In 2009, 63,283 homes received a foreclosure notice in North Carolina

Through November 2010, 63,589 homeowners received a foreclosure notice.  

North and South Carolina are the Top 10 Foreclosure Hot Spots in the United States

You Hold The Keys to Reversing This Trend

Learn How You Can Help Stop This Epidemic!

What CE Class Didn't Tell You About Short Sales

Presented by Attorney Jaime Kosofsky and Realtor Jonathan Osman

You will learn:

• Foreclosure stats you need to know
• Options for homeowners facing foreclosure
• Implications for homeowners
• How to Write your Short Sale Contract to Protect Buyer & Seller
• Questions to ask Short Sale Listing Agents
• Behind the Scenes of a Short Sale file
• The Unauthorized Practice of Law
• Dumb Stuff Agents Do
• How to Pre-qualify your Buyer for a Short Sale
• How to Treat Multiple Offers & Backup Contracts

Special Guests Gwen Oberg and Leah Gamble from Wells Fargo Home Mortgage to provide insights as to Wells Fargo's Short Sale Process, Tips to Improve Your Files, and so much more!

Seating is limited so register today.  

After registration, share this event with your colleagues using the Facebook Like, Tweet, and Email buttons on top!

If you have an FHA loan and are possibly facing foreclosure, there's help for you in the form of the FHA Pre-Foreclosure Sale Program. Introduced in 1994, this program is one of the best short sale programs available in my opinion. For more information, you can read the entire program guidelines in HUD Mortgagee Letter 2008-43 however this post has the highlights in plain english.

If you are facing foreclosure, first contact your lender directly by way of the number in your statement. Do Not Follow any third-party solicitation that advises you to contact them and then requests a fee as that is illegal in North Carolina...but it doesn't stop people from trying.

How to you know if you have an FHA loan? Ask your lender or check your closing documents.

The FHA Pre-Foreclosure Sale Program allows homeowners with a hardship to sell their home when the fair market value exceeds the current amount owed on the mortgage. As a homeowner, you must be in default (delinquent more than 30 days) on your mortgage AT THE TIME OF CLOSING however it is the lenders discretion to accept applications from owners that are current but facing imminent default.

Additionally:

• Default must be as a result of adverse or unavoidable financial situation
• Borrower must have only one FHA-insured loan
• Are owner occupants (i.e. primary residence) unless it can be demonstrated that the reason to vacate was related to the cause of default (i.e. left for work in another state, divorce, death and the property in question was not purchased with the intent as a rental or used as a rental for more than the past 18 months.

Once you have fallen behind on your payments, you will receive a pamphlet (How to Avoid Foreclosure HUD-PA-426) which has information on this program. Remember, you don't have to fall behind to get into the program.

When the borrower applies for the program, the lender will need to analyze the borrower's ability to pay which includes examining their monthly income and expenses. HUD considers all monthly reoccurring expenses so do not forget to include utilities, food, outstanding obligations such as student loans, credit cards, etc.

Who Sets the Value?

The property value is set by an FHA appraisal. The appraiser will need to complete a full interior inspection for the appraisal and the the value set is for an AS-IS sale. Distressed sales (foreclosed homes and short sales) may not be considered by the appraiser unless they represent the only comparables within a reasonable proximity of the subject property. The homeowner and their real estate agent may request a copy of that appraisal. The appraisal is good for six months however a new appraisal may be ordered to ensure the most current Fair Market Value.

Property Condition

The home must be kept in marketable condition. That means no excessive damage, no removal of fixtures that should be in place, or additional neglect. The must remain maintained as normal however sold in as-is condition. That means, the lawn must remain trim, minor repairs must be completed, etc.

Approval to Participate

When you receive your approval to participate, you will need to hire a real estate agent within 7 days. The broker cannot be anyone that shares a conflict of interest otherwise they will not receive a commission. Your agreement must contain the phrase: "Seller may cancel this Agreement prior to the ending date of the listing period without advance notice to the Broker, and without payment of a commission or any other consideration if the property is conveyed to the mortgage insurer or the mortgage holder. The sale completion is subject to approval by the mortgagee."

The buyer of the property cannot be a relative or someone you have an arms-length relationship with.

HUD will allow your lender to pay your real estate agent a commission of up to 6%, real estate taxes to the date of closing, typical and reasonable seller real estate fees and will pay you up to $1000 at closing for a successful transaction.

HUD will also allow up to 1% in seller paid closing costs for your buyer provided they are obtaining an FHA mortgage in the purchase. If more is requested, the lender can request a variance from HUD and it will need to be approved.

You will be given four months to complete the sale of the home and during that period, all foreclosure proceedings will cease. An extension can be granted for 2 additional months under certain circumstances.

