Winterizations - Inconvenience or Necessary Evil?

Because our lovely state is at or below freezing temperatures for such a large portion of the year, banks and sellers with vacant homes will hire a plumber to winterize the property in an effort to preserve the plumbing during the cold temperatures.  Winterizing a property will include, but is not limited to; turning the main water valve off inside the home, blowing out all water pipes to clear them of any remaining water, pouring anti-freeze (or comparable solution) down all drains and toilets, disconnecting the water meter, draining the water heater, draining the boiler and last but not least, blowing out the sprinkler system lines when there is one in place.  Buyers will encounter more and more properties in this condition now through mid-Spring even.  

This can easily pose a delay in the inspection and/or appraisal process for both the buyer and seller.  The effects of the winterization almost always outweigh the hassle of getting the home prepped for these steps.  One of the best ways to keep the process moving smoothly through the specified time frames is to ensure the winterization/de-winterization is discussed in the purchase contract.  Be sure to let the listing agent know as soon as possible what day and time you'd like to inspect the home, giving at least two days notice or longer when possible.  Often times the seller and/or bank will hire a separate company take care of all preservation work and orders like this must be called in to the preservation company before a vendor can perform the work.  If there is a sprinkler system on the property, do check to ensure that part of the home was winterized at the same time as the rest of the plumbing.  If it was winterized properly, check with your inspector and appraiser on whether it's necessary to de-winterize the system in order for them to do their jobs properly.  

Once both the inspection and appraisal have been completed, the seller will more than likely require that the home be re-winterized after wards.  Again, this may seem like another 'hassle' to deal with once you've closed and are ready to move in or begin repairs.  However, the flip side to not having the property winterized after inspection can very easily lead to plumbing damages in the future and in turn make the home more costly to the buyer and seller in the long run. 

Let me know if you have questions on winterized homes and how best to proceed, feel free to drop me a line or give me a call.

Ready, Set, Close! Part 2

Many emotions surround closing day.  To ensure some of the anxious and stressful feelings are kept to a minimum, here are some things a seller will have on their list to ensure the last few weeks before the big day go over smoothly. 

Packing and cleaning the home are obvious items on a sellers checklist.  They will also need to close out the utilities with each of the city and area service providers as well as telephone, cable and internet.  A change of address form will need to be submitted to the post office.  It's best to turn it in about a week before closing so there's no delay in receiving your mail at your new address. 

The title company hired to complete the transaction will set up the payoff of a seller's mortgage(s).  The title company will also close out the escrow account where the insurance and property taxes may have been set aside each month.  Recording the paperwork signed is one of the most important jobs the title closer has.  If you sell your home as a short sale, make sure to read over the approval letter(s) ahead of time with your lawyer to ensure accuracy.  Checking in with these processes is a good way for a seller to help ease their mind on the progress of closing.    

Closing day will include a moment to hand keys over to the buyer and a good time to inform them of any special features of the property.  Bring your license and any questions you might have before the closing is finalized.  Leave any/all paperwork and pamphlets for the appliances, mechanicals, etc. at the property so the buyer can read through at their leisure.  This will shrink the list of things needed to bring to closing significantly.  Keep copies of your closing documents in a safe, dry place in the event they're needed for future reference. 

If you have any questions on closing or other real estate topics, please give me a call or send me an email.

Ready, set, Close!

Closing day can be an exciting, yet anxious day for both buyers and sellers.  Besides all the packing and moving, there are many things that need to be handled in order for the process to go smoothly at the closing table.  

Let's start by taking a look at what a buyer needs to do in order to be prepared to close the transaction properly. 

How you as a buyer will pay for the home at closing plays a big role in what is needed for completing this transaction.  For example, if you pay for the home by securing a mortgage lien on the property you will have some lender paperwork to sign at closing as well as provide financial paperwork ahead of time to a loan officer representing the lender.  This pre-paperwork includes, but is not limited to, pay stubs, bank statements, previous years taxes and even letters explaining certain situations of your financial history.  The lender more than likely requires that little to none of your financial history can change in between the time that they approve the financing and when you sign the closing documents.  This would mean waiting to order new furniture, buying a new car, etc. until after the closing has occurred.  If you are paying for the home with cash, then you will need to bring the cash in the form of certified funds to the title closer.  

Say you are moving from an apartment to the house, then you will need to finalize all utilities that are being serviced to that apartment for the day that you plan to move out.  You will have to give your landlord notice of vacating per the terms of your lease.  A buyer will also need to start utility service in your name as of the date of closing.  If you've sold or are selling your previous home you will also need to finalize the utilities servicing that property according to the city and utility company requirements (i.e. final water, gas or electric meter readings).

For the closing, a buyer will need to bring a valid form of government identification (driver's license, passport, etc.), a cashier's check for the amount of money that will be out of your pocket as part of the loan requirements, 10 years of address history, an insurance binder for the required hazard insurance determined by your lender, proof of sale on your previous residence (if selling that home and moving to the new home) and of course any other paperwork your lender would require to see at closing.  

