North Phoenix Agent Blog

I’m noticing an uptick in the number of roadside cardboard signs that have something to do with real estate lately. You know the kind - here in Phoenix they’re usually hand-inked, on cardboard or oak tag, stuck in the ground with a stake.

Surely it’s a function of the bad economy, the looming recession, the credit crisis and the housing ‘bubble’.  Whatever, I figured it would make a good blog post or two. Here’s today’s Real Estate Road Sign:

I didn’t call to find out exactly what scam they’re peddling, but rest assured it isn’t as good as it sounds. No one is going to pay off your mortgage out of the goodness of their heart and not expect something for it. Either they’ll refinance you under their own (probably dubious) terms, or they’ll pay off the mortgage and let you stay in it, as a tenant.

There are some instances where it might be beneficial to let someone buy your home from you and then arrange to stay in it as a tenant. But contact a trusted Realtor or mortgage lender to do it. Placing your single largest financial asset into the hands of someone who advertises on roadsides with hand lettered cardboard signs is not in your best interests.

If this is a refinancing “plan” it probably involves people who look and sound a lot like the Sopranos and there are a lot of other, better options for refinancing if you’re facing foreclosure.

If it’s a plan to buy your home and rent it back to you, be very careful. There are a lot of scams out there now that start out this way, and then whack you with huge penalties if your rent is even an hour late. Worse, some of those rent back to owner schemes allow the company you’re dealing with the evict you from your home without notice if you pay late.

If you’re having financial troubles large enough to even think about calling the number on this sign, you’re probably better off contacting someone about a refinance or a short sale.

Related Posts

1. Real Estate Road Signs - Buy A House with $500 Down
2. Hire a Professional Lender, Not Your Buddy Who Does Mortgages Part Time
3. How Your FICO Score Determines Your Mortgage Interest Rate by the XBroker (not light reading but highly worth your time)
4. The AZ Mortgage Guru updates the status of the federal housing assistance bill
5. Try the federal Hope Now campaign designed to help you stay in your home

Today it was announced that the FDIC (Federal Deposit Insurance Co) shut down IndyMac Bank after an old-fashioned ‘run on the bank’. IndyMac customers withdrew $1.3B from IndyMac branches since a June 26 letter written by Senator Schumer (D-NY) that said the bank posed “significant risks to taxpayers and borrowers” was leaked to the public.

What Happened to the Money?
There’ll be a name change, and a management change. For insured depositors (most average folk), their money isn’t going anywhere. They’ll still have have access to their money through the new name - IndyMac Federal Bank - and the new managment, courtesy of the FDIC.

From an InmanNews story: Insured depositors and borrowers will automatically become customers of IndyMac Federal, FSB and will continue to have uninterrupted customer service and access to their funds by ATM, debit cards and writing checks.

Uninsured depositors will be contacted by the FDIC to meet with their claims people. The FDIC typically insures bank deposits up to $100,000.

The FDIC has established a toll-free number for customers of IndyMac Federal Bank, FSB. The toll-free number is 1-866-806-5919 and will operate today from 3 p.m. to 9 p.m. (PDT), and then daily from 8 a.m. to 8 p.m. thereafter, except Sunday, July 13, when the hours will be 8 a.m. to 6 p.m.

Or visit the FDIC website: http://www.fdic.gov/bank/individual/failed/IndyMac.html for further information.

You can read and hear the story of the latest Congressional foul up over the housing bill here, on National Public Radio’s show Marketplace or over at Reuters.

• See Bloomberg’s take on the story
• And see the New York Times article yesterday for background on the bill, which has a 3-pronged plan to:

1. Help homeowners facing foreclosure by assisting them with a refinance, or getting banks to write down some loan balances,
2. Offer incentives to first time home buyers who want to buy currently vacant homes (many foreclosure properties sit vacant and risk becoming blight in the community), and
3. Implement some new regulatons on Fannie Mae and Freddie Mac, the government regulated lending behemoths

Apparently, our US Senators have not signed this bill today as originally thought and intended. Instead, they spent the day haggling over whether to add energy tax breaks to the bill. Democratic Senate Majority Leader Harry Reid wanted the bill passed today (and most sources say it would have), but Republican Senator John Ensign wouldn’t let the bill go to a vote without the addition of his pet project, $7 billion in renewable energy tax cuts.

