For example, if you are buying a home in the short sale or foreclosure market it doesn’t make sense to seek out a realtor with seasonal rental background when that person may not have experience with the quirks and paperwork that are involved in a short sale. They may not have the right experience or contacts for working with banks in the foreclosure market and someone that has closed on more of those types of deals.  Instead, seek out a realtor that has been through the routine.

In addition, make sure that your realtor understands the goals and limitations in place while going through the real estate purchase and has an attitude that you can get along with.  If the limit on a purchase is 100K and a realtor is showing houses at 150K, you may need to clarify your limits if you wish to continue working together.  It’s always good to make sure you get along with your realtor as well.  I know it sounds cliché but if you can’t stand being in a car with someone for an hour or two while you’re out looking at properties, imagine how poorly things could go when money and contracts enter the equation.  While talking to a realtor, think of some general questions you would ask if you were interviewing someone for a job.  Are they motivated?  Are they presentable?  Are they responsible?  Are they knowledgeable and up to date on real estate trends? I’m Ron Burgandy?

Any realtor worth their weight in salt should be able to take care of a “standard listing” but if you are looking for a property in a niche market, do some research and make sure your realtor is a specialist in that market. Whether it is a first time purchase or a seasoned investor’s purchase, the process should always be a comfortable and positive experience.

Well, the answer is maybe.

It used to be that in order for many banks to even consider your home for a short sale, you had to be a few months behind on your mortgage payments. I never really heard a detailed explanation of why this was, but I am convinced it was simply a good way to filter out the toe dippers- those people who didn’t really want or need to, but wanted to see if they could. These days, that seems to have gone out the window for most banks. The reality is that often times you can successfully short sell your home without being late or having missed payments.

Why would someone continue to pay on a home they are short selling? Well for starters, much of the damage that it done to a person’s credit during a short sale comes from the missed payments. If your short sale takes 4 months to complete and you stopped paying 3 months ago, that means that at the time you close, you have a 90+ day late payment showing on your credit. Paying through the process avoids that series of 30, 60, 90+ day dings.

And now for the coin flip.

If you are a person who is short selling their home because you lost your job, are drowning in debt, have crazy medical bills, or one of the hundred other ways someone can financially slip under these days, there is no way I am going to recommend you drain your last bit of savings paying for a home you will NOT own in a few months. I’m not advocating NOT paying, but I certainly can’t advocate doing it if it will put the final nail in your financial coffin. Often times, people realize too late that they have been bailing out the Titanic with a child’s water pale. A home gets sold or foreclosed on, and they walk away with $0 to start their new living situation. If that is your case, I think you know where I stand.

by Joseph Maggiore, Realtor/Owner

Either way, you can see how the answer is, maybe. Often times there is a surprisingly little amount of planning that sellers put into the short sale process. These days, many people are beginning to realize that it infact requires just as much thought as was dedicated to the decision to buy in the first place.

The moral of the story is- think your decisions through, all of them, and make sure you are planning for YOUR big picture!

For more information on your home short sale, visit our website or contact me directly!

Please call us today for more details,

Phoenix Business Journal, Jan 2011

Banks and mortgage lenders are shunning a $125 million foreclosure assistance program started by the state of Arizona in September.

Thus far, only one — National Bank of Arizona — has agreed to participate in a principal reduction program started by the Arizona Department of Housing.

Of the 1,055 Arizona home­owners who have applied, only one has qualified for help from the program. A National Bank borrower is slated to get $40,000 knocked off a distressed home loan. Executive Vice President Greg Wessel declined to give details about the borrower, but he said two or three more are up for approval.

The Housing Department started the Save My Home AZ program after receiving

$125 million from the Obama administration’s Hardest Hit Fund, which aims to help states with high foreclosure rates. Arizona has one of the highest foreclosure rates in the country, along with Nevada, California, Michigan and Florida. Half of the mortgages in Arizona are underwater, according to research and business services company CoreLogic.

