that every rule of law has an exception. Knowing how these exceptions work will mean the difference between success and failure as a real estate investor on the grandest of scales!  I don’t make that statement lightly, rather I make it with as much of the emphasis and weight that the English language will allow. Please read it again, “Knowing how these exceptions work will mean the difference between success and failure as a real estate investor on the grandest of scales!” If you intend to be successful you must be able to separate marketing fluff from well researched and analyzed fact.   If you rely on marketing materials and hype your failure is nearly certain, however if you rely on well researched information formulated into a methodology then the keys to success in any endeavor are in your hands. 

 

 

What Does This Mean to Me and Why Should I Care?

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What this means is that you must forget about blanket marketing statements when dealing with tax foreclosed property.  For every statement that is contained in the bulleted list (at the top of the page) there is an exception and just like any business what you don’t know WILL hurt you.  If you have contacted me by email or purchased one of my courses you know that I absolutely believe in covering all the positive and negative aspects of investment techniques.  This does not mean focusing ONLY on the benefits or making wild claims about investment techniques.  It DOES mean thoroughly covering what could go wrong and a relentless approach to risk reduction.

 a

In the following sections we will review some of the areas that you must consider when researching and evaluating tax sale properties.  I call them due diligence areas #1 through #5.  These are not an exhaustive list but they do set out some of the areas which are typically left out of most people’s analysis.  For a complete list please review my course materials.

 

 

Due Diligence Area # 1:

What Liens Will Survive Foreclosure?

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One area that really upsets me is when I hear a general rule of law blindly applied to every tax foreclosure situation with reckless abandon.  Whenever you hear that the foreclosure of a tax lien ‘wipes out all over liens’ or that the property is now ‘free and clear of all other liens’ a general rule has been overstated.  The general rule can be found in the property code of every state and the UCC (Uniform Commercial Code) which covers commercial transactions.  The general rule can be stated as: The foreclosure of the superior lien will eliminate the rights of any junior interests in the realty or personal property.  This general legal rule stands for the proposition that: that when a superior lien (one that was recorded or ‘perfected’ before all others) is foreclosed (i.e., through the state’s legal foreclosure guidelines) any junior interests will lose their interest in the property.  Remember that there are exceptions to this general rule. 

 a

Let me give you an idea of some of these exceptions:

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1) Federal Tax Liens – Since most liens on a property will likely be liens from the state or a municipality within the state you must be aware of the possibility of a federal tax lien.  You can ask your title company to search for this, however a good title company should spot this lien pretty quickly. 

2) State Income Tax Liens – Some states which have a state income tax may give priority to any liens for unpaid state income taxes.  As the purchaser of the property or the holder of the lien you could still have these liens surviving as encumbrances on your property even after foreclosure.

3) State Sales Tax Liens – Unpaid state sales taxes can result on a lien which attaches to the property of the delinquent taxpayer.  You should contact an attorney to find out if your investment state has a sales tax lien which could survive foreclosure.

4) Mechanics Liens and Materialmen’s Liens – Work performed on the property where improvements or repairs are made can result in a mechanics lien if payment is not made by the party who contracted for these services.  You will find many different names for this type of lien, for example: mechanics liens, materialmen’s liens, artisans liens, workers liens, etc.  

a

Don’t forget to learn more about your investment state as your state could include others or exclude some of these liens. Don’t be scared off by this list, BUT glad that you are now informed about this potential risk. Since you have the knowledge you need only perform adequate research to avoid the risks in this area.

 

 

Due Diligence Area # 2:

 Are Environmental Risks Associated with the Property?

a

In some instances you can run the risk of purchasing someone else’s environmental liability.  Congress passed the ‘Superfund Act’ (42 U.S.C. 9601 et seq.) which made every landowner liable for previous environmental contamination on a property regardless of whether they caused the damage or not.  There is some good news for lienholders since Congress has given them an exception from liability if you are a lienholder not considered an ‘owner or operator’.  Court rules and interpretations have been changing regarding this issue so don’t risk it.  I want to be sure my liability is limited therefore I believe in being extra cautious when dealing with commercial properties in the tax sale setting.  If there is some question as to the area or type of business conducted on the parcel you should contact an environmental specialist and ask some preliminary questions about the area and property you are investigating.