Walking through a list will help you remember to do all that is necessary to close out one residence and open up another.  Most buyers tend to give themselves some time in between moving from one living situation to the new home so that they can paint, clean or replace carpet or other flooring, do repairs or clean the home.  The amount of time you should allow yourself to complete the things you want to do before moving in will depend on the amount of work you want to put  into the property ahead of time.  In my experience, buyers tend to be less stressed if they don't plan closing one day and moving that day or even the next day.  You will feel less anxious and stressed when you all for transition time.  If you have any questions about what is needed to close from a buyer's perspective, do not hesitate to contact me. 

Properties with Mold - To buy or not to buy?

I recently showed a property that had water damage in the basement with evidence of mold beginnings. I've noticed that most buyers tend to shy away from these properties; however the clients that I accompanied were open to the idea of purchasing this home despite this typically negative feature. These particular clients were not as leery as a 'typical buyer' out shopping for homes when it comes to mold. This visit with said clients has compelled me to write a little 'tid bit' on mold in an effort to help people understand how much work could or could not be needed to remediate.

The State of Minnesota's Seller's Disclosure form dedicates an entire page to discussing evidence of mold spores and water presence throughout the home. While the visible mold is certainly cause for concern, most of the time it can be treated and with minimal disruption to the area infected. Remediation to the infected areas can usually mean cutting out the affected sheetrock in order to get into the walls and correcting what could be the cause of this moisture intrusion at such a rapid pace. Mold is inevitable in every home, most of the time you may not be able to see it!  Finding the cause of the moisture issue is what ends up taking the most time and effort to assess. It's entirely possible that you may not even correct the issue the first time you 'repair' the affected area.  Mold very often originates in basements and most of the time it is caused by the landscaping (or lack thereof) surrounding the exterior of the home. Other causes can be poor construction of the homes walls, leaking windows or a lack of airflow through a bathroom that does not have a fan to keep the moisture from condensing on the walls.


There are indeed homes that are so greatly affected by mold where it is best to redo the entire walls, rooms and even demolishing the home completely. When mold is left untreated for any length of time, it continues to grow and fester throughout the level that it originated in and once there's no more room to grow it quickly moves up/down the different levels of a home. This is why it's always best to get to the bottom of the mold origination sooner rather than later. Mold is one repair that a homeowner cannot procrastinate on fixing.


So, before you make any harsh judgments on a home that has mold, bring a mold remediation contractor out to look at the affected areas and give you a professional bid on what it would take to remove and correct the cause for the moisture leakage.


Please contact me for a referral of a mold contractor if you're having trouble with your current home or are interested in purchasing a home that has evidence of moisture issues.

Realtors - Which ones know what they're talking about?

I was recently at a networking event where a veteran realtor gave a short, ten minute talk on the market to come and included some tips on selling a property in our current market. This particular realtor stated she had 25+ years of experience before jumping into her speech. I will gladly admit the realtor had some great tips for sellers and was surprisingly blunt when talking about seller’s expectations and the difficulties they are having with adjusting their frame of mind on the value of their home.

On the flip side, I was rather disappointed that this realtor was so eager to report that 2011 would be the start of the market's turning point for the better. It is very difficult for economists to predict the economy ahead and am surprised this agent was so quick to claim 2011 would be the year the housing market will begin turning for the better. I find myself curious as to what sources this realtor researched to come to this conclusion and most importantly, which of the top 5 REO Realtors did she interview? (An REO Realtor is one who markets and sells bank owned properties.) Citing your sources or quoting specific professionals for a 10 minute speech is not truly necessary for such an event. However, I found myself asking many questions while she was speaking. I instantly wondered if the majority of buyers or sellers have the background knowledge to tell that this agent’s statements were in fact accurate or if she was just misinformed? Was she merely projecting her personal optimism that most of us keep secret in our minds? How would the ‘average Joe’ know if her interpretation of the market was skewed due to her lack of research?

 As an agent that works side by side with an REO Realtor, I've learned so much more than I would have had I started real estate solo in the 'traditional' real estate office. Not only have I learned firsthand how to approach a bank with an offer, but I’ve also seen what happens ‘behind the scenes’ in order to get a home ready for marketing. During my time spent working with this REO agent, I've seen the rise and fall of property assignments over the years sync up with the federally required foreclosure moratoriums and initiatives set up to try and keep homeowners in their homes.

Working closely with an REO Realtor has also given me insight on what is to come to our particular market, as well as around the US, and the potential issues that could and most likely will harm the real estate upswing. I've personally seen their inventories begin to rise in the last few months and find myself questioning this 'veteran' realtor's statement that 2011 is the year the market will begin it's slow, yet steady upswing.

I bring this to your attention for one reason and one reason only. In this day and age where information is readily available at your fingertips at any time of the day, it's imperative that you cross reference the information you've learned with multiple sources before making speeches or significant statements like this to any sized group of people. We all must do our own due diligent research on the information we read, see or hear before repeating it others at the time that we’re claiming our expertise in a particular subject area.

