California Foreclosure Report

The most recent foreclosure report published by ForeclosureRadar has some good news and some bad news.

  • Notices of Default – the first step in the foreclosure process – increased 26% and reached a record peak in March 2009 with 54,268 filings (previous peak was April 2008)
  • Notices of Trustee sale – which set the auction date and time – increased from February by 82.3% to 33,178 filings
  • Sales at auction decreased 41.4%.  While there is a lag between the foreclosure filings and the sales, this will catch-up eventually.

Your status as a buyer or a seller will determine whether or not this is good news or bad news.  The perfect storm of low mortgage interest rates and low real estate prices make this a great time to buy, but that can be a little tricky if you need to sell your property before you can buy another one.

List of foreclosures in California

Are you looking for foreclosures in California?  We have the access.  Send a message to info@mangledmortgage.com with “foreclosures” in the subject line.

Where can I buy a copy of Mangled Mortgage?

Right now, the only place to buy it is right here. Email info@mangledmortgage.com and you’ll get a reply with easy payment options.  Books start shipping the week of March 9th.

Someday, you may be able to find it on the big online shops.  Until then, this is the Mangled Mortgage shop.

Mangled Mortgage is a book about foreclosures, short sales, and loan modifications written by someone who lives and breathes mortgage challenges every day.  Jon Sterling works in real estate sales Southern California, where he moved specifically because of the housing crisis.  Working in some of the most challenging markets in the United States, Jon’s team provides a wealth of experience and perspective for today’s real estate market.

Foreclosure Coaching for Agents and Brokers – How to build a big REO business from someone who knows

One of my coaching clients made over $1.1 million in commissions in 2008 by focusing her attention on selling foreclosures.

Oh yeah…she won’t turn 30 for a few more years.

Whether your new to the business or well-versed in foreclosures already, the coaching program will make you better.  It costs less than the major competition and provides superior results.  No long-term contracts, no gimmicks, no inexperienced coaches.

If you’d like to learn how to sign-up for Jon’s REO coaching program, send a message to  info@mangledmortgage.com.

Check back for Technology Coaching…coming soon!

Foreclosure lists

Foreclosure List Update:

Most of the lists of foreclosure information are available for free from your county office where you’re searching.  There are many title insurance companies that can provide the information in an electronic format for their customers as well.  You will usually have to be a customer in order to get access through the title companies.

Update for agents and brokers:

Some of the asset management departments and asset management companies are no longer allowing their asset managers to assign listings.  Countrywide has had this policy for a long time already.  The reason behind it is the potential for an asset manager and a less-than-honest agent to be in cahoots for stripping a house of valuable items.  When the asset management company has a neutral employee assigning listings, it helps limit their risk.

For specific questions about foreclosures, foreclosures lists for your area, or industry news and trends, send a message to Jon Sterling at info@mangledmortgage.com

The house strippers. Real estate’s latest nightmare.

No, not those kinds of strippers.

There are people in our area who are taking a bad housing situation and making it worse.  I call them the house strippers.

These guys and gals target homeowners who are losing their homes through the foreclosure process.  They approach the defaulting homeowners and make an offer:

“Before you get evicted, give us a call and we’ll get your keys from you.  We’ll pay you $1000 (sometimes much more…depends on the house) for the keys and you walk away.”

Once the homeowners leave the house, the strippers take everything of value out of the house.  I mean everything. Appliances, copper piping, light bulbs, doors, you name it.  Everything goes.

For whatever reason, the homeowners are often angry with the lender for evicting them when they stop making their mortgage payments.

This is especially nasty because it makes it harder for the lenders and their investors to recoup their money when they reclaim a house.  Many of these houses are going to have to be torn down.  Does it make financial sense to invest $150,000 bringing a house back to marketable condition, when the after-repair market value is $205,000?

For information on the other scams that are making the housing headaches worse, check out Jon Sterling‘s new book Mangled Mortgage.

First-Time Home Buyer Tax Credit

The first-time home buyer tax credit will help us burn through some of the short sale and foreclosure inventory on the market.  The tax credit has been through several iterations.  Here are the broad strokes:

-The tax credit does not have to be repaid.