 

If you want to steer clear of the whole issue then you should avoid commercial properties all together. The chances of environmental damage found on residential properties in zoned subdivisions is much less.  I do tell my students to avoid commercial properties unless it’s a really good deal.  Naturally if it is a good deal you can afford to do the extra research to make sure there are no environmental problems on the property.

a

 

Due Diligence Area # 3:

What About Other Fees Not Included in the Foreclosure?

a

You should always get an idea of whether there are any other fees or dues not included in the foreclosure purchase price.  I know this sounds odd but it can occur if an entity that is owed money was not included in the tax foreclosure lawsuit.  If they did not get notice or did not decide to ‘join’ themselves in the collection lawsuit then the money simply won’t be added to the opening bid amount. The purchaser of the property would still be responsible to pay for these fee amounts.

 a

Here is what I suggest that you do:

 a

 Contact the tax collection entity or authority (typically the tax assessor)

Ask them which entities they collect taxes for

Then ask which entities are outside of their collection area

Create a list of entities whose taxes are not collected by the assessor BUT may still be owed by delinquent taxpayer

Call and ask the entity the amount of back taxes, dues or fees

Add this amount to your bid analysis

 

 a

Again, by following a simple step-by-step methodology you can greatly reduce you risk and boost your success rate ten fold.  Make sure you go through this checklist of tasks with every property you consider purchasing.

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Due Diligence Area # 4:

Bankruptcy of Delinquent Property Owner

a

You must check to see if there is a looming bankruptcy associated with the property.  I see very few tax sale products covering this issue.  This is an ABSOLUTE MUST in your analysis of any property.  You can access federal bankruptcy records through the federal bankruptcy court in your state.  Some of these records may be online.  There are generally two main possibilities that you must be wary of:

 a

1) A Bankruptcy has occurred prior to purchase – Sometimes you will find that a property is tied up in a bankruptcy administration while it is being prepared for tax sale.  You should avoid properties which are on a tax sale list which have a pending bankruptcy suit.  

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2) A Bankruptcy has occurred during the redemption period – This scenario can be problematic as well.  Here the property has been sold to tax sale investor but while the redemption clock is ticking the delinquent property owner has declared bankruptcy.  Now a trustee has been appointed to protect the assets of the estate.  The biggest risk to the tax sale purchaser is that the trustee will attempt to argue that the tax sale purchase was a ‘fraudulent transfer’.  For such an activity to occur there must at least some dealing or scheme between the debtor and the purchaser such that an attempt is made to avoid liquidation of the estate by transferring property to a 3^rd party.  While the tax sale purchase really should not be classified as such a transfer if the trustee raises this argument it can interfere with the tolling of redemption period, your ownership rights and the final disposition of the tax sale property or lien.   Keep in mind that if the trustee wins this argument you won’t lose your initial investment, but you will lose any of the anticipated profit.  It is not an easy argument for the trustee to win but just be wary of this possibility. 

a

The best thing to do is to avoid situations where you know the property is involved or will be involved in a bankruptcy.  You should check in the owner’s district of residence for any bankruptcy filings.  Lastly, don’t be too frightened by this issue because doing your research will help you greatly reduce your risk of being affected by a bankrupt estate.

a

Due Diligence Area # 5:

Doing Deals in Your Own Name

a

This is an area that is very critical to apply and apply correctly.  If I could refuse to sell my products to someone who does not have a legal business entity from which they will make these purchases, I would do it. That means that if I find out you are buying tax sale property in your own name I will come and take my course from you!  No seriously…this is a very critical issue and I just want you to understand how much it worries and keeps me up at night knowing that some of you will ignore my advice and buy tax deeds as ‘John Jones’ instead of ‘Jones Real Estate, Corp.’

a

Why is this such a bid deal? The reason is that when you purchase a property as an individual you are now personally liable for the anything that goes wrong with the property.  This could include someone getting hurt on the property (yes, even a trespasser can sue you), environmental issues with the property, liability from ‘unknown’ liens, and a myriad of other problematic scenarios.  

a

However, when you form an entity you generally will not be personally liable for these acts, omissions, or hidden liabilities.  What will happen is that the corporation, partnership, or LLC will take the hit.  Now why did I say that ‘generally’ you will not be liable?  I said that because if you do not maintain the entity using the proper formalities you will lose that protection.  In a landmark business law case the courts determined that to “preserve equity and prevent injustice” it could “pierce the corporate veil” and hold the shareholders or owner(s) liable for the acts and/or omissions of the corporation if proper formalities were not met.

a

If you go to any real estate investing seminar and they tell you, “Just do a deal or two then worry about forming your company”, please run out the door!  It will only take one bad deal to make you liable thereby risking everything you own.  Before you attempt a deal you should find an attorney to help you determine which form of business entity will serve you:

