Weitz Law Firm - 520 Kirkland Way, Ste 103 - Kirkland, WA - (425) 889-9300

Thursday, December 27, 2012

Challenging a King County Property Tax Assessment

Annual Valuation Notices

The Assessor revalues all property in King County each year and sends out revaluation cards in April, finishing sometime in August, depending on location and/or property type. These new valuations will be the basis for the amount of taxes due the following year.

Opportunity to Appeal and Filing Deadlines
Property owners who believe the new assessed value of their property exceeds its fair market value have the opportunity to appeal each year following receipt of the Assessor’s revaluation notice by timely filing a petition to the King County Board of Equalization (BOE). DON’T MISS YOUR FILING DEADLINE! Petitions must be received by the Board on OR before July 1st of the assessment year OR within sixty (60) calendar days after the date listed on the Assessor’s value change notice – whichever date is later. Due to the timing of the Assessor’s revaluation notices, in most cases, the filing deadline will be 60 days from the mailing date listed on the notice.

How to Appeal

SUBMITTING YOUR PETITION TIMELY IS KEY. While it is recommended that you provide the evidence you will use to support your appeal as early as possible, additional evidence may be submitted up to seven (7) business days before your future hearing, which is typically several months after you file the appeal. There is no filing charge for filing an appeal.

Assessor’s Response to Your Appeal

You should expect a response from the Assessor in two to six months, depending on the volume of appeals. Based on the evidence included within your petition, the Assessor may choose to recommend an adjustment in the assessed value. If this occurs and you agree to the Assessor’s stipulated or recommended value amount, the need for a hearing will likely be eliminated. About 20% to 25% of the petitions filed each year are resolved in this manner.

For more information on challenging your property tax in King County, consider contacting a Seattle Real Estate Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033


(425) 889-9300

Monday, December 10, 2012

Seattle / Federal Mortgage Debt Relief Act

Weitz: Below is a recent Seattle Times article exposing one of the larger issues that faces the current Real Estate market - the Mortgage Debt Relief Act. I will provide our thoughts and input where appropriate.

AP — Patrick Boris, a banquet chef in Las Vegas, is inching closer to his own “fiscal cliff,” 2,100 miles away from the political brinkmanship under way on Capitol Hill.
If Congress and the White House allow the country to go over the cliff later this month, Boris figures he could owe federal income taxes on more than $100,000 in forgiven mortgage debt after the short sale of his two-bedroom town home next year — a personal financial “disaster,” in his words.
Weitz - currently, the law is set to expire at the end of this year, BUT there are numerous bills on the floor to take its place.
In Sacramento, Calif., Elizabeth Weintraub, a real-estate broker who specializes in short sales, says “many” of her clients have potentially taxable exposures on $200,000 or more in negative equity balances on their short sales next year if Congress fails to act.

Across the country, fears such as these are mounting. With the outcome of negotiations over taxes, spending and the federal debt uncertain, huge numbers of underwater owners worry that a single legislative provision that has been sucked into the “fiscal cliff” vortex could devastate them personally.
The issue is the extension of the Mortgage Forgiveness Debt Relief Act, which is to expire Dec. 31.
Dating to 2007, the law temporarily amended the federal tax code to allow mortgage debt on a principal home that is canceled by a lender through a loan modification, short sale or foreclosure to escape taxation as ordinary income.

Weitz - it applies to loans that were taken out to 'purchase or improve' your PRIMARY residence....it does not apply to loans for rental properties, investment, etc.

Several bills have been introduced in the House to extend the law for at least another year, and the Senate Finance Committee passed a bipartisan bill this summer that would do the same.
Weitz - it should be noted that foreclosure or bankruptcy could potentially be used to avoid this tax in Washington State, so it would behove Congress to pass the law as firms like ours would simply push more people into Bankruptcy or Foreclosure to evade this tax burden.

But mortgage-debt forgiveness is on hold in both chambers, effectively a hostage until Congress works out a grand bargain, if it ever does.

Though it’s a relatively small and noncontroversial item compared with the multitrillion-dollar debates over taxes and spending, what’s striking is that it potentially affects such a large group of owners and could be extremely painful.

Consider this:

• Nationwide, according to mortgage-industry estimates, about 11 million owners are underwater.
Weitz - this is unrelated to the tax issue, but provides reason that any optimism in real estate should be cautious optimism as there are certainly some fundamental issues that could derail our current recovery.  

New data generated for this column by realty-information company Zillow indicates that the average negative-equity amounts of owners who are underwater — their loan balances exceed the property value — are higher than $90,000 in more than 64 local markets and more than $50,000 in 470.

• Federally regulated Fannie Mae and Freddie Mac own approximately 4 million mortgages that are underwater, and as of Nov. 1 began encouraging owners who are current on their payments but facing a financial hardship to apply for short sales that forgive their outstanding loan balances.

All participants in these short sales who close after Jan. 1 could be subject to federal taxation on the forgiven balances if Congress does not extend the law.

• Forty-one state attorneys general recently appealed to Congress to pass an extension so as not to disrupt the $25 billion nationwide “robosigning” settlement they negotiated with five major lenders.

Among other provisions, the settlement encourages lenders to forgive billions of dollars in mortgage debt next year and beyond.

Failure to renew the law, said Nevada Attorney General Catherine Cortez Masto, would cause families who are already facing financial distress to be “stuck with an unexpected tax bill” that could deter them from “participating in this historic settlement.”

What’s the outlook? There are no indications that either House Speaker John Boehner, R-Ohio, or Senate Majority Leader Harry Reid, D-Nev., plans a separate vote on a mortgage debt-forgiveness extension, essentially freeing it from the game of political chicken under way.