Encouraging the use of renewable energy sources is a laudable, noble goal. But what has it to do with the foreclosure crisis? Nothing. Senator Ensign is trying to tack his tax credit bill onto the foreclosure assistance bill simply because he knows foreclosure assistance will pass, and his tax credits plan likely wouldn’t, unless it is attached to a popular, will-pass measure.

American homeowners are hurting, and badly in many places. I don’t often like to sound like I’m commenting on politics here. It isn’t the place. But this is just truly depressing news. It seems our elected officials still don’t get it. Some of them would still rather wrangle and scrap over pet projects with little chance of success than get behind a much-needed bill that was sure to pass anyway and will help tens of thousands of truly hurting Americans. 

By the time the Senate returns from the Independence Day holiday to deal with this bill again, tens of thousands more Americans will have received a foreclosure notice on their home. The bill will almost certainly pass, even with Ensign’s tack-on tax credits. For shame, Senators. I wonder which of Ensign’s ‘close friends’ and business associates stand to benefit from the $7 billion he’s going to hand out for renewable energy sources?

Related Posts on The North Phoenix Agent Blog

1. Definitions of REO, Foreclosure, Short Sale and Bank Owned
2. Mosquito Eating Fish for Green Pools?
3. Countrywide Offers Assistance to Struggling Homeowners
4. I Got a Notice of Trustee’s Sale. What Now?

The Wall Street Journal says the US housing crisis is over. They actually say we hit the bottom in April.

Of course, all real estate is local. Your neighborhood may be doing worse or better than the national average. Outlying areas like Queen Creek, Surprise and Buckeye are still experiencing severe downward pricing pressure as the foreclosure wave continues. Established neighborhoods close to central Phoenix and central Scottsdale aren’t faring so badly.

You can check out local real estate statistics by ZIP code at Jay Thompson’s Phoenix Real Estate Home. 

From Inman News, here’s an excerpt from an article they ran today about a mortgage lender getting sued for shenanigans.

Leib Pinter, 64, is accused of fraud in connection with the alleged theft of $44 million in proceeds from refinance loans funded by Fannie Mae.

According to an indictment filed by the United States Attorney for the Eastern District of New York, Pinter’s company Olympia Mortgage Corp originated and serviced mortgage loans owned by Fannie Mae. Some of those loans were refinanced through Olympia, with Fannie Mae wiring money to an Olympia account.

Instead of paying off the underlying mortgage loan by remitting the outstanding balance to Fannie Mae, Pinter is accused of pocketing the proceeds. By the time the scheme was discovered, Fannie Mae held nearly $44 million in unpaid, but refinanced, mortgage loans from Olympia, prosecutors said.

Yikes! Maybe in addition to a terrorist watch list, we need a lender fraud watchlist. It might help solve the problem we seem to be having, where most folks want to help homeowners who got duped into a loan they couldn’t afford, but nobody wants to help guys like Pinter and homeowners who knowingly took out a mortgage they couldn’t afford.

Thinking about buying a home? Have questions, need info, but aren’t ready to speak with a lender yet? Have a fear that a pushy salesperson will bug you till you sign?

See this awesome glossary of mortgage terms compiled by Jack M. Guttentag. Jack is Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania, and founder of GHR Systems, Inc., a mortgage technology company. He contributes to InmanNews.com where I get my daily fix of real estate news. You can see excerpts of Inman headlines on my main website, the NorthPhoenixAgent.com.

Related Entries:

• PMI Defined
• What’s an 80/20 Loan?
• How Much Earnest Money is Enough?