If you have any questions about this particular topic or any others I've not discussed, feel free to give me a call or send me a note!

HAMP Trial Program Disappoints

A recent article in DS News reports that the government’s HAMP foreclosure prevention initiative stated that 616,839 HAMP trials were cancelled out of the 1,307,489 trials that were started when the program began.

This is definitely disappointing news considering the big push over the last year to keep homeowners in their homes in lieu of the foreclosure process. The article goes on to discuss some of the reasons for the cancellation of the trial programs and the different numbers in each group of reasons. The article can take you to the report that goes into great depth on the details of the program and what it has accomplished thus far. Some of the main reasons for falling out of a HAMP trial modification program can include insufficient documentation, trial plan payment default and borrowers who are ineligible as their income to debt ratio is well above the 31% guideline.


While there is no doubt that this is disappointing news, however the flip side of this is that short sales are becoming easier to process with the lenders. They are taking less time to review the offers, less time to obtain investor approval of the offers and in turn less time to approve the short sale offers.

Do not forget about my Foreclosure Prevention Seminar being held on August 31, 2010 at the Maplewood Community Center at 7:00pm. This is a great opportunity for one to come and learn about the different options available to homeowners that are currently struggling with their payments and want to plan ahead.

Homeowner Foreclosure Prevention Seminar

Click below for details on my upcoming seminar.

August 31, 2010

Maplewood Community Center

2100 White Bear Ave

7:00 - 8:00 pm

Please RSVP Liz Novotny @ 651-203-1769 or liznovotny.com

Can't wait to see you there!

Online Help for Homeowners - Fannie Mae's New Website

Have you ever started on a web search, trying to find information on a particular subject, only to find that you have to read through multiple sites just to get one answer?  Ask.com has certainly helped in this arena, but it doesn't quite solve the problem that Fannie Mae's website has figured out for homeowners that are struggling with their mortgage. 
This new website goes into great detail about the different options available to a mortgagor based on your current financial situation.  There is a woman that comes on to the page and immediately starts talking about the site, how to move through the different tabs, and some simple tips on what to do first.  The site also has links to general forms a mortgage servicer may require when submitting information for a loan modification, pursuing a short sale, etc.  After spending some time walking through all the different scenarios and I found the site easy to understand and navigate through along with a list of numbers to call if you want to speak to a live person about your situation and even a glossary explaining all the key terms used while working with your mortgage company on a solution.
I am very pleased to see a website that is clear and concise with its information and lists ALL options available to homeowners who are struggling with their payments. If you would like to speak with someone about your situation in particular, please give me a call or send me an email and I'd be happy to visit with you to find the best solution or help navigating the website.

Save The Date - Foreclosure Prevention Seminar - August 31, 2010

I will begin teaching Foreclosure Prevention Seminars with my first one in August and will continue teaching these seminars until the interest runs out!

This seminar will go through the different options a homeowner has available to them while behind on their mortgage payments.  My first seminar will be held at Maplewood's Community Center on August 31st from 7:00-8:00pm.  Please pass along this information to anyone you may know that would like to learn about their options with my contact info to sign up.

Formal invitation to follow, can't wait to see you there!

Multiple Offers - What to do?

It seems we're now in a market where the best houses go quickly and the so-so ones sit at the same list price for months or one minor price reduction. With the houses that do go quickly, the majority of the time they end up with multiple offers. As a buyer, this can be frustrating when you finally find the house you like. Below are a few tips on how to work this type of situation.

Let’s start off with a situation where you presented your offer first. Likely you presented an offer that is lower than what you originally expected to pay for the home, testing the waters to see what the minimum that seller will accept. Within hours/days of submitting that offer, one or more offers are also submitted and in turn are asked to come back with your highest and best offer for the seller to review. You say you love the home and would be sad if the end result is someone else winning the bidding process. In this situation, I would suggest updating your offer so that the net will give the seller the closest dollar amount to the list price as possible. If you’re not approved to purchase at list price, make sure it is as close as possible. If you’re purchasing with cash, you might even be best served with an offer above list price. You could even consider offering $100 above the highest submitted offer, so long as it doesn’t exceed a pre-determined amount.

How about the flip side, where you submit your offer after someone else already has? This is a situation where you want to come in with your highest and best from the get go. Again, if you’re paying cash for the property and are comfortable submitting an offer over list price or one that would beat out the highest offer by $100, then by all means do so. With financed purchases, you would proceed the same way as described above when your offer was presented first. Write your offer to be as close to the list price as possible or slightly over list price.

