Mike West

FOLSOM, CA REO (BANK OWNED) SALES DATA FOR JUNE 2009

This is a continuation of my monthly report on Bank Owned home sales data for Folsom, CA. This report covers REO homes sold in June of 2009.

There were fourteen REO homes sold in June, exactly the same number that were sold in May. The average days-on-market dropped from 42 in May to 30 in June, so REO homes sold even more quickly. Of the REO homes sold, 57.2% were on the market for less than two weeks, confirming the fact that well priced homes sell quickly.

The fourteen homes sold represent only 24.6% of all homes sold in Folsom in June, down from 30.5% in April and 50.0% in March.

The cost per square foot in May decreased to $ 159, down from $ 175 in May. However, the average cost per square foot of all homes sold in Folsom June INCREASED to $ 185, up one dollar from the May. This is the first increase we have observed since we started tracking this data almost two years ago. Could we be at the bottom of the market in Folsom? There is less than a four month inventory, indicating a strong seller’s market! The difference between the cost per square foot of REO properties and the cost per square foot of all properties sold indicates that REO sales represented a 14% savings for REO buyers. A bigger savings than we have seen before.

The final overall sales price for REO homes was 99.7% of the final asking price, and 97.2% of the original asking price, proving once again that an expectation of buying a Bank Owned home for fifty cents on the dollar is a pipe dream. Unfortunately, some self-proclaimed experts may still be preaching about 50% savings to the uninformed and gullible. The actual, measurable savings is the difference in cost per square foot between REO homes sold and the cost per square foot of all homes sold: in June, $26 per square foot. That is a $ 65,000 savings on a 2500 square foot home, not a small sum.

Specific Data Follows:

Every once in a while it is good to take your nose away from the grindstone and relax. Photography is my avocation, and when I apply my photographic skills to things growing in my courtyard, I occasionally come up with something worthy of the effort. As a gardener I excel at growing weeds and causing perfectly healthy plants to die.

This weekend, in the 100 degree plus weather, our Lotus plant decided to bloom. The lotus plant is not indigenous to El Dorado Hills, CA. Perhaps for that very reason the Lotus blossom is the most ephemeral of flowers. Each year we don't know if the plant will blossom or not, and when it does it only blossoms once in the summer. The blossom lasts for no more than two or three days.

The two shots below were taken on Saturday and Sunday early morning. It is Monday and, sadly, the blossom is no more. Perhaps next year.

Taken about 8:00 AM Saturday morning.

The same blossom taken at about 8:00 AM Sunday Morning. The blossom is eight inches across.

Enjoy!

The Certified Distressed Property Institute has just released the National Mortgage Delinquency Numbers for the first quarter of 2009. These are statistics compiled by ethe Mortgage Broker's Association and reflect a significant increase in the number of homeowners in trouble with their mortgage.

The Certified Distressed Property Institute trains real estate agents to better help distressed homeowners avoid foreclosure. THeir web site is a wealth of informations on the subject and worth a visit. Check it out at:

http://www.CDPE.com There are over 500,000 licensed real estate agents in California. There are only a little over 8000 certified CDPE agents in the country. I recommend that distressed home owners consult a CDPE agent for assistance.

Distressed homeowners can find help in Sacramento, El Dorado and Placer counties by contacting Mike West, Realtor, CDPE, e-PRO & Sr. Loan Consultant. (916) 337-0658

CONSUMER ALERT!

California Department of Real Estate issues a fraud warning for Home Owners in Financial Distress!

FINALLY, the California Department of Real Estate has issued a fraud warning to financially distressed California home owners, warning about loan modification scams rampant in the market place today. Last July, the DRE had fewer than 10 complaints involving loan modification companies; today the department has 750 pending investigations. In addition, just since last October the DRE has filed more than 200 Desist and Refrain Orders!

Obviously, the hucksters and con artists have found easy pickings with their loan modification scams. Unfortunately, not enough of these people will end up in jail.

A list of the companies that the DRE has filed an action against can be viewed at http://www.dre.ca.gov/cons_drs.asp . If you have been considering using a loan modification company, or are presently involved with one, check the list to ensure that they are not included.

The DRE does mention that "not all firms who collect advance fees for loan modification services do so illegally." However, if you are considering employing the services of a company that does charge fees up front they warrant very close scrutiny. Real Estate brokers participating in this practice must have their advance fee agreement reviewed by the DRE legal staff prior to its use. Those not licensed by the DRE do not have to submit to this scrutiny.

