Personal income rose 0.4% in November after slight upward revisions in the previous two months. In a positive sign, wages and salaries increased 0.3%. Transfer income, originating mainly from fiscal stimulus gained 0.5%. Consumer spending increased 0.5% on the month and is up a modest 2.3% over the past year. For now, the main support to incomes and spending continues to be the government, which is not sustainable in the long run.

New home sales plunged 11.3% in November to an annual pace of 355k, compared to market expectations for a small gain to a rate of 438k. After recovering somewhat in recent months, new home sales have tumbled anew to a near record low. It may be explained in part by the earlier expiration date of the first-time buyer tax credit. Extension of the tax credit should help to lift sales in the next several months

Consumer sentiment, while slightly lower than the mid-month reading, increased to 72.5% in December from a reading of 67.4% in November. Consumers gave higher ratings for both current conditions and expectations month-over-month. Sentiment has not entirely thawed from severely weakened levels earlier this year but is at least on a modestly improving trend.

These numbers suggest continued strength in the foreclosure market in the Prescott, Prescott Valley, and Chino Valley real estate markets.  If you are looking to take advantage of the bargains out there right now, contact me.

Sadly, this is not always the case. Here’s an excerpt:

Some homeowners are finding that when they sell their homes for less than the outstanding mortgages — a so-called short sale — their mortgage companies are going after them for some or all of the difference. Mortgage companies are also sometimes taking legal action to recover unpaid amounts after a foreclosure is completed.

In a growing number of cases, holders of mortgages or home-equity loans are requiring borrowers in short sales to sign a promissory note, which is a written promise to pay back a loan or debt. Real-estate agents and attorneys say they have seen an increase in requests for promissory notes as mortgage companies look to short sales as an alternative to foreclosure.

In many states, lenders have always had the right to pursue former homeowners for unpaid mortgage debt. Yet until recently, most borrowers who ran into trouble were able to refinance or sell their homes and pay off their loans. Now, falling home prices are widening the gap between home values and mortgage balances, and the number of homeowners who can’t make their mortgage payments is rising as the economy has weakened. More than 3.8 million homes will be lost in 2009 and 2010 because borrowers can’t make their mortgage payments, according to forecasts from Moody’s Economy.com.

Mortgage companies are sometimes going after unpaid debt after a short sale or foreclosure.

Here are some factors they may consider:

How big was the unpaid debt?

Was the property purchased as an investment?

What are the borrower’s assets and income?

What is the policy of the investor or mortgage insurer?

Read the full article here.

 It’s true that in Arizona your primary residence is USUALLY subject to the anti-defficiency statutes, but there are exceptions.   Bottom line: before you call an agent who specializes in short sales, call your CPA and spend the $150 to find out if a short sale will leave you shorter than your think.

See this post: Common questions about short sale tax consequences

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Thinking of buying a home in the Prescott, Arizona area?  Perhaps one of the foreclosed or REO homes? 

Now is the time with the incredible decline in home prices and historically low interest rates!  Are you prepared to move forward? 

Before you answer yes, have you consulted a lender? 

If you are one of the 30% or so who do, congratulations!  Many others rush out to seize the opportunity and forget a vital step. 

Why is it so important?  Well, ask any lender and they will tell you how radically different the loan process is compared to three years ago.  

Gone are all the non-qualifying programs along with stated income loans for self-employed borrowers.  Higher credit scores are required and additional monies for down payments particularly for second homes and investment properties.  With Fannie Mae and Freddie Mac virtually being the only source for mortgages, they have enacted risked based fees for anyone possessing a credit score below 720.  With advanced planning you may be able to avoid these fees by ensuring your credit score does not cause you to pay  addtional monies. 

So don’t be insulted if your Realtor asks that you talk with a lender before being shown properties.  After all, nothing is as embarassing as finding that special home and, as your Realtor waits to prepare a contract, you are told that you do not qualify.  On the bright side, with these low rates, you may qualify for more than you thought.  Happy house hunting! 

For more information about the current financing market or to get pre-approved, call
Tom 928-775-9330 or email him at tomhenichek@cableone.net.

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 On Wednesday, the Federal Reserve agreed to purchase a large amount of mortgage securities since investors are sitting on the sidelines and not actively participating in these securities. 

This action spiked a short term rally in the stock and bond markets with the bond market seeing its largest yield decline since 1962.  Interest rates declined .25% but we are not sure how long this exuberance will last. 
 

Many bond experts are predicting that since the government is backing these securities, interest rates will continue to decline providing home buyers a significant savings.   
 

Keep your eye on the market and stay in touch – this could be the time for make that purchase!

For more information about the current financing market or to get pre-approved, call
Tom 928-775-9330 or email him at tomhenichek@cableone.net.