The Sale
If you are able to sell your home within the first 3 months of your Approval to Participate, you will receive $1,000 at closing as a relocation incentive and most importantly, relieved of any mortgage obligation. If the sale occurs in the last month or later, the amount drops to $750. This relocation incentive is only available if there are not any additional junior liens (2nd mortgage, past due HOA, past due IRS, past due property tax, etc) that must be paid by the lender in order to close.

Participation in the short sale program will be reported on your credit report as a "short sale" and a 1099 will be issued for the forgiven balance. If the home was a primary residence, borrowers can find relief in the Mortgage Forgiveness and Debt Relief Act of 2007.

During the first 30 days the home is listed, lenders will only accept contracts that have a net proceed above 88% of the appraised Fair Market Value (FMV). During the next 30 days, that figure drops to 86%. For the balance of the program, the lender will only accept contracts above 84% of the FMV. That figure includes commissions, taxes, etc.

If you are are unsuccessful in selling your home in the time allotted to you, you should request a Deed-in-Lieu of Foreclosure. So long as you complied with good faith in selling your property and were not kicked out of the program, HUD and your lender will not hold a deficiency against you.

Charlotte NC Short Sale

The Mecklenburg County Tax Assessor's office is set to release it's reassessed real estate tax value for every home in Mecklenburg County starting this month. Tax values were last set in 2003 in Mecklenburg and were delayed several times by the county commissioners "due to the economy." Now, with the county in financial crisis, there's no time like the present to raise your taxes.

A Mass Appraisal was performed to update the value of your home. The assessor is unable to examine every sale in your neighborhood, rather a value is set based on a few sales of an entire area. Recent sales in the area will be considered as well as any permitted improvements. It is unlikely that someone from the assessor's office actually visited your home. Rather, they analyzed the sales date and assign based on the information at their disposal. Foreclosures are also not taken into account because they are not considered "arms length" for some reason.

So what should you do when you get your new tax value in the mail?

1. When you stop either laughing or crying, research to determine what homes in your neighborhood have recently sold for. Start by using our free Market Snapshot tool, which gives up-to-date sales data around every address in the Charlotte area straight from the Multiple Listing Service.

Alternatively, you can request a market analysis of your home from a Realtor, which would provide you with sales of similar properties. If sales around your home are below your tax value, complete the form attached to your revaluation notice and include your report as evidence.

2. If your request is denied or they request more information, you may want to consider hiring a licensed Appraiser to complete an appraisal on your property. This will cost $300 - $500 but may be worth the money considering your potential tax savings.

3. If your request is denied at the Real Estate Division of the Tax Assessors office, your next step is to file an appeal to the Board of Equalization. All appeals must be made by May 15th or within 30 days of your notice.

4. If your appeal to the Board of Equalization was declined yet you feel very strongly that the value was too high, your next steps involve hiring an attorney and appealing to the North Carolina Tax Commission and the North Carolina Court of Appeals.

There are tax deferment and relief programs available to Home Builders with unsold inventory, low-income elderly, disabled veterans, and disabled citizens.

What You Might Expect

A brick ranch in Charlotte (28226), built in 1966, on .70 acres, and 2,993 square feet has a tax value today of $223,400 based on the 2003 assessment. Their 2010 tax bill was $2,958. Similar homes in the area have sold as high as $400,000 over the last few years. Today, however, the revaluation tax value could be $350,000.

• 2011 Tax Value of $350,000
• 2011 Combined Charlotte / Mecklenburg tax rate of 1.2973
• 2011 Property Tax: $4540.55 or $161.88 more per month

In 2008, Union county completed property tax revaluations and the result today is that the majority of properties are selling for less than the tax value.

On January 1, 2011, a new Offer to Purchase and Contract debuts and will be the basis for nearly all residential resale purchases in the state of North Carolina. It is vastly different from it predecessor, which was written to benefit the buyer rather than the seller. Here are the highlights:

1. The Due Diligence Period

For the last few years in North Carolina, the statewide contract had always given buyers the ability to back out of the contract and keep their Earnest Money Deposit (money deposited at the time of contract, credited to the buyer at closing, that could be liquidated to the seller in the event the buyer breached the contract) so long as they did so before a series of separate dates. They were:

• Inability for loan approval
• Appraisal
• Home inspection / Negotiation / Cost of Repair Contingency
• Mortgage Application
• Closing Date
• Receipt of Property Disclosure...and so on.

Savvy buyer agents could structure the old contract in such a way as to always enable their client retain their earnest money. This has now been consolidated into one date called the Due Diligence Period. This is a hard date (noted by Time is of the Essence...meaning that it is a firm date). During the Due Diligence Period, the buyer must:

• Complete all inspections and negotiate repairs with seller
• Review all Homeowner Association and Condo Documents
• Investigate and agree to the cost to insure the property
• Order the appraisal and find it the results satisfactory
• Order a survey to assess if any fences, sheds, etc are over the property boundaries
• Investigate any special assessments that may be pending for the property (i.e. city to install sidewalks and charging the homeowner for the work)
• If the home is in a flood hazard
• Zoning and Governmental Regulation (i.e. buyer discovers that the school assignment for the upcoming year is no longer desired).

