Burbank Real Estate Agent Ana Connell

The Burbank real estate landscape has changed and there are many terms out there today that buyers and sellers did not have to worry about a few years back.

If you have been thinking about purchasing a short sale property or a foreclosure property, here are some terms you should know:

ASSIGNMENT OF DEED OF TRUST: A document that transfers the lender’s (beneficiary’s) interest in a deed of trust.

BANKRUPTCY: A legal process that allows a debtor to discharge certain debts without paying the total amount due.

BENEFICIARY: The lender or person to who the obligation is owed.

BIDDING INSTRUCTIONS: An authorization form signed by the beneficiary authorizing the trustee to make the initial opening bid at a trustee’s sale and subsequent bids.

DECLARATION OF DEFAULT: A document signed by the beneficiary instructing the trustee to prepare the Notice of Default should the borrower not bring the loan current, to sell he property, encumbered by the loan, in order to satisfy the unpaid debt. This document is not recorded.

DEED OF TRUST: A written document describing the real property being given as security for an obligation.

EXTENSION AGREEMENT: An agreement that extends the due date of a note.

FORECLOSURE: Enforcing a lender’s rights upon the default of an obligation that is secured by a deed of trust. A deed of trust must contain a power of sale clause to enable he trustee to initiate a non-juridical foreclosure.

FULL RECONVEYANCE: A document prepared by the trustee or substituted trustee, when the obligation secured by the deed of trust is paid in full. When recorded, the econveyance takes the deed of trust off record.

NOTICE OF DEFAULT: A written document that is recorded, published, and posted giving notice of public record that a borrower has failed to perform his or her obligation under the erms of the promissory note. This document is recorded.

NOTICE OF TRUSTEE’S SALE: A document that is recorded, published, posted and mailed and sets forth the date, time and location of the trustee’s sale. POSTPONEMENT: A verbal announcement made at the time and location of a trustee’s sale, extending the sale to a future date.

PUBLICATION PHASE: The period of time beginning after the third month starting on the date that the Notice of Default records. This period ends with the trustee’s sale being conducted. The trustee sees that the document is recorded, published and mailed in accordance with the requirements of the civil code.

RESCISSION OF NOTICE OF DEFAULT: After the default has been brought current or by the request of the beneficiary, this document when signed by the lender and recorded by the trustee, will remove the Notice of Default from record.

REINSTATEMENT PERIOD: The time period between the time that the Notice of Default records and ends 5 business days before the trustee’s sale. The lender must allow reinstatement during this period of time. A lender may elect to allow reinstatement after the 5-day period ends, but before the trustee’s sale.

SOLDIERS’ AND SAILORS’ RELIEF ACT OF 1940: An act passed by Congress for the financial protection of those individuals serving in the military service.

SUBSTITUTION OF TRUSTEE: A document signed by the lender and recorded by the trustee whereby the beneficiary appoints a successor trustee to the trustee of record.

TRUSTEE: The party who holds title to real property in trust for the benefit of another. The trustee’s most common functions are to process a full (when a loan is paid off) or partial (when a portion of the property is being release) reconveyance and to process a non-judicial foreclosure and process a trustee’s sale.

TRUSTOR: The borrower/owner at the time the deed of trust is created.

TRUSTEE’S DEED UPON SALE: A document signed and recorded by the trustee that transfers ownership of the real property to the purchaser at a trustee’s sale.

TRUSTEE’S SALE: A public auction sale of a property described in a Notice of Trustee’s Sale, which property was Information gathered from public sources and deemed reliable but not guaranteed.

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The Obama administration has given us some new details on its $275 billion plan to help stem the tide of foreclosures nationwide.

It’s offering many incentives to investors, lenders etc. to entice them into modifying distressed mortgages to keep Americans in their homes. The steep fall in home prices is the main reason we’ve had a global financial meltdown, so the administration’s housing plan is vital to ending the deepening economic recession.

The plan is called the “Making Home Affordable Program”, which the administration thinks can help up to 9 million homeowners. There are two primary goals of this plan:

· First, it offers $200 billion to provide refinancing for homeowners who owe more than their homes are worth-also referred to as being “underwater” on their mortgages. To qualify, these homeowners-5 million of them by administration estimates-must have their mortgages in the hands of Fannie Mae or Freddie Mac, the mortgage finance giants that the government seized last September.

