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A great article courtsey of CNN Money.com

Mortgage lenders pursue homeowners even after foreclosure
cnnmoney

Les Christie, staff writer, On Wednesday February 3, 2010, 3:21 pm

As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right?

Wrong.

Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes.

It can even happen to people who got their bank to approve them selling their home for less than it is worth.

Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.

"My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."

Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called "liar loans" where they didn't have to verify their income.

Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances -- like unemployment or a job transfer -- can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

"After the banks foreclose, it's very common now to have large deficiencies with houses not worth the balances owed," said Don Lampe, a North Carolina real estate attorney.

Lenders mostly declined comment. Although Corey's lender, BB&T did indicate it was pursuing more deficiency judgments.

"They follow the rise and fall of foreclosures," said the spokeswoman, who would not discuss Corey's account.

Can they come after you?

Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.

"Once they have a judgment, they can pursue you anywhere," said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. "They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail."

In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.

Some states, such as California, are "non-recourse" and don't allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.

Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.

But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.

"People shouldn't have a false sense of security that a deficiency judgment may not be later sought," Zaretsky said.

He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.

"The parties who bought those notes wouldn't have paid money for them unless they had the intention of acting," Zaretsky said.

Ticking time bomb

What can be scary is that the judgments don't have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn't have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.

It wasn't until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.

"I told them, 'Hey, you guys released the title,'" he said. "As far as I know, I'm off the hook."

He wasn't. Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.

"He had no idea what he was doing," said Zaretsky. "All the lender had to do was go to court to convert the confession into a deficiency judgment."

Lenders are also very inconsistent. One of Zaretsky's short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.

Strategic defaults

Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

"Banks are pulling credit reports to see if it's a strategic default," he said. "If you're behind on all your other payments, you're okay. But if you're not, they'll come after you."

If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.

"We don't favor any short-sale contracts that leave any deficiency that can be pursued," he said.

Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.

I realize that this is a touch lengthy, but it's nice to see an end in sight!

-Branden

Fed minutes: officials saw recession's end in Aug.
Fed: With US economy on mend in Aug., officials felt comfortable slowing revival program
By Jeannine Aversa, AP Economics Writer
On Wednesday September 2, 2009, 3:57 pm EDT



WASHINGTON (AP) -- With the U.S. economy on the mend, Federal Reserve policymakers last month felt comfortable slowing the pace of one of its economic revival programs and not changing any others, according to documents released Wednesday.

Minutes of the central bank's closed door deliberations, held Aug. 11-12, also showed Fed Chairman Ben Bernanke and his colleagues striking a much more hopeful note about the economy's prospects compared with an assessment made in late June. Many Fed officials saw "smaller downside risks," the documents stated.

Fed officials expected the pace of the recovery to "pick up" in 2010, but there was a range of views -- and considerable uncertainty -- about the likely strength of the upturn because of concerns about how consumers will behave.

After being pounded by the recession, consumer spending finally appeared to be leveling out, the housing market was firming and manufacturing was stabilizing, the Fed said. Plus, the outlook for other countries' economies improved, auguring well for the sale of U.S. exports.

All that strengthened the confidence of Fed officials that "the downturn in economic activity was ending." They also repeated a prediction that the economy would start growing again in the second half of this year. That expected growth will be helped by President Barack Obama's $787 billion package of tax cuts and increased government spending, they said.

Against that backdrop, the Fed at its August meeting, announced that it would gradually slow the pace of its program to buy the remainder of $300 billion worth of Treasury securities and shut it down at the end of October, a month later than previously scheduled. The program is designed to force interest rates down for mortgages and other consumer debt, and spur Americans to spend more money.

The Fed also did not change another program that aims to push down mortgage rates. In that venture, the Fed is on track to buy $1.25 trillion worth of securities issued by mortgage finance companies Fannie Mae and Freddie Mac by the end of the year.

"With the downside risks to the economic outlook now considerably reduced, but the economic recovery likely to be damped" Fed policymakers agreed that it didn't need to either expand or cut back those programs.

Summing up the Fed minutes, "the overriding theme is that the economy was just beginning to turn around," said Stephen Stanley, chief economist at RBS.

