About Saint Clair County, MI

We saw this coming a mile away....socially acceptable "strategic defaults." For purposes of my blog I am suggesting that "strategic default" means a homeowner that can make his or her payments but chooses not to for one reason or another. (Note: this excludes legitimate hardships like job loss or health issues for example)

Many owners think, "I'll walk away, my credit will get dinged up a bit, I will keep my credit clean and be able to buy again in a few years". But we should look at the real long term affects of default.

First, how long will it be before the borrower can buy again? The numbers change depending on who you ask and when, but a common response is 5 to 7 years from date of default to get any kind of respectable mortgage loan. Unfortunately (or fortunately depending on your view of things) it could be much longer for some opting for strategic default.

Why might some buyers have to wait 10 years or more to reenter the market? One reason is many borrowers are forgetting about the ticking time bomb that maybe awaiting them...the "deficiency" collection. The deficiency is the difference between what is owed on the note and what the house sells for at the foreclosure sale (different from state to state but I am referring to Michigan).

In Michigan, lenders have up to 6 years to purse a deficiency judgment against the borrower. Keeping this in mind, do think lenders are going to purse borrowers now, while the economy is in the crapper? Or do you think they will wait a few years until the borrower gets back on his feet, when he is making and saving some money for a home down payment. The last lender I spoke with about deficiencies said "we don't even have time to go after people now...we're too busy foreclosing, but we're not concerned about it because we have six years to go after them." Six years! Ones financial outlook can change a lot in six years. And it's not the bank that will be going after these borrowers; it'll be Collection Agencies that bought the loan deficiency rights at 10 cents on the dollar. My guess is they will be ruthless and efficient...nothing like today's loss mitigation departments.

So just when the defaulting borrower thinks he is re-establishing himself and the wife starts to dream about a new home...BAM! The collection calls and wage garnishments will start. Now what? My guess is the borrower will either have to file bankruptcy, thus starting the credit rebuilding process all over again...prolonging the rekindled dream of homeownership another 5-7 years. Or, option B, he will reluctantly make payments to settle the old and forgotten debt he walked away from. Either option likely will be a major financial setback.

I guess the moral of the story is if you're planning a strategic default...you might need to sleep with one eye open. Before walking away, consult your lender, an ethical attorney and trusted real estate professional. There may be a more suitable option. The loan may be modified, or a short sale may be in order. We can in many cases address the deficiency during a short sale so there is closure at the end of transaction.

For more information on deficiencies and short sales, email or call Marc Reno at mreno@bauerreno.com or 810-966-1200 or 810-650-2856.

Marc Reno, Associate Broker, CDPE

**This blog for informational and entertainment purposes, I am not an attorney and am not qualified to give legal advice.

My hours at work were reduced - The Bank was at war with us.
I had always worked overtime, 30 or more hours a week in over time, for the past 10 years at least. My wife worked at the hospital but they cut back, she lost that job. Now she is a part time school bus driver. The house hold income has been cut more than in half so this house payment is not possible any longer.

I felt the Bank was attacking us. The Bills are piling up for this house we bought new five years ago. A nice colonial family home with newer homes around us. We have been caught in the loss of work affecting everyone in South East Michigan. There is just not enough money to go around. That house payment, Taxes, gas, heat, electric (I have to keep the lights on) our car payments and insurance. Months went by, we were barely hanging on, the calls had started coming, late fees piling up.

My wife and I talked it over one night, we were not sleeping very well. We felt helpless, had been knocked down and kicked to the curb, just felt beaten to a pulp, lost. We could not go on with this secrete, had to do something. The Bank is taking our home back. That realization helped us, we accepted the fact that we had to do something ourselves.

There is a Manufactured home village we had friends in that offered low priced lot rent and low cost homes. We put our names on the list and got a call right away. Needed to move quick but there was still that problem with the house. The market would not let us sell it for what we owed, that had been tried already. The home could not be left empty or it would be considered abandoned.



We heard a real estate investor talk at our church about "Short Sales", that sounded like it could be a way out. He was a nice guy and very helpful, he suggested that we call a company in our area that he had heard was working very hard for their Clients. A Bauer-Reno & Associates agent was contacted.

Mike Warfel came over to our house to explain the short sale process to us, he was very positive, everything was explained and we put the house on the market. He was very confident, which was a real lifeline for us, this was a way out. We got real involved in supplying all the paperwork needed to do the short sale, the proof of insufficient income to support this house. I think we worked together real well, whenever he called requesting pay stubs or bank statements we would run them right over to him. Mike made himself very available to us to keep us aware of progress, email updates and phone calls.

We got an acceptable offer quickly and signed their Purchase Agreement. Mike contacted the Bank and FAX-ed the 37 page packet to them. He also mailed them the copies so we were sure that the paper work was in their system. The phone calls and follow up emails started. Mike really worked hard calling or emailing two or three times a week. The bills and the Phone calls at home did not slow down, we owed the bank.

The time kept going by, it seemed like very little changed with the bank. Nine weeks after the purchase agreement and supporting documents had been sent in our file was assigned to a negotiator. Pay stubs and bank statements needed to be updated, answers were slow in coming but the buyer was still willing. Then 12 weeks into it the bank representative emailed Mike saying if the deal could be closed in Two weeks The short sale would be approved and lender would wave all deficiency rights. WOW, we were so excited.

The lender for the buyers was not prepared, Mike had warned him that he should get some of the ground work done. Maybe get the appraisal done and submit the package to the underwriter but for various reasons that was not done. That lack of preparedness on the buyers side caused unnecessary tension. Somehow, even though it came right down to the wire, everything worked out.