-The tax credit is only for first-time buyers.

-The tax credit is 10% of the purchase price, with a maximum of $8,000.

-So far, this only applies to property purchased in 2009.

-To qualify, single people can’t make more than $75,000 and couples can’t make more than $150,000.

For a list of frequently asked questions on the tax credit details, visit the tax credit FAQ page.

Foreclosure Moratorium

The country’s largest banks have put a moratorium on new foreclosures…for the next few weeks.

Wow.  A few weeks.  That should stop the flood for sure.

Wells Fargo, Chase, Bank of America (including Countrywide Home Loans), and Citigroup are all waiting to see what the Obama administration will do before they move forward with any more foreclosure filings.

Much like the loan modification efforts, industry professionals and economists believe this is just delaying the inevitable flood of foreclosures.  The programs unveiled so far as a result of the stimulus package are too complex, too little, and too late.

Foreclosures


Foreclosure is the process by which a lender reclaims property when a borrower defaults on a loan.

The foreclosure laws change from state to state and this is the basic process:

  • The borrower defaults on mortgage payments.
  • The borrower gets phone calls and letters from the lender demanding payment.
  • If the payments are not made, a notice of default is filed with the county which usually allows for a specified period of time for the borrower to make the payments current.
  • If the borrower fails to make the payments current during the redemption period, a notice of sale is posted on the physical property and filed with the county.
  • A sale is held where the property is auctioned to the highest bidder at the time and place designated in the notice of sale.
  • At the auction, one of two things happens.  The property is either sold to the highest bidder, or nobody bids on it and the property goes back to the lender.
  • When the property belongs to the lender, it is called real estate owned or REO.

*It is usually possible to stop the foreclosure process at any time by becoming current with all past due mortgage payments.

Some consumers are headed for foreclosure, regardless of efforts to avoid it.  In most cases, industry professionals do not even know a homeowner is headed for trouble until it is too late.  Foreclosure is considered a last resort by lenders.

For more information on the forclosure process or to purchase a copy of Mangled Mortgage, email info@mangledmortgage.com.

Loan Modifications

Some experts, including the smartest people I know, believe the loan modification efforts are delaying the inevitable flood of foreclosures.  Without a major change in strategy on the part of the lenders, it is just a matter of time before the newly modified borrowers become delinquent with their payments.  Recent reports of the first major round of loan modifications are supporting this theory, since over half are delinquent.

Even if the loan terms are modified to be reasonable given the borrower’s current income, it still does not solve the negative equity problem.

The current relief structure provides free money for those who cannot or will not stay current with their mortgage payments.  The unintended consequence of the handouts is an incentive for borrowers to stop making payments.  This is a dangerous road to travel, and my fear is it will not be recognized as a big problem until it is too late.

Given the current loan modification policies, is there really an incentive to stay current with one’s mortgage?

It can be argued that the benefits of being a few payments delinquent far outweigh the benefits of staying current.  Yes, you read that correctly.

People who honor their commitments might feel a little bit of indigestion from that last statement, and I understand.  Look at the long term benefit of intentionally missing a few mortgage payments.  It could allow you to have your mortgage interest rate reduced or your loan balance reduced, or both.  The short term consequence of dings on your credit report might be worth it to some people.  The penalty for your misbehavior is simply not significant.

If I was considering walking away from my house or defaulting on my payments, I would certainly say I should do it as soon as I can.  That way, I can start the clock ticking on my “repaired credit” status so I can buy another house at today’s prices and today’s interest rates.

It may sound a little goofy, but you can see how this would make sense to the less-than-honorable borrowers in the world.  I meet people like this in my market every week.

I am not advocating this as a strategy.

I do not think this is even close to a good idea, but it is not difficult to see the logic.  As long as there are incentives to become delinquent with mortgage payments, this scenario has the potential to fester and grow.

To purchase a copy of Mangled Mortgage, send a message to info@mangledmortgage.com.