 Corporation – C-corp or S-corp.; 

    Limited Liability Company (LLC) (Taxed under Subchapter K or S)

 Limited Partnership (LP); 

You should then have the entity up for you and teach you how to maintain its formal status in the eyes of the law.  I have helped individuals with the matter and I can tell you that you must have an attorney who will listen to your needs and spend time educating you.  The reason I think education is important is that if you don’t maintain the entity correctly its the protective shield will not exist in the eyes of the law.   It will be as if you never incorporated at all.  What good will the slick corporate minute book and fancy company logo be if the attorney did not teach you how to keep the entity separate from your personal dealings?  Unless your attorney takes the time to teach you how to maintain your entity status it will be worthless.

7 Ways to Avoid Foreclosure

By Steve Teta

Through no fault of your own, you may be facing one of the greatest challenges of your life; how to prevent your property from being foreclosed upon.

Why let the bank take your most valued asset and leave you with nothing? Fortunately, alternatives exist. In fact, there are seven ways you can avoid foreclosure. They are:

1. Refinance
2. Bring your mortgage current
3. Create a “workout” with the bank
4. Declare bankruptcy
5. Create “shared equity”
6. Transfer title
7. Sell the property quickly

Let’s discuss each option—what it is, and the pros and cons of using each one:

1. Refinance

In today’s marketplace, there are many different types of financial institutions that lend money. Although you may not be able to refinance with your local bank due to your current situation, there are many mortgage companies and lenders who specialize in creative financing solutions. That’s how they can compete with the big banks. They are often able to review your situation and find a solution to your needs. It is true that the loan you get will probably have a higher interest rate than a regular loan. But if you have a good amount of equity in your property, the ability to refinance will most likely be a good option that’s available to you.

2. Bring your mortgage current

I know what you are thinking: “If I could bring my mortgage current, I wouldn’t be in this situation!” That may be true, but have you investigated every possible way that you may be able to get the funds? Can you borrow it from a friend, family member or co-worker? Can you sell something? Does your employer have any hardship loan programs? Brainstorm with family members or close friends. The more you think about it, the more likely it is that someone will remember or come across a solution.

3. Create a workout with the lender

The lender does not want to foreclose. That’s because lenders are in the business of having their money at work in loans, and not sitting in a property they have taken back through foreclosure. Not only is that a black mark on the lending institution, but it hurts their financial picture as well. Therefore, in many instances lenders are willing to do “workouts” (also known as a forbearance agreement). What this means is that they are willing to work out the back payments that are owed, until you become current again.

A typical workout would be the lender taking the full amount of your back payments and dividing that number by 12 or 24. They would then add that amount to your current payments, until you are paid off. When considering a workout, you’ve got to be able to make that extra payment each month or you will be right back where you started—in the foreclosure process for the second time. At that point, the bank will not look very favorably upon your situation. It’s best to work with a workout specialist…someone who has done workouts before and knows the “ins and outs” of the lending business.

4. Declare bankruptcy

Declaring bankruptcy is a viable option to being foreclosed upon, but it should be used only as a last resort. Also, use it only if you know that you will be able to keep up with the future loan payments. Otherwise you’re just postponing the inevitable, and the longer you wait, the less money you will walk away with from your property. A bankruptcy will be reported on your credit report for seven years. The bankruptcy will also be reported in the financial section of the newspaper—it’s a requirement from the bankruptcy court.

Declaring bankruptcy is also costly. When declaring bankruptcy you will have the option to declare either Chapter 7, 11 or 13 bankruptcy. These refer to different parts of the bankruptcy law, and relate to whether you are somewhat in debt and need to renegotiate with lenders, or whether you truly are going to walk away from your debts. However, be warned that because you can only declare bankruptcy periodically, certain future debts might not be eligible for even bankruptcy protection. The point is that bankruptcy should be your route of last resort. If you truly have no other alternative, call us and we will give you the names of two or three reputable bankruptcy attorneys.

5. Create shared equity

To create shared equity, you borrow the money from an investor, in order to make up your back payments. In return for bringing your loan current, you give the investor a certain portion of the equity in your property. You are giving up part ownership, in return for keeping part ownership: That beats giving the whole thing over to your lender.

Of the seven methods to avoid foreclosure, this is the most difficult to accomplish, because there are not many investors who are willing to risk money (the back payments) on an individual who has a history of not paying.

