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Owners with Indy Mac bank must act FAST

by Southern Californias Top Producing Mother & Son Te

We’re learning new things every day in this real estate world with all the policy changes that are taking place with the different lending institutions.  We recently had a foreclosure emergency on one of our Listings in Huntington Beach harbor.  It’s an amazing town home with a 30 foot boat slip and located in an amazing community.  Unfortunately the seller was in a situation where he had received an N.O.T. (Notice of Trustee Sale) in the mail and the date for the foreclosure sale was set. 

The seller was ineligible for a loan modification so his only option to escape foreclosure was to short sale the property to keep his credit clean from the stains of foreclosure.  We had received a cash offer and it was submitted and in review with Indy Mac bank.  Typically when you have an offer submitted to a bank it takes anywhere from 30-90 days to receive an approval.  With most banks a foreclosure on the property can be postponed when an offer has already been submitted, even though an approval hasn’t been received, officially accepting the buyers offer.  In the case with our listing in Huntington Beach Harbor, the seller didn’t hire us soon enough to get the short sale process started, and  there wasn’t enough time for us to receive a short sale approval from Indy Mac Bank.

Indy Mac’s new policy is slightly different from other banks.  Their policy now sates that in order to postpone a foreclosure date, there must already be a short sale approval on the property.  If that approval has not been furnished to the seller yet, than unfortunately the property will proceed with the foreclosure date state on the “Notice of Trustee Sale” letter.  In most instances we are successful at postponing the foreclosure date so that the seller can sell the property and not go into foreclosure but Indy Mac Bank is going to make that very difficult now for some sellers with this new policy of theirs. 

We’re not sure if other banks are going to follow suite with this new policy.  When we questioned Indy Mac on why they are no longer postponing foreclosures when there is an offer in review, they replied saying that it was because many false offers were being submitted just so that the foreclosure would be delayed and not because they were real offers. 

We highly recommend that if you are in a situation where foreclosure is imminent, please call us immediately so we can structure a plan for you to avoid foreclosure.           

Don't convert your home unless you get PERMITS!

by Southern Californias Top Producing Mother & Son Te

Don't convert your home unless you get PERMITS!

We have been running into road blocks with a couple of the sales that we currently have going on and  we thought it would be a good idea to inform our readers about what’s currently going on with homes that are illegally converted. 

We have a pending sale in a nice area of La Mirada.  Everything was going smoothly up until we got a call from a city inspector telling us that the converted garage and the laundry room must be demolished and put back to its original state before the close of escrow.  This has created a very difficult situation for a few reasons

1.       Time – this property is a short sale and the home owner’s bank has given us less than a 30 day window to close the transaction.  If we do not close within the window that has been given to us, the property will go into foreclosure and tarnish the credit of the home owner for the next 7 years. 

2.       Money – Someone is going to have to pay for the cost of the demo work.  The seller definitely doesn’t want to pay because they most likely have no money.  The entire reason they are having to short sale the property is because they are in financial hardship and can no longer afford the property.  In addition to that, they are not netting anything on the sale of their home because they are upside down with negative equity.  The buyer doesn’t want to pay for the work, they already have closing costs to pay for the purchase of the home, so of courses they are not going to offer to pay for the demolition.  The real estate agent can pay for the work with the commission that is supposed to be earned from the deal, but commissions to agents are very minimal since home values have gone down and no one wants to work for free. 

3.       The Buyers Lender – Many buyers are getting the money they need to buy a home through FHA financing.  FHA financing is appealing to buyers because all they need to put as a down payment to purchase a home is 3.5% of the purchase price.  The problem with FHA financing is that in cases where there are conversions on properties, FHA will only lend the buyer money if all those conversions are corrected, so that the property is back to its original state.  In some cases correcting the conversion may be as simple as removing a wall.  In other cases correcting the conversion may entail removing electrical work, sinks, entire bathrooms, kitchens, the list can go on.  Once everything is returned to its original state the buyers lending institution will require the appraiser to go back out to the property to take pictures of the corrected work, verifying that everything has been brought back to its original state. 

The same is true for another home we currently have in escrow in the city of Pico Rivera.  The property was not even converted by the current owners but by the previous owners.  In this case the city has not required the home to be returned to its original state but the Buyers lender has.  Before they would lend the money needed for the buyer to purchase the home, they presented a large list of corrections that needed to be done on the property. 

It has only been recently that we have seen this change in guidelines.  Back when subprime loans were dominating the market, these issues never presented a problem.  Many time these illegal conversion were overlooked.  But now many home owners would be very wise not to illegally create or destroy bedrooms, bathrooms, and kitchens. 

Pico Rivera, and La Mirada are only 2 of the many cities that we work in the Los Angeles area.  Many of the rules that apply to these 2 cities also apply to the many surrounding cities as well.

If you or anyone that you know is planning to do any kind of work on your property, please consult us first so we can advise you on whether or not it would be a good move regarding the investment apect of your home.   

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Photo of The Mother & Son Team - Maria Palacios & Chris Gon Real Estate
The Mother & Son Team - Maria Palacios & Chris Gon
Berkshire Hathaway HomeServices, California Properties
16911 Bellflower Blvd
Bellflower CA 90706
(877) 883-1003
Fax: 562-381-9113