Mon, February 22nd, 2010
Your Contractual (and Moral) Obligation When Buying Real Estate
In most instances when someone buys a home, at their own free will, they sign a large assortment of documents, including a promissory note and a deed of trust. Does the homebuyer have a moral obligation to honor the loan commitment? Yes, but not in the way some view this.
The note and deed of trust essentially require the homebuyer (now the homeowner) to pay X amount per month for each consecutive month, in an amortized amount, over the life of the loan (usually 30 years). This can vary in some cases, but the payment obligation is virtually the same in all cases. According to the loan docs, it the homeowner fails to make the required payments, the lender, who also freely entered into the agreement, can declare a default and call the loan due. The lender is entitled to, and often does, foreclose.
In the loan docs, notably the note and deed of trust, the homeowner has agreed to give the property back to the lender if the lender proves the homeowner did not fulfill the payment obligation. When the lender forecloses on the property and the homeowner leaves the property or home, the homeowner has fulfilled his or her obligations under the loan.
In short, the homeowner agreed a) to pay the loan back to the lender, or b) to give the property back to the lender. When the latter option is excercised by the lender, the homeowner, unless he or she tried to stop the latter option from happening for no real reason, has ethically performed according to the loan agreement with the lender. The contractual obligation and the moral obligation was fulfilled, just not in the manner the lender ideally hoped for when they freely signed the loan docs.
Remember, the loan docs do not state that the homeowner has to pay the loan amounts under any specific conditions, such as if he or she has adequate money to pay, or doesn’t have money to pay, or when the property is underwater or not. It just says the homeowner has to pay, and if he/she doesn’t, the lender gets the house back.
There are related consequences that the homeowner, when he/she signs the loan docs, agrees to as well. California is not a recourse loan state, so first deeds of trust do not come back to homeowners in the form of a deficiency judgment. However, the homeowner will suffer some form of credit repercussions, which is part of the deal. A contractual obligation and a moral obligation, both which the homeowner, when defaulting on their loan and giving up the property, has satisfied in full.
Posted by Nick Yonano at 11:41
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Labels: Mortgage Default, foreclosures, housing, real estate
Sat, February 20th, 2010
A Morsel of Housing Help for California… And an Idea
The Feds finally acknowledged, somewhat, that the housing problem in this country goes much deeper than banks and insurers, and threw a bone this week toward homeowners in the hardest-hit states, including California. (There are five states designated to receive funds.)
Time will tell exactly how much California receives from the allocated funds, or in what manner the funds can be used as approved by the feds. The amount of TARP funds allocated to the homeowners (and perhaps would-be homeowners as well)? $1.5 billion. Total. Not $1.5 billion per desperate state. $1.5 billion for everyone, including our state, which could swallow that paltry amount in minutes with its needs.
There clearly is not enough money allocated in this proposed program to truly repair the loss of equity many homeowners have suffered in their property in relation to their loans on the property. Perhaps some assistance to the banks in approving short sales? Oh, I forgot, they already subsidize the banks by compensating many of them for losses on property.
I would suggest attempting to use funds to draw down principals on loans for homeowners in a short refinance (principal reduction). If this works on a small scale, then a larger version, perhaps with real money, could be implemented next year. Just an idea.
Yes, the Obama camp acknowledged the problem. Just not that it’s a big problem.
Posted by Nick Yonano at 05:52
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Labels: Mortgage Default, foreclosures, housing, housing market, property value, real estate, short sale
Fri, February 5th, 2010
Short Sale Seminars in El Dorado Hills
We just had another short sale seminar at Old Republic Title in El Dorado Hills, sponsored by Intero Realtors of El Dorado Hills. Paul Norton and Jody Durkett did a great job of facilitating. We had a wonderful credit specialist as well as a title officer, an Certified Public Accountant (Sam Hoppe, one of the best around), and yes, me.
If you missed it, and live in the El Dorado Hills, Cameron Park, or Folsom areas, or even nearby areas such as Sacramento or Placerville, let myself or Jody Durkett know so that we can make sure you are informed of our next seminar.
Posted by Nick Yonano at 04:51
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Labels: Mortgage Default, el dorado hills, folsom, foreclosures, housing, real estate, short sale
Thu, August 30th, 2007
The Market Today
In talking to many different professionals in the real estate business each day, I’ m starting to guage which type of professional will begin to show optimism about the housing market first. Will it be mortgage brokers? Agents? Title companies? Attorneys? So far I have heard lots of skepticism from across the board. I’ll be watching for trends.
Posted by Nick Yonano at 03:08
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Labels: housing
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