foreclosure

Buying a Foreclosure: 3 Things You Should Know

August 29, 2017 By Chris

While the real estate market in Florida is continuing to recover from the recession, there are still some foreclosed properties on the market. Historically the foreclosure rate in the entire state of Florida hovers right around five percent, which means there will always been foreclosed houses on the market. While buying a foreclosure can be a great way to get into a the real estate market at a lower price there are other points to consider.

As-Is

The most important thing Buyers should be aware of when buying a foreclosed property is that it is almost always an “as-is” property. Not all properties will be ramshackled or falling down but the average foreclosure house sits empty for at least a year before the mortgage company is able to take possession and list it for sale. While many municipalities have enacted laws that require mortgage companies to perform basic maintenance on a property, there is still the possibility that the interior or housing systems may have fallen into disrepair. While you may save money on the purchase price, it may be used to resolve any existing issue after closing.

Buying a Foreclosure: 3 Things You Should Know

Negotiations

It’s no secret that mortgage companies are motivated to sell their foreclosed home, also known as REOs (real estate owned). That doesn’t necessarily mean you’ll walk away the owner of a home for pennies on the dollar. In fact, most REOs sell for within 5% of the fair market value of a similar property. When considering your options for negotiations, you and your Realtor need to evaluate the absorption rate and sale price of similar properties. If the absorption rate, the rate at which a house sells, is high and the sale price is comparable you may want to come in with your first and best offer.

It Takes Time

In a traditional transaction, a Buyer will make an offer to the Seller and a deal will be struck or decline within 72 hours. That’s not always the case for foreclosed properties. Depending on the volume of properties the mortgage company is handling may determine how fast or slow an offer is reviewed and approved, denied, or countered. At the height of the foreclosure crisis it wasn’t unheard of to wait several weeks for a response to an offer. Now that volume is decreasing, response times average a few days to a week. That may not be the only hang up though. When the title insurance company begins to review the property’s title report, there may still be open claims, liens, and taxes. While most of these items should have been taken care of at the time of foreclosure, the title company will need to investigate each of them before allowing closing to proceed.

Purchasing a foreclosure doesn’t have to be a nightmare experience or one you should immediately discredit. If you’re aware of the market, do your due diligence, and have a bit of patience you can take that foreclosed house to home.

There’s a Zombie House In My Neighborhood What Do I Do?

October 4, 2016 By Chris

While many experts talk about the recovery the real estate market is experiencing there is still an obvious sign of what happened following the mortgage crisis of 2008. Zombie houses, or houses that are abandoned and not yet foreclosed, still litter some neighborhoods. As recent as early 2016, the Tampa Bay area holds the unfortunate distinction of having the fourth largest number of zombie houses in the country.

The plague of the zombie house can be far reaching into the neighborhood. Lack of proper and regular maintenance can lead to unsafe conditions and even affect other properties, especially those sharing a common wall or other boundary. Abandoned and unsecured houses can attract a host of unauthorized people to enter the property for their activities. Wild animals can also find shelter in abandoned properties in or in the unkempt yards. In addition to the unsafe and undesirable conditions of a zombie house, it can also greatly reduce the value of your well maintained property. If a house in your neighborhood begins to show signs of becoming a zombie, what can you do about it?

Source: Craigh Clouter via Flickr

Investigate

In our post about neighbors affecting the sale of your home, we suggested that you talk with a neighbor who’s home was showing signs of disrepair or neglect. Not all unkempt houses are zombie houses. Reaching out to a neighbor can tell you if the house is vacant or if the owner is elderly or otherwise unable to perform the needed maintenance. From there, you can get a better idea of how to proceed. If the property is vacant, reach out to your local building or code enforcement office who most likely responds to these types of situations. If it’s simply a neighbor in need of some assistance, roll up your sleeves and lend a hand.

Report

In Tampa and many other local communities, property owners are required to register a vacant home. The idea is that officials will know who to hold responsible when repairs are required. If the municipality is forced to make the repairs the bill will be collected against the owner. One of the defining characteristics of a zombie house though is the failure for the mortgage company to have completed a foreclosure in a timely manner and transfer ownership into their name. A recent ruling by the state’s Appeals Court found that liens placed on a home prior to completing a foreclosure are not divested at the Sheriff’s Sale. This puts more pressure on banks to keep houses in good order no matter what stage of repossession they may be. If you learn about a zombie house in your neighborhood, advise your local municipality who will monitor the property and address any code violations.

Watch

An abandoned home is attractive to a number of people, from squatters to copper thieves to kids just looking to explore. It’s best to keep an eye out for suspicious activity in or near a zombie house. If you do notice people who should not be in the house, contact the police…do not confront anyone you don’t know. By helping to keep the property secure, you help ensure that the mortgage company does not need to spend more time repairing it before listing it for sale and lengthen the life of a zombie house.

