Losing your home to foreclosure

I was asked by my representative at the Idaho Statehouse to tell stories of hardship.  The stories are real and the names have been changed:

John

I listed the home in February 2008. It is probably what drove me to my run for Congress. It made me mad enough to run. It was a short sale with Wells Fargo. John is a school teacher.  He and his wife took out a second mortgage on his home. The home appraised for $30K more then the home was ever worth.  Five months later, his wife left him.  He didn’t know he was upside down until he tried to refinance according to the divorce decree. He tried to pay the mortgage but released that he was selling everything he owned make the payments.  Without his wife’s income he could not make the payment.

I listed the home and dropped the price to $185K.  In April I had a good offer at asking price.  The bank would not let me call in and talk to a negotiator.  In the end they rejected the offer even though it appraised for 98% of the offer.  That is very good for a short sale.  They didn’t tell me they canceled the file for over a month.  Everyone I talked to gave me a different story.  One person said it was that the second wouldn’t settle.  My client would have settled a bit  of money to make the deal go fast (we were within the 3 month window of nonpayment of the mortgage).  We upped the price and never got another offer.  My seller was so upset that he moved before the foreclosure.   The home foreclosed in February of 2009 and the bank sold the home in May of 2009 at $165K.  During the summer a company called him asking for a $70,000 deficiency judgment.  At this point I became involved again.  The company was willing to settle for $7000 but John didn’t have the money.  We went and saw a bankruptcy lawyer.  We offered the bank $3000 at the end of summer school.  They said they needed the money right then.  I explained that he wouldn’t have the money until he got his summer pay.

In the end John, who only had the mortgage against him, had to declare bankruptcy.

Working from the hospital….

In the last post my step-mom was in the ICU.  She is getting better and will finally have the surgery on her arm tomorrow… It has been a very difficult week and my step-sister in law and I took the car home this weekend.  I do not have pictures from the hospital but I will include one from a break at the beach on Thursday… I do love the ocean. I actually went in fully clothed because I left Boise in a hurry and had no time to get a swim suit.

Now as an active real estate agent I still had work to do.  I did not work on new clients but I had 2 things that I had to keep going.  I have a pending that we ran the inspection on.  I picked this bank owned house for the buyers (sort of scary) and they came up Sunday July 31 to see the home.  They liked it (phew….) and we proceeded to the inspection scheduled Wed.  I arranged for the inspector to be let in.  We got the report on Thursday and my buyer wanted to walk.  It was just a little more repairs then he wanted to deal with.  I prepared the return of earnest money form and sent it to the buyers.  I informed the loan officer.  The loan officer called the buyer and talked him into waiting.  He thought that the underwriter might call many of the items that worried the buyers.  He often works with this listing agent and I was relieved but a bit nervous.  My buyer sent the inspection report for the underwriter.  I waited and waited…. I wanted to see what the underwriter was going to pick.  Meanwhile my step mom developed a liver problem to add to all her other problems.  It was a tense day.   I was worried because Friday was the last day for the earnest money to be returned because of the inspection.  I waited some more getting more worried.   I talked to the listing agent who assured me I could get my buyer out of the contract or hope for the underwriter to pick the scary stuff up….  I had not worked with the loan officer and felt this was leaving my buyer very vulnerable.  What if the underwriter didn’t care about the same things that concerned my buyer?

I called my broker to discuss the problem and came up with a solution (poor broker I started talking told him I figured it out and went to work).  My solution was a very careful reading of the contract.  I could stop the clock by putting in the repair request.  I knew, my buyer knew and the listing agent knew that the seller would not agree to anything that didn’t prevent the underwriter from approving the loan.  But it also stopped the clock until Monday.  Today the seller agreed to wait until the appraisal was in so my buyers doesn’t have to worry about losing his earnest money.

I still don’t know if the sale will go through but my buyers will get their earnest money back if they don’t proceed with the sale.  I know the house is a good value.  I have protected the buyers!  If I had $25,000 cash I would be glad to buy it as an investment.

I did all this work from the hospital…..People (including the listing agent) were helpful when they heard about my situation.

‘The other project I worked on is a job site I hope to list in a couple of weeks.  I have been working as a sort of contractor arranging the workers at the site.  I left my handyman partner in charge of meeting the sprinkler guy (that is really the name of the company) and the heating contractor.  I got the report and talked to the owner.  Again it is amazing what you can done with a cell phone and a good internet connection….

This was a very tough week and I am very tired.  I am up $7 from gambling in Tonopah on the way home (the Ramada is very nice)…..I did my caregiving and my real estate work from the hospital room….Pray tomorrow goes well for my step mom tomorrow….

Why I sell HUD HOMES…MORE OF AN ESSAY..

Over the years I have been the buyers agent for several homes in the Treasure Valley.  The first thing you want to do is make sure your broker has signed the agency up to sell HUD homes.  The first time I sold a HUD home I had to refer my client out and lose a significant portion of my commission check.   It also makes the deal stranger since you know all the in and outs of the deal and the other agent doesn’t.  Talk to your broker or the office manager and ask for the HUD number and check to make sure it is active.  It needs to be renewed every year.  Being the government your brokerage will not get any notice when it needs to be done….

HUD  homes are government owned homes that have been foreclosed on but the government has insured them when to original loan was taken out..  OH no !  Unfortunately I just broke some rules about selling or talking about HUD homes.  We are not allowed to use the words repossessed, REO, distressed, foreclosed when describing these homes because HUD feels that these words have negative connotations  .  We now have to use the words HUD owned.  This also means that the Intermountain multiple listing service had to add a separate category called HUD homes.  This is very annoying because it one more parameter you have to search for.

Now those of you who no me know that I am a rare breed.  I am a Democrat in Idaho who has run for Congress.  If anything ever turns me into a person who thinks the government is malevolent it will be selling HUD homes.  HUD makes the rules for everyone else but does not seem to feel the need to follow them.  Someday I will blog about this….. They will not fix things (even things to inspect the property).  They set their own timelines that are difficult for the loan officers.   They make you rush for brokers signatures and make you send docs in expensive Fedex packages.  When you make a mistake they threaten to cancel the contract.  The mistake can be forgetting to get an initial.  I must admit to being paranoid by now.  To my credit the contract that I have pending was perfect the first time.  You have to be on top of things and be your buyers advocate.

So obviously I do not like HUD or selling HUD homes….  Why do I do it?  Because it gives my buyers a chance to get into the housing market with FHA loans.  Also HUD, Fannie Mae and Freddie Mac all have a home owner first look programs.  That means that my buyers are only competing against fellow owner occupants and not investors.  This is a huge advantage to first time home buyers. HUD homes are also often competitively priced with FHA financing (for insurable property). HUD bidding is easy and everything else will seem harder then it needs.  I work for my buyers and not my comfort.  It is important to me that my buyers get a home that  works for them and I am willing to work hard and make my loan officers to work hard to make this happen.

I truly believe that part of the American Dream is to own your own home.  It makes us as individuals, the community and our country stronger.   Part of helping my clients achieve this dream is to offer them as many homes available in my community.