Fed officials suggested consumers will be a wild card in the unfolding recovery.

A "poor" jobs market, evaporated wealth from decimated home and stock values, hard-to-get credit and wages that aren't supposed to advance sharply anytime soon mean consumers are still facing "considerable headwinds," the minutes said. How consumers behave is crucial to the recovery because their spending accounts for roughly 70 percent of all economic activity.

"With these forces restraining spending, and with labor income likely to remain soft, (Fed) participants generally expected no more than moderate growth in consumer spending going forward," the Fed minutes stated.

Unemployment -- now at 9.4 percent and expected to top 10 percent this year-- is the biggest burden facing American consumers. Another source of uncertainty: the extent to which consumers will sock more money into savings, the Fed said.

To entice consumers to spend more, the Fed last month also left a key interest rate at a record low of near zero. It pledged to hold that bank lending rate at between zero and 0.25 percent for an "extended period." Economists predict that means through the rest of this year and may be longer.

"We suspect that it won't raise interest rates possibly until 2011," said Paul Dales, economist at Capital Economics Ltd.

As a result, commercial banks' prime lending rate, used as a peg for rates on home equity loans, certain credit cards and other consumer loans, will stay at about 3.25 percent, the lowest in decades.

Given weakness in the job market and that factories -- while improving -- are far from full throttle, inflation should stay contained, the Fed said. Fed officials did, however, acknowledge that some on Wall Street have expressed worry that the central bank's aggressive actions and the federal government's bloated budget deficit will spur inflation later on.

To address those concerns, the Fed said it is important to keep sending the message that it has the will and the tools necessary to reel in the trillions of dollars it has pumped into the financial system to revive the economy.

Some positive news that you might enjoy from the Wall Street Journal...Is the bottom near?

-Branden

Inventory of Houses Falls in July

By JAMES R. HAGERTY

The number of homes listed for sale declined again in many U.S. cities last month as bargain hunters continued to search for foreclosed properties.

Interactive Graphic: Bargain Hunters Dent Home Supply

..The supply of homes available for sale in 28 major metropolitan areas at the end of July was down 2.5% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The Zip data cover all single-family homes, condominiums and town houses listed on local multiple-listing services in metro areas where the firm operates.

On a national basis over the past 25 years, inventories in July have fallen by an average of 1% from the June level, according to Zelman & Associates, a research firm. Compared with the year-earlier month, the July inventory in the 28 metro areas was down 27%, according to the Zip data.

The exact level of supply is unclear because the figures don’t include all of the foreclosed homes that banks are preparing to sell. According to some industry estimates, as many as half of those homes aren’t included on multiple-listing services at any given time. Some foreclosed homes aren’t listed because they are being offered as rentals, while others are awaiting repairs or are subject to litigation or other delays.

Some analysts expect a resurgence in foreclosed homes on the market later this year, as lenders pursue legal actions that had been delayed by moratoriums in various states that sought to keep more people in their houses.

The Zip data don’t cover New York City. But Miller Samuel Inc., an appraisal firm, reports that there were 8,644 cooperative apartments and condominiums on the market in Manhattan at the end of July. That was down 7.8% from June but up 6.9% from July 2008.

Write to James R. Hagerty at bob.hagerty@wsj.com

An interesting article from www.RealTrends.com:

HOME SALES INDICATE THAT THE HOUSING MARKET CONTINUES TO STRUGGLE TO FIND A BOTTOM WITH APRIL 2009 RESULTS OFF SOMEWHAT FROM MARCH 2009 RESULTS

April 2009 results were down measurably compared to the March 2009 in the level
of home sales and prices. April 2009 housing sales were down 11.1 percent
compared to April 2008 which is still the second best performance on a year-overyear
basis in the last 18 months. The average price of homes sold fell 20.5% in April
2009 from April in 2008 which indicates the continuation of much higher sales in
lower priced segments.