Your options may seem limited and realistically they are when it comes to a zombie house. Staying aware of the status of your neighborhood and keeping in touch with the proper authorities can make a difference in how long a zombie house affects your neighborhood.

Foreclosure Rescue Scams

September 13, 2016 By Chris

Despite recent improvements to the housing market, there are still homeowner’s facing the uncertainty of foreclosure. Whether teetering on the edge of delinquent payments or named as the defendant in a court filing, most of these homeowners are desperate to resolve their financial situations as quickly and as painlessly as possible. While there are legitimate programs available to assist homeowners in their endeavors to keep their home, there are many nefarious people and companies that are looking to take advantage of unsuspecting and eager people. What are some of the most common foreclosure rescue scams and how can you identify them?

“We’ll Do The Leg Work For You”

Each mortgage company has what is called a loss mitigation department. This department is in charge of taking and reviewing applications for programs such a loan modifications, repayment plans, and short sales. It can be a long and time consuming effort to apply and follow up for the status of your application. Many scams will guarantee that you will receive a faster and favorable results if you hire them to do the leg work for you. Once you sign their contract and pay their fees, you’re unlikely to hear from them again or get an excuse as to why the process is taking so long. When you contact the mortgage company to find out the status yourself, they most likely won’t have a record of ever receiving your initial application or any communication from the company who scammed you. There are numerous versions of this scam. Some claim to help you apply for HARP or HAMP both of which you can also apply for by yourself.

“Rent From Us”

The premise behind this scam is the owner in foreclosure deeds the house over to the scammer with the idea that the scammer will be able to qualify for a mortgage that the original homeowner can afford. The original homeowner then rents the house from the scammer with the goal of buying the house back within a set time frame. The scammer drafts an agreement with terms heavily in favor of the scammer and almost impossible for the original homeowner to ever fulfill. If the original homeowner is unable to fulfill their obligations under the agreement they are then evicted from the house and lose any equity they may have had in the home. Other times the scammer will simply default on the new mortgage made to “buy” the house and the original homeowner is evicted after the foreclosure on the second mortgage is completed.

“Let’s Find a Loop Hole”

Several years after the initial mortgage crisis, there was a lot of talk about predatory lending practices. There were several counter suits brought by homeowners being sued for foreclosure that argued the mortgage company took advantage of the borrower or lied to them outright. The Courts found in favor of several of these borrowers. With the idea that there were loop holes to be found to get out of foreclosure or even cancel the mortgage altogether, the audit scam was born. In this instance, the scammer asks for a fee to review all of your closing documents to determine if they can find conflicting information, even a missed signature that they will claim can be argued for predatory lending and stop the foreclosure, some even goes so far as to say they can have your mortgage cancelled. While it would seem that easy, it’s not. These types of legitimate claims need to have egregious evidence and take several years to work their way through the court system, which will cost thousands of dollars a homeowner doesn’t have without any guarantee that the Court will find in their favor.

“Just Sign This”

The scariest and arguably the easiest to pull off is what’s considered a “bait and switch” scam. The scammer will present themselves as someone who will help the homeowner resolve their foreclosure with the bank. All the homeowner needs to do is sign a few forms, usually with the intention to make a new mortgage that will pay the old one off. Buried within those forms, however, is a document that titles the property over to the scammer. Not only is the original homeowner still being sued for foreclosure but they also are now out of a home. This type of scam involves a high level of fraud and many complete their scam by making fraudulent mortgages against the property.

When it comes to identifying foreclosure rescue scams the best advice is: Trust your gut.

If it seems to easy, it probably is. Always read every document you are asked to sign and don’t sign it until you understand every item detailed in the document. Never stop paying your mortgage on the advice of anyone and never make your payments to a third party with the guarantee that the payments will be held in escrow or made on your behalf. If someone is promising you guaranteed results or the mortgage company will only speak with “licensed” parties, they’re lying. Most mortgage companies want to keep the borrowers in the house. A foreclosure suit and owning a home after a completed foreclosure is an expensive situation for the mortgage company. Their staff members are trained to guide borrowers through the loss mitigation process and don’t require that you be represented by an attorney or a third party. Finally, any fees charged by legitimate third party companies are collected at the end of the process. If a company is attempting to collect from you upfront, it should be a red flag to cease communication from them.

4 Tips for Buying a Foreclosed Property

April 21, 2015 By Chris

Since the financial crisis of 2008, foreclosures have become a staple of the real estate market. Bank owned properties have been advertised as a steal for home buyers and then can be there are things to consider when purchasing a foreclosed home.