Whether or not a grand bargain including an extension can be struck before the New Year witching hour is anyone’s guess — and an underwater short seller’s ongoing nightmare.
Weitz: this is certainly a very large issue for many folks in the distressed real estate market, and a constant conversation with our clients. That said, I remain optimistic that Congress will 'come to its senses' and extend the law - only time will tell.
For more information on your rights in Short Sale or Foreclosure, consider seeking guidance from a Seattle Foreclosure/ Short Sale Attorney.
To contact us today, please click here.
Our Firm:
Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
 

Tuesday, November 13, 2012

Short Sale Commissions

Pursuant to a new NWMLS short sale rule, selling offices will no longer have to lower their commissions on short sales if the seller's creditors require that the total commission be reduced.

NWMLS Rule 101(g) currently provides that if a sale is a short sale and the seller's creditors require that the total commission or the selling office commission be reduced, then the listing office and selling office commission will be reduced equally. It allows the selling office's commission to be reduced without the selling firm's written consent. This rule will be deleted effective December 12, 2012. For short sales listed after December 12th, selling offices can be paid as stated in the listing. Thus, the listing firm will have to bear the entire loss if the creditor requires that the total commission be reduced. For short sales listed before December 12th, Rule 101(g) will still apply.

This means short sale commissions will no longer be subject to lender approval. If the bank refuses to pay more than a certain amount toward commission, the selling office can still be paid as published in the listing. According to NWMLS, Rule 101(g) is no longer necessary because Fannie Mae and Freddie Mac both have policies regarding short sale commissions and there is less uncertainty about how much commission a creditor will pay in a short sale. This will allow selling offices to collect their full commission on short sales.

For more information on rules affecting the short sale process, contact a Seattle Real Estate Attorney

Our Firm: 

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

weitzlawfirm.com

Monday, October 29, 2012

Deed for Lease: Avoiding Foreclosure by Becoming a Tenant in Your Home


Fannie Mae’s Deed for Lease program allows qualified borrowers to transfer the deed to their property back to their lender and rent their home at market rate for 1 year (with possibility of term renewal or month-to-month extensions). The program has existed since 2009, but hasn’t gotten much publication nor has it been widely utilized because of its eligibility restrictions.

How it works:
  • Step 1: Enter into a Deed-in-Lieu of Foreclosure agreement with Fannie Mae.
    • This agreement means you have agreed to give title back to Fannie Mae in exchange for forgiveness for defaulting on your mortgage terms. It must be in place for you to be eligible for the Deed for Lease program. It will impact your credit score, but the impact will be less harmful than a foreclosure. 
  • Step 2: Fannie Mae determines borrower eligibility and contacts a property manager to start the Deed for Lease process.
  • Step 3: Property manager inspects property and imposes lease conditions.
    • This includes setting the rental rate for the next 12 months.
  • Step 4: Fannie Mae approves
    • If you don’t qualify for the Deed for Lease program, the normal Deed-in-Lieu of Foreclosure process  will continue- you will lose the home and won’t be able to stay there as a renter.
  • Step 5: Property manager becomes sole administrator of your new lease

Eligibility Requirements:
  • Borrower must:
    • Have a Fannie Mae mortgage in a Deed-in-Lieu of Foreclosure agreement
    • Have requested and been denied a loan modification
    • Show that the rental rate won’t exceed 31% their monthly income
    • Not be involved in bankruptcy proceedings
    • Have made at least 3 payments since the loan started or since the last modification.
    • Not be more than 12 months past due on payments
  • Property must:
    • Be in good condition
    • Be borrower’s primary residence
    • Be in compliance with local rules and laws
    • Be released from any subordinate liens  

Major lenders like CitiMortgage and Bank of America have also recently begun testing Deed for Lease programs, but only in certain markets.  These programs are more extensive than Fannie Mae’s program, offering longer term leases and imposing less eligibility restrictions.

Our Take: Experimenting with these programs is good for borrowers. It's not ideal - you still have to give up your title and lose any equity you have in your home. The market rent for your home may not be any more affordable than your mortgage payments. But if your household can afford it, you can avoid move-out costs and new security deposits while you’re struggling with your finances. Your kids can stay in the same school and no one even needs to know that you no longer own the property. The bank, in turn, gets to skip the hassle and cost of foreclosure, avoids having to sell the property in a dismal market and protect an unoccupied property from vandals. It's good for the community too- it provides stability and decreases the number of vacant, deteriorating properties.

For more information on your rights in distressed Real Estate, consider contacting a Seattle Real Estate Attorney

Our Firm: 

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

weitzlawfirm.com


Sunday, October 7, 2012

QE3 - What is it and how does it effect homeowners

See a video from the Daily Ticker on yahoo Finance regarding QE3 ("Quanitative Easing"):

For those who have no back ground in what 'Quanatative Easing' is, I'll give a quick back ground that is hopefully easy to understand.

Essentially, all 'QE' amounts to is the buying of assets by the Federal Reserve. QE 1 sand QE 2 were focused primarily on buying 'Treasury Debt'. In essence, this increases the government debt and adds more money in the government that can be spent on 'stimulus' or simply to pay for traditionally governmental functions.

QE3, alternatively, focused on buying Mortgage Backed Securities ('MBS'). This essentially amounts to another bailout for the banks as they hold many of these MBS and the valuations by the Fed are likely far above what the market would dictate for these assets. The idea is that it will make the banks feel healthier and they will lend more to public for homes, businesses, etc. I remain skeptical as the none of the 'bailouts' to date have led to a dramatic increase in lending, so I question where QE3 will be much different than the other forms of bailouts which have benefitted the banks, and left the public out to dry. What it will likely do is lead to a nominal to marginal decrease in interest rates for a significant period of time.