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Search for Foreclosed Properties in Prescott

Many of you are familiar with the $7,500 tax credit if you purchased a home after April 8, 2008 and before July 1, 2009.  Essentially, the government has given you an interest free loan for purchasing this home if you are not a high-income tax payer.  This credit must be paid back within a 15 year period.  If you sell the house prior to that time, the remainder is due in the year of the sale.
 

Another new program has been released by the IRS for those purchasing a home before December 1, 2009.  This program allows for up to $8,000 tax credit ($4,000 for married filing separately) which does not have to be paid back as long as you occupy the home for 36 months.  Again, this benefit begins to phase out for high-income earners ($75,000 or $150,000 for joint filers).  If you purchased a home on or before December 31, 2008, you are not eligible for this new program.

 This program is only available to first time homebuyers which includes those who have owned a home previously but not within the past 3 years pf the date of purchase.  Simply fill out IRS Form 5405 to claim this credit.

For more information about the current financing market or to get pre-approved, call
Tom 928-775-9330 or email him at tomhenichek@cableone.net.

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Arizona Laws

Important Note:  I am not a foreclosure lawyer; if you are facing foreclosure, you should consult with a Prescott or Prescott Valley real estate and foreclosure attorney. 

You can streamline the process  by familiarizing yourself with the Actual Statutes: Arizona State Revised Statutes Title 33:  Property.

State of Arizona foreclosure law summary

Judicial Foreclosure Available: Yes

Non-Judicial Foreclosure Available: Yes

Primary Security Instruments: Deed of Trust, Mortgage

Timeline: Typically 90 days

Right of Redemption: None

Deficiency Judgments Allowed: Varies

In Arizona, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”.

Power of Sale Foreclosure Guidelines

If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:

The trustee must record a notice of sale in the office of the recorder of the county where the property is located. Within five (5) days after the notice is recorded, the trustee must mail, by certified mail, a copy of the notice of sale to each of the people who are parties to the trust deed, except for himself. Additionally, the notice must appear in a newspaper in the county where the property is located once a week for four (4) consecutive weeks, with the last notice being published not less than ten (10) days prior to the date of the sale.

Optionally, if it can be done without a breach of the peace, the trustee can post the notice at least twenty (20) days prior to the date of the sale, in some conspicuous place on the property to be sold and/or he or she can post the notice at the courthouse or at a specified place at the place of business of the trustee in the county in which the property is located.

The trustee or the trustee’s agent must conduct the sale. The sale is for cash to the highest bidder, except that the lender can make a “credit bid,” which means to cancel out some part (or all) of the money the borrower owed the lender on the lean, instead of paying cash. A successful high bidder must pay the bid price by 5 pm of the day after the bid, other than a Saturday or legal holiday. Every bid is an irrevocable offer until the sale is completed, which happens when the bidder pays the bid price to the trustee’s satisfaction. If the high bidder fails to make the payment by 5:00 pm, the day after being notified of the option to buy, then the trustee may postpone the sale.

 The trustee may postpone the sale to another time, or another place, by giving notice of the new date, time and place by public declaration at the last place and time the property was offered for sale. No other notice is required. A trustee may also, by written agreement, extend the time for a buyer to come up with the payment.

Once the sale is complete, the proceeds will go to the payment of the obligations secured by the deed of trust that was foreclosed, then to junior lien holders in order of their priority. The successful bidder gets a trustee’s deed, which provides conclusive evidence that the trustee conducted the foreclosure sale property.

A note regarding Deficiency Suits: A lender may not bring a deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure, provided the property was a single one-family or a single two-family dwelling. This is so even if the high bid at foreclosure was less that the balance due on the loan. However, in foreclosures against other types of property, a deficiency suit is allowed, but is limited to the difference between the balance owed and the fair market value of the property, and then only if the suit is brought within ninety (90) days of the power of sale foreclosure.

To Reference the Actual Statutes: Arizona State Revised Statutes Title 33:  Property

Other references from the web:

Foreclosure and The Right of Reinstatement

Information Videos from LegalInfo.com on Foreclosure

Bankruptcy Helpers, Inc., Arizona Law Firm Specializing in Foreclosures and Bankruptcy

Facing Foreclosure?

Often we are asked by Prescott, Prescott Valley, and Chino Valley homeowners about their options when they are facing foreclosure.

 We are not lawyers or accountantS and you should consult with professionals in those areas before making any decisions that will affect your credit for at least 7 years.

Here are some of the frequently asked questions we get:

1. I missed some payments on my property recently, am I in pre-foreclosure? 

There are a few options you have to avoid having a foreclosure on your credit history.