With financed offers, you’ll want to be careful not to go over the list price too much as the home must appraise for your offer price or you could find yourself having to come up with cash for the difference. In multiple offer situations, you’ll want your purchase agreement to be as ‘seller friendly’ as possible. This could mean closing sooner (or later, depending on whether the seller’s readiness to close), writing cash in lieu of a financed offer, omitting the inspection and even buying the house with debris/trash left in. Reducing the amount of work needed to close can weigh just as heavy as a higher priced offer with lots of contingencies to a seller. Show the seller you want to close this transaction as soon as possible with as few potential problems capable of surfacing while in the process of closing. Another important factor is delivering your highest and best offer as quickly as possible, don’t waste precious time deliberating how you should proceed or trying to speculate what the other buyers are thinking.

If you have questions about multiple offers or other real estate topics, please call or send me an email and I’m happy to help!

It's Official ~ Tax Credit Deadline Extended!

Congress officically passed the bill late yesterday to extend the closing deadline of the qualifying purchase transactions to September 30, 2010. 

If you've got a contract ready and just haven't closed yet you are in good shape as you'll now have another 3 months to complete the transaction and earn the $8,000/$6,500 after all!

Tax Credit Deadline Extension - Update

Great news folks, the House of Representatives passed the bill to extend the tax credit closing deadline yesterday!  All that needs to happen now is to have the Senate pass the bill.  

This extension was part of a larger bill that fell through on the Senate floor last week.  There was wide support amongst the senators for amending the American Jobs and Tax Loopholes Act by adding the tax credit extension to this bill, however the much larger bill stood still last week when discussed within the Senate.

There seems to be lots of support within Congress for the extension of the tax credit, it'll all depend on whether both sides can come to terms and agree to pass it once and for all.

Again, I will continue to keep you posted on the progress of the extension as it happens. 
Feel free to contact me with questions!

Is there an inspection needed to list my home on the market?

Did you know that a large portion of the cities in the Metro Area now require that an inspection be performed on their home prior to transferring ownership? Quite a few of these cities even require the inspection be performed prior to listing on the MLS, so that the report is available to all interested parties prior to offer submission.

Nowadays, more and more cities are joining the ‘inspection train’ where a seller must have a property inspection be performed prior to the transfer of ownership. The inspection is very different than that of the buyer’s inspection performed in that it only goes over the specific city's code requirements.  All cities that require these inspections have a detailed form, specialized by each city, that an inspector must go through when evaluating the structure. Most cities allow for qualified home inspectors perform this inspection, so long as they’re approved by the city to perform said inspections. Some cities require a city employed inspector perform the inspection. No matter who does this inspection, the inspector must go over a specific list of items to test or evaluate and disclose the findings on a report. Each city has their own way of ‘checking the list’ but they do have similar levels of notating whether or not the item is up to city code. For the most part; an item can either meet the minimum requirement, be below the minimum requirement or considered hazardous if not repaired.

Once you have the report, you may need to complete some of the items ‘flagged’ prior to transfer of ownership. Which items need to be taken care of will depend on each city. For example, in the City of St Paul, all homes must have at least one hardwired smoke detector in the home. If the home does not contain one of these detectors, then this item is marked Hazardous and requires the installation of the detector prior to the sale of the home. This is the only item on the St Paul report that is required to be addressed before transferring ownership. Almost all cities will allow the transfer of ownership on the required repairs to a buyer, so long as they repair and have the items re-inspected within a specified timeframe. A buyer must submit a signed form to the city and include a copy in their closing paperwork in order to move forward with the sale. Some cities even require an escrow agreement be put in place for the required repairs notated on the report.

Now you ask yourself, should I complete all the repairs notated on my report? While most buyers are agreeable to assuming repairs, if you are in a financial position to complete them, I highly suggest that you do so. In this real estate market, most of the homes being sold are now ‘As-Is’ sales. This means that the seller will not be doing any repairs to the property, unless required by the city to do so, prior to closing and the buyer must accept the property condition as is. Banks and servicers are already taking a large financial hit on these assets as it is and have little intention of spending any more money to sell the home than is necessary. The sellers who sell their home as a short sale have experienced great financial difficulty and do not have the means to fix every item flagged on their report. Lenders who approve these short sales also require these particular sales to be As-Is anyways. A home that has an inspection report that is ‘clean, where there are no repairs required to sell, is much more appealing than a home that has required repairs already notated before even viewing the home.  Every buyer will have built in expenses with the purchase of a new home, furniture, paint or even fixture updates.  No need to pass along the additional expense of fixing the required repairs and hiring an inspector to re-inspect the completion of the repairs if it isn't absolutely necessary.

If you have any questions regarding the different city required inspections, or are in need of a quality, certified inspector, please feel free to ask me. 

Tax Credit Deadline Extension - Update

I'm sure you've been hearing in the news that there is movement to extend the $8,000/$6,500 tax credit deadline. Last week, senate passed the vote on this matter however it has been attached to a jobless benefits bill that is still in need of passing. While this is good news for most, it may seem slightly misleading.