For more information on your rights in distressed Real Estate, consider contacting a Seattle Real Estate Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

weitzlawfirm.com

Monday, September 3, 2012

New Seattle Short Sale Policies


A recent article on the FANNIE AND FREDDIE short sale procedures and policies along with our take.

For more information on your rights in the Short Sale process, consider contacting a Seattle Short Sale Specialist.

WASHINGTON -- If you're underwater and facing financial distress, what might Fannie Mae's and Freddie Mac's new short sale-overhaul policies mean for you? Potentially a lot -- even if you are current on your mortgage payments and never imagined that a short sale and principal reduction could be in the cards.

Here's what's involved: Starting Nov. 1, owners whose loans have been purchased or guaranteed by Fannie or Freddie may qualify for a 
short sale if they fit key hardship criteria, including: unemployment; divorce; long-term disability; a change of employment that is more than 
50 miles from the current home; a business failure; death of the primary or secondary wage earner; or a natural or man-made disaster.

Our take: in general, I think this is a great policy for fannie and Freddie. To date, many of our clients have been forced to go 

delinquent on payments in order to have a short sale approved. With this new policy, hopefully clients that do a hardship 
can have a short sale approved without damaging their credit rating as harshly.

Short sales allow borrowers and lenders to avoid the crushing costs of foreclosure by bringing in a new purchaser for the house at what is 

normally a price well below the amount owed to the lender. In a successful sale, the distressed owner receives a write-down of the portion of the principal not covered by the new buyer's price.

Our take: a ‘write-down’ is not technically correct. What we aim for is a ‘waiver of deficiency’ so our clients will not owe 

money at the conclusion of the short sale. That said, it is NOT AUTOMATIC and must be NEGOTIATED.

In what could be a far-reaching change, Fannie and Freddie will allow borrowers current on their 

mortgage payments -- not seriously delinquent as traditionally required -- to qualify for short sales, provided they fit the "hardship" criteria.

Borrowers considered "most in need," that is, they are far behind on payments, have depressed credit scores and are facing financial stress, 
will be eligible for streamlined processing of short sales, involving reduced documentation and much speedier resolutions than usual.

Under rules that took effect in June, loan servicers already are required to operate on fast timelines for short-sale requests. They are 
supposed to respond to borrower requests for short sales within 30 days of receipt of an offer by a purchaser, and must give applicants 
a final decision within 60 days of receipt of a completed short-sale package.

In the past, short sales often have been drawn out and contentious, sometimes taking more than nine months to close. They have also had 

a high rate of failure and cancellations, when buyers get frustrated and bail out of the transaction after waiting for banks and loan servicers 
to make decisions and process paperwork.

Banks that hold second mortgages or credit lines secured by the house have been another choke point. As lien holders, they can block the 

entire transaction if they feel they are not being properly compensated along with the first mortgage holder, and have frequently blown up 
deals with their demands. Under the new Fannie-Freddie rules, second lien holders will be entitled to a maximum of $6,000 out of the 
proceeds of the sale.

The broadening of short sales to those current on their mortgage payments but encountering serious hardships could help huge numbers of 

underwater homeowners. Though the Federal Housing Finance Agency has no estimates of how many borrowers might be assisted by the 
change, its acting director, Edward J. DeMarco, has said that 4.63 million loans in Fannie's and Freddie's combined portfolios are underwater, 
and that approximately four-fifths of these are current on payments.

She added that the new rules won't solve all the problems, however. For example, banks owed large sums on second mortgages may not 

be satisfied with the $6,000 maximum payoff to release their liens, even though they know that in a foreclosure their second liens likely would 
be worthless -- the first lien holder must be paid first.

Among other key changes in Fannie and Freddie short sales:

* Members of the armed forces who receive permanent change-of-status orders and are underwater will be automatically eligible for short sales, 

even if they are current on their loan payments.

* In states where Fannie and Freddie have the legal right to pursue "deficiencies" when short sale proceeds do not pay off the existing debt, they 

will waive that right and instead ask borrowers who have sufficient assets or income to make "cash contributions" or execute promissory notes 
to cover part of the shortfall.

To find out whether your loan is owned by Fannie or Freddie, visit either FannieMae.com/loanlookup or FreddieMac.com/corporate.


For more information on your rights in the short sale process, consider contacting a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425.889.9300

weitzlawfirm.com

Tuesday, July 10, 2012

Foreclosure starts outnumber foreclosure sales



In May, foreclosure starts outnumbered foreclosure sales by a near 3-1 ratio, according to a report from Lender Processing Services.

Even though foreclosure starts and sales saw similar monthly increases in May, 11.6 percent and 10 percent respectively, the actual number of foreclosure starts was significantly higher than foreclosure sales. Foreclosure starts numbered 202,707 while foreclosure sales totaled 73,439.

Weitz – I’d love to hear from the folks that claim real estate is recovering and get their spin on this. The reality is that we cannot and will not have a sustainable recovery in real estate or otherwise until the distressed real estate situation tempers out. There are still far too many people that owe much more than their homes are worth and I strongly believe that the foreclosures and short sales will be on a drag on pricing for some time.

Also, foreclosure inventory maintained historically high levels at 4.14 percent.

LPS Applied Analytics SVP Herb Blecher said the situation is more nuanced when looking at the breakdown between states that apply judicial versus non-judicial foreclosure processes.

“There’s a stark contrast in foreclosure inventories between judicial and non-judicial states,” said Blecher. “In the former, 6.5 percent of all loans are in some stage of foreclosure – that’s more than 2.5 times the rate in non-judicial states where only 2.5 percent of loans are currently in the foreclosure pipeline.

Blecher added both figures are significantly higher than the pre-crisis average of 0.5 percent, but noted the average yearly decline in non-current loans for judicial states is less than one percent compared to 7.1 percent in non-judicial states.