The UK Bank released a statement today that says the worldwide credit crisis is being overstated, and the financial market will gain strength in coming months as investors realize the impact of the subprime mortgage crisis wasn’t as bad as we all thought it was.

I’m no expert on the worldwide financial markets, but being in sales does give you the chance to hone your people watching skills. The UK Bank’s statement seems logical. Pendulums swing, and then swing back, before settling into the new normal.

Overreaction in the residential mortgage market was bound to happen, given the easy lending standards that prevailed over the past couple five or six years. For a while there you could get a mortgage as long as you could fog a mirror. Lenders are waaaay more restrictive these days. That’s not to say you can’t get a mortgage. You can. Just be prepared to provide documentation in the form of tax returns, pay stubs, bank account statements and the like. If your income comes from anything other than W-2 wages, you could have a difficult time getting a home loan right now.

But I think the UK Bank is right, if only because they’re describing a typical human reaction: overreaction, followed by settling down.

From Inman News, I got a eblast news update that gave me a little more insight into why lenders maybe aren’t so eager to modify loan terms for homeowners facing the possibility of foreclosure.

“On mortgages carrying mortgage insurance that go to foreclosure, investors are protected up to the maximum coverage of the policy, which is usually enough to cover all or most of the loss. This discourages modifications. Why do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer?”  So says Jack Guttentag, professor emeritus of finance at The Wharton School at the University of Pennsylvania. (I found Jack’s comments at Inman.com and I think the site requires a free registration to view the article)

Unlike my last post proposing a “fix” for the foreclosure mess, I’ve got no advice or ideas on this one. I assume it’s the investors who bought the loans from the original lender who are getting payouts from the insurance funds. The bulk of today’s foreclosures are loans carrying private mortgage insurance, since many of them were exotic 80/20 and 80/15/5 loans which left homeowners with little or no equity in the property. Since the news is filled with stories of big banks announcing big losses due to their involvement in the mortgage meltdown, I guess it’s just the banks and the homeowners who are paying the price. Investors (apparently) have their losses covered by insurance.

Being a political junkie, I’m fascinated by the various “fixes” offered by The Big 3 to help American homeowners out of the foreclosure mess. Hillary proposed a moratorium on foreclosures. Congress was debating allowing judges to renegotiate loan terms. Obama …. well, I like him lots but I forget what he proposed. And McCain just yesterday offered a plan whereby homeowners could “go to any post office” and fill out a simple form to apply for a new home loan.

Being in the trenches myself, so to speak, I’m not thrilled by any of these plans. Barack, I don’t remember what you proposed to help homeowners but I still like your inspirational change message. Most economists say Presidents don’t impact the national economy one whit, so I’d rather have someone inspiring sitting idle in the Oval. Billary: a moratorium is helpful only if the homeowner can resume making the payments at the end of the term.

John, I respectfully submit that most American facing foreclosure aren’t having trouble applying for a new loan; they’re having trouble getting one. Why? Because they can’t afford the current payments, they frequently owe more on the house than it’s currently worth, and to rub salt in the wound, they’ve dinged up their credit score badly by missing a few mortgage payments they can’t afford.

My Plan To Fix The Foreclosure Problem (and maybe enter the presidential race)

• A moratorium on foreclosures for 6 months
• Sellers must attend counseling and sign an agreement to save their usual mortgage payment for the 6 months of the moratorium
• Congress directs lenders to do the following: (1) write down principal, (2) lower interest rates and use fixed (not adjustable) rates, (3) lengthen loan terms, and (4) use the homeowners’ credit score from before they missed their first mortgage payment to calculate the refinance terms

If done properly, both homeowners and lenders can win. It won’t be easy but it’s going to be awfully difficult to ride this out without doing anything. Under this plan, homeowners will build a little savings account to guard against future emergencies, and come out of it with a future mortgage payment they can afford.  Lenders get to charge & collect more interest over the life of the new, longer loan and write down a heckuva lot less in losses through principal write downs than through out and out foreclosure. (Some of the out of work mortgage lenders could get a new, temporary job as mortgage & credit counselers too, although they make a easy scapegoat in this crisis so that might be a hard sell on Capitol Hill.)

