Minnesota Fixer Upper

One of the worst things about any crisis is the way shysters manage to take advantage of people in trouble.  With smooth sales pitches law firms are lining up willing to take even more money from people already suffering under the burden of mortgages they cannot pay.  This last week 2 of these schemes ended up in my e-mail in-box. These scams are not new. They are just new versions of old schemes.  Time magazine ran an article back in 2008 about walk away scams.But these things have been around for much longer.  Beware  if you hear terms like ‘Strategic Foreclosure’ and Walk Away Plan.

The first scam is courtesy of a law firm supposedly out of Seattle Washington. They first asked me about a short sale listing I have on the MLS.  Next they invited me to become an “affiliate”. I listened to their online spiel and it didn’t take long for the red flags to start popping out. They claim to offer a unique foreclosure prevention solution.  Their solution is not unique and it does not prevent foreclosure.

They simply ask you to assign your house to their company.   You sign a contract and walk away leaving this shyster law firm to take care of your contractual obligation to your lender.  There is nothing unique about assignment.  Scam artists have been doing this for decades.   Assignment does not get rid of your obligation to your lender!   Mortgage contracts do not allow for assignment.  Once you assign a mortgage, you are immediately in violation of the due on sale clause contained in every mortgage contract. Assigning your home to anyone is a sure way to insure maximum credit pain.  The most likely outcome is bank will ignore the assignment and foreclose.  If you are lucky the firm will do a short sale and flip leaving with only a hefty deficiency judgment.  This outfit is so brazen the even use a .org address usually reserved for non-profit organizations.  They call themselves walkawaytoday.org.

The next scam to hit my in box was in the form of an online walk away calculator sent to me by a friend.  This scam has taken advantage of the new catch phrase ‘strategic default.’  Besides the handy dandy calculator they have a page dedicated to educating you about scams.   They put together a good list of things to watch out from scan artists.

One warning I found ironic was, “*It is likely a foreclosure scam if you are being asked to pay money up front to negotiate a loan modification on your behalf if the company is not a law firm or a DRE approved Real Estate Broker.”  Then they proceed to convince you to send them $995 for a ‘The Personalized Plan’

Please!  Please!  Never pay upfront fees!

I read through the list of promises in the “Personalized Plan.”   For the most part the promises list is made up of simple things you should be able to do on your own.  The more difficult items can be done for you for FREE by experience and certified counselors at non-profit organizations.

Another of their scam warnings says, “***It is likely a foreclosure scam if someone says they can cancel your mortgage all together and stop foreclosure due to an error in your loan documents. “  But then they advertize another service called Foreclosure ok.  The advertisement states, “We may be able to help you get the financing you need to buy a new home, even 1 day after foreclosure.”  Are they kidding? This is a blatant credit repair scam.

Here’s the scary part. On their website you find logos of over 2 dozen news organizations that supposedly ‘feature’ You Walk Away.    The “Time” article specifically featured them as a rip off, because a non-profit center could do the same work for free.   They also fail to mention that the State of California has filed a class action law suit against them.   I couldn’t find anyone who actually endorsed their program.  But they do manage to get their strategic default message into the news.

What are the proper steps to take if you are in trouble with your mortgage?

First, stay in touch with your lender.

Next, find a certified counselor at a nonprofit organization.  In Minnesota contact the Minnesota Home Ownership center.

Click on the link or call 651-659-9336 or toll free 866-462-6466.

After working with a counselor, if you are still faced with losing your home a short sale will allow you to repair your credit in the shortest period of time.   Contact a Realtor with an experienced short sale team.  A team that includes an attorney for legal advice with no upfront fees is a big plus.

Your last alternative should be a cash for keys walk away.  The government actually has a new program pressuring lenders with an incentive to do a deed in lieu of foreclosure.  The program is called HAFA.   You don’t need a lawyer for this!!

Questions on Short Sales

If you have questions take action.   Call me or use the form below and someone will contact you.

The Minnesota Real Estate Team has several experienced short sale agents and we have an attorney to help navigate the legal complexities of short sale negotiation.   We charge no upfront fees. All attorney and Realtor fees are paid at closing from the proceeds of the sale.

