Archive for the ‘Lenders and Appraisals’ Category

Appraisal Issues

Posted on: May 29th, 2012 by Margaret No Comments

I recently had an appraisal on a North Monrovia Property not come in at value. This is a common problem in trying to close a real estate transaction. The appraisal came in $15,000 less than the agreed upon purchase price. The buyer and seller were willing to split the difference. In doing this, the agreed upon price was reduced $7500. This is one way to solve an appraisal problem. I was lucky, not all sellers are willing to budge off of the sales price. The benefit of doing this is that the buyer and seller can proceed to close escrow without seller having to put the property back on the market and the buyer ends up with a slightly better purchase price. This can work when the difference is minimum. In this case, only a $7500 difference for the seller. Sometimes the difference is much more, and that creates a more difficult problem that sometimes cannot be easily resolved.

Short Sale Lenders Want Seller Contributions

Posted on: May 29th, 2012 by Margaret No Comments

Greetings to all. There is a disturbing trend in lender practices regarding short sales that I would like to share with you. For anyone who is unfamilar with short sales, a short sale is a process for a homeowner to sell a property for less than the amount they owe on the mortgage. Many of these homes are also in default or foreclosure, but that is not necessarily the case for all. Perhaps the homeowner bought at the top of the market and now needs to sell. When I started doing short sales several years ago, the banks seemed more flexible in what they were willing to take to close the transaction. The problem now: the banks are seeking seller contributions — that means they want cash from the sellers for the short sale to close. However, most sellers are in serious financial trouble by the time they get into a short sale situation. This can be a devastating blow to the parties who have waited patiently, usually many months, and then face the deal cancelling. I have heard of some banks wanting $50,000 or more to allow the escrow to close. There have been recent laws enacted to help homeowners get past deficiency claims on the loan after the sale, but it appears that the banks are counter-acting that legislation by asking for the money during the transaction, rather than after. This is creating an impossible impasse between the sellers and the mortgage holders and many deals are falling out of escrow. The result is buyers and sellers who have waited months, maybe even a year, looking for the light at the end of the tunnel only to find out that unless someone comes up with cash, the months of waiting were for nothing. If you have a short sale disaster story to share, please feel free to share it here. I would like to know your story.

Trying to Refinance

Posted on: May 26th, 2012 by Margaret No Comments

A dear client of mine encountered disappointment in trying to refinance recently.

From Jeff in the San Gabriel Valley:

“I wanted to say that I enjoyed our discussion yesterday about the housing and lending markets.”

“As I mentioned to you, I find myself in uncharted waters trying to figure out how I can refinance my home mortgage now that I am underwater. It seems like the normal disclosure rules of business no longer apply.”

“Obtaining information about refinancing my home has left me frustrated During my research and questionings, it seems that the consumer needs to be highly aware that information provided by lenders may not be the whole picture. I was looking into negotiating a settlement with my second mortgage and they invited me to make a reduced offer of settlement. They did not tell me the drawback would be a 1099 tax form for the balance over what they forgave. This would leave me owing taxes on the difference between the settlement amount and original amount owed. If I took this deal, I would have had to pay thousands of dollars to the IRS. The other information they neglected to provide was that any settlement on the loan, that is, anything less than payment in full, could have a negative effect on my credit score.”

“My point is that I had to speak to many different people, each giving me a small pieces of the puzzle, to figure out the true picture. I don’t think this is right. I don’t know if the lenders are purposely leaving out important information, or if it is simply my duty to ask every possible question about every possible pro and con. Perhaps this is a “buyer beware” situation. Nevertheless, it is disturbing and worrisome.”