Handy Example - Homeowner owes $250,000 on a home currently worth $215,000 and struggles to make the monthly payment on their post-adjustment-period ARM loan, which began with a teaser rate of 5.125% but is now at 7.25%.

• $250,000 loan at 7.250% for 30 years = $1705 a month, principal & interest
• $225,000 loan at 6.000% for 45 years = $1206 a month, pricinpal & interest

While the homeowners are probably rejoicing at their $500 a month savings, notice that the lender wasn’t forced to write down the entire pricinpal loss. The home is worth only $215,000 but the homeowner refinances $225,000. This should prevent the talking heads from ranting that we rewarded folks who knowingly got in over their heads. Importantly, this should help more Americans facing foreclosure actually stay in their house and keep making mortgage payments they can afford long into the future. Finally, fewer foreclosures equals less downward pressure on home values.

Sure, some homeowners won’t save the money they’d normally spend on mortgage payments. Sure, some lenders won’t write down the principal and/or interest enough to make a difference to the homeowner. Sure, some homeowners will still be so angry and (dare I use the word?) bitter that they’ll still choose to walk away from their abode, stripping it bare on the way out the door. But I think it’s better to try than to do nothing.

I’m sure there are other problems with my plan, holes I didn’t see and issues I didn’t think of. I’d like to know what readers think. I’m a relative guppie in the blogging world compared to some of the big fish who (graciously) read me. Want to leave your 2 cents? Please do! 

 This post inspired by my Dad, the Original Political Junkie. He’s got a steel trap mind for everything that happened in the political arena since about 1954, and he should have been making millions in Washington as a policy wonk or a Senior Advisor on anything. He chose instead to quietly step in to help a formerly single Mom raise her 2 kids. I’d be lost without him.

A few days late with the update, but it seems that February 28, 2008 brought another, final ruling from District Court that AmeriDream is OK to continue funding dreams by providing buyers with a down payment for the purchase of a home. Yay!

Related Posts: 
How AmeriDream Works

HUD Smacked Down By District Judge

AmeriDream Continues Funding Dreams

“Subprime” Defined

Are you a first time home buyer shopping in Arizona? If so, you’d better double time your shopping trip. Starting next month it’s going to get more expensive to buy a home in Arizona.  Why?  The rules for PMI are changing.

PMI is Private Mortgage Insurance. It’s required on any home loan made without at least 20% down payment. It protects the lender against the risk that you, the less-than-20%-down buyer, will default on your loan.  Your monthly mortgage payment is higher, but that increase is way less painful than saving 20% which could take years and years for most of us.

Starting in March 2008, the nation’s 2 biggest PMI issuers are restricting who gets a PMI policy. Industry leader MGIC Investment Corp’s limit is a minimum of 5% cash down; it’s 3% for competitor PMI Group. The change applies in areas the companies consider “restricted markets”.  These markets include the entire states of Arizona, Florida, and Nevada, as well as the metropolitan areas of Washington, D.C., Detroit, Chicago, Boston and Atlanta.

This change will hit first timer buyers hard, since they’re rarely rolling around in spare cash.  Less than 3% to 5% cash down = no PMI policy = no home loan = no new home smell in your future.  What’s a cash-strapped buyer to do?