Unlike non-judicial states, lenders must receive court approval before initiating a foreclosure. This leads to a longer timeline for when foreclosures actually exit the pipeline.

In non-judicial states, foreclosure sales were three times greater than in judicial states, with 6.46 percent of foreclosure inventory making its way out of the foreclosure pipeline in May compared to only 2.14 percent in judicial states. Judicial states also hold a much higher percentage of past due loans that are more than two years old. In judicial states, about 53 percent of loans in foreclosure have been delinquent for more than two year compared to just over 30 percent of loans in non-judicial states.

Weitz – this non-judicial situation is good for Washington, and I will note that the Foreclosure Fairness Act has done a nice job of reducing foreclosures, and slowing down the foreclosure pipeline. That said, it does solve the underlying problem that the foreclosure pipe line still enormous.

At 7.2 percent, delinquencies in May were up slightly by 1.1 percent, but down almost 12 percent a year ago.

LPS uses loan-level residential mortgage data and performance information on nearly 40 million loans for its monthly report.

For more information on your rights in Foreclosure or Short Sale, consider contacting a Seattle Foreclosure Attorney.
Our Firm

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425.889.933


Friday, June 22, 2012

Foreclosures up across the country




A video from the Dylan Ratigan show this week discussing the increase in foreclosures.
On a side note, Dylan is leaving cable news - selfishly, I'm very disappointed as I think he is the most educated, objective news anchor in the market these days. He will be missed.

An overview of the discussion can be found below:


1) U.S. Foreclosures are up for the first in 2 years.

Weitz – this is not a surprise as the banks are now free to continue the ‘foreclosure mills’ without concern that Attorney General Offices will pursue them for improper practices.

2) States are using the AG Settlement for homeowners to aid in their general budget short falls.

See my original thoughts on the AG Settlement here: AG Settlement


3) Mediation programs, like the one implemented in Washington, work. Banks are more willing to utilize other loss mitigation methods including short sale or deed-in-lieu of foreclosure.

For more information on your rights in foreclosure or short sale, consider consulting with a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425.889.9300

Weitzlawfirm.com

Monday, June 11, 2012

Complaints of Mortgage Settlement in Washington

Weitz - the main reason I'm posting this is to inform folks that we now have a place for complaints for abuses of the mortgage settlement(s) surrounding 5 of the big banks.

AP- The court-appointed monitor of a $25 billion U.S. settlement with five banks over abusive foreclosure practices said he's hoping consumer advocates will let him know if banks aren't complying.

Joseph A. Smith Jr., who left his position as North Carolina's banking commissioner to take the monitoring job, said he's set up a website — www.mortgageoversight.com/report-client-issues/ — where housing counselors, bankruptcy lawyers and other advocates can report problems.

"I am hopeful that we will get additional input in terms of our review of the banks' work from out in the field," he said. Smith said Wednesday he's working on setting up uniform standards for monitoring compliance at each bank, and has hired BDO Consulting to help. He said he plans to hire additional outside consultants to track each bank's progress.

The settlement agreement, filed in federal court in Washington, D.C., in February, was reached after attorneys general from all 50 states announced a probe into foreclosure practices after disclosures that banks were using faulty documents to seize homes.

The nation's five largest mortgage servicers — Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial — negotiated the agreement with federal agencies, including the Justice Department, and 49 states.

The banks have committed $20 billion in relief for borrowers plus payments of $5 billion to states and the federal government.

About $17 billion of the agreement will pay for mortgage-debt forgiveness, forbearance, short sales and other assistance to homeowners. Servicers will also provide $3 billion in refinancing to lower homeowners' interest rates. The settlement also sets new standards for servicing loans aimed at preventing foreclosure abuses.

Smith said he expects to get reports on the banks' consumer relief efforts later this year. Progress reports on servicing standards will come at the beginning of next year, he said.

More more rights in foreclosure, bankruptcy, or short sales, consider discussing with a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

425.889.9300

Federal Reserve Leader Bullard gives assessment of Mortgage Crisis



Here's a post for the real economic geeks out there!

A recent report by the head of the St. Louis Fed James Bullard can be found here.

Some highlights from the report:

1) With regard to real estate, U.S. homeowners have about $9.8 trillion in debt outstanding against $490 billion of equity.

Weitz - this is a huge number - I've said since I created this blog that DEBT is the number one problem in America from mortgages to credit cards to students loans. Until we start seeing the average family deleverage, we will simply not see a robust recovery as most families continue to use their resources simply to service the debt they have taken on. This benefits the creditors (ie. banks), but does very little for the common person.

2) To get back to the normal LTV, households would have to pay down mortgage debt by about $3.8 trillion, about one-quarter of one year’s GDP. This will take a long time. It is not a matter of business-cycle frequency adjustment.

Weitz - let me translate - to get back to a normal Loan to Value ration, we would have to face MASSIVE defaults or LOAN PAY DOWNS.

3) The U.S. economy had a bubble in housing which collapsed. Recovery from this event is ongoing and will ultimately take many years.

4) In particular, households are saddled with far too much mortgage debt compared with historical norms.
Monetary policy has been ultra-easy during this period, but cannot reasonably encourage additional borrowing by households with too much debt.

Weitz - kudos to Mr. Bullard for taking an honest assessment of the Mortgage situation. In a position such as his, it can be very easy to fall into the 'tell people what they want to hear' category.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
425 889-9300

Monday, June 4, 2012

Seattle Mortgage to Lease Program



Weitz – a recent article regarding the potential of a ‘Mortgage to Lease’ program which would allow distressed homeowners to rent the homes in which they are being foreclosed upon. Unfortunately, this particular program is not utilized in Seattle, however, that could very well change should the program be successful in other States.

AP- Unable to qualify for modifications on Bank of America mortgages, a few of California's most distressed homeowners are being offered one last chance to stay in their homes: Become renters instead.