This plan will help, but it won’t reach lots of homeowners in places like California and Florida where homes are now worth substantially less than their mortgages.

Because most mortgages are bundled into securities and sold into a secondary market, it’s not easy for homeowners to find out whether Fannie or Freddie owns their loans or whether they’ve been pooled with other loans and sold by an investment bank to other investors.

· The other part of Obama’s plan attacks the problem of affordability. The administration provides another $75 billion in incentives to help prevent foreclosures in cases in which the homeowners, up to 4 million of them, are about to lose their homes. The money comes from the $700 billion bailout fund approved last October.

This part of the plan is extremely complex as it offers many financial incentives to mortgage servicers, who are essentially bill collectors for private investors who own pools of U.S. mortgages. Some incentives stay with the servicers while others flow through to investors.

In exchange for the incentives, a servicer would modify a mortgage so that no more than 38% of a homeowner’s monthly after-tax income was taken by the monthly mortgage payment. The government then would step in and share the cost of reworking that mortgage so that no more than 31% of the borrower’s monthly income was tied up in the payment.

· Any lender that takes new taxpayer bailout money under the administration’s Financial Stability Plan will be required to participate.

· The Obama plan got a strong endorsement Wednesday from the Financial Services Roundtable, which represents many of the largest mortgage lenders. This first step will go far in adopting consistent guidelines for everyone. But, officials confirmed that there’s no standard procedure for lenders under the Fannie and Freddie portion of the plan. It will be up to each lender to determine whether the refinances go through them or whether mortgage brokers and other intermediaries can help homeowners seek refinanced loans under the program.

· Officials were also careful to note that mortgage servicers won’t be able to modify mortgages if the terms of their contracts with the investors who own the pools of mortgages don’t allow it. There is no reliable data on how many of these investors are on the other ends of contracts that prohibit mortgage modifications.

That question is important, since many of the weakest loans underwritten during the height of the housing boom, from 2004 to 2006, were sold by now-defunct investment banks to investors abroad, many in Europe.

So who qualifies?

· Your mortgage must predate the start of 2009, you must live in the home and you’ll have to provide proof of income.

· First, are you already behind on payments or even in the foreclosure process? If the answer is no, then ask yourself whether your current mortgage rate is high enough to make it worth your while to refinance to take advantage of today’s low rates for 15-year and 30-year fixed-rate mortgages.

· You must find out who owns your loan. Most mortgages are bundled together and sold into a secondary market, where investors technically own them. If Fannie Mae or Freddie Mac placed your loan into the secondary market, you can contact the company that sends your monthly mortgage statement to discuss the new program. If your mortgage is in the portion of the secondary market where the private sector issued the mortgage-backed securities, you don’t qualify.

· To qualify under the refinance portion of the Obama plan, you can owe up to 5% more than your home is now worth. Thus, many homeowners in California, Florida, Arizona and Nevada, where home prices have plunged, won’t qualify.

There are many more details to this plan, this was just a bare bones explanation!

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* Find Out If You Qualify For Mortgage Assistance [Foreclosure Prevention] (consumerist.com)

* Clark Howard Simplifies "Making Home Affordable" Plan (hsh.com) * Obama housing rescue could help millions (dailyfinance.com)

* Looking for a Mortgage? Check Out the F.H.A.'s Rules (nytimes.com)

I get alot of questions from home buyers asking me if we are at the real estate bottom here in Burbank and the San Fernando Valley and the honest answer is, I don't know. But I will tell you that looking at the unemployment numbers that came out today, I would guess the answer is probably, no. But keep in mind that we won't know where the bottom actually was until things start to improve.

Unemployment hit at 25 year high for February coming in at 8.1% and to make matters worse the numbers from December were revised.....for a total loss of 681,000. The December revision makes that the worse figure in 59 years. If you look at the numbers more closely you'll find that the average wage has been trending up slightly indicating that more lower paying jobs were cut. But the cuts have been widespread canvasing a wide range of industries.

The other statistic that we should all be looking at is the number of delinquent mortgages.

More homeowners are struggling to pay their mortgages, according to the latest study. More than a tenth of households were behind on payments, 7.9% of the loans are overdue and 3.3% are in the foreclosure process.

We'll have to see how effective the new stimulus package is as far as helping homeowners avoid foreclosure, but even with that help be prepared to see short sales and foreclosures for some time to come. On the glass is half full front I will say that there are some great deals out there!

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