6. Transfer title

This is a form of property sale. It’s called a “subject to” transaction. An investor offers to make up your back payments and take over your property, subject to the existing mortgage. The title of the property goes into the buyer’s name, though the mortgage stays in your name until the loan is paid off. This could take as little as thirty days, or as long as three years. You may ask, “How do I know the investor will make the payments?” The answer is quite simple: He has just made up all of your back payments; he now has a financial stake in the property. It only makes sense that he makes your payments to protect his investment.

This type of sale is becoming quite common. The benefits to you:

· You don’t have a foreclosure on your record;
· You may get some cash immediately to start fresh;
· You immediately solve your looming foreclosure; and
· Your credit gets built back up through no effort of your own
because the investor makes up your back payments and begins
making your monthly mortgage payments on time every month.

Before long, your credit score is once again in good standing.

7. Sell your property quickly

Sometimes people just want to walk away from a bad situation, and leave everything that reminds them of that situation behind. In this case, you sell your property outright, collect any equity that you have in the property and start over again. One great thing about time is its ability to heal wounds. Yes, things may be bad now, but as Johnny Cash always said, “This too shall pass”. It may be time to face what is happening and act in your best interest right now for a better tomorrow. You can sell your property through a real estate agent or directly to an investor. Selling directly to an investor will save you the commission that you would pay to a real estate agent and more importantly will save you time. A real estate agent sometimes takes three to six months to find you a buyer. If for some reason that buyer cannot get financing or close on the property, you might be left in a real bind.

The three to six months (or eight to twelve months in this market) that a real estate agent may take to find a buyer could be longer than you can afford. That’s because once your lender has set a date for the foreclosure, it will foreclose on that date, regardless of whether your buyer needs more time. In many situations, investors like can pay cash and can close quickly.

About The Author Steve Teta is the owner and Founder of STS Real Estate Solutions, LLC and is an active real estate investor and wholesaler. To receive more information and your FREE report entitled How To Buy A Wholesale Deal Without Taking A Bath go to: http://www.stswholesaledeals.com/

The foreclosure crisis is affecting homeowners from all walks of life. A recent newspaper article revealed that Atlanta experienced the highest number of foreclosures in its history last month with 6873 advertised houses scheduled for auction. I personally am overwhelmed by the number of property owners that are seeking some kind of solution and there aren’t enough investors out there to handle the amount of properties in default.

 

The problem is so close to home that even our neighbors, friends, and co-workers are affected by the crises. They don’t teach a class in high school, grade school, or college called “what to do if your house is in foreclosure” so here are some guidelines if you or anyone you know is already or about to go into default.

 

The lenders do not want to foreclose on anybody, the first thing a property owner should do is contact their lender and tell them about their situation. The lender will look at the financial situation and is willing to try to come up with a workout plan. They may be able to modify the loan to help an owner get back on track. The owner must be able to convince a lender that they can afford to keep the house. Most owners are several months behind and can’t come up with the back payments but may be able to make next months payment but they can’t come up with all the past due payments at once. Therefore the lender may be able to spread the arrearages over the life of the loan. A lender can’t help if the owner is not willing to discuss the matter.

 

A second option is to contact the government about a special low interest refinance loan for homeowners affected by foreclosure. Ask your lender, a credit counseling agency, or go to the website, www.hud.gov to inquire about the program. I understand there are qualifications that must be met and there are only so many of these loans available, but an owner should inquire to see if they qualify…

 

The third option for defaulting owners is to contact a credit counseling agency. There are many available to discuss the owner’s circumstances and negotiate for you. Most are non profit organizations and it may be worthwhile. I do believe it will affect a credit rating and they may not be able to help everybody but it is an option to be aware of. There was a phone number in a newspaper article for people affected by the crises and the number is 1-888 995-HOPE. If they are unable to work out a solution they might advise the owner to try selling the property, or they may offer a certificate to consult with an attorney about bankruptcy protection.

 

It may be in the owner’s best interest to sell their property and find something that’s more affordable. Though it’s true we are in a slow market and there are multiple houses for sale, there are investors that can buy the property and can close quickly. Property owners get plenty of mail from companies that buy houses fast so an owner can contact a few of them and see what they have to offer. Put a “for sale” sign in the yard because a property in foreclosure gets plenty of free advertising.

 

There is no justifiable reason to let a house go all the way to auction with so many options available. I am surprised at the amount of properties that get cried out on the courthouse steps each and every month. There are many gurus telling investors to buy from the lenders. But let’s not forget about the homeowners. Investors can make a difference.

 

If you are an investor seeking to buy a property from someone in foreclosure, here are some guidelines that I recommend.