1. Hurry. If you’re buying to live in it and plan to stay 5+ years, don’t worry about whether home prices will fall a little bit more in the rest of 2008 and 2009. There are 55,000 Valley homes to choose from, Sellers are being exceptionally accommodating, and interest rates remain relatively low. It’s a buyer’s market like we haven’t seen in decades. Bold buyers can make a killing, long-term.
2. Hope that your lender can get you a PMI policy from somebody other than the 2 big boys in the game, MGIC & PMI Group.
3. Use a Down Payment Assistance program like AmeriDream and Nehemiah Corp. But note that these have time limits too. They won’t be around forever.
4. Calculate how long it would take you to save 20% on your expected home purchase. Then evaluate whether buying now and risking a little price deflation in 2008/09 is better or worse than waiting X years till you have 20% down saved. For most buyers, buying sooner makes more sense than waiting & saving.
5. As long as you’re calculating your savings rate in #4 above, be realistic. On paper I can save tens of thousands per year. In reality, my savings account needs a few human growth hormone injections to beef it up. There’s always a movie to see, a new gadget to buy, or a round of drinks to spring for. Most of us don’t save as much as we think.
6. Don’t forget that regular mortgage interest is tax deductible, and so are PMI payments. You’ll have a fat deduction on your federal income tax statement that might offset some of the temporary pain of budgeting to pay a mortgage every month.

 New PMI policies are just another brick in the wall of reasons to buy an Arizona home now if you’ve been fence sitting for a while.

Don’t Get Old Trying to Save a Down Payment!

AmeriDream is a fantastic resource for first time buyers who are having trouble saving the downpayment on house. With price appreciation like we’ve seen in the past few years, even 3% of a home purchase price can be extraordinarily difficult for first timers to save.

(For those who like my writing style, read on. If you just want to cut to the chase, scroll down to below the smiley face.)

Three percent of the median home price in the metro Phoenix area is about $8,000. Plus buyers need another $2,000 to $4,000 for closing costs. It’s super important to have some savings leftover after the housewarming party for unforseen home emergencies, which pop up like those Whack A Mole games at the arcade. Then, it’d be nice to have some money to cover a few cosmetic upgrades once you’re in the house - like maybe switching out the lighting fixtures from 1973 - ’cause the median metro Phoenix price of $263,000 doesn’t buy granite counters and stainless steel appliances in this town. All in all, you’re gonna need about $10,000 or $15,000 grand to do it right. Sure, you could skate by with the bare minimum savings, but being house poor leads to lots of dinners based on ramen noodles.

How in the heck are first  timer homebuyers supposed to save up all this money?! You could do what my cousin in Pennsylvania did. He lived with his mother in law for 3 years while he (an architect) and his wife (a loan processor) saved pennies. They accumulated $40,000 at  the end of the three years. Bought a house and six months later my cousin saved his marriage by refinancing to pull out a little equity. He used it to “help” send his mother in law to far away Florida.

Or, you could rely on AmeriDream. Here’s how it works. Federal housing law allow 5 types of people/organizations to gift down payment money to a home buyer. Sellers are expressly banned from gifting down payment money to buyers. Group 1 is parents. Parents are allowed to gift money to kids. (There’s 4 other categories: government entity, religious organization, 1 I can never remember, and the 1 below).

There’s a lovely little loophole in federal law which allows a non profit agency to gift down payment money to buyers. Somewhere back in the 1990’s a couple of nonprofits appeared and did just that. Nehemiah Corp is the other one I’m aware of.

These nonprofits set up a neat little triangle, so to speak, between the seller, the buyer, and themselves. The seller agrees to make a “donation” to the nonprofit org in the amount of the buyer’s needed down payment, plus a small administrative fee that’s usually about $300. The nonprofit turns aroun and “gifts” the down payment (minus their admin fee) to the buyer. The title/escrow company coordinates it all after the Realtors write it all up in nice legalese. And it’s all totally legal, tested by dozens of lawsuits. Most recently, last October HUD sued AmeriDream and got their shirts handed to them in federal district court.

AmeriDream claims to have given out over $400 million in down payment assistance grants which translates into over $14 billion in housing. Nehemiah says they’ve given out over $999 million in grants. I love this country!