The state program allows for borrowers facing foreclosure to receive up to $100,000 in principal reduction if their lenders agree to split that loan forgiveness with the state. To qualify, a borrower must be 60 days behind on the mortgage and be facing foreclosure.

ADH spokesman Shaun Rieve said Fannie Mae, Freddie Mac and major national banks are passing on the voluntary Arizona program.

“The program has been slow getting started due to significant resistance from lenders to consider any other foreclosure prevention programs beyond what they had to implement through (the U.S. Department of) Treasury’s HAMP program,” said Rieve, referring to the federal government’s Home Affordable Modification Program.

“When we provide examples of how our program can actually save them thousands of dollars, keep home­owners in their homes and stabilize neighborhoods, they answer that they just do not have the resources to implement another program,” he said.

RESISTANT BANKS

Bank of America, JPMorgan Chase & Co. and Wells Fargo — the three biggest banks in the Arizona market — are not part of the Save My Home AZ program.

Chase and Wells officials said they prefer forbearance programs and giving temporary help to unemployed borrowers rather than straight-up principal reductions. Chase participates in forbearance programs in Michigan and other states.

Both banks also are working with customers outside federal and state programs to help them avoid fore­closure.

Wells Fargo spokesman Tom Goyda said his bank has forgiven $3.7 billion in principal nationally since 2009, but also is focused on finding ways to help out-of-work borrowers. Both Goyda and Chase spokeswoman Mary Jane Rogers said their banks continue to talk to Arizona officials about the state program.

Freddie Mac spokesman Brad German said the underwriter is OK with forbearance, but still is considering the overall impact of principal reductions and forgiveness. Fannie Mae officials did not respond to requests for comment.

Bank of America spokesman Rick Simon said his institution also is talking to Arizona and other states about their HHF programs, but he said BofA prefers a national, across-the-board approach.

“While some states receiving funds are in the process of launching state-level programs with unique eligibility requirements and benefits, we continue to focus our collaborative efforts on implementing consistent programs nationally,” he said.

Simon said principal reductions and help for the unemployed are on the table as BofA looks at helping distressed borrowers.

Bank of America faces a consumer fraud lawsuit from Arizona and Nevada over its mortgage modification practices. Arizona Attorney General Tom Horne said earlier this month that suit was filed because BofA would not agree in writing to certain modification practices, including making sure home­owners weren’t being foreclosed on while they were working out modification terms. Chase and Wells signed off on those protocols, Horne said.

DECADE TO RECOVER

Wessel said National Bank prefers principal reductions to other antiforeclosure instruments, and that meshes with the state program. The state housing agency looks to turn around applications in 30 days, and his bank then takes 30 days to consider principal reductions under the state program. He said that approach gets to the heart of the problem, while others are less successful.

“We go straight to principal reductions. It fixes the borrower’s problem,” Wessel said. “We find the temporary solutions do not tend to work.”

Local real estate executives say other banks are very resistant to principal modifications, and that it could take a decade for the Phoenix housing market to bounce back.

“This crisis is not going to go away for 10 years,” said Dean Wegner, a mortgage banker with WJ Bradley Mortgage Capital Corp. in Scottsdale.

Wegner said he’s seeing very few principal reductions, even though that is probably the best way to help distressed borrowers and the overall market.

Joseph Maggiore, a Realtor with Realty Executives, agreed.

“Unfortunately, I only have clients that have had failed modification attempts and no real success stories,” Maggiore said.

Wegner said he’s still seeing distressed home­owners who try to work out modifications, but then get foreclosed on during the process.

“If you haven’t made a payment in three months, you can lose your house at any time,” he said.

Phoenix Business Journal, Oct 2010

Elvis Saloum said his mortgage brokerage has done 100 modifications over the past 18 months and not one of them has resulted in lowering the principal loan amount for distressed borrowers.

“Not a single one,” said Saloum, a loan officer and modification consultant for Arizona Wholesale Mortgage Inc. in Phoenix. “It’s not like we haven’t asked for it.”