 All parts of the tax credit are not being extended, merely the closing date portion. The two important criteria of this tax credit are those of buyers having a purchase contract executed by April 30th, 2010 and that of closing the transaction by June 30, 2010. The portion that is in the middle of debate is that of the closing deadline, where the powers that be are in the process of extending this deadline to September 30th, 2010. A new buyer can not have an executed contract after the original April 30th deadline, close by September 30th and expect to receive an $8,000/$6,500 check in the mail. A buyer must have already had a purchase agreement executed by April 30th, but was struggling to close in time for the June 30th deadline in order to be eligible for this credit.

 This extension was initiated due to the heavy inventory of the properties being sold in these transactions being either bank owned or homes sold as a short sale. Very often, these transactions are delayed due to title issues, short sale approvals and other miscellaneous reasons not caused by the buyer's actions. Congress has clearly taken note that the buyers in these circumstances should not be penalized when they’ve done everything in their power to close the sale in the designated timeframe.

Again, while this is good news to the buyers who fit the criteria of having an executed contract by April 30th, do not be confused and think you can find a home and close by September 30th and receive the tax credit.

I’ll be watching this closely and in turn post at the time that it does come into law. If you have any questions regarding the tax credit or other real estate issues please give me a call and I’d be happy to answer!

Home Inspections - Are they really necessary?

I've had many buyers ask this over the years, whether or not an inspection of the property is really necessary when buying a home.  A lot of cities now require some sort of inspection be done prior to or at the time of listing, whether it be just a well/septic inspection or a full structural inspection.  While this information is very handy when looking at properties, it should not be the only inspection you rely on to decide if that particular home is the right one for you.  These city inspections do not go into the full depth that a buyer's home inspection will dig.

I think I'll have my handy father do the inspection.  Or maybe my uncle who's a contractor?  While these people may have a good base of knowledge on a home, they have not gone through the training required to be an inspector.  It's very possible they may not know what to watch for on a foundation, in a particular neighborhood or style of house, to adequately inform you on whether or not it is collapsing.   Your father or uncle likely specialize in certain areas and can be a great sounding board for rehab/remodeling ideas in the future, but they will not give you the scope of information that a quality licensed inspector can.

It is always best to perform a full home inspection, prior to committing to the purchase, so that you can truly get a feel for the home's strengths and weaknesses.  It's extremely important to be present during said inspection as well.  This will give you a chance to have someone walk you through how the mechanicals work, if there's moisture seeping in, where to find certain things (like your gas/electric/water meter!) and how each part of the home functions.  If after the inspection, you find that there is much more work than the naked eye could detect, you may be able cancel your purchase agreement. However, your purchase agreement must be contingent on the home inspection in order to have the right to cancel and retain your earnest money.

If you have any questions on home inspections, need the name of a quality inspector or any other real estate topics, please give me a call or send me an email and I will be happy to help.

HAFA - Lenders and Servicers are now sending solicitation letters

Hello Folks-

I just heard in one of my latest Partner First training sessions that lenders and servicers are now sending out solicitation letters about short sales or a deed in lieu to gauge interest with the homeowner on how they would like to proceed with their mortgage/home after missing one or more payments.

The most recent list of lenders/servicers that are officially participating in the HAFA/HAMP program is as follows:

Bank of America
Citibank
GMAC
Wachovia
Wells Fargo

If you pay your mortgage to one of these companies and are behind on your mortgage payments, do not be surprised to find a letter in your mailbox asking if you would like to sell your home as a short sale. The letter will also ask if you're interested in a deed in lieu.

If you find yourself with one of these letters and want to discuss which option is best for you, please give me a call or send an email.

Tenants - Where is the rent?

So you've got rental property.  You have a lease in place (verbal or written) with tenants to occupy the home.  Soon you find yourself wondering each month if the rent will come by the first. Some months it comes on time, others days or even weeks later. 
What do you do if it doesn't come for 30 days?  What exactly do you do if it's not coming at all?

If this is familiar territory for you, I sincerely advise you to meet with a real estate attorney.  While this may pull anywhere from $150-500 out of your pocket, the return on investment will be the information obtained from this meeting.  You will gain knowledge of how to approach the situation surrounding eviction, how to proceed in accordance with the lease you have in place with your tenant.  This can also be a great time to discuss all sorts of topics revolving around your rental property, including the leases you are currently using or have used in the past. 
Researching topics on the internet will only get you so far.  Once it comes to enforcing the contracts you have in place, you'll more than likely find yourself feeling as though the meeting with an attorney can be priceless!  They will not be able to do the 'work' for you, but at the very least, they will point you in the right direction.
If you need a real estate attorney referral, please let me know and I'll send you a few good names.
If you have questions on this topic of real estate or the market your home is in, do not hesitate to drop me a line.

Free Government Program Eligibility Surveys

Liz Novotny, CDPE


This resource now contains eligibility surveys for government programs offering help to distressed homeowners, including the Home Affordable Foreclosure Alternatives Program, or HAFA, which increases the likelihood of a short sale or deed-in-lieu of foreclosure.


