The Lawhead Team would like to share a recent article from Realtor.com about Fannie and Freddie’s foreclosure free holiday:

Fannie, Freddie Gift a Foreclosure-Free Holiday

Daily Real Estate News | Wednesday, December 10, 2014

Fannie Mae and Freddie Mac announced they plan to suspend evictions on foreclosed single-family properties nationwide during the holidays, from Dec. 17, 2014 through Jan. 2, 2015.

Legal and administrative proceedings for evictions may continue, as well as pre-foreclosure activities, but families who are living in foreclosed homes will be allowed to remain in their homes during that time.

Freddie Mac says that the foreclosure moratorium applies to all foreclosed occupied single-family homes as well as properties with two to four units that have mortgages owned or guaranteed by Freddie Mac.

“Today’s announcement will bring some holiday relief to borrowers who went through foreclosure and were preparing to move,” Chris Bowden, senior vice president of REO at Freddie Mac, said in a statement. “We strongly urge home owners with financial challenges to start the New Year by calling their mortgage servicer to explore one of the Freddie Mac workout options that have prevented over 1 million foreclosures since 2009.”

The foreclosure moratorium has become a holiday tradition, which Freddie Mac and Fannie Mae both have extended the past few holidays.

“As in previous years, we believe it is important to extend the timeline of help for struggling borrowers during the holidays,” says Joy Cianci, senior vice president of credit portfolio management for Fannie Mae. “If you are in trouble or facing foreclosure, reach out to Fannie Mae or your servicer today to get help. There are more options than ever before to avoid foreclosure. We want to help struggling borrowers whenever possible.”

Fannie Mae reports that it has completed more than 1.6 million loan workout solutions to help distressed families avoid foreclosure since 2009.

Source: Freddie Mac and Fannie Mae

If you have experienced a foreclosure in the recent years, as many homeowners have, you may be surprised to find out you can buy a home sooner than you thought.

The Lawhead Team came across a great article from Realtor.com discussing when you can apply for a mortgage after you have gone through a foreclosure.

A foreclosure can be a big blow to your desire to own your own home. After all, you worked hard to buy your home only to see it taken away from you. You may think you will never again be in a position to buy another one. However, while your credit score will indeed be affected by a foreclosure, it may only be a matter of time before you can once again apply for a mortgage. It all depends on the circumstances of the foreclosure, the foreclosure waiting period, your ability to increase your credit score and the type of loan that you are prepared to apply for.

Seven years: The standard waiting period for buying a home after a foreclosure is seven years. This is the period required by Fannie Mae, a federally chartered corporation that purchases a significant number of American mortgages. However, even then, you are likely only to be successful in your mortgage application if you have re-established your credit score after the foreclosure. While a record of your foreclosure will only remain on your credit report for seven years, your new lender will want to ensure that you are not a high-risk candidate for a loan.

There are a number of ways to increase your credit score. If, after the foreclosure, you will be renting a property, find a place that falls within your means. This will help you to save money for a down payment on a new home. It may also be worthwhile to obtain a secure credit card, where you make a deposit to the card’s issuer and the credit limit is tied to that amount. Paying off your purchases on the card will reflect well on you when you apply for a mortgage.

Lenders also take note of a borrower’s employment status. It is therefore to your advantage to find steady employment. The longer you remain on a job when applying for a loan, the greater are your chances of being approved.

Three years: If the foreclosure was the result of documented extenuating circumstances, the Fannie Mae waiting period will only be three years, rather than seven, before you can apply for another mortgage.

Extenuating circumstances are non-recurring events that are beyond your control that resulted in a sudden, significant and prolonged reduction in income, or a catastrophic increase in your financial obligations.

If your foreclosure was caused by such circumstances, you will need documentation supporting your claim in order to apply for a mortgage after three years. Documents could include those that confirm the event, such as a copy of a divorce decree, medical bills and job severance papers. Other types of documents that you could produce include those showing your inability to resolve the problems that caused the event, such as insurance papers or tax returns.

Straight away: If you are prepared to meet their conditions, some lenders that do not sell their mortgages to Fannie Mae may be prepared to loan you funds soon after a foreclosure.