Saloum, who’s company provides modification services, said he’s read about principal reductions by Bank of America and other lenders, but he’s just not seeing it in the struggling housing market.

Arizona Wholesale Mortgage char-ges $3,000 for loan modification work. If it is unsuccessful, all but $600 is refunded. Saloum said consumers should be leery of modification firms promising principal reductions. He said the more likely scenario is for banks to temporarily lower interest rates to as low as 2 percent and then gradually bring them back up each year until they reach 5 percent. That practice is occurring under federal mortgage assistance programs.

Other real estate pros also aren’t seeing banks trim principal off underwater loans.

“I’ve never seen a principal reduction,” said David Dziedzic, founder of Housing Angels, an Avondale-based short sale company.

Housing Angels’ investors buy homes from underwater owners and then lease the homes back to them with the hope the original owner will buy back their residence within three years. Dziedzic said he talks to about 100 distressed mortgage borrowers in the Phoenix area each month and while all hope to lower their payments, many of them are frustrated by banks’ unwillingness to make major modifications.

Others say lower interest rates still can benefit borrowers in the long-term.

“Interest rate adjustments are really all I’ve seen, but these are tantamount to principal reductions if the homeowner ends up staying in the home long enough,” said Robert Nagle, a real estate attorney and senior partner of the Nagle Law Group in Phoenix. “By this I mean when we borrow $100,000 to buy a house, we end up paying back, say $300,000, when you add in the $200,000 of interest. If you reduce the interest rate early enough in the term, as we are presently seeing, then perhaps the total paid drops to $250,000. So, in essence, the homeowner ‘repays’ $50,000 less.”

But that’s a long-term realization and not a short-term lifeboat, said Diane Brennan, a Realtor with Keller Williams Integrity First Realty in Scottsdale. She said short-term interest rate cuts aren’t enough to make up underwater values or help borrowers in financial distress.

“They are still underwater and end up walking away.” she said.

JPMorgan Chase & Co. spokeswoman Mary Jane Rogers said Chase Bank has modified 214,500 home loans nationally since January 2009. Under federal assistance programs Chase has reduced the interest rate 100 percent of the time, extended loan terms 56 percent of the time and offered principal forbearance 29 percent of the time, she said. She would not provide a state-by-state breakdown of those numbers.

Rogers said Chase is looking at principal reductions under federal assistance programs but has not done any.

Bank of America spokesman Rick Simon said BofA has done 28,700 “permanent” modifications in Arizona since January 2008, including 9,000 so far this year. Simon said BofA has worked to forgive principal for some “severely underwater” adjustable rate mortgages. BofA also could offer as many as 45,000 home loan principal cuts nationally for former Countrywide Loans customers, he said.

BofA earlier this month said it was freezing foreclosure proceedings nationwide as it and other banks came under scrutiny for not reviewing foreclosure documents. Chase and Ally-owned GMAC Mortgage Corp. have frozen mortgages in 23 states for the same reasons, but in not Arizona.

Wells Fargo Bank has agreed to some principal forgiveness for some former Wachovia borrowers, said spokesman Tom Goyda. Goyda estimates Wells has cut $3.4 billion in principal off its loans nationally since 2009.

The Arizona Department of Housing last month started a program with a $125 million grant from the Obama administration to curtail foreclosures in the state. The program could lower principal by as much as $100,000 for underwater borrowers at least two months behind in payments. But the principal reductions hinge on banks going along with the plan and matching a $50,000 principal payment by the state.

Real estate pros aren’t optimistic.

“I have never seen a principal reduction, just ‘trial periods’ that drag on and on… Seems like most of these banks know they are going to get the house back sooner or later, so they have made up these trial periods as a method to get some additional money to come in on the property before it is ultimately short sold or foreclosed on,” said Joseph Maggiore, a Realtor with Realty Executives in Scottsdale.

Phoenix Business Journal, Jan 2010

Investors and real estate agents who want to buy and then flip houses are getting a head start over other buyers when it comes to short sales, and that’s raising red flags among consumers and banks.