Technorati Tags: Avoid Foreclosure, Defaults, Foreclosures, HAFA, Short Sales

Never pay Upfront Fees!

It seems that whenever there is a crisis affecting  people, there is always an army of scum bags ready to step  in and make the situation worse.  If you or anyone you know is having trouble paying a mortgage there is FREE help available from good reputable sources.  In Minnesota we have an organization called the Minnesota Home ownership Center.   These people provide free mortgage counseling from certified home counselors.  They also act as a sort of central clearing house statewide and can help people find mortgage  counselors anywhere in Minnesota.

The Home Ownership Center Toll Free number is 1-866-462-6466.

Know your Rights!

I also ran across a national legal  organization dedicated to preventing loan scams. Its  simply called Prevent Loan Scams.   The website: PreventLoanScams.org

The Prevent Loan Scam website contains  lots of information regarding home owner rights in each state.  Did you know Minnesota already has several statutes aimed at helping distressed home owners?  For reference here are a few of those statutes:

1.)  Minnesota Law Prohibits Advance Fees for Loan Modification Services (Minnesota Statute 325N.01-.09)

2.) Protection of Homeowners Against Equity Stripping by Foreclosure Purchasers (Minnesota Statute 325N.10-.18)

3.) Credit Services Organization Act (Minnesota Statute 332.52-332.60).

This site has a wealth of information just on Minnesota. Including:

• Help for distressed homeowners
• Scam reporting
• A list of alleged Minnesota scammers
• Important state laws
• References to Law enforcement
• And a summary of Our Minnesota Crisis

We at the Minnesota Real estate Team are dedicated to preventing foreclosure one home owner at a time.  We encourage people to seek  free professional help.  We are here to help.  If you must sell your home we have experienced specialists to help.  We don’t charge upfront fees.  We have an upcoming seminar for distressed home owners.  Thursday, March 4 from 6:30 to 8pm at Cornerstone Mortgage-435 Gateway Blvd, Burnsville, MN, Denae Frampton and Trent Johnson will host Short Sale Solutions. You can sign up for this seminar on this site.

If you would like a personal one on one explanation of how the short sale process works just call or email.

I’ve also set up a special site where you can read and download information on short sales.

Technorati Tags: Avoid Foreclosure, Defaults, Foreclosures, Short Sales

Over the last few weeks I’ve run across a few articles what the future holds for the large number of homeowners in default or about to go into default and facing foreclosure.   Many experts expect to see a big increase in successful short sales.  While I’m not a national expert, I am a full time Realtor trained in working with distressed property owners.  As such I keep a close eye on the direction of the distressed market is going .  I try and analyze what’s working for distressed homeowners and what’s not working.  From my point of view it does look like 2010 will be the  Year of the Short Sale.

2009 might be called the year of the foreclosure.  It might also be called the year of the failed mortgage modification.   Foreclosure activity hit highs in the summer of 2009.  In my blogs on Shadow inventory you can see the trend. Foreclosure activity peaked in July and the trend has been downward.  Unfortunately foreclosure sales are not keeping pace with number of defaults.

Also during 2009 the Obama administration introduced the “Making Home Affordable” campaign.   This program was all about keeping people in their homes through refinancing or loan modification.   As part of the Making Home Affordable program many banks signed on for the  Home Affordable Modification Program (HAMP).  HAMP gives lenders incentives for modifying loans for trouble home owners.   The aim of HAMP is laudable, but the results have been disappointing.    Some say the program is poorly designed, others blame the lenders, but another fact is undeniable. Many homeowners in distress cannot afford to stay in their home even if the loan payments are lowered significantly.  Eventually, these homes will be sold.

After several months of poor progress of the HAMP program, the administration announced a new directive to HAMP participants as part of the Making Home Affordable program.  This new directive is called Home Affordable Foreclosure Alternatives ( HAFA).   HAFA gives incentives to banks for Short Sale and Deed in Lieu of foreclosure.  The directive goes into effect April 5, 2010.  Lenders can choose to participate before April 5.   In most cases Short sales and Deed In lieu are much more cost effective than foreclosure for lenders.  In basic terms; Short sales and Deed in lieu make more sense than foreclosure! Unfortunately, short sales too often end up in frustration and foreclosure.   Many Realtors acting as buyer agents will discourage buyers from making offers on short sales for this reason.