 

DON”T,  It is not a good idea to buy a property in foreclosure and lease it back to the owner on a lease option. (my opinion)

 

DON’T,  Never let an owner sign a power of Attorney

 

DON’T, Hold an owner to a contract, if they are not happy with the deal, let them back out. (re-negotiate)

 

 

 

Tony Youngs can be contacted through our Coaching Club website at www.TheCoachingClub.com  and is always willing to answer questions about real estate investing in up or down markets.

He has a twenty years experience and a wealth of knowledge to share.

 

 

Short Sale Negotiation Tips to Outsourcing your Short Sale Negotiations

The foreclosure process can take quite a long time for anyone real estate investor looking to close a short sale deal.  However, you’ll find the short sale negotiation is a time consuming and involved process.  Your time is valuable and you have to invest it in valuable projects and efforts.

 

 

Making the most of your time is important for a real estate investor in order to make the most profits with the least investment of time.  The way to do this is by outsourcing your work and ‘To Do’ lists.  You can outsource a lot of the short sale negotiation process to short sale services. 

 

These short sale services are companies that offer to help investors with the process of completing a short sale deal for a nominal fee.  These companies are run by or employ experienced professionals, many of whom used to work as loss mitigators for the banks with which you are attempting to make short sale deals!  They have years of experience with the foreclosure process and short sale negotiations.  So, these services can quickly and easily help you put together a short sale package, find the right person at the bank to negotiate with and even negotiate with the bank‘s loss mitigator over the phone for you. 

 

You can find plenty of short sale services to help you in your negotiation process.  They are all over the web and even in the yellow pages.  Just make sure you do your research before signing on with a particular company.  A short sale services company can offer a range of services or even have a completely different focus from yours as a real estate investor. 

 

Some negotiation companies that help with the foreclosure process actually work with the homeowner and attempt to help them keep their home.  While this is an excellent company to recommend to the homeowner who isn’t certain they want to go with a short sale, it’s not a company you want to hire. 

 

On occasion, other short sale services companies have been known to take a deal out from under the real estate investor.  This is extremely rare, but every industry does have its bad apples.  A deal can be lost when you sign on a short sale negotiation service that also works with homeowners to save their homes from the foreclosure process or when you sign on with a service that also does investing of their own in real estate foreclosures.

 

To make sure your property stays safe in the hands of the short sale services company you pick, you’ll want to research them thoroughly to make sure they only offer the services you want.  Plus, be sure to enter into a contract agreement with them, stating that they’ll only perform the services you ask for and not approach the homeowner about a deal of their own.

 

All worries about the short sale negotiation aside, outsourcing your time consuming work to a short sale services company is an excellent way to ensure you make the most profits with the least amount of time.  As long as you do your research and use a contract you’ll be safe in outsourcing that short sale negotiation.

 

Call to Action: Colin Egbert is the CEO of Real Estate Investor.com and also advises investors on ways they can outsource their Short Sale Negotiation.  Here you’ll find free real estate contracts, a real estate dictionary and a free lifetime membership!

8 WAYS TO PROFIT FROM ONE FORECLOSURE

© 2007 by Tony Youngs

 

 

 

As I write this article, I have just returned from a foreclosure auction. I like to give the most up to date information on what’s happening in the foreclosure market. About four weeks ago, I obtained a new list of the foreclosures for the county I live in and as always, I highlighted the ones in my zip code and plotted them on a map. There are usually forty five to sixty every month in a five mile radius, this month there were forty four.  Last month there were sixty. I don’t know for sure, but there may be a decrease because I read somewhere on the internet that the government is asking lenders to avoid foreclosing unless there is no other way. If that is the case, In the future that will mean that the ones in foreclosure are the ones with no other solution, and more owners may be willing to accept offers.

 

There are several ways to contact the owners. You can send letters, call on the phone, put out signs, or pay a visit. I myself like to drive out and see all the ones in a five mile radius, and pay a visit. By doing this I find all sorts of opportunities. This has been a routine for me for the last 19 years or so. It keeps me abreast of the market. Four weeks ago I got my map and started visiting owners. I am finding more and more vacant houses than ever before. People are walking away from their houses and letting the lenders repossess them. Some of them have equity but most are financed to the hilt with 80/20 loans or second and third mortgages. At the auction today, homes were being repossessed by the lenders at a phenomenal rate and very few people were bidding. The few that were sold to third party bidders went for only one dollar over the opening bid.