These lenders likely will require large down payments and high interest rates. Depending on your financial situation, you might need to lower your expectations in terms of what type of home you are looking to buy. A smaller home may, for example, mean that you will need to borrow less, thereby increasing your chances of obtaining a loan and reducing the amount that you will need to repay.

However, the longer you wait before applying for another mortgage, the more time you will have to re-establish your credit score, which could lead to loans with more favorable conditions.

Read entire article here: http://www.realtor.com/home-finance/homebuyer-information/how-soon-can-you-buy-a-home-after-a-foreclosure.aspx?source=web

Are you wondering what type of sale, a foreclosure vs. short sale, will give you the best return on investment?

It is often tough to decide which one will give you a better ROI but knowing the details about each type of sale, will help in making your buying decision. In most cases, both properties will usually be distressed and there are usually additional steps you will have to take as the buyer when buying a distressed home.

• The definitions of foreclosure vs. short sale: With a short sale, the homeowner receives permission from the lender to sell the home for less than what is owed on the mortgage. This is a pardon from the banks because the homeowner can no longer afford the mortgage payments but they want to avoid foreclosure. A foreclosure is a property that is now owned by the bank. The previous owners did not pay their mortgage and after falling delinquent, instead of requesting a short sale, were forced to vacate the property.
• There is a big difference in the time it takes for a foreclosure vs. short sale. Don’t be deceived by the name, “short sale” as they usually take much longer than a foreclosure. A lender has 30 days to respond to a short sale offer and up to 60 days to approve or reject the offer. After the 60 days, you must wait for closing. Just because the short sale deal is set, doesn’t mean the home will not be foreclosed. If the short sale deal takes too long, the lender may be forced to foreclose regardless of your short-sale deal. With a foreclosure you can hear back within a few days if your offer was accepted. If you are in a rush, a foreclosure is a faster route.
• In a foreclosure vs. short sale, a foreclosed home will be empty since the lender has evicted the previous owners or they have abandoned their home. Short sale properties still have the homeowners living inside. In most cases, the short sale homes are better maintained than foreclosed homes since the homeowners are still living in them. There is the chance that an angry distressed homeowner could cause deliberate damage to the home upon moving out.
• When negotiating a foreclosure vs. short sale, you usually have more negotiating power with a foreclosure. Short sales usually have limited room for negotiating, depending on how much the homeowner’s mortgage is for and what the bank is willing to work with.
• Foreclosures usually require more repairs to be made that short sale homes. In a foreclosure vs. short sale situation, make sure to inspect the home thoroughly and make sure you are aware of any major repairs needed to make the home livable. If you are buying a foreclosure, never spend more than 5 to 10 percent of your purchase price for renovations. If you do, you might be getting as good of a deal as you think.

Have you recently bought a foreclosure or short sale home? Please let us know your thoughts on the buying process. Looking to purchase? Please call The Lawhead Team at 760-518-8700.

If you are in the market for a home, chances are most houses on the market are foreclosures. The Lawhead Team would like to share some pros and cons involved with buy a foreclosure property.

Pro’s of buying a foreclosure property:

• Buy below value – While the deals aren’t as good as they were in the past, you may still be able to purchase a foreclosed home for three quarters of what a home is worth.
• Faster process – If you find a home in the pre-foreclosure stage, there will be a sense of urgency from the seller to avoid the stigma of a formal foreclosure. You may request inspections on the property prior to making a final decision along with research the title to make sure it is clear of liens.
• You are allowed to inspect a foreclosure before buying it – You will know exactly what you are getting and will be given a predetermined contingency period in which to make your final decisions.
• You may use regular mortgage financing – Even though the process of buying a foreclosure is different from purchasing a regular home, you can still take out a mortgage loan to pay for the property.
• Quicker sale and negotiating powers – The bank will be motivated to get the property sold and may negotiate price, down payment, closing costs, etc.