We will not be able to buy for a few years and we suffered a big financial loss. In the end we were rescued by a knowledgeable, skilled Real Estate agent with a very good company. The Bank, in the end, actually helped us by allowing us to move on with our lives. We still have our family and our health, we both can work, so that will be behind us and we can breath again. Thanks Mike.

First time home buyers, buying a foreclosure in the country. The Story of Jack and Jill (not really), a recently married couple, looking at homes with me in St Clair county, Michigan. Approved up to $50,000 for an FHA 3.5% down loan. This couple and their family can do some repairs but the home must pass the FHA guidelines. This is a familiar set up and there were a few homes to look at, I think we found 6 or 7 to view.

This is the home the young couple hoped for. Well, we found a foreclosed 3 bed room ranch with a three car detached garage,on a large fenced- asking price of $45,000. We decided to offer $43,000. The counter of $43,900 with the sell paying up to $900 toward the buyers closing costs was accepted. There was an inspection period.

The family choose an inspector from a Friends recommendation. I meet him out there along with Jack and his Dad. I had to leave them there, duty called elsewhere. I got a call "The well does not work, our inspector looked at it and it had been messed with then he went home." I needed more information, so I called another inspector. Who is A friend of mine and asked a favor- could he take time out of his day and go check that pump?

He found a wire off, fixed it, the pump now works. I called Jack, the families inspector was brought back. The house had no other big flaws Except, FHA requires no hazards deemed harmful to the family. Two windows needed repair, the small bathroom floor had a hole in it and there were a few exposed wires from missing light fixtures.

The house was acceptable but those repairs were needed The house was sold "AS IS". Jack's brother sneaked in through a window and fixed the issues. The seller's agent and I were told later.

Michigan's deer hunting season slowed Jack's response. Thanksgiving holiday slowed the completion of the appraisal. Underwriting slowed the loan agent with demands for assorted addendum's. We were three weeks past the original closing date when Jack and Jill finally sat down with me at a closing to sign the papers.

They got their first house. Soon, I am sure, to become a home they will be proud of. The path we followed had a few more twists but they overcame the problems and Won the prize. A Realtor can always be proud to help a young couple buy their first home, I am.

The country life we enjoy outside of Avoca, Michigan has morning chores I have chosen to do. We have horses that need to be feed and watered every morning in the winter months. There is also a small flock of chickens to be taken care of. Each of these animals reward us in there own way.
The chickens help make the compost for me by keeping the pile stirred and a supply fresh eggs to eat.

The horses are a joy to watch them interact and fun to ride. In the Summer time we always have a big garden.

The choices we make come with daily chores . As Realtors active with an online community we have chosen to keep in touch with our own group. There has been an acceptance of an obligation take place. I am committing to write often and with hopefully interesting content.

The list of "Chores" that a Realtor must do every day contains mostly phone work. Client contact and follow up is our business. The warm market is always preferred for us. The only way to keep the sales funnel full of warm leads to to continually reach out, seeking to touch as many potential clients as possible. This opportunity to put my thoughts out there in a post is really incredible. The extension of reach out into the community and the opportunity for me to learn the skill of writing are two things that I am very grateful for.

I hope to use this to attract readers in the Thumb of Michigan to the educational side of real estate. The beautiful country side of St. Clair County has been divided into small farm size parcels that are just the right size to raise a few animals on and grow a garden to supply fresh healthy food. We love our small farm and hope to help others to build the same thing, we know that moving to the country is more than just buying a house, it is a lifestyle. That is what some of this blog will be about, the small farm lifestyle. My Dad raised a country boy, I will have stories to share.



This is Wishing you all a Very Merry Christmas form a small country family living in the southern thumb of Michigan. May Santa bring you most of what you wish for and a Joyous New Year filled with the opportunity to earn the rest.

There are some great opportunities for buyers in today's real estate market. We have all heard about how one can get a great deal on a bank foreclosure. However, if you are willing and able to wait out a short sale purchase, that may be the best option.

What is a short sale? It is a sale where the seller owes more on the house that the market is willing to bear. Thus, if the seller has a valid hardship, his or her mortgage company maybe willing to accept a short payoff on the loan which would allow the home to be sold.

Why would the bank take a short payoff? Banks do not want houses back...it costs a ton of money to foreclose, maintain, repair and resell a foreclosed house. With a short sale, the bank saves tens of thousands of dollars on every potential foreclosure.

Why should a buyer consider a short sale? The biggest reason (other than a great price) is because the buyer will have a better chance of knowing the condition and history of the house. The buyer can often meet the seller and ask questions about the house, etc. The seller will ususally maintain the house untill closing as he or she has a vested interest in the sale go though. With a foreclosure, buyers are going in to the sale completely blind as to the history and condition of the house.

How does one buy a short sale? Buyers need to interview agents and make sure their agents have successfully closed short sale transactions. The process has a lot of steps and it is not handled properly the sale will not go through. Not every sale will go though even when an experienced agent is working the sale. It is best to work with an agent that can help set proper expectations and realistic time lines.

Banks are dealing on the short sale properties. The process is often lengthy and requires patience. But if a buyer can wait, he or she could get their dream home at a dream price!

If you want to bid on or sell your property as a short sale, email or call Marc Reno at mreno@bauerreno.com or 810-966-1200 or 810-650-2856.

Marc Reno, Associate Broker, CDPE