 

With all these homes going back to the lenders, and homeowners walking away, we investors can provide solutions. The best way to work in todays market is to pick an area and track the properties from before the foreclosure begins until it is occupied by a homeowner,  after the foreclosure auction. Then you can stop pursuing it. There are eight ways to profit from one distressed property.

 

The first way is to contact the owner to see if they want to sell their house. Not all of them want to sell. It’s a numbers game. If they do want to sell you will know. They welcome you with open arms. Investors can buy and close quicker than traditional home buyers and the homes usually need repairs. I only buy houses from people that really want to sell. I start by asking  them if they have talked to their lender to see if they can work something out. Lenders don’t want to repossess houses and are willing to do a workout plan or modify the terms of the loan. But they can’t make it work in every situation. Then I ask if they have talked to a credit counseling agency such as CCCS. I offer a phone number to a helpline so the owner can see if they can help. If the owner has sufficient income, the helpline may work but not for all.

 

In my experience, I have found that modifications, credit counseling, and bankruptcy doesn’t work for everybody that is going through foreclosure and a lot of homes are lost. If they have tried those options and it didn’t work out, or if they they would rather not do those things, I make an offer.

 

A second way is to learn how to do loan modification packages for them. A homeowner can talk to their lender about a modification without our help, but you would be surprised how many don’t or won’t. They want someone to do it for them or they have never heard of it. If an owner doesn’t want to sell the house, perhaps you can assist. The bank does not want to foreclose on them or repossess the home and if the owner qualifies, the bank can modify the mortgage. The owner needs to gather a lot of financial information and they may want your help in doing so. I have seen some owners get turned down and I have seen owners who couldn’t keep up with the new plan and went back into default.

 

A third way to profit and create win win win solutions is to learn how to do short sales and lien discounts. Even real estate agents should learn all they can about them. I am seeing more and more owners list their homes while in default and theres no equity.  The lenders don’t want to keep repossessing houses with no equity. A large majority of homes in foreclosure have no equity and the lenders are willing to discount the balance of the loan so owners can sell before the auction. I believe you will see short sales get faster and easier over the next few years. Why? With the subprime collapse and the increase in foreclosures nationwide, the slow market, and the fact that investors are paying less at the auctions, the lenders are finding it in their best interest to discount these loans before the auction to cut down on the amount of repossessions. It is better for them to take less cash before the auction and then they can lend it out to produce income rather than sit on a property that needs repairs and has no equity. The main problem is the homeowners must be willing to sell their homes. I have been to auctions in other states where the lenders were opening the bid at much less than the balance to get the house sold. A short sale on the steps. Although short sales have been around for years, It will payoff to continue educating yourself as the lenders change the way they process them. They simply don’t have enough staff for the workload.

 

A forth way is to learn how to buy “notes and mortgages” There always has been and always will be homeowners that won’t cooperate. They won’t sell their houses and won’t work with the lenders. They don’t want what you have to offer. Then there are the many who walk away and can’t be found. This is where you can offer to buy the loan before the auction. Lenders sell loans even when they aren’t in default. How much more would it help them to sell a defaulted loan to keep from repossessing a property.  You buy the loan at a discount but it keeps its face value.

If someone bids you get paid, if not you get the house at a discount.

 

A fifth way is to buy it at the auction. If you have been tracking a property and you have not had any results from the first four, go to the auction. Bid on the houses that have equity and keep track of the ones that go back to the lenders. Make sure you know what you’re doing when buying on the steps. Make sure you bid on first mortgages and not seconds or thirds. Make sure there is not a tax deed or certificate and make sure you have done a thorough title search. Remember you are buying in as-is condition and you usually don’t get a chance to inspect the property. Let the buyer beware. There are no friends on the steps.  About eight out of ten houses that get cried out on the steps, don’t get sold to third party bidders. They go back to the lenders, which brings me to number six.

 

The sixth way to profit is to buy these houses after they go back to the lender. I think I can safely say that only houses with no equity get repossessed by lenders.

If they need repairs like most of them do, the lenders have to spend money on repairs that the property doesn’t give back. They list them with real estate agents and pay commissions also. A few years ago while the market was booming, that was not a big problem but today it is. Learn how to present offers with logic and reason. You can get great deals if it makes sense to the lender and  is in their best interest. I submit data and documentation with my offers to show how it is better to sell in as is condition than to lose more money by hanging on. There is no shortage of lender owned properties to make offers on.  I’m in the due diligence stage of  a package deal from a lender where they have 54 properties for sale but you must buy all or none. Their asking price pencils out to $26,000 per property and the majority of them have an after repair value of $80,000 to $100,000. I suspect we will see more of these types of package deals in the future.