The buyer's inability to get a loan is no longer apart of the equation as well as many of the other provisions of the old Offer to Purchase and Contract. During the Due Diligence period, the buyer may elect to walk away for any reason or no reason and the seller MUST forfeit the Earnest Money Deposit. If the buyer backs out after this period, the Earnest Money is liquidated to the Seller.

The typical closing in North Carolina currently takes 4 weeks and much of that time deals with the buyer staggering how they investigate a property and the financing. For example, a buyer may obtain a mortgage pre-approval letter but not apply for the loan and pay for the appraisal until after the home inspection has been completed. Under this new setup, everything will need to be investigated altogether of the buyer might risk losing their Earnest Money.

2. Due Diligence Fee

For Sellers, this means taking the home off the market for a few weeks while the Buyer completes the Due Diligence Period. For the privilege, the Buyer will pay the Seller a non-refundable (except in the case of material breach) "Due Diligence Fee" that will be credited to the Buyer at closing. The amount of the fee is completely negotiable but expectations will be the seller wants $1000 and the buyer will only offer $10. Earnest Money is still apart of this contract as well.

The remainder of the contract is fairly straight forward with another variance from the current Offer to Purchase is that closing can be delayed for up to 14 days without agreement while currently, the figure is 30+.

If you are a prospective home buyer, you might be thinking that purchasing a home has just got a lot more complicated but not so. More expensive for you...no, but there is more required earlier in the transaction.

Tips For Home Buyers in 2011

Here are a few tips that will help you when using the new contract and your purchase:

1. Investigate up front what has been completed by the Seller.

When I sold real estate in Maryland, I learned quickly that gathering as much information up front was the best way to ensure that the property was headed for a smooth closing. Even today, I follow the same tactics which involves gather HOA docs from the seller, any surveys they have on file, completed disclosures ahead of time, etc. As a buyer, a property where the seller has taken these steps in advance should be a HUGE green flag that there's nothing to hide and that they want to sell their home more than they want your Due Diligence Fee. Consider holding off from making an offer until the disclosures are completed and submitted for your approval. If the seller is unable to supply some items, consider holding off until either you, your agent, or their agent has gathered the required information.

Some sellers may even complete a home inspection up front and complete the recommended repairs.

2. Don't just get a pre-qualification letter, get a Conditional Loan Commitment.

Even to this day, I get pre-qualification letters from lenders that do not state what program the buyer was qualified for, how much they are qualified for, if credit, employment, accounts have been verified and they are WORTHLESS. As a buyer, it is essential to meet with a lender before ever making an offer on a home to determine exactly how much you can afford, exactly how much they charge, and the time they will need to complete the appraisal and loan review. On the phone with someone you've never met while driving back to the agent's office to make an offer is NOT the right time. Ideally, you want the lender to issue stating that aside from a contract, completed appraisal, and final underwriting, this buyer is approval.

3. Bank-Owned sales will Nullify the New Contract.

If you have purchased a bank-owned home in the past, you will know that the addendum that follows will completely overwrite any contract that you have on a local level. The same is true here. Actually, the new contract is exactly like a bank owned sale, minus the as-is clauses, as the bank requires that everything is completed within 3-10 days of Contract.

I am certain that the next few months will be interesting as we all adjust to the new contract in North Carolina. The good news is that now that you've read this post, you're prepared to use the new contract to your advantage.

Charlotte NC Homes For Sale

Taken from my Charlotte Short Sale, Foreclosure, and Loan Modification Blog

When facing foreclosure, the number one issue that homeowners fail to consider is the possibility of a deficiency judgment. Deficiency Judgments allow your former lender to sue you for the balance of what was owed at the time of the foreclosure, what it eventually sold for, plus legal expenses, penalties, etc. If a home in the Arboretum area with a primary mortgage of $500,000 nets the lender after foreclosure $350,000, the amount of deficiency would be $150,000.

However, for homeowners facing foreclosure in North Carolina, some homeowners can walk away or otherwise foreclosed upon without recourse from their lender. Granted, their credit is wrecked and buying another home is out of the question for about 7 years but they would escape the possibility of deficiency thanks to North Carolina General Assembly Statute § 45‑21.38A. Deficiency judgments abolished where mortgage secured by primary residence.

I am not an attorney so before you consider walking away, I would advise that you meet with one to see if you are eligible to apply (some do).