May 14, 2009 – Denver, CO - The recovery in home sales slowed somewhat on a year-over-year basis in April. The results indicated that homes sales continue to suffer from overall weakness in the general economy and the
weakness in middle and upper tiers of the home price segments. Unit sales were down 11.1 percent from April 2008 to April 2009 that compares unfavorably with March numbers that showed sales down only 5.8 percent from
March 2008 to March 2009. Prices of sold homes were down 20.5 percent from April 2008compared to the March report that showed closed sales prices being down 18.1 percent.
The best region for sales units was the western region where unit sales continued their run of increased housing activity although the increase is less than previous months. Unit sales in the western region were up 9.9 percent in
April 2009 compared to April 2008. Other regions saw sales decreases of between 13.3 and 20.5 percent with the Northeast region having the largest unit decline compared to last year.

Prices continue to be soft with every region reporting continued price declines. The western region showed the largest decline with April 2009 prices down 31.7 percent from April 2008. The best region was the South where
prices were down 15.8 percent from the same month a year ago. The national average price of homes sold was down 20.5 percent from a year ago. Much of the decline in the average sold price is due to the inordinately high number of lower priced foreclosure and short sales and the impact of the first-time homebuyer sales which typically are focused on lower priced home segments.
"April 2009 results show that low interest rates, soft home prices and high levels of affordability are having a positive effect but that the lack of affordable mortgages for the middle and upper tiered home priced segments and
weakness in the general economy continue to be a drag on the housing recovery," said Steve Murray, editor of REAL Trends. "As we said in our last report, there are several factors that will subdue housing sales in 2009. The
April results show strong evidence that a true broad based housing recovery is a ways off."

Strange Times...Pricing you home for sale in a volatile market.

This is always a fun topic - Truly, that was my bad attempt at humor... One of the most common questions that we're presented with is "What is my home worth ?" This is such a dynamic question, but also a simple one. As you read on, know that this writing is simply a summary and that a Goldizen, Riley & Co. Agent will be your best resource to answer this question.

Let's clarify one of the most important points - EVERY homeowner wants the MOST for their home. The interesting part to this is that so does EVERY agent that represents a seller. So many sellers take it personally when an agent asks for a price reduction - in a perfect world, agents would ask for a price INCREASE. Always keep in mind that you and your agent make money based on the final sales price, so when your agents asks for a price reduction, they LOSE money along with you.

When you sell your home, a great agent will pull and asses all statistical information about your home, as well as all social, political, and economic data about the sellers geographic area. From this data, a baseline pricing will be created and recommended to the seller. The purpose of this is to set an operable range for the seller to select the sale price the home. This assists the seller from pricing the home out of the market based on emotion or lack of market understanding/experience.

That being said, how does this apply to the current, insane market that we're experiencing?

It doesn't...

What? C'mon, Branden...This doesn't make any sense!

All right, maybe a little, but barely. Play along with me for a minute - How can anyone - Broker, consumer, or buyer, accurately assess the price of a property when banks are accepting a mere percentage of the current market value simply to offset a toxic asset? Simply said, we can't...In this climate, you must find a relative market position based on your Agents analysis and be willing to adjust accordingly.

"Well, what if I can't ?" - I could spend days on this , therefore defeating the purpose of this article, however, right now, you don't have a choice. To answer the question, you have to stay in line with what's happening in your neighborhood. You must, must, stop looking through the eyes of "My kitchen is the most expensive in the neighborhood" or "We've just updated the study" and so forth. The bank asset down the street that has twice your amenities is going for $50,000.00 less without the emotion and minimal terms. Your "wants" and "feelings" have suddenly taken second chair to more aggressive pricing.

That, Dear Seller, is your competition...

I know that it's not "fair" and that it skews the market - believe me, I, if anyone, understand you. For now, though, do your best to flex and stay ahead of the pricing "curve" that the competition has set, dispel any myth about making incredible profit (for now), and exhale. It's time to accept the price that you don't want to hear and move forward, knowing that in your purchase you historically have an upward trend, or...wait.

While no one is promised the morning, know that this too in time shall pass and that "normal", whatever that may be, is around the bend.

Welcome to the Goldizen, Riley & Co. Blog

Welcome to our new real estate Blog. Please check back often as we will be posting regular updates.

Sincerely,
Goldizen, Riley & Co.