Mortgage delinquencies still in play

I just read an article on DSNews, the leading magazine that discusses the latest on the default servicing industry, that mortgage delinquency rates rose from the March. April's data shows that there are 6,388,000 mortgages that are at least 30 days late or in the foreclosure process. The article did not go into detail about the reasoning behind the increase in delinquent mortgages, but we can certainly speculate some reasons for this while looking around at our communities. 
While the unemployment rates seem to be on the slow track showing slight improvements in the job sector, there are many other indicators showing that our country is begining to dig it's way out of the rescession.  However, that does not mean that mortgage delinquencies immediately dissappear because there are small sign of improvement around the economy.  Take a look at your own community and neighborhood conversations to find what people are stresssed about.  People are still in distressed financial situations, still looking for jobs and trying to play catch up on their bills. 
Loan modifications are still playing a big roll for mortgagors and lenders alike.  I have taken some time out of my days to help a few clients with loan modifications as they've been given the run around by other non-profit and profit agencies alike.  These companies are dropping the ball somewhere, somehow on the mortgagors and their files sit at a stand still with the lenders because the follow up and persistence just isn't a priority while working the cases.  While helping these clients, I've discovered that most lenders require a homeowner to be behind on their payments by at least 30 days before they can even submit a modification request.  This is one contributor to the 6,388,000 delinquent home loans.
If you'd like to see more of the article, click here.  If you know of anyone that is in a distressed financial situation, please have them give me a call.  I've successfully negotiated loan modifications for Bank of America, GMAC and Wells Fargo, so if you know someone that is struggling to get this completed I can help in this areana as well.
Your friend in the business,
Liz Novotny
651-203-1769 or liz@liznovotny.com 

Who's negotiating my short sale?

I was speaking with a newer friend recently about his experience selling his home as a short sale.  I was not the listing agent on this situation as this friend had already signed on to another realtor about the time that we were getting to know each other.  I wanted to hear about his experience, first to ensure that the process went smoothly and secondly to see how this agent negotiated with the bank in the event there was something I could learn. 
I found out rather quickly this agent ended up taking money out of my friend's pocket.  His agent hired an attorney to negotiate the short sale in lieu of taking the time to do this themselves.  Agents do this so they can continue focusing their time on the rest of their business instead of getting bogged down to a phone and computer while working with the bank.  While this is becoming more common place in the distressed market, I've yet to see an attorney get an offer negotiated faster or smoother than when the agent negotiates themselves.   The price of hiring an attorney to negotiate a short sale could get expensive, depending on the attorney doing the negotiating.  The attorney will either charge a flat fee or a percentage of the commission on the sale.  Most agents will deduct this fee out of their own commission, as they feel this is their price to pay.  However, this was unfortunately not the case in my friend's situation.  
My friend ended up paying the attorney's fees out of their own pocket!  As part of the listing agreement, they had agreed to pay the attorney's fees themselves instead of the agent deducting this from their commission.The sellers were to receive a small amount of relocation assistance at the closing table because they had an FHA loan and FHA allows for $1000 to the seller at closing.  Most loans do not allow funds to go to the seller, due to the fact that the lender is writing off the remaining balance.  While the sellers didn't have to come up with the money out of their own pocket before closing, they did lose out on money that was rightfully theirs at the closing table. 
I share this story with you to illustrate that how they were taken advantage of.  In this housing market, there are many realtors out there that will do what they can to keep as much commission in their pocket as possible.  If that means charging a seller a fee that should have come from themselves, they apparently see nothing wrong with this situation.  People in distressed situations should never have to pay to sell their house, even as a short sale.  I ask you to please keep this in mind when you hear about folks discussing short sales with you in the future.  Remind them that a realtor with INTEGRITY will never charge a distressed seller uncustomary fees to sell their home.   
Feel free to call or write with questions or comments on this situation, I'm always happy to help. 

Have we closed yet?

A situation that's becoming more common at the closing table is when a buyer signs closing paperwork but does not take possession of the home immediately after wards.  This is almost always due to the seller not signing off on the settlement pages by the time the buyer has.  While this particular situation happens more than often happens with bank owned properties, it can also happen with short sale properties from time to time.

For a buyer purchasing a bank owned property, generally the seller is residing in the state the property is located.  Reasons behind the seller delay in signing the documents in time can vary from property and in turn their situations. The results of the delay can be caused by: a title company not providing documents to the seller in a timely fashion, an investor taking longer than usual to review and sign off an adjustments of the costs listed on the HUD as well as needing supplemental parties to agree to the figures.  Very often in these situations a bank deliver the signed settlement pages by the end of business on the scheduled closing date or even the day after, thus leaving the buyer(s) without possession no more than 24 hours. 

For those buyers purchasing a short sale property, possession issues can also happen despite there being a live seller who does in fact reside in the state.  The source of the delay can be that of a seller's lender(s) having not approved the final settlement pages prior to the scheduled closing date.  Per the terms of a short sale approval letter; the title company, real estate agent and/or seller must obtain final approval on the HUD statement prior to delivering possession and allowing the funds to disperse to the lender that has been shorted.  A delay in the final sign off on the settlement pages can be a result of many things.  One being that the loss mitigation departments are truly understaffed due to the many short sale requests happening today and in turn those managing the files are sincerely unable to get to all requests they've received in any given day.  Another being that of needing additional party approvals, such as the mortgage insurance company, investor approval of the HUD statement.  Involving additional parties to the process always ends up time delays.  

For any of the reasons listed above the delay of passing on of the keys to the home after signing the closing paperwork can and usually is frustrating.  It's difficult to spend the time moving through a lengthy process, such as a home purchase, to then be cut short where the contract has not been completed as agreed upon at the closing table.  The most frustrating piece of this situation is how little a buyer and their agent can do to remedy the situation.  Phone calls and follow up notes are typically the best tools accessible to a buyer or their agent to ensure the final step has been completed.

To know if there are other efforts that can be effective in transferring possession of the property, please send me a note or give me call to discuss your situation.  Your friend in the business, Liz

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.