 

The seventh way to profit is to continue to follow up on the properties that went into bankruptcy before the auction. The bankruptcy process will stop the foreclosure for a while until the case is settled.  More often than not, a property eventually gets released and ends up heading for foreclosure auction again. If you continue to follow up you will have an opportunity to make an offer before it gets published in the foreclosure list or legal notices.

 

The eighth way to profit is the “Hidden Market” The hidden market is how to find homes that may be heading for foreclosure but are not published in the legal notices yet. There are no for sale signs in the yard, no ads in the paper, nobody even knows these properties can be bought. Statistics say that out of one hundred of your neighbors, four to seven of them are three months behind on their house payments.

That’s only part of the hidden market. There are many more hidden opportunities that you discover while working and tracking the foreclosures in a confined area.

 

If you have ever thought there is too much competition in the foreclosure business it is probably because you have only sent letters.  If you learn to work the eight ways to profit, you will always have a steady stream of opportunity and you will beat the competition if there is any.   

 

Tony Youngs is an investor/mentor and the author of the 8 ways to profit and the “Hidden Market”system.

 

 

 

 

Foreclosure businesses are booming by filling a need in the market for maintaining foreclosed properties. These businesses help prevent the bank-owned properties from losing value by making repairs, cleaning, cutting the lawn and other maintenance tasks. For more, see the following article from Property Wire.

The continuing increase in foreclosed properties in the US may be bad news for lenders but it has also spawned a whole new industry in terms of cleaning them up.

Banks and other lenders who either can’t sell or want to hold onto properties until the real estate recovery begins are increasingly employing companies to keep them in good condition.

Across the country a veritable army of entrepreneurs are cutting grass, taking away rubbish, carrying out essential repairs and cleaning properties inside and out.

They are particularly in demand in Florida, Arizona and California, three of the worst hit states in terms of foreclosures.

Scott O’Berry whose Property Shield business in that operates in Michigan said that he gets up to a dozen calls a day. ‘Vacant foreclosed properties can attract vandals, squatters, thieves and animals so it is better to look after them as they will be worth more in the long term. Unkept properties also drag down the value of other real estate in the neighborhood,’ said O’Berry who now employs 45 people.

But there are signs that the banks and other lenders may not be willing to keep paying out. Property Shield charges $3,500 for full maintenance per property. Matt Johnson, who owns Tri-County Property Preservation in Lansing, said he has had to cut prices to stay competitive as demand is dropping off.

‘Now we’re starting to see a downturn as banks are working with homeowners more,’ he explained. But many companies are confident that business will still be good for many years to come. Manny del Valle, owner of Florida based Foreclosure Cleanup, said that her business is kept busy just dealing with things like mold which can quickly take hold on properties in the state.

With foreclosure figures continuing to rise and new mortgage delinquencies on the increase as well, there seems no end to the upward spiral. One thing the lenders cannot guard against, however, is owners that remove valuable fixtures and fittings before leaving the property. It has become quite extreme in some cases. One million dollar lake front home in Florida had its marble kitchen tops, gold plated bathroom fittings and even the palm trees in the garden removed.

This article was republished from Property Wire. You can also view this article at Property Wire, an international real estate news website.

How a Piece of Paper – Or the Absence Thereof – Can Protect You From Foreclosure

Imagine if you will, walking in to your local Honda dealer and purchasing a car.  The following month, you make a late payment, and half a dozen Honda dealers threaten to repossess your vehicle even though only one dealership holds the actual loan paperwork for your car.  For up to half of Americans facing foreclosure, a similar crime is taking place – a crime referred to as real estate theft.

Produce the Note:  Requesting a copy of your original mortgage note can stall foreclosure action in up to 40% of all cases, according to a University of Iowa study.  “Produce the note”, has become the battle cry of millions of homeowners in danger of losing their home, their greatest investment, and their greatest source of security.

A copy of your original mortgage paperwork can be the final thread that protects you from foreclosure or at least a step in the process that keeps you and your family in your home when you have reached the end of your rope and tied a knot to hang on.

With more and more lenders moving to put homeowners out on the street, judges nationwide are holding lawyers seeking litigation against delinquent homeowners to much higher standards regarding the laws governing such litigation.   In a landscape where foreclosed homes are destroying the fabric of America, where unfair and predatory lending practices have driven home values to an all-time low, and where the government is too busy bailing out banks to take care of its citizens; the “produce the note” strategy is a huge step in the process of protecting homeowners.