These surveys will let homeowners quickly discover new options made available by the government.  When faced with the possibility of foreclosure, I’ve seen too many homeowners make mistakes because they hadn’t been advised by a qualified professional. These people didn’t know the options available, or even how to find any information on their situation. My website helps to solve this problem.


Liz Novotny, CDPE acts as a hub for information on the facts and issues for struggling homeowners, putting all the necessary information in one, easy-to-use location. With the addition of these new eligibility surveys, the site lets homeowners make educated decisions about their future.


Seven out of 10 homes that have gone into foreclosure did so without even being listed on the market, said Alex Charfen, co-founder and CEO of the Distressed Property Institute.  Agents like myself, with the CDPE designation are helping distressed homeowners understand that there may be options available to avoid foreclosure.


The CDPE designation provides real estate professionals with specific understanding of the complex issues confronting the real estate industry. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing financial hardship in today’s market.


For more information about the CDPE Designation, visit www.cdpe.com.

Sticking it to the bank or the community?

Recently I sent out a mailing to homeowners whose homes had recently sold at a sheriff's sale.  The intent of the mailing was to gauge interest of these homeowners in trying to save their credit by pursuing a short sale offer to negotiate with their lender before the end of the redemption period.

I received a return call from one homeowner who stated that he was 'not interested in helping out the bank' as they did nothing to help him out when he needed it.  He was also not interested in inconveniencing his family for showings over the next few months trying to sell if he didn't have to.  While I can certainly empathize with folks that have initiated conversations with their lender, trying to get help with their mortgage situation before it comes to default, I have a hard time understanding why a person would want to purposefully jeopardize their credit situation just to 'stick it to the bank'.

Foreclosures certainly do affect a bank's bottom line and will not improve the business' standing.  However, foreclosures also hurt the surrounding community the home resides in and harms them more in the long run than the foreclosure hurts the bank.  A bank has ways of dealing with the repossessions in the form of tax write offs, depreciation of the asset, etc. With foreclosures at an all time high, neighborhoods across the country are losing their stability due to an increasing number of vacant and vandalized homes.  The community pays the price with the loss of neighbors, increased vandalism and homes that are left in disrepair.  In the end, it's our neighbors and communities that suffer from a foreclosure, not the bank.

When you're trying to decide how to move forward with your mortgage stress do keep in mind that there really isn't a way to 'stick it to the bank' without hurting your community at the same time. 

What in the world is HAFA?

HAFA

Now that the tax credit has expired, are the buyers gone?

Not at all folks, not at all.


It is very true that the tax credit pushed buyers that were on the fence about purchasing a home, giving them an extra $ incentive to 'take the plunge', so to speak. These buyers knew there was $8,000 available to them if they could find ‘the one’ in time to execute a contract by the 4/30/2010 deadline. Some of those buyers worked frantically at finding their best choice during the month of April. However, the past few weeks of real estate has taught me that money isn't everything! Not only in real estate, but many other aspects of life as well.


Buyers today want to get the best house for their money. This means looking at more homes, taking longer to decide the pros & cons of their favorite(s) and/or realizing that a home purchase is not something to settle on. This has become the mentality we real estate agents are finding in most buyers today. They may have said to their agent “I’ll jump at writing an offer, so long as it’s the perfect house in the perfect location” before the tax credit expired. However, if they didn’t find that perfect house, in its perfect location then they will continue to take their time but in the end still make the purchase.


Sellers have become weary that the buyer pool has been eliminated by the expiration of the tax credit. Do not fret, I say to my sellers and all others with homes on the market currently. There are still plenty of buyers out looking at homes, who may have ‘missed the boat’ on the tax credit, yet are serious about a home purchase. There will be more buyers added to the pool each month due to their recent employment changes as well. These buyers may have just gotten a promotion, a raise or are hitting their two year history of employment over the summer. Any of those circumstances will bring new buyers each week and in turn hundreds of buyers added to the pool each month.


When deciding whether or not to pull your home off the market, because the buyer pool may have potentially shrunk, one must be sure to focus on your long term goals in addition to the short term ones. I've heard sellers say that they'll pull their home off the market and try again in a few years.  Except, no one can guarantee that the market will indeed turn two years from now.  While we enter the next ‘wave’ of foreclosures; i.e. folks that were laid off, injured or had a decrease in pay/hours, it will be tough to truly estimate what year the market will turn again. Many numbers have been thrown around by economists over the last few months, most landing in the 8-10 year range, on when home prices will show consistent value increases year over year.  The difference between two years and 8-10 is huge, when it comes to the necessity of selling your home.  Deciding whether or not now is the time to sell will significantly depend on the latest estimates of when the market truly will turn around.  


As always, keep me in mind if you would like to sit down and discuss your situation in an effort to help determine whether or not you should continue pursuing a buyer. I am happy to help counsel on your options, no matter what the outcome of the discussion is.

Who's that knocking on my door?

A door to door sales person? Fed Ex/UPS? Your neighbor? The mailman?