So what’s different in 2010?

Besides the HAFA directive, there are  other factors that point to an increase in short sales in 2010.

• Major mortgage servicers like Wells Fargo  have been ramping up the number of people working with distressed home owners. In a December 10, 2009 press release Wells announced, “The company has worked to improve responsiveness to its customers and improve its overall operating process through efforts such as increasing home retention staff by more than 7,600 people in 2009 – for a total of 15,000 U.S.-based staff – to manage the increased home preservation volume.”     Even Bank of America, which has a terrible reputation regarding short sales has promised to streamline its short sale process.
• Realtors across the country are becoming better trained to help home owners.  The Certified Distressed Property Expert (CDPE) Institute recently announced that 19,000 people have completed their training course and are now CDPE members.  The National Association of Realtors (NAR) has also begun a certification program called Short Sale and Foreclosure (SFR) Certification.
• Political pressure is ramping up big time!  Everyone is aware of the anger over the housing collapse.  With congressional elections coming later this year, there is pressure to show results. With so many loan modifications failing the  alternative with the least pain for homeowners, lenders and the housing market would seem to be a big increase of short sales.

What should a homeowner in trouble do?

First of all take  action! Learn your options.

• Avoid foreclosure scams-never pay up front fees!
• Check out the Making home Affordable website: http://makinghomeaffordable.gov/
• Find a free local housing counselor through The Minnesota Home Ownership Center
• Attend a free Seminar put on by a top notch CDPE short sale expert.  Our team is sponsoring two of these events check them out on this site.                          How to Avoid Foreclosure Seminars
• Down load helpful information from my short sale site.

The  Minnesota Real Estate Team is dedicated to solving the Foreclosure crisis one homeowner at a time.

Technorati Tags: Avoid Foreclosure, Foreclosures, HAFA, HAMP, Home affordability, Making Home AFfordable, Short Sale Seminar, Short Sales

The January foreclosure numbers reflect a drop from the spike we saw in December.  Overall the trend is still down from the peak seen in July of 2009.  So far we see stabilizing prices and less foreclosure activity.  Foreclosure activity also includes Preforeclosure and defaults. So where’s the “Shadow?”  So far it appears to be more hype than reality.

Technorati Tags: Defaults, Foreclosures, Shadow Inventory

How ironic.

The 2400 member Mortgage Bankers Association recently sold it’s building for $41.3 milion to a company called CoStar.   This handsome 10 story building is located at 1331 L Street in Washington, D. C.    It’s prime location is just a 5 block walk over to the  White House. Costar will occupy 80% of the building after the MBA moves out.

No big deal until you look at what the MBA owes- $79 million to  a group of banks including PNC for the building they bought in 2007.   That’s nearly a $38 million dollar shortfall.   This bears emphasis-the Mortgage Bankers Association bought this building less than 3 years ago.   Now it can’t afford the payments so it did a short sale and must move out.   This is certainly an embarrassment for the MBA.   Especially president and CEO John Courson who has been critical of homeowners who walk away from from mortgages that are underwater.  He said people should worry about what their children would think.

It’s also must be an embarrassment for the financial who’s who on the MBA board of directors.  You would think experts from J P Morgan, Wells Fargo, and Key Corp should have known better.  But of course the board has members from the likes of Citigroup, Fannie Mae and Freddie Mac too.  Institutions who have punished the taxpayer with incompetence.

So is the Mortgage Banker Association also a Deadbeat Tenant?

If all this isn’t bad enough, the MBA is still in litigation with it’s former landlord Tishman Speyer Properties over $1 million in termination fees over space it rented previous to owning this property.  The MBA says it plans to pay the penalty but, “Timing” is an issue.  Timing?  The MBA moved over 2 years ago!

So what’s next for the MBA?  The MBA says it will remain at the L street building until June when it says it will rent other space.

So if you’re a DC landlord do you rent to the MBA deadbeats who failed to pay Tishman Speyer after 3 years?

So far this seems to be a non event for large media outlets like AP and Reuters.  However, a real estate new outlet (Real Estate Channel) ,  the Street.com, and a few other services have picked up this story.