When foreclosure notice is received, requesting the original mortgage paperwork – the actual promissory note which serves as the official legal record of the loan WITH the homeowner’s signature on it, can stall, or even stop the foreclosure process.  Over the last decade in the midst of a real estate feeding frenzy mortgages were flipped and sold and packaged up to investors on Wall Street.  While lenders rushed to unload the mortgages they made to homeowners, little details like paperwork fell through the cracks.  Often times the original note has been destroyed, shipped off to a warehouse, errantly filed, or misplaced entirely.  Carelessness on the part of lenders in their rush to profit from mortgage writing may actually protect the very borrowers they seek to profit from.

This oversight on the part of investors can be timely protection for homeowners.

Cases are setting judicial precedent all over the country as judges slow, halt, or throw out entirely foreclosure actions against homeowners where the mortgage holder cannot prove their right to sue for foreclosure in light of the absence of the original promissory note.  Once the lender is stalled in court from moving to foreclose they become much more willing to renegotiate the mortgage to assist the homeowner in staying in their home.  When the “produce the note” cry is issued, the battle lines are drawn and the gauntlet is thrown down on the mortgage holder.

Another reason that it is important to demand that your mortgage holder “produce the note” is that in some instances, once a lender has foreclosed and put the homeowner out, other lenders who have held the note on the home can also take collections action against the homeowner on the home they no longer live in.  If a lender who doesn’t hold the note takes action, then another lender out there somewhere can still take action against you.  Again, insisting that they “produce the note” protects you from being charged twice for the home you no longer even own!

According to Mitch Stacy of the Associated Press, “More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes.”  The Center for Responsible Lending projects nearly 2.5 million homes will move into foreclosure in 2009.

While “produce the note” is not a guarantee in and of itself to protect you from foreclosure, it can be a step in the process to keep you in your home long enough to find employment, to obtain assistance from President Obama’s new stimulus aid package, or to negotiate a mortgage package that is fair and reasonable with your lender.

For free documents to file your produce the note request with your mortgage holder, refer to Chris Hoyer’s Consumer Warning Network website – http://www.consumerwarningnetwork.com.

The stimulus aid available from the government is only available to people who are still in their homes, so the inability of your lender to “produce the note” may very well enable you to stay in your home long enough for relief to come.

Do your homework on the Homeowners Association

About one in six Americans currently live in a community run by a condo or homeowners association. With the recent increase in foreclosures, some homeowners associations are running out of cash. HOA’s are like miniature governments that depend on revenue to finance upkeep of common areas, community pools, tennis courts and private roads.

Before a property goes into foreclosure, many owners stop paying their monthly HOA dues. In fact, HOA fees are generally among the first bills struggling homeowners quit paying. If they can’t afford their mortgage, then they aren’t going to pay their HOA fees. Adding to the problem, some banks aren’t paying HOA fees on properties they have foreclosed on and now own. As a result, association fees rise and the property may be less desirable to buyers.

There is a very informative article in the May 13th, 2008, Wall Street Journal that summarizes some of the problems to home owners and potential buyers.

In the current climate of foreclosures, it’s even more important for potential buyers to read the bylaws; as the bylaws will explain what services are provided and if there is a cap on the annual fees. Some of the bylaws even include information on how they’ll handle foreclosures and payments of fees. It’s also important to know how the board is managed. Boards are typically managed two different ways; by the homeowners themselves, or by an outside company that has been hired by the homeowners association. In the uncharted waters of foreclosures, a professional management company may be the best bet for a home owners and potential buyers.

When looking at the balance sheet of a homeowners association, a buyer should look at their reserves. Buyers want to make sure there is enough cash on hand to take care of maintenance and other services. If there is no reserve fund, the association may have to impose special assessments when major projects become necessary. If HOA’s don’t have reserves, they may be forced to close community amenities like parks, pools and community centers, because they can no longer afford to build and maintain them.

It’s also important for buyers to remember that Associations aren’t corporations. They operate year to year. They collect in dues what they believe they need to pay for amenities and services that residents expect. Even though many homeowner associations have the power to foreclosure if dues are in arrears, few have the money or means to do it.

Buyers need to do their due diligence; as it will help them avoid surprises after they move in. Realtors who specialize in being a Buyer’s agent or who have the Accredited Buyers Representative designation can help guide a buyer to get the documentation they need; as well as they can find out how many foreclosures are in the area.

For more information, Contact Kathy Torline at KTorline@msn.com, http://www.KathyTorline.com or http://www.ColoradoSpringsVintageHomes.com