Short sales are ripe for the picking because they require substantial paperwork, which gives agents time to talk with investors and others interested in buying properties before they are listed for sale with the Multiple Listing Service. As a result, the first bids can come from investors linked to short-sale agents or their families or business partners.

“There is a lot of paperwork required to start the process, and none of it requires the house to be on MLS. So an agent could have anywhere from a few days to weeks lead time on the listing going into MLS,” said Joseph Maggiore, a Realtor with Realty Executives in Scottsdale.

A Phoenix homeowner who asked not be identified said he became suspicious when he saw one of the first bidders on his short sale was the real estate agent hand­ling the transaction.

“I mentioned this observation to my Realtor, and he said that’s not illegal,” the homeowner said. “Perhaps it’s not illegal, but it seems unethical for Realtors to buy distressed properties and then turn around and sell them to clients at a higher rate, thus making money on both fronts.”

Arizona Department of Real Estate spokeswoman Mary Utley said her agency is seeing a significant uptick in consumer complaints about how real estate agents are handling short sales, though she didn’t have specific numbers.

Jennifer Sanchez, owner of Keller Williams Professional Partners in Surprise, said investors interested in bidding early on short sales have deals with real estate agents so they can the get jump on desirable properties, which they can resell at a profit when the market rebounds.

Sanchez said the profit margin often is not substantial, though there have been some good deals.

Banks have been catching on to some of the shenanigans and are making short-sales agents sign agreements stating they will not sell to family members or investors with whom they have standing relationships, Sanchez said. Lenders also are doing more due diligence.

“The banks have slowly caught on, but people are still finding loopholes,” she said.

Steve Trang, a Realtor with Occasio Realty in Tempe, said having someone waiting in the wings for a short-sale deal is not always bad, because it can expedite the process and keep the home from going into foreclosure. He said lenders always can turn down suspicious offers.

JPMorgan Chase & Co. spokeswoman Mary Jane Rogers said Chase has put short-sale safeguards in place.

“Chase has all parties — seller, buyer and Realtors involved — sign an arm’s-length transaction disclaimer,” Rogers said. “Chase also has an independent evaluation team that determines market value of the properties.”

Egregious cases of agents steering short sales to investors or themselves for low prices could amount to fraud or breach of fiduciary duty, but such allegations are not easy to prove, according to legal and real estate officials. In addition, Arizona does not extensively regulate the mortgage industry, let alone short sales.

Utley said her agency can punish or suspend the licenses of agents conducting unethical sales. She didn’t have details of specific complaints, but she said disciplinary measures could go as far as “cease and desist” orders or agents losing their licenses.

Molly Edwards, press secretary for Arizona Attorney General Terry Goddard, said the AG’s Office is considering stat­u­tory changes related to short sales, including who has jurisdiction over such matters.

Phoenix Business Journal, January 2010

Arizona is a popular tourist destination — mostly for the Grand Canyon, golf and warm weather.

But a new trend is emerging in state tourism, and it’s not based on one of Arizona’s strengths.

In foreclosure tourism, out-of-towners take mini-vacations in the Valley to shop for foreclosure and short-sale bargains as investments, second homes and even primary residences.

“They seem to lay in the sun at their resort and make phone calls to attorneys and lenders, trying to see if there is a deal to be had,” said Jordan Rose, managing partner of Rose Law Group in Scottsdale, which specializes in real estate and often deals with out-of-state investors.

Rose said she’s received dozens of calls from foreclosure tourists from New York, New Jersey and the Midwest who are looking at suburban markets that have seen home value declines and a substantial number of foreclosures and short sales.

“It seems as if ‘Fodor’s’ is suggesting that one of the things you do on a holiday to Phoenix is buy a foreclosed house — like be sure to try the cactus jelly, see the Grand Canyon and, by the way, don’t dare leave without a cheap house,” Rose said.