The California Association of Realtors reports that there is a new loan modification scam by hucksters using legislative bill number 3648 to make them look like a government entity, complete with a seal closely resembling a government seal. They are not affiliated with the government.

A copy of the complete DRE consumer alert is available on request. Simply e-mail your request to Mike@SellYourVilla.com or call 916 337-0658.

LOAN MODIFICATION

Part II

This is a continuation of yesterday's post on Loan Modification.

The Market In recent years investors were clamoring for ever increasing returns on their investments. Financial markets developed more risky loan products to meet that demand, knowing full well that in order to increase the reward there had to be an increase in risk. These products allowed buyers to qualify for purchases that they could not otherwise afford and, they met the investor's need for a higher return in investment. Real estate related financing was riding high.

Home buyers were seduced into accepting loans that provided initially low monthly payments because those products allowed a buyer to purchase a larger and nicer home. Some even accepted negative amortization loans (a loan with an allowable minimum payment that did not cover the interest cost of servicing the outstanding balance. Each month the shortfall between the minimum acceptable monthly payment and the actual cost to cover the outstanding principal was added to that outstanding principal!). Many buyers found themselves an additional $ 10,000 in debt after having a neg-am loan for only six months!

Then the bubble burst. Values stopped appreciating and immediately went into free fall. Buyers disappeared and the exit strategy for many financially stretched homeowners evaporated. They could not just sell and walk away with a clean financial record as they originally planned. By the time they realized what had happened they were upside down on the largest investment most of us will ever make: our home.

Facing foreclosure is not a pleasant prospect. Foreclosure and bankruptcy are stigmas that remain on a borrower's credit report for seven years, making it difficult or even impossible to make any kind of a purchase on credit for those seven years. Merchants who will extend credit will exact excruciatingly high interest rates.

So, how can one remain in their home and avoid foreclosure?

Unfortunately, many distressed homeowners will not be able to do so. However, there are options that will work for many.

The first step is to attempt to get a loan modification.

How do I qualify for a loan modification? In order to start the process you must ask. Prior to contacting your lien holder you can quickly complete an eligibility test at http://www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP)

Find a list of mortgage lenders and servicers at http://www.HomeNow.org.

Once you have completed this test it is time to call your lien holder. Do Not Delay. Have the information listed in yesterday's post ready so that you are fully prepared to discuss your situation with them. Approach this call as a problem solving exercise, without emotion or placing blame. The old adage that you can catch more flies with honey than you can with vinegar applies in spades. Different lenders have different names for the department that you should talk to. Common names may be loss mitigation, mortgage modification or H.O.P.E.

Loan Modification Experts A word of caution at this point. In the last year or so we have seen a proliferation of loan modification experts entering the market place. Many collect fees up front: a RED FLAG. Unfortunately, the business is rife with hucksters and con-artists who prey on distressed homeowners. The doctrine of caveat emptor (let the buyer beware) applies. Check references before you open your wallet.

What is a Home Affordable Refinance? If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This program will allow qualified borrowers to refinance their home and often lower payments.

A borrower can find out if their mortgage applies by entering their property information in each of the following web sites.

How do I know if my loan is owned by Freddie Mac?

Website: ww3.freddiemac.com/corporate

How do I Know if my loan is owned by Fannie Mae?

Website: lookup.fanniemae.com/loanlookup

What are the qualifications for a Home Affordable Refinance? According to the resources provided by the government, the following is a list of qualifications:

The owner must occupy the property of a one - four unit property

The loan on the property is owned or securitized by Fannie Mae or Freddie Mac (see links above)

At the time you apply you are current on your mortgage payments (you have been more than 30 days late on your mortgage payments in the last 12 months, or you have had your loan for less than 12 months and you have never missed a payment)

You believe that the amount you owe on your first mortgage is about the same or less than the current market value of your home

You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

What if I don't qualify, can't afford my home, and owe more than it's worth? You are not alone and foreclosure is not your only option. Some loan servicers are under contract with the investors which prohibit loan modification.

Others may not be willing to work with you for reasons that they will not disclose.

In these instances, you may wish to consider a short sale. A short sale allows you to sell your home for less than you owe and avoid foreclosure. We have clients who completed a short sale two years ago and are presently out shopping for another home.

Agents with the Certified Distressed Property Expert Designation have undergone extensive training in how to process and negotiate short sales. Speak to your market expert to see if you may qualify.

Feel free to contact us. We are always prepared to answer questions and help wherever we can.

Mike West Certified Distressed Property Expert

(916) 337-0658