Find out what you’re buying. Foreclosed homes are “as-is” properties. Banks are unable to give a disclosure on homes that are being sold to remedy a foreclosure so it’s imperative that you obtain a comprehensive property inspection and a mold inspection. Be aware that most banks have very little, if any, room to negotiate when it comes to repairs so know what you’re willing to accept and what you’re not. Investigate the area as well. If the neighborhood is flooded with foreclosed or vacant homes, values may continue to fall and hurt your long-term investment.
Put your best foot forward. Again when it comes to negotiating many banks are limited so it’s best to make your strongest offer immediately. Like most sellers, the bank will want to see a pre-approval letter from a mortgage company for any offer that needs to be financed. You should also be prepared to close as soon as possible with ready access closing funds and a clean credit history.
Time may not be on your side. Getting an offer approved on a bank owned home is a notoriously slow process. There is usually an asset manager at the bank responsible for all the properties in a certain area and they need to review and approve or deny all of the offers received. It can be weeks before the bank responds to the offer. Once the offer is approved though the bank will want to move fast to close the deal so they can end their liabilities on the property.
Don’t skimp. Bank owned properties can be rife with issues ranging from clouds on title to unseen physical damages. Purchasing title insurance and hiring certified, experienced inspectors will help protect you from unexpected issues that can arise.

If you’re considering purchasing a foreclosed property, working with a Realtor experienced in bank owned properties will make the process easier for all parties involved. Our team is ready to assist you contact us today at (727) 642-9107.

Facing Foreclosure: Your Options

January 6, 2015 By Chris

Despite state legislation aimed to assist with and reduce the number of foreclosures, Florida remains the leader in foreclosures across the country. Overall in the state, foreclosures are down 15% from 2013 to 2014 but that fact doesn’t offer any consolation to those who have received notice of default. There are many options for home owners when faced with the prospect of foreclosure but it can be overwhelming and confusing to sort through and decide which option or options may be best for the owner’s situation.

Reinstatement

Reinstatement may be a good option if the home owner fell behind on the mortgage due to an emergency situation. The mortgage company’s loss prevention department will be able to provide a reinstatement quote which will include interest, late fees, and attorney fees, if applicable. If the owner is unable to pay the amount in full, the lender may be able to draft a repayment plan over the course of a few months.

Loan Modification

Despite what the media would have you believe, loan modification programs are not always easy to qualify for. The lender is required to meet the guidelines set forth by the mortgage investor when qualifying owners for a loan modification. If a home owner qualifies for a modification, the terms of the mortgage are adjusted either temporarily or permanently and the arrearages will be rolled back into the loan. Many lenders require that the home owner make a series of trial payments before finalizing the modification, placing the account in current status, and ending any foreclosure action.

Bankruptcy

There’s a heavy stigma involved with bankruptcy but it’s not as lethal to a borrower’s credit history as many think. Filing bankruptcy immediately haults a foreclosure from proceeding but it does not dismiss it from the Court’s docket. There are two types of bankruptcy an individual can file: Chapter 7 and Chapter 13. Chapter 7 will liquidate all of the assets a borrower has and the proceeds will be distributed to creditors according to a plan developed by the court. Chapter 13 will settle the outstanding debts of a borrower but for a greatly reduced amount, again, according to a plan developed by the court. If a home owner files Chapter 7, they will turn over ownership of the home to the mortgage company either through a deed or foreclosure, while a Chapter 13 plan will most likely allow the borrower to retain the home and the mortgage after the arrearage is settled.

Deed in Lieu of Foreclosure

If the mortgage company is willing, a home owner who will be unable to catch up on their arrearages and stay current can tender a Deed-in-Lieu of Foreclosure to the mortgage company. With this option, the home owner deeds their full interest in the property to the mortgage company in exchange for the foreclosure action ceasing. Again the home owner needs to qualify with the mortgage company and the investor before being able to proceed with this option and each lender and investor has different criteria to be met.

Short Sale

With this option, the home owner will partner with a licensed Realtor to list the property and market it as a short sale. The home owner’s mortgage company may require that they have final approval on the listing price and other marketing techniques. It’s best to work with a Realtor experienced in short sale marketing and transactions. Once an offer has been submitted by a potential buyer, the Realtor and home owner will submit the offer to the mortgage company for final approval. Approval is normally required because the sales price will be less than what is owed on the mortgage. After approval has been received, the transaction will proceed as a fairly typical closing with any remaining proceeds being delivered to the mortgage company to settle the outstanding debt.

Foreclosure

Sometimes none of the remedies listed above will be applicable to or will fail to resolve a foreclosure situation. On average it takes a year for the foreclosure to be completed in the state of Florida although timelines are different for each case. Once a foreclosure is completed and the mortgage company is the titled owner of the property the previous owner will need to vacate the property and if they do not leave an eviction proceeding will be filed.

Obviously, some resolutions are better than other. Short sales, deeds-in-lieu of foreclosure, and foreclosure open home owners up to possible deficiency judgments and both bankruptcy and foreclosure will affect a person’s credit history. Foreclosure is a legal proceeding and if you are named as a defendant in a foreclosure action you should seek the advice of an attorney.

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