“We thought it was an odd submarket niche, as we have been getting calls from out-of-staters who want ultra-fast due diligence and contract review in order to do a quick close on a foreclosure,” she said.

Rose said out-of-state investors and buyers comprise the bulk of her real estate business right now.

“Nearly all the buyers we talk to — dozens over the last two weeks — have at least out-of-town financial backers. Money is trying to flow into Arizona right now,” she said.

Joseph Maggiore, a Realtor with Realty Executives in Scottsdale, said most of the visiting investors he’s dealing with are focused more on business than pleasure.

“They are structuring their visit around touring a predetermined set of listings, based on weeks or months of searching and refining the available properties,” he said. “The goal that I have seen has really been to get in; take a look; identify the right property, possibly with a backup or two; make a move on it; and then head home after writing the offer.”

Maggiore said he’s seeing buyers from Canada and the Midwest, along with an influx of interest from the Pacific Northwest, looking for quick deals.

He said such buyers now make up about one-third of his business.

Most resort and tourism officials contacted for this story weren’t specifically aware of the foreclosure tourism trend. But Kirsten Schaefer, public relations director for the InterContinental Montelucia Resort & Spa, said it is on that Paradise Valley resort’s radar.

“We eventually want to create partnerships with local real estate agents for both foreclosure tourists and relocation visitors,” Schaefer said.

Phoenix is one of the hardest-hit housing markets in the U.S., ranking high in foreclosures, price declines and underwater mortgages. About 41,000 homes were foreclosed on in the Phoenix market last year — a record, according to Arizona State University. Those foreclosures and short sales are piquing the interest of investors and second-home buyers looking for bargains.

But the fallout is not all good, according to ASU economist Jay Butler.

He said foreclosure and other bargain-basement sales drive down home values.

“Investment interest is being driven by the anticipation that home prices will rise again in the next few years. While lower prices can greatly improve affordability, they can adversely impact many owners and potential sellers who are watching their limited equity erode as prices decline to — and even below — existing debt level,” he said.

Phoenix Business Journal, Aug 2009

House flippers and real estate investors are coming back to the Valley and looking to get rich off the housing crash and anticipated rebound.

While many Valley homeowners and buyers are sidelined by underwater values, damaged credit scores and tightened mortgage lending, houses are selling as the market looks toward recovery.

Cash-ready investors — many of whom were blamed for the real estate bubble and crash in markets such as Phoenix — are back, buying up bargain-price foreclosures. There also are some first-time home buyers looking to snatch up deals. First-timers benefit from an $8,000 federal tax credit and are not saddled with existing mortgages and homes they can’t sell.

Outside influences

Eric Wright, a senior loan officer with CNN Mortgage in Scottsdale, said investors — including those from California, Canada and overseas — are creeping back into the market buying homes to rent or flip.

“Investors have cash,” he said. “A minimum down payment of 25 percent is needed, and many are paying cash for the properties.”

Wright said about 40 percent of the investors he is seeing are local, 25 percent are from California, 10 percent are from Canada.

Gary Drew, the broker-owner of Coldwell Banker Daisy Mountain in Anthem, said some investors are buying blocks of foreclosed homes from banks, and others are buying single properties and trying to flip them. He noted a lot of Canadian buyers and investors are coming into the Valley, buying second homes or investment properties.

“My client base is over 50 percent Canadians for buyers,” he said.

Drew said he has nine Canadian clients actively buying and 10 prospects who came to him via the Internet or referrals.

Part of Arizona’s appeal to Canadians is that the exchange rates have been fairly level between the U.S. and Canadian dollar. A Canadian dollar is worth 92 American cents, according to X-Rates.com.

‘Smart people with cash’

Signs remain mixed as to whether the Phoenix housing market has bottomed out and is starting to recover. The S&P/Case-Shiller Home Price Index released Aug. 25 shows Valley home prices were down 32 percent for the second quarter compared with the same period last year, but improved by 1.1 percent from first-quarter to second-quarter 2009.