Con’s of buying a foreclosure property:

• Maintenance issues – Homeowners who know months in advance they are losing their property may be less likely to take care of it and may not have the funds to make necessary repairs. In extreme cases, homeowners may feel bitter about their bad investment and may purposefully damage the property they’ll be vacating.
• Unforeseen repairs – While you may be able to buy a foreclosure home below its market value, that doesn’t mean you may be getting the best deal when you consider major repairs that may need to be done.
• No warranty available with a foreclosure – A foreclosure is sold as is with no cause for recourse if the home has defects. If the home has been lived in already you may be more likely to have issues that won’t be discovered until you’ve moved in.
• You may incur the previous owners cost of neglect – When purchasing a foreclosure, keep in mind the previous owner couldn’t afford to keep it. In this case, it is possible a lien may have been placed against the home which becomes your responsibility once you’ve purchased it.  Do a title search before committing to buying a foreclosure to uncover any liens.

Do you have questions about purchasing a home in the North San Diego County area? Contact The Lawhead Team for all your buying and selling needs.

It is true!  Foreclosure rates in San Diego County are on a decline.  Check out this article The Lawhead Team came across from San Diego Channel 6, the CW.

SAN DIEGO (CNS) – The number of San Diego County homes slipping toward foreclosure dropped by 1.4 percent in the second quarter of 2012, compared to the same period last year, a real estate information service reported Monday.

Lenders sent default notices to 4,099 homeowners in San Diego County in the second quarter, down from the 2011 second-quarter total of 4,158, according to San Diego-based DataQuick.

Statewide, default notices were sent to 54,615 homeowners in the second quarter of the year, DataQuick reported. That was a 2.9 percent drop from the previous quarter’s 56,258 notices and down 3.6 percent from the second quarter in 2011, when 56,633 default notices were sent.

“The foreclosure process has always been the sanitation department of the housing sector,” said John Walsh, DataQuick president. “It’s where financial distress is processed. The question is whether these lower (default notice) numbers mean that there’s less distress to process, or if we’re just seeing distress get processed at a slower pace.”

Default notices do not always lead to a home foreclosure, according to DataQuick. Some homeowners emerge from the foreclosure process by bringing their payments current, refinancing or selling the home.

If you have faced foreclosure in the past, looking into buying a new home might be a bit trickier than for others.  The Lawhead Team would like to share some helpful tips to buying a home after you have faced foreclosure.

Many of us have experienced some form of financial hardship over the last few years such as losing our job, taking a pay cut, or a decline in the value of our investment and retirement portfolios. Many more people than some of us realize have also experienced extreme financial hardships because we have been forced to lose our homes, resulting in a foreclosure.

Losing your home can be devastating both personally and financially, but what’s important is that we do what we have to do to clean up our past and then we move into our future with hopes of making it better. One of the biggest questions that people ask when they lose their home is how long they have to wait to apply for another mortgage loan after declaring bankruptcy, foreclosing on a previous home, or having a short sale on your home.

What you need to know before you apply for a mortgage loan – There can be a lot of confusion surrounding when you can apply for a mortgage loan after a bankruptcy, foreclosure or a short sale.

Applying for a mortgage loan and being approved for a mortgage loan are two different things.  Just because you are able to apply for a mortgage loan doesn’t necessarily mean that you will automatically be approved.  Being approved for a mortgage loan depends on many factors such as your personal income, the amount of your savings, as well as your ability to repay the new mortgage loan. You have to take the necessary steps towards improving your personal finances, and being informed on the process of applying for a new mortgage loan after a bankruptcy, short sale, or foreclosure is a great first step.

Applying for a Mortgage Loan After a Bankruptcy – If you filed a Chapter 7 Bankruptcy you will have to wait 4 years from the discharge date if you are applying for a conventional mortgage or for a mortgage with Fannie Mae. However if you have filed several Chapter 7 Bankruptcies in the past 7 years you will have to wait at least 5 years to apply for a new mortgage loan.  If you file a Chapter 7 Bankruptcy and you are applying for a mortgage loan with FHA you must wait at least 2 years from the discharge date.

If you Foreclosed on your previous home you will have to wait 5 years before applying for a new conventional mortgage loan.  You will have to wait for 7 years before applying for a new mortgage loan with Fannie Mae and 3 years from the completion date of your foreclosure if you are applying for a new mortgage loan through FHA.

If you have to wait five years after financial hardships before you can apply for another mortgage loan then you have five years to get your finances in order.

Of course if you have any home buying questions what so ever, it is important to call The Lawhead Team.  They can find the answer for you or direct you in the best way suited for your situation.