Maybe, just maybe, it's your mortgage company/servicer with a possibility to save your house. Wait a second, "Why would a mortgage company/servicer want to help you stay in your home?" you ask.  You probably thought banks want to foreclose??? Not at all my friends, not at all.

Banks are in the business of loaning money, not in owning homes. With all the new government programs available to homeowners today, banks are trying harder than ever to keep people in their homes. One of the ways they do this is to hire Home Retention Consultants (HRC).

An HRC works for Titanium Solutions, a company hired by your mortgage servicer that specializes in sending people (yes, live people!) out to mortgagors in trouble with the express intent of having a conversation with you about the possibilities available to stay in your home. HRC's will come to your front door to discuss these options; if there has been no response to previous attempts of communication through letters or phone calls. Your mortgage servicer will always send a letter ahead of time notifying you that the HRC will be stopping by soon, this letter may even come from Titanium Solutions themselves.

If you're not home when an HRC rings your door bell, they will either leave a letter or business card behind with local contact information of the HRC that stopped by. If you are home and don't answer for whatever reason, the HRC will still leave this letter or business card behind. The HRC will attempt contact with you over the next several days, maybe even a week, as their main goal is to have this face to face conversation with a distressed homeowner. I ask you to please, take the time to call this HRC and arrange a time for their return so that they can discuss the possibilities your mortgage lender/servicer has to offer. An opportunity to save your home is worth much more than the cost of the embarrassment of answering the door in your robe to speak to a stranger. Most of the time, they will not be able to discuss the opportunities over the phone and need to speak to you face to face (for verification purposes as they can only speak with the person on the mortgage), and thus will make multiple attempts to reach you. So, the next time your door bell rings, do not hesitate to answer the door as it could be just the solution you were hoping for to keep your home. If you do find a letter or business card on your door, feel free to call the HRC to let them know when you’ll be home next. Because of privacy laws, an HRC is not allowed to discuss anything regarding your account to anyone for any reason and thus your information is safe. If you are in the process of bankruptcy or are not interested in staying in your home, all you have to do is state this and they MUST leave you alone. Keep in mind that an HRC will never ask for money or collect mortgage payments from you. If this person does, let them know you’re not interested as this is a scam and these people do not work for Titanium Solutions or your mortgage lender/servicer.

If you have any questions about this or other foreclosure rumors/facts, do not hesitate to contact me as I’ll be happy to answer them.

Will the lender tack on the remaining balance of your short sale to the new loan of your next purchase?

I was just asked this recently and want to clarify what happens with the mortgage balance that was not paid off with a short sale.
The definition of a short sale is that where a lender approves a 'short' payoff of your mortgage as payment in full when selling.  There are a few places for the remaining balance of your loan to go and they will always be stipulated in the written approval letter from your lender/servicer. 

1. Lender writes off the balance and waives their right to pursue the deficient balance.
2. Lender writes off the balance but holds their right to pursue the deficiency from the mortgagor at a later time. 
3. Lender accepts the short sale offer, but requires a promissory note signed by the seller in an amount negotiated at the time of the offer.  This could be the remaining balance or a portion thereof.

In all cases, the lender has the right to issue a 1099 for the unpaid balance.  The amount on the 1099 will reflect what was negotiated at the time of the short sale offer.  How to proceed with this 1099 will be determined by your financial situation and ownership status of the home that was sold as a short sale.
Do not hesitate to contact me regarding this and any other short sale questions you may have.  I look forward to helping you determine if a short sale is the best option for your current and future financial needs.

Deficiency Judgments

A lot of homeowners have questioned what happens after a short sale and in particular the possibility of their lender filing a deficiency judgment against them.
While the State of Minnesota may be considered a deficiency judgment free state, it's important to understand the facts regarding this statement.


It is widely assumed that if you let the home go through foreclosure that you are free from receiving this deficiency judgment down the line since the bank was able to recover a portion of their loss through the sale of the bank owned home. This is, in part, true within Minnesota so long as the foreclosure is conducted by advertisement with a redemption period. https://www.revisor.mn.gov/statutes/?id=582.30
The negative side to this aspect is that of the second mortgage. Second mortgages are governed by different laws and those lenders can file a deficiency judgment for the entire balance of the second mortgage or even the balance of the loan that was ‘dismissed’ with the short sale acceptance.


Selling your home as a short sale does not erase the possibility of your first mortgage filing said deficiency judgment. It's important to be aware of this fact and request certain language be inputted into the short sale approval letter to protect yourself in the future.
A statement to protect the mortgagor could be as follows:
“Only upon receipt of certified funds and the final HUD-1 Settlement statement, will XYZ mortgage release its mortgage on the property and waive any deficiency against John Doe.”
Request this language in the hardship letter as well as the intro letter your realtor submits with the short sale package once an offer is received.
i.e. “Please accept this offer as payment in full and waive your right to deficiency against me/us”

Most lenders already have this language detailed in the letter. If it is not, you can negotiate this verbiage at the same time of negotiating the short sale offer of which can also be negotiated into the second mortgage's approval letter as well.