Here's the statute:

(a) As used in this section, the term "nontraditional mortgage loan" means a loan in which all of the following apply:

(1) The borrower is a natural person.

(2) The debt is incurred by the borrower primarily for personal, family, or household purposes.

(3) The principal amount of the loan does not exceed the conforming loan size for a single family dwelling as established from time to time by Fannie Mae.

(4) The loan is secured by: (i) a security interest in a manufactured home, as defined in G.S. 143‑145, in the State that is or will be occupied by the borrower as the borrower's principal dwelling; (ii) a mortgage or deed of trust on real property in the State upon which there is located an existing structure designed principally for occupancy of from one to four families that is or will be occupied by the borrower as the borrower's principal dwelling; or (iii) a mortgage or deed of trust on real property in the State upon which there is to be constructed using the loan proceeds a structure or structures designed principally for occupancy of from one to four families that, when completed, will be occupied by the borrower as the borrower's principal dwelling.

(5) The terms of the loan: (i) permit the borrower as a matter of right to defer payment of principal or interest; and (ii) allow or provide for the negative amortization of the loan balance.

(b) Except as provided in subdivision (6) of subsection (c) of this section, this section applies only to the following loans:

(1) A loan originated on or after January 1, 2005, that was at the time the loan was originated a rate spread home loan as defined in G.S. 24‑1.1F.

(2) A loan secured by the borrower's principal dwelling, which loan was modified after January 1, 2005, and became at the time of such modification and as a consequence of such modification a rate spread home loan.

(3) A loan that was a nontraditional mortgage loan at the time the loan was originated.

(4) A loan secured by the borrower's principal dwelling, which loan was modified and became at the time of such modification and as a consequence of such modification a nontraditional mortgage loan.

(c) This section does not apply to any of the following:

(1) A home equity line of credit as defined in G.S. 45‑81(a).

(2) A construction loan as defined in G.S. 24‑10(c).

(3) A reverse mortgage as defined in G.S. 53‑257 that complies with the provisions of Article 21 of Chapter 53 of the General Statutes.

(4) A bridge loan with a term of 12 months or less, such as a loan to purchase a new dwelling where the borrower plans to sell his or her current dwelling within 12 months.

(5) A loan made by a natural person who makes no more than one loan in a 12‑month period and is not in the business of lending.

(6) A loan secured by a subordinate lien on the borrower's principal dwelling, unless the loan was made contemporaneously with a rate spread home loan or a nontraditional mortgage loan that is subject to the provisions of this section.

(d) In addition to any statutory or common law prohibition against deficiency judgments, the following shall apply to the foreclosure of mortgages and deeds of trust that secure loans subject to this section:

(1) For mortgages and deeds of trust recorded before January 1, 2010, the holder of the obligation secured by the foreclosed mortgage or deed of trust shall not be entitled to any deficiency judgment against the borrower for any balance owing on such obligation if: (i) the real property encumbered by the lien of the mortgage or deed of trust being foreclosed was sold by a mortgagee or trustee under a power of sale contained in the mortgage or deed of trust; and (ii) the real property sold was, at the time the foreclosure proceeding was commenced, occupied by the borrower as the borrower's principal dwelling.

(2) For mortgages and deeds of trust recorded on or after January 1, 2010, the holder of the obligation secured by the foreclosed mortgage or deed of trust shall not be entitled to any deficiency judgment against the borrower for any balance owing on such obligation if: (i) the real property encumbered by the lien of the mortgage or deed of trust being foreclosed was sold as a consequence of a judicial proceeding or by a mortgagee or trustee under a power of sale contained in the mortgage or deed of trust; and (ii) the real property sold was, at the time the judicial or foreclosure proceeding was commenced, occupied by the borrower as the borrower's principal dwelling.

(e) The court may, in its discretion, award to the borrower the reasonable attorneys' fees actually incurred by the borrower in the defense of an action for deficiency if: (i) the borrower prevails in an action brought by the holder of the obligation secured by the foreclosed mortgage or deed of trust to recover a deficiency judgment following the foreclosure of a loan to which this section applies; and (ii) the court rules that the holder of the obligation secured by the foreclosed mortgage or deed of trust is not entitled to a deficiency judgment under the provisions of this section. The amount of attorneys' fees to be awarded shall be determined without regard to the provisions of the loan documents, the provisions of G.S. 6‑21.2, or any statutory presumption as to the amount of such attorneys' fees. (2009‑441, s. 1.)

The statute is very specific on who may receive mortgage deficiency forgiveness so that's why an attorney is so important. If it is your primary residence, the loan was originated after 2005, it is still your mortgage since 2005, and it isn't a line of credit, you could be covered. This does not cover the tax implications that may be forgiven by the Mortgage Forgiveness and Debt Relief Act of 2007.

Charlotte NC Short Sale