1. Contact your mortgage company and find out if you can reinstate the loan. Sometimes they will allow you to put any late payment fees and interest on the backside of your loan and bring you into compliance.
2. If you have had income adjustments or you will not be able to continue payments you should try to sell your home as soon as possible. Making contact with your mortgage company is important. They want to see the property being marketed. Be aware of time restrictions and market conditions. Also inquire about what you owe vs. what your property value is worth. A short sale may need to be negotiated. You should talk to the lender about the possibility of a sales price below what is owed on the mortgage and what steps will need to be taken.
3. If your situation has changed, refinancing through another program might be a good option. You will want to seek advice of other lenders and programs that may be available to you to lower your monthly payment.
4. There is a possibility of adding a 2nd mortgage and using that cash to help bring you current with your loan. This avenue should only be explored if there was a short term reason for the delinquent and missed payments.

2.  Should I wait for the mortgage company to foreclose?

Whatever you do, don’t wait for the mortgage company to foreclose. Contact a specialist right away to discuss your possible options. Be aware of individuals or companies that may try to profit off of your distress. It is always best to contact an agent or someone that will represent your best interest.

3.  What should I do if someone offers to buy my home?

If you have someone that wants to pay cash for your house, tell them that you will select an agent to perform a Broker’s Price Opinion (BPO) and they will need to pay $100-$150 for the report. Be aware of companies that will offer to buy your property and allow you to stay there. They usually offer to set you up on a lease to own option. Contact an expert to make sure this company is legitimate. There are many companies that will take advantage of your situation and it could create a much worse outcome.

4.  What else should I do?

Do Not Ignore The Problem

If you know you are having trouble making your payment and/or are receiving letters from your lender you must confront the issue. The further behind you become on your payments the more difficult it will be to modify your loan, so act fast.
 
Contact Your Lender

Did you know it costs the bank over $58,000 out of pocket to handle the average foreclosure? The lender does not want your house! They will often be willing to do a loan modification in order to ensure that you are able to stay in your home. Be sure to keep in contact with your lender, refusing to open your mail will not be excused in court.  If you need your bank’s phone number, check this list of mortgage company phone numbers: 

List of Loan Servicer Phone Numbers

Know Your Rights and the Laws in Arizona

Be sure to re-read your loan documents and make sure to educate yourself on the laws and process in Arizona:

Arizona Foreclosure Laws 

Arizona Foreclosure Process

Arizona Foreclosure Timeline

Arizona Attorney General’s Foreclosure Information

Contact a Housing Counselor

Try to find a HUD approved counselor. Often a HUD counselor will offer their service for free or at a very low cost. Additionally there are several businesses that can help you with your loan. You must beware of scams; there are plenty of businesses that claim to have the ability to get rid of your debt and mortgage burdens. Read everything carefully and understand that you should never sign anything you do not understand.
 
Cut Back on Any Excessive Spending

Create a list of priorities such as health care and your mortgage, and take a look at assets you have. For instance, you may want to give up your second car or sell off your life insurance policy. It is important to let your lender know that you are making an effort to pay your mortgage.

The most important step to avoiding foreclosure is to explore all of your options. Only by confronting the problem head on can you tackle the issue. Don’t let yourself become a statistic. Take the steps necessary to avoid foreclosure today.

More resources on the web:

 Options for Homeowners Facing Foreclosure

 Guide to Avoiding Foreclosure – HUD

Get a better interest rate

Well, for starters we have lower prices than anytime in the recent past, great interest rates and the possibility of seller concessions.  Every product today has at least a guarantee of 3% seller concessions.  So, if the seller will or cannot lower their selling price, they may allow some concessions in order to sell their home.

This is only one of the reasons why if you are thinking of purchasing a home, you should talk over your situation with a lender.  In today’s cash poor society, your lender can assist in this process.

 After all, if you need assistance with your closing costs, your lender will be the first to advocate for you.  The best way to document this is to come up with a figure for the seller’s contributions.

The 3% is based on the loan amount and if the contract states that the amount is for closing costs, some lenders may not allow the contribution for prepaid items i.e. interest, home insurance and property taxes.  With a specific amount stated and contributed, that money can be put toward prepaid items or be used to buy down your interest rate. 

Today, the spread between interest rates is lower than at any time in the past and this option may be worth considering.

The credit system is ripe for errors and something from your past may still be lurking on your report even though you thought it was corrected.  With the number of foreclosures, credit reports are weighed heavier than at any time in our history.  Being pre-approved for a purchase will cost you nothing but time and will put your mind at ease when the time arrives for you to make your move.

For more information about the current financing market or to get pre-approved, call
Tom 928-775-9330 or email him at tomhenichek@cableone.net.

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