If you’re a buyer who wants to use a down payment assistance program, ask around until you find a Realtor and a lender who done these types of deals before. There’s only a little extra paperwork involved, but the deal goes a whole lot smoother if “your people” know how to explain it to the seller properly. Hmmm…. I’m a Realtor who’s done AmeriDream deals. Nehemiah Corp too. Hmmm….

I try to stay away from politics here, but it pleases me to no end when one of George W’s minions gets a public slap in the face for doing something that’s blatantly political and hurts the Little Guy in the process.

You’ll recall that on October 2, the Housing & Urban Development department (HUD) issued a ruling stating they’d disallow any more Down Payment Assistance programs (DPA) as of today. See post about AmeriDream & HUD here.

HUD later ruled on October 22 (for fear of the federal district court’s review) that they’d extend the DPA programs till next February.  Yesterday a federal district judge handed down an injuction against HUD. He said their October 2 ruling lacked “reasoned analysis” and was based on “flimsy support”. You know you’ve made a big boo-boo when a federal judge calls your lawyers ”flimsy” in public.  Ouch! Somebody over at HUD is gonna lose a job over this.

The good news for first time home buyers? HUD can’t shut down DPA programs. You don’t need to save tens of thousands of dollars for a down payment. Good folks like AmeriDream will continue to help by gifting you the down payment (by asking the seller for a donation which covers your cost).

Take that HUD! Score one for the Little Guy and bring on the buyers. Gawd knows we need ‘em now more than ever.

I’m in a cranky mood this afternoon, because I spent a full hour on the phone with a client’s lender trying to get an agreement that will help her avoid foreclosure. (see yesterday’s entry)I call the lender to tell them that the current payment ($1461 a month) is unaffordable, and can’t we work out an agreement where the loan is re-financed for 40 years instead of 30? I explain that as the neighborhood Real Estate expert who’s sold homes just like these for the past 3 years, I’m here to say you, Mr. Lender, will lose at least $75,000 if you issue the foreclosure notice and we short sale it.  So can’t we work together to do something that results in a payment the homeowner can afford?

I’m thinking this is a reasonable plan: the lender avoids a huge write off and gets 10 years of extra interest payments, the homeowner gets to keep her home at a payment she can afford. Certainly not the lender’s first choice, but a reasonable alternative if they’re at least a little creative and progressive.

They turned me down flat. Wouldn’t even discuss it. Also wouldn’t discuss any other plan. No forbearance, no alternate arrangements, they won’t try to refinance her…. You want to hear the lender’s brilliant plan? The homeowner should send an extra $862 per month for 4 months, and then she can go back to her regular $1461 a month payment and everything will be fine. Oh, and for a limited time only, because you’re such a good customer, we’ll ding your credit rating every month with a late code on the extra-big payment.   

What the heck kind of plan is that? If she can’t afford the current $1461 a month, what makes you think she’s got $2323 a month? You think she’s going to Vegas every weekend with an additional $862 and she just “forgot” to send to you?! Sheesh!

So all’s I’m sayin’ is, if you’re even a day behind on your mortgage payment, call your lender. If you think this isn’t a once and done fluke of a situation, call. If it might be a whole month late, or if some emergency came up, or if you just can’t afford the payments… call right now. Don’t wait until you’re 3 months behind like my client did. The banks just don’t have a lot of wiggle room to negotiate another deal if you’ve left it go for months. Call today. Please.

Related Posts:

1. REO, Foreclosure, Short Sale - What’s the Difference?
2. I Got a Notice of Trustee’s Sale, Now What?

You’re an Arizona homeowner who’s been getting behind in your mortgage payments. Today’s mail included a document entitled “Notice of Trustee’s Sale” that says the county will auction your house to the highest bidder 3 months from now.

Now what?

First, it’s crucial to remember that you still own your home. Too many people think they’ve lost the house already and give up. Don’t! There are many ways to avoid foreclosure. Consult a pro; you’ll need the expert advice. Talk to a Realtor, a CPA, your accountant, an attorney or a bankruptcy specialist. But do it quickly! Arizona’s time frame is 90 days between issuance of the Notice of Foreclosure and the actual auction.