Testing a mortgage-to-lease program in the Golden State, Bank of America sent 300 letters last week inviting borrowers without other options to apply. An additional 1,500 letters will go out in the next few weeks as the bank, which also is testing the program in Arizona, Nevada and New York, evaluates whether a national rollout is feasible.

Bank of America plans to sell the homes to investors. It typically would recoup far less than what's owed but would come out far ahead compared with where it would be after evicting borrowers, making "cash for keys" payments to help them move and selling empty and often vandalized foreclosures in the troubled housing market.

Evicted homeowners tend to look for single-family homes to rent in their own neighborhoods anyway, so why not let them exchange the deed to the home for a lease, Bank of America executive Ron Sturzenegger said.
"It's good for us, it's good for the borrower and ultimately good for the community," said Sturzenegger.

Borrower advocates say the approach, providing a cushion for homeowners at the end of their rope, is long overdue. They point out that mortgage giant Fannie Mae has had a similar "deed-for-lease" program for 2 ½ years for the occupants of foreclosed homes it owns.

Some investors already have been pursuing similar goals, such as the partnership that acquired Eduardo and Juanita Quezada's home in Moreno Valley, Calif.
The Quezadas' financial setbacks began in 2005, when they refinanced the home after a strike at the supermarket chain where they worked. The walkout wiped out their savings.
Bank of America, which serviced their loan, began foreclosure proceedings in October 2010 after the couple fell behind on payments. Lengthy efforts to qualify for a loan modification were denied, the couple said, because their household income fell short of their monthly expenses by $90.

TwinRock Partners of Newport Beach, Calif., bought the three-bedroom, two-bathroom home at a foreclosure sale last year and worked out a deal to rent it to them for $1,310 a month, about $40 less than their old mortgage. Staying in place helped them at the time, but has been a difficult experience, Eduardo Quezada said.

"We both have jobs, me and my wife. I thought for sure we would work it out some way," he said. "I had invested a lot in the house, and to walk away from it was depressing."
The Quezadas, who started with a one-year lease and have signed on for an additional six months, are thinking of downsizing to an apartment in a better school district.

"It's like going backward," Quezada said. "It's like you're going back in time." TwinRock Chief Executive Alexander Philips said his partnership prefers to keep former owners as renters when it buys distressed homes. Often, though, the residents are suspicious and must be convinced of the advantages because the experience of losing ownership was so horrible.

"Once you get them through that adjustment, (they understand that) it actually makes economic sense to stay in the house," Philips said. That's in addition to "the comfort of being in their own house, the convenience of staying where they are, with the kids close to their friends in the neighborhood and keeping them in the same schools."

Bank of America emphasized that its test program is limited to borrowers it selects, so homeowners can't sign up themselves.

Weitz – This is classic bank rhetoric – “don’t call us, we’ll call you…..if it fits our best interest”.

It is available only on mortgages the bank owns — just 15 percent of the home loans for which it collects payments. The other 85 percent are owned by investors in mortgage securities.

The homeowners must be 1) at least 60 days behind on payments , and must 2) have been run through every available loan-modification program without success, because they either didn't qualify or had rejected an offer from the bank.

Those willing to become renters must resubmit financial information so the bank can verify that they can afford typical rent payments for their local housing markets. If they qualify, they will conduct what is known as a deed-in-lieu transaction, swapping their claim to ownership for a lease.

The leases are for a year, with options for the residents to renew for two more years. Since the damage to credit ratings from deed-in-lieu transactions is erased after three years, the renters at that point would have an easier shot at buying a home again, Sturzenegger said.

The program will be expanded only if it works out for enough borrowers, bank officials said.

Weitz - In theory, I love the idea of this program. Many homeowners want to stay in their homes, but simply can't afford the original mortgage or don't qualify for a modification. I'd like to see this program, or similar programs expanded on a massive scale, but I'm certainly skeptical given the past success of government or large bank programs.

For more information on your rights in Foreclosure, Short Sale or other alternative, consider discussing with a Seattle Foreclosure Attorney, or a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
weitzlawfirm.com
(425) 889-9300

Sunday, April 1, 2012

Fannie and Freddie Principal Reductions...or lack thereof.


Weitz: I often have clients approach me and ask about the possibility of a principal reduction to allow them to stay in their home - my response is always the following: who actual owns your note? If its Fannie Mae or Freddie Mac, you've got a better chance of winning the lotto. As of today, there have been 0 principal reductions by these large GSEs since the crisis bagan. Below are some excerpts on the topic from a recent Seattle Times article:

Nongovernment holders of delinquent mortgages are offering more payment plans with debt forgiveness as Fannie Mae and Freddie Mac resist, according to the U.S. Office of the Comptroller of the Currency.

Principal reductions were granted in 8.5 percent of the 116,153 delinquent mortgages that received permanent modifications in the fourth quarter, according to a report by the unit of the Treasury Department.

Weitz: 8.5% - that's pathetic; unless banks and Fannie and Freddie get more aggresive with this, the foreclosure numbers will continue to mount.

That's up from 8.1 percent in the prior three-month period.

Debt forgiveness was included in 16 percent of loans held by private investors, 25 percent of loans held in bank portfolios and in none owned by the government-run companies.

"Principal modifications can be a tool in the overall arsenal," said Bruce Krueger, a senior mortgage expert with the comptroller's office, said in a conference call.

"It just makes sense for homeowners who have been significantly underwater to take a principal writedown," he said.

Lenders have struggled to find ways to reduce losses as 12.1 percent of mortgages were delinquent or in foreclosure at the end of last year, down from 12.4 percent a year earlier, according to the comptroller's report.

About 5 million homeowners have lost their property through foreclosure or other forfeiture actions since 2006, according to RealtyTrac.