Please be sure to consult an attorney when considering your options of short sales and foreclosures to determine your best course of action considering your financial sitaution and future goals.

How does a person's home get to foreclosure?

The word foreclosure is thrown around daily, without much thought on how a person's home gets there.
So you ask, how does a property go through foreclosure?
Foreclosures in Minnesota are typically non-judicial and are commonly called 'foreclosure by advertisement'.  Here is a breakdown of this process within the state of Minnesota, keeping in mind that each state is different.

Once you become 90 days late on your mortgage, your lender/servicer can legally file that you are in default on your mortgage.  Most mortgages have a 'power of sale' clause written within them which permits the mortgagee to sell the property that secures the mortgage loan where timely payments have not been made.  The lender/servicer hires a foreclosure attorney to begin this power of sale process.  The attorney drafts a demand letter and sends via US mail to the last known address of the mortgagor(s). 
This demand letter will tell you the total amount owed (including processing and attorney fees) to bring your account current and that you have 30 days to cure the default.  At this point, you must pay the total amount owed (unless otherwise noted).  If you ignore this letter (or can not pay), the attorney then schedules the sheriff's sale and proceeds with the required 6 week public notice and 4 week private notice.
Public notice is that of publishing a notice of foreclosure sale date in a general circulatory newspaper in the county where the property resides.  Private notice is that of a letter to the occupants/owners of the property 4 weeks ahead of the sale, 8 weeks if the home is homesteaded.

The sheriff's sale is more like an auction, where the property is sold to the highest bidder (including the bank).  After the sheriff's sale, there is a statutory 6 month right of redemption period where a mortgagor can redeem the loan (by paying the entire balance in full + costs incurred during the redemption period) or negotiate a short sale with their lender.  The redemption period is 12 months if the amount due is less than 2/3 of the prinicpal balance and property exceeds 10 acres or if the property exceeds 40 acres.  One can shorten the redemption period by court order to 5 weeks if the property has been abandoned.

Once the redemption period has ended, the property immediately transfers ownership to the winner of the sheriff's sale bid (almost always the lender that foreclosed upon).  This new owner must go through the process of evicting the occupants/owners of the home, paying special attention to what type of occupants are in the home currently.  Minnesota law recently changed where the owner must now give a tenant 90 days to vacate and can not evict this tenant until the 90 days are up.

After reviewing this timeline, you can see that there is plenty of time and opportunity to try and negotiate a short sale on your home.  While it is possible to negotiate during the redemption period, there are some lenders/servicers that do not allow short payoffs during redemption.  Please check with your lender/servicer before putting your home on the market as a short sale to ensure this is possible. 

Also, it is very possible to postpone a sheriff's sale with your lender/servicer so long as you have an offer presented for review and there is enough time for the attorney to postpone said date with the sheriff (best to request 1 week ahead of time).  The longer it takes to put the home on the market, the less likely it will be possible to secure an offer in time to negotiate with your lender/servicer.  Negotiating short sales can take anywhere from 30-120 days, so the sooner you get the home on the market the better chances you will have to negotiate and close before the end of redemption.

Security Clearance

Did you know that if you go through foreclosure that you could lose your security clearance? 



This is one of the most challenging issues against security clearance, outside of a serious misdemeanor or felony conviction.  If you have a foreclosure and work as a police officer, in the CIA, airport or business security, are in the military, or any other position that requires a security clearance, in almost all cases security clearance will be revoked and in turn your position terminated.


A short sale does not challenge most security clearances on it's own.  This is yet another good reason to try and sell your home if you are, or will be, having problems making your payments.  It's always best to try and modify your loan with your lender/servicer, but if the modification doesn't get approved or adjusted to a payment that you can afford, find a realtor (like ME!) that has the Certified Distressed Property Expert designation so they can properly submit offers once your home is on the market.  Since the 'foreclosure' stamp goes on your credit record at the time of the sheriff's sale, you are best served by putting your home on the market at the time of your first missed payment.


Do not hesitate to call or write me if you're concerned about your financial position during these stressful times or if you know of friends or family that could benefit from my services.  I am always ready to help people out of a bad situation and thank you in advance for your referrals.

CDPE - What does this mean?

You may see this from time to time, yet another acronym for a particular training a real estate agent has gone through on top of their basic yearly continuing education credits.  This stands for Certified Distressed Property Expert.  A person with this designation has spent 2 full days learning how to properly submit short sales to the lenders and servicers for distressed property owners.  
As a realtor who has built her business on short sales, I found it necessary to attend the training and ensure I haven't missed any tips and/or secrets of the trade.  After the 2 days, I was pleased to see that I've gone through the process of submitting short sales exactly as was taught to us.  Watch out for this designation when it comes to hiring a realtor to sell a distressed property home.  While people can claim they are an 'expert', not everyone has gone through this training and has this designation.  Not to mention years of experience of working with these types of real estate transactions as I do.
http://www.cdpe.com/home