Foreclosure Auction Sale   If you do nothing, your home will be auctioned to the highest bidder 90 days after the date of the Notice of Trustee’s Sale. You’ll need to be completely out of the house within hours of the auction. You as the homeowner will have no control over this process, unless you speak with your lender(s) to convince them to stop the auction. How do you do that? Read on.

Work Out a Deal with Your Lender(s)    Call your lender and ask for the workout, foreclosure, or loss mitigation department. Ask them to help you work out a new plan to repay your loan. Be prepared to explain and document your monthly income and expenses. And remember they’re recording your conversation and can use any information you give them. See the FTC website for a great simple FAQ sheet on consumer rights in debt collection situations. For temporary hardships like a lost job or illness, you might be able to get a Forbearance Agreement where you temporarily don’t pay the mortgage and catch up later. Read and understand what the lender asks you to sign, if anything. You should almost certainly consult an attorney. Remember, if you have more than 1 home loan, you’ll probably need to have this conversation with each lender.

Refinance Your Mortgage Debt     If you still have decent credit, and a little equity left in your home, you might be able to refinance. Ask more than 1 lender about a refinance plan. Don’t choose your new lender only by the rate you’re quoted! The Mortgage Porter explains why.

Sell Your Home   Never an easy choice, but worth considering. If you owe more on the house than a buyer will pay, you’ll have to involve your lenders and get their OK on a short sale. In a short sale, the lender agrees to accept less in payoff than you owe them. There can be serious credit consequences to a short sale, so always consult an attorney or accountant. Trust me when I tell you that you’ll need a seasoned Realtor if your home is in metro Phoenix in order to successfully short sell your house. Homes for sale are at an all time high, while the number of homes that actually sell hit a new low in September. (July 2008 update - houses are still selling slowly and the overall market stats aren’t good, but short sales seem to be about the only things that DO sell). How to find a great Realtor? Get your friends’ recommendations on Realtors. Visit their websites and blogs to narrow your list to 2 or 3. Then interview those few. Choose the Realtor your gut tells you is the best fit for you. Read my series on How to Buy a Short Sale Home for the inside scoop on how these sales happen.

Give Back Your Home   In Arizona at least you can give your home back to your lender through a transaction called a Deed in Lieu. Note, this is much different than “mailing back the keys”, which is a seriously bad idea and essentially the same as doing nothing. A Deed in Lieu involves talking to your lender(s) and negotiating a deal you can both live with. This option might have less serious tax consequences than a foreclosure auction or a short sale, but it’s not a perfect process either. Laws and lender regulations are changing rapidly in this arena, so do a little online research before you decide on doing a short sale or a deed in lieu.

For some, bankruptcy is an option. For this one, you absolutely need a pro. Do a little research at www.martindale.com and ask friends & colleagues for recommendations before choosing a bankruptcy attorney. Ask the attorney if he provides a list of satisfied past clients and whether you can contact them.

And finally, consult a professional. Whether that’s a Realtor, an accountant, or an attorney, you’re going to need the help. Don’t ignore the problem, and don’t forget that you still own your home. Do something, anything to get out of this jam. If you do nothing you’ll surely lose your home. But doing some or all of these steps can help keeps you happy & snug inside your beloved abode.

Update: Arizona’s Mortgage Guru Shailesh Ghimire has a spectacular post covering a lot of the same territory I do here. And as usual, he uses fewer words and is clearer than I.

Related Posts

1. REO, Short Sale, Foreclosure - What’s the Difference?
2. The Inside Scoop on Short Sales
3. Favorite lender Shailesh Ghimire of CTX Mortgage explains the credit consequences of losing your house (none of them are pretty)
4. Senate Doesn’t Sign Housing Bill (June 200