Fannie Mae and Freddie Mac, the mortgage financiers under government conservancy since 2008, haven't granted principal reductions because it would cost the taxpayer-funded companies almost $100 billion, Edward DeMarco, the acting director of the Federal Housing Finance Agency, said in a Jan. 20 letter to Congress.

Weitz - here is a perfect example of the short-sightedness of these companies. They look at the losses of doing the modifications...they SHOULD be looking at the loses they are going to incur when theses properties go to foreclosure because a modification was not executed.

The agency oversees Freddie and Fannie.

Private investors may have acquired the mortgages at a discount or been forced to write down the value of the loans to comply with U.S. banking regulations, making it easier for them to offer debt forgiveness, Krueger said.

Principal deferrals, which reduce payments by delaying rather than forgiving debt obligations, were offered on 20 percent for loans held by Freddie Mac, 26 percent by Fannie Mae, 30 percent by private investors and on 39 percent of mortgages in bank portfolios.

"We haven't been able to determine whether principal-reduction modification works better than principal deferral modification," Krueger said.

Delinquent loans that received payment reductions greater than 10 percent have had a lower re-default rate than plans with smaller discounts, Krueger said.

The number of permanent modifications fell 44 percent in the fourth quarter from a year earlier and 16 percent from the prior three-month period, according to the report.

Weitz - not sure how to interpret this number - are we improving in the Real Estate market or the modifications becoming less successful - I would guess a little bit of both.

At the same time, the number of homes seized through foreclosures rose 22 percent to 116,060 and the number of short sales, when lenders agree to sell for less than the debt on the property, increased 29 percent from a year earlier to 63,257.

Owners of 768,773 homes had active mortgages modified under President Obama's Making Home Affordable program as of Jan. 31, the most recent data available from the Treasury Department. That included 44,058 loans with principal modifications, with a median debt reduction of $68,063.

For more information on your rights with Foreclosure, Short Sale or Loan Modification, consider seeking the Guidance of Seattle Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

425.889.9300

weitzlawfirm.com

Friday, March 9, 2012

Washington Foreclosure Fairness Act - Bad Faith Determination


The foreclosure fairness act is now playing a big part in Washington foreclosures. The big component of the bill is that all parties must act in good faith, but what does that mean and why does it matter? Below is a very basic overview of the law and the potential ramifications of getting a bad faith determination at mediator.

General Rule. RCW 61.24.160

A violation of a Duty to Mediate in Good Faith include:

a. failure to timely participate in the mediation without good cause
b. failure to provide the following documents to the borrower at least ten days prior to mediation:
      - accurate statement of loan balance
      - copies of note and Deed of Trust
      - Proof the beneficiary is the owner of the promissory note
      - estimate of arrearages
      - payment history for past 12 months
      - NPV analysis
      - explanation regarding any denial for loan modification or other foreclosure alternative
      - most recent BPO or appraisal
c. Pool Servicing Agreement that prohibits modification
d. Failure of a party to designate representatives with adequate authority to fully settle, compromise or otherwise reach resolution

What does it mean if the bank gets a failure to act in Good Faith?

If mediator issues a certificate that beneficiary failed to act in good faith, it would constitute a defense to a non-judicial foreclosure - the most common type of foreclosure in Washington.

A mediator certificate that the NPV (Net Present Value) of a loan modification exceeds the NPV of a foreclosure, it would constitute a basis for enjoining the foreclosure.

For more information on your rights in Foreclosure, Short Sale or otherwise, consider seeking the guidance of a Seattle Foreclosure Attorney or a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

(425) 889-9300

Weitzlawfirm.com

Sunday, March 4, 2012

HARP 2.0 for Washington Homeowners


A recent AP article regarding the new HARP program:

The most ambitious federal mortgage program to date aimed at millions of underwater homeowners is poised to take off in the coming two weeks, yet some key issues could hinder borrowers' participation. One of them involves something most owners know nothing about: Who was your mortgage insurer on your underwater loan?

Weitz - We all know that the original HARP was a failure. Hopefully, the 2.0 version will be more productive - time will tell. Here are some basics of the program.

Though it was announced by the Obama administration late last year, the so-called "HARP 2.0" — the second version of the Home Affordable Refinance Program — will only hit full stride around the middle of this month, when Fannie Mae and Freddie Mac finish tweaking their automated underwriting systems to accept applications, and lenders and mortgage-insurance companies start handling large volumes of requests.

The revisions are crucial for owners who have outstanding mortgage balances in excess of 125 percent of the current resale values of their homes.

Under the second version of HARP, there is no upper limit on permissible loan-to-value ratios (LTVs). You can owe twice or even three times the value of your home and still qualify for a refinancing at today's low interest rates. The earlier version imposed a limit of 125 percent, which cut out millions of the hardest-hit victims of the real-estate bust.

Weitz - this is a major and necessary change from the previous version of the HARP program that will hopefully help out many more homeowners than the previous version.

The latest HARP also comes with streamlined underwriting — no requirement for physical appraisals in many cases, speedy processing and elimination of some of the deal-breaker fees imposed by Fannie Mae and Freddie Mac in recent years.

The objective, federal officials say, is to get it right this time around by removing the previous obstacles to widespread participation by lenders and severely underwater borrowers. Industry studies estimate that as many as 6.9 million loans could fit the broad requirements for refinancing, but that far fewer — somewhere around 2 million borrowers — are likely to qualify on all the detailed eligibility criteria.

Among the key rules:

• Only loans owned or guaranteed by Fannie Mae and Freddie Mac are eligible. Underwater borrowers who have FHA, VA or other types of mortgages are not. Both companies' websites — www.fanniemae.com and www.freddiemac.com — offer "look up" features that tell you whether they own your loan.