Technorati Tags: Dead Beat Tenant, Short Sales

Home affordability has never been better.  This is especially true with the discounted prices on foreclosures and short sales. Down payment assistance, rehab loan money, and historically low interest rates make this a great time to buy a new home.  But how do you turn a run down foreclosure or short sale  house into your dream home?

Mary Alice Short of the Minnesota Real Estate Team and Elizabeth Vaughan of Cornerstone Mortgage have the answers.  Mary Alice knows short sales and Foreclosures inside and out.   She can tell you how to get your offer accepted.  Elizabeth knows all the programs available to help you fund the rehab and purchase of these distressed houses.  You will be able to ask questions and be well on your way to a game plan that will put you in the home you want.

While this is primarily aimed at First-Time home buyers,  even move up buyers will find lots of useful information.

Saturday, February 13th, 9-10:30AM; 436 Gateway Blvd, Burnsville, MN 55337.

Sign up here:

Technorati Tags: Bank owned, First Time Home buyer seminar, Foreclosures, Free Real Estate Seminar, Short Sale Seminar, Short Sales

Some of our talented Minnesota Real Estate Team members who also happen to be Certified Distressed Property Experts (CDPE) will be hosting two upcoming seminars.  One  in the northern suburb of Coon Rapids, and the other, south of the river in Burnsville.

1.) Thursday, February 18th from 6:30 to 8 pm at the Coon Rapids City Center-11155 Robinson Drive, Rob Reinke will host Short Sales: how to avoid Foreclosure.

2.) Thursday, March 4 from 6:30 to 8pm at Cornerstone Mortgage-435 Gateway Blvd, Burnsville, MN, Denae Frampton and Trent Johnson will host Short Sale Solutions.

If you or someone you know is struggling with a mortgage come and learn your options. Learn about the short sale process and how professional negotiating can save you from foreclosure. Our CDPE’s have extensive training and can go over all of your options.   Bring your questions, because these experts will take all the time  you need to help you choose your best alternative.   We are dedicated to helping solve this crises one homeowner at a time.

I have also set up a special informational site where you can download free reports regarding short sales and some of the myths and misconceptions.   This site is on my property information website FyiBob.com under the Short Sales explained tab.

For more information or to save a spot at one of the seminars use the contact form below.

Technorati Tags: Avoid Foreclosure, Short Sale Seminar, Short Sales

Fixer Upper Mortgages

One of the big challenges of buying a home these days is how to buy one of the many distressed houses that need fix-up.   The traditional ways to do this is to either save your cash and fix up with your own funds or take out a construction/rehab loan and later replace this loan with a traditional fixed rate mortgage (see ‘Doing the Two Step‘).  Both of these methods are beyond the means of most home buyer’s.  In an earlier post I talked about one program offered only on Fannie Mae owned properties called HomePath.  Today I want to talk about another program for financing real estate, the FHA 203K,  which a can be used on almost any distressed house.  This program is not available to investors.  But this program can be a great way to create the home of your dreams from what first looks like a run down mess.  The Minnesota Real Estaete Team will sponsor a seminar  Fixin’ to Stay? Use a 203k - Tuesday, March 2nd, 6:30-8PM in Burnsville.

There are two versions of the FHA 203K.  Both loans involve only one mortgage which finances both the purchase and rehab with one mortgage and one closing.

1.) The Streamline FHA 203K is meant for projects under $25,000 which are not too complex in nature.  This is perfect for those neglected homes that need paint, flooring, and non-structural repairs.

2.) The full version or just FHA 203k, can take on just about any rehab project up to tearing down the house and reusing the foundation.

These are great loans in today’s market, because there is so much fixer upper  inventory available today.  The FHA 203K also allows even first time home buyers to customize a home to fit their dreams.

So What’s the catch?

Actually there are a lot of “catches.”   First of all you need to find a lender willing to underwrite an FHA 203K  because not all lenders have the experience and capacity to help a home buyer with a 203K.  It also helps if you have a Realtor who can team with the lender to help you coordinate the complications of a 203K purchase.  Purchasing a house with a 203K requires a step buy step process that will involve a team of professionals to be involved.  The entire team needs to understand the process and paperwork.   There is also an order that should be followed to insure the best outcome.  Understanding, the loan process, the construction process and all the paperwork involved requires teamwork and preparation.   To borrow another sports cliche´ you first  need a game plan and you need a team to carry out that plan. Here are the key players needed besides your lender and Realtor: contractors, inspector, consultant (not needed for Streamline 203K),and appraiser.