Existing-home sales have been buoyed by trustee sales on foreclosed homes, according to Metrostudy research. In June, single-family existing home sales rose to an annual rate of 75,204 homes, a 62 percent increase from June 2008, according to Metrostudy. Other recent housing indicators also find bank sales of foreclosed homes fueling Valley home sales.

Jordan Rose, managing partner of Scottsdale-based Rose Law Group PC, which specializes in real estate, said those with ample cash are taking advantage.

“Smart people with cash are buying high-end properties and getting amazing deals. We have seen $4 million-plus homes on the market for $1 million,” she said.

Sheri McBroom, a Realtor with Re/Max Integrity Realtors, has purchased a handful of investment homes. That includes a recent buy of a three-bedroom, 1,200-square-foot home in the northwest Valley. She bought the home for $130,000 and is renting it out for $950 a month.

McBroom hopes the market will improve soon, but she does not intend to flip the house. She’d like to buy more investment properties, but said there are some limitations on the number of loans she can hold because more restrictive rules were established after the housing bubble burst.

‘Financing is tough’

Investors bought houses in markets such as Phoenix, Las Vegas, Northern California and San Diego during the housing bubble, and many got caught when the market tanked. The difference now, though, is that much more cash is required up front, and creative or adjustable-rate mortgages are much more difficult to get.

Joseph Maggiore, a Realtor with Realty Executives in Scottsdale, said many of his clients are buying one investment home at a time, doing the repairs and then flipping it for a decent market value.

On the other end of the spectrum are first-time buyers buoyed by federal tax help and unburdened by existing mortgages.

Wright said most of the first-time buyers are in their 20s and 30s, have a credit score of at least 620 and a debt-to-income ratio of less than 41 percent, and can put at least 3.5 percent down to qualify for Federal Housing Administration-backed loans.

“There are a lot of challenges out there right now for first-time buyers, though,” Maggiore said. “Financing is still tough.”

Phoenix Business Journal, Dec 2008

Arizona and California are in the same sinking ship when it comes to the rise in foreclosures and the subprime mortgage mess. But the two states are oceans apart in how they are dealing with those distressed mortgages.

California is taking a very aggressive approach. Gov. Arnold Schwarzenegger recently announced his state has inked deals with number of lenders, including Countrywide Financial and GMAC, to fast-track loan modifications for distressed subprime borrowers.

California also is using state housing money to offer some bridge loans to help consumers rework their mortgages, and the state has created consumer protections related to foreclosures and lending. In addition, a number of California lawmakers back foreclosure moratoriums.

Arizona’s approach, in contrast, involves very little government intervention.

Fred Karnas, director of the Arizona Department of Housing, said the state does not have the funds to give out money to rework loans.

Arizona has gotten more than $121 million in federal housing aid to deal with foreclosures. Karnas said that money is going to consumer groups that help homeowners, and to first-time and lower-income home buyers to help them work out mortgages so they can buy foreclosed houses. California has a similar program.

Karnas said Arizona has not inked any mortgage modification deals with lenders like Schwarzenegger has. But he noted some lenders have voluntarily slowed or stopped foreclosures and are looking to rework distressed loans.

“We’re all sort of in the same boat — getting the lenders to make deals,” he said.

Joseph Maggiore, a Realtor with Realty Executives in Scottsdale, said there is no widespread awareness of what is being done in Arizona on the mortgage front.

“There have not really been any actions taken or systems put in place to help distressed homeowners,” he said.

Economists and the real estate industry are split on whether government intervention is the right medicine. Supporters of government action argue no one really wins when homes are foreclosed, and loan modifications offer better results for lenders and borrowers alike.

Others, including Maggiore, say government involvement delays the market from bottoming out and turning around.

“It does not seem like any actions taken by the California government have had a significant impact on home values or homeowners in distressed situations,” Maggiore said. “I am of the belief that there is no quick fix out there to repair damages done by a lot of personal and corporate greed and uninformed overspending.”