• Your mortgage must have been purchased or securitized by either company no later than May 31, 2009, and must have an LTV ratio in excess of 80 percent.

• You must be current on your loan with no 30-day late payments during the six months preceding application and no more than one late payment during the last 12 months.

If you think you qualify, you can apply to your mortgage servicer and ask how to proceed. Once the fully automated program gets going in a couple of weeks and your LTV is higher than 125 percent, you should also be able to shop around among other lenders who are large enough to run servicing operations of their own.

But be aware of a little-noticed glitch that has arisen in the program that could hamper your opportunity to refinance. Some lenders may not want to proceed with your application because of a detail buried in your loan documents that was always beyond your control — the name of the mortgage insurer on your current loan.

If it is United Guaranty, they may set your application aside because that firm alone has not agreed to adhere fully to the streamlined procedures other insurers accepted as part of the basic deal with the White House, Fannie and Freddie to kick-start the revised refi program.

The issue is technical and complicated — United Guaranty has refused to waive its rights to force lenders to repurchase what it considers badly underwritten loans, and is requiring additional underwriting in some cases. All other private mortgage insurers have waived their rights.

The net effect of United Guaranty's policy, say lenders and federal officials, is to disrupt the intended fast and efficient processing of HARP refi applications — potentially denying lower interest rates to as many as 10 to 15 percent of underwater borrowers who might otherwise qualify.

Some major lenders, such as Quicken Loans, said in interviews that they will have to either set aside or reject HARP applications where the original loan carries United Guaranty insurance. United Guaranty, a subsidiary of giant insurer AIG, said in an email statement that it "fully supports the Obama administration's efforts" in revising HARP, and that only a "minority" of its insured mortgages should be affected by its policy disagreement with the rest of the industry.

Bottom line for you if you're deeply underwater and interested in a HARP refi: Proceed with your application anyway, but be aware there are tripwires and snares that could derail you

For more information on your rights with Distressed Real Estate, consider dicussing with a Seattle Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

(425) 889-9300

weitzlawfirm.com

Tuesday, February 21, 2012

Washington Foreclosure Settlement - What it means to you


As some of you may or may not be aware, there was a recent settlement between 5 of the large banks and the State Attorney Generals regarding the Foreclosure practices and on-going servicing of their loans.

Below, I will provide a detailed overview of the settlement and provide my take on what it means for Washington Homeowners.

The Settlement:

The $25 Billion settlement will provide financial ‘relief’ to an estimated one million at-risk borrowers.

The pact, as agreed upon by Bank of America, Wells Fargo, Chase, Citi and Ally Bank will offer reduction in loan principal and other assistance to qualified homeowners. $17 Billion will go to at-risk homeowners.

Weitz - Let me translate: these 5 banks only hold 20% of mortgages (note the difference between owning the loan and servicing the loan – they service a much higher percent, but only own 20%).


The pact allows for potential re-financing for people current on payments even if they are underwater on their homes.

Weitz - there were no specific details given who gets re-financing and under what terms.

Additionally, the deal will potentially provide $1500 to $2000 to people who have previously been foreclosed upon.

Washington Specific Information:

Washington stands to get $648 million under the $25 billion national settlement with five of the nation's biggest mortgage servicers announced Thursday.

The biggest chunk, $525 million, is aimed at helping those who are financially underwater on their mortgage because their home's value plunged: $455 million will go for reducing the loan principal of homeowners who are delinquent on payments, and $70 million for refinancing the loans of homeowners still current and paying higher-than-market interest rates on their mortgage.

Other moneys Washington state will receive under the settlement include:
• $45 million for foreclosure relief programs, including housing counselors, free legal assistance and mediation.
• $5 million to the state Attorney General's office to recoup its costs.
• $5 million in civil penalties, which will go to the state's treasury

How long will it take to get help?

Over the next 30-60 days (From Feb. 10, 2012), settlement negotiators will pick an administrator to handle the logistics of the deal. Over the next 6-9 months, the parties will work to identify which borrowers will get help.

It is expected that servicers will reach out to borrowers in the coming weeks, but they techinically have 3 years to provide help.

Each bank will have their own toll-free number and website and a national clearing house will be established at nationalmortgagesettlement.com.
• Ally/GMAC: 800-766-4622
• Bank of America: 877-488-7814
• Citi: 866-272-4749
• JPMorgan Chase: 866-372-6901
• Wells Fargo: 800-288-3212

What are the rules of the principal reduction program?


1) Borrowers must be a. behind on payments or b. at imminent risk of default
2) This does not cover loans owned by Fannie and Freddie Mac – this is important has a majority of loans are in-deed owned by Fannie and Freddie.
3) It will apply to both 1st and 2nd mortgages (if they are owned by the banks).

** Expect this to apply mostly to the 2nd loans that should reduced anyways.

What about the Re-Finance Program?

The re-finance program will apply to loans owned by the banks (rare).
Further, borrowers must be current on their loan payments and owe more than their home is worth. The interest rate can be reduced to as low as 5.25%

Weitz - Ha!!. Note the 5.25% - that’s only about 1.5% higher than current market rates – thank you, Banksters! ….Way to solve the problem with way above market interest rates.


Post –Foreclosure Help:

Apparently notices will be mailed to eligible borrowers. (Weitz – not sure how they are going to get those mailing addresses of people post-foreclosure).

What’s my take?

Let me translate what the banks have negotiated:
Don’t call us. We’ll call you. We’ll send you a letter if we think that you are eligible for help and we’ll decide (arbitrarily) in ‘awhile’ who is eligible for help.

My opinion: The devil is in the details. I see no real way in which to hold banks accountable to the pact. In fact, I think they benefitted tremendously as the threat of future legal recourse has now been alleviated.