FHA 203K Rehab Game Plan

As you might suspect that someone (me)  who writes a blog about Fixer Uppers might be able to help you put together that game plan and find great players for your team.    I’ve put together an online Businesses I Refer list online on my website FYIBob.com.  I have the names and contact numbers of people who would be a great additions to any FHA 203K team.   I can also provide you with great search tools for finding just the right fixer upper to rehab into your dream home.   I can set you up with MLS search functions for your phone for when you are driving around a neighborhood you like,  and an online home search engine you can use on your computer.

If you would like to sit down and discuss your own plans my contact numbers are on the sidebar of this blog.  Or you can use the contact form at the bottom of this post.   The Minnesota Real Estate Team will also be sponsoring a seminar to help you become more familiar with the FHA 203K rehab process. As I mentioned above;  on Tuesday March 2 from 6:30-8 pm Cornerstone Mortgage and the Minnesota Real Estate Team will sponsor “Fixin’ to Stay? Use a 203k!”

Use the contact form to reserve a spot at the seminar, request more information, or set up a one on one consultation.

Technorati Tags: FHA loan, Fixer Upper Inventory, real estate finance

We are so lucky to have so many talented people on the Minnesota Real Estate Team!

Our team has put together 5 new seminars!!!!

New Short sale Seminars

Some of our talented distressed property experts will be introducing two new Short Sale and Foreclosure seminars.  We hope these group sessions help people realize they are not alone facing this financial crisis. Distressed homeowners can find out ALL their options and ask questions of the experts.   If you can’t make it to one of these seminars we would be happy to help you with one on one counseling at a time and place convenient for you.  If you can’t make your mortgage payment you do have options.  We are committed to helping avoid foreclosure one homeowner at a time.

If you want to learn more about Short Sales and foreclosures I have a special site dedicated to helping people learn more about the short sale process.    Check it out

Two new seminars for First Time home buyers

The first of these seminars is not really new.  It’s a new northern metro location and a Saturday for those in the nothern burbs.   Thursday February 25th, 6:30 -8:00 pm Shoreveiw Community center, 4580 Victoria St N 3203

Next we have a new twist on the First Time Home buyer theme.  In addition to First Time Home buyer information, Mary Alice Short will help people understand how to make offers on Short Sales and Foreclosure and get those offers accepted.  Mary Alice is an expert in Distressed property listing and sales.  This will be a Saturday morning seminar. Saturday February 13th, 9-10:30am,  Cornerstone Mortgage building, 436 Gateway Blvd, Burnsville, MN.

A great new seminar for people who buy those Bank Owned and Short Sale Fixer Uppers.

Fixin’ to stay?  Use a 203k!

This seminar will focus mostly on the 203k  rehab loan program.  However, much of the information would apply to other rehab programs like HomePath. This seminar will be Tuesday, March 2nd, 6:30-8:00 pm., Cornerstone Mortgage building, 436 Gateway Blvd, Burnsville, MN.

For more information call 952-240-5949 or use the contact form below:

Nationally December foreclosure activity saw spike up from November numbers.  In December there was a 42,000 unit rise. to 349,519 new foreclosures nationally.   This is still below July and August numbers. However, this does break the 5 month trend of lower foreclosure rates.  Could this be the beginning of the so called bank owned “Shadow Inventory” coming to market?   Possibly, but that still may not affect our local market.

National Foreclosure Trend 2009

Here in Minnesota we see a slightly different trend.  As in the national graph we see a peak in July 2009.  Following this we see a 4 month down trend with a November spike.   Both Nationally and here in Minnesota the numbers continue to be extremely high.    But so far we are not seeing the huge spike predicted by conspiracy theory pundits who are saying a shadow inventory of bank owned properties will flood the market. Stay tuned for Part 3.

Minnesota Foreclosure Trend 2009

Technorati Tags: Bank owned, Foreclosure Trends, Foreclosures, Shadow Inventory