Now that the banks no longer have to worry about ‘robo-signing’ lawsuits and other procedurally driven complaints / lawsuits, I expect the number of foreclosures to begin to rise again at least modestly, if not substantially.


For more information on your benefits and pitfalls of foreclosure and/or short sale, please consider contacting a Seattle Foreclosure Attorney or a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033

(425) 889-9300

Monday, January 2, 2012

Seattle Real Estate: Is now the time to buy?

A recent well-written article in the Seattle Times about ‘Testing the Real Estate Market’ in Seattle – obviously, I’ve got plenty to say on this one.

Despite declining prices — or is it because of them? — last year is shaping up as the Seattle area's best year for home sales since the real-estate market tanked in 2007.

Weitz- “Best since 2007” …. Not a very high bar to exceed!

Through November, closed sales of houses and condos in King and Snohomish counties were running 10 percent ahead of 2010's pace, according to Northwest Multiple Listing Service statistics (December's numbers are expected Wednesday).
That's still barely half the peak pre-bust volume. But market-watchers say the improvement is encouraging, especially considering 2011 was the first year in the past three with no federal-stimulus tax credits to entice buyers.

Weitz - ½ of the pre-bust levels – let me interpret…..still dreadful.

So who bought last year? And who's likely to be buying in 2012?
Renters who've decided low prices and interest rates now make buying more attractive than renting, brokers and other industry insiders say.

Weitz - For the first time since the crash, I have actually started to say that there are ‘SOME’ opportunities in the market place. Where are they, you ask? The low end of real estate has obviously been hit hard. We are seeing investors buying properties and easily being able to rent them and cash flow – namely, places like Everett and Tacoma seem to make sense with a lot of Single Family Homes and Condos falling to less than $150,000.

Investors who sense opportunity in deeply discounted distressed properties. Folks whose changing life circumstances — a new job, a growing family — dictate a move.

And, perhaps most important, people willing to live with the possibility that their home's value may go down still farther before it goes up — because they don't plan to sell anytime soon.

Weitz – while this can make sense, I don’t agree with this theory for a lot of folks. If you can rent and save a significant amount of money on a monthly basis, you are much better off waiting for opportunities in the housing market. It is my opinion that Real Estate has yet to bottom in the Seattle area in most areas – even if I am wrong on this fact, I find it hard to believe that rapid appreciation will be seen in the near future. As the only saying goes: ‘you don’t want to be the one to catch a falling knife’.

Buyers aren't purchasing homes as short-term investment vehicles anymore, says principal Jeff Bell of Cobalt Mortgage in Kirkland, and that's a huge shift.

"The whole system is different now," he says. "We're going back to the way real estate was 20 or 30 years ago."

Seattle economist Matthew Gardner, who analyzes the market for Windermere Real Estate, concurs.

Before the bust, he says, "it wasn't, 'This is my home.' It was, 'This is going to make me money.' "

Among buyers today, Gardner says, that expectation is all but gone.

No big change

Weitz – below are some ‘industry experts’ discussing the market – I’m going to comment on all their opinions, and then point out the obvious for everyone.

For the most part, industry observers don't expect any dramatic changes in the local real-estate scene in 2012. "The market's probably going to be struggling for a while overall," says Glenn Crellin, director of the Washington Center for Real Estate Research.

Weitz – agreed – with the amount of distressed Real Estate in the market, there is an incredibly high possibility of continued struggles.
"We'll be bouncing along the bottom," OB Jacobi, Windermere's president, told a recent industry gathering.

Weitz – note that OB is a Broker – Brokers will generally be overly optimistic as their paychecks gain as Real Estate gains.

Prices may slip a little more, experts say, or at best hold steady. Interest rates should stay at or near their record lows.

Weitz – Agreed.

Inventory probably will remain depressed — in part because so many homeowners are underwater on their mortgages, says Tim Ellis, who writes the Seattlebubble.com real-estate blog: "People who might otherwise be selling can't afford to."

Weitz – Agree with Tim (as usual) – check out his blog Seattle Bubble: it’s a great resource for Seattle Real Estate.

Tougher lending requirements probably will continue to short-circuit a significant number of sales, brokers say — financing obstacles are depressing sales by 10 to 15 percent, says John L. Scott Real Estate Chairman and CEO Lennox Scott.

Weitz – Agree with Mr. Scott for perhaps the first time ever.

Finally, observers say, foreclosures — which helped drive sales up and prices down in 2011 — will continue to play an influential role.

Weitz – Again – I agree.

Weitz – Note that you have a handful of experts in Seattle Real Estate indicating that things will not be improving (and most say that tougher times will be ahead). So please tell me why NOW is a good time to buy?

Sales of bank-repossessed homes were up substantially last year. They accounted for 17 percent of all King County sales in October, up from less than 10 percent in October 2010, according to Seattle-based real-estate marketplace Zillow.com.

Those homes sold not only for significantly less, but also at steeper discounts than other properties compared to a year earlier. The median price of repossessed houses sold in King County in November was down 18 percent from the same month in 2010, according to an analysis by Washington Property Solutions, a short-sale negotiating firm.

For nondistressed houses, the year-over-year drop was less than 3 percent.

Weitz – I’m not sure why ‘distressed’ and ‘non-distressed’ numbers always get separated. The reality is that a buyer has equal access to both. ‘Distressed’ homes are not some distinct sub-category of the market. They are the new reality.

The foreclosure pipeline probably won't dry up anytime soon, most analysts say, despite a recent slowdown in auctions and repossessions they consider merely a pause.

Weitz – Correct, the New Foreclosure Fairness Act has been a great ‘stalling’ aide for foreclosures. The FFA, coupled with the Recontrust issues (Bank of America’s Trustee for Foreclosures), has led to a recent slowdown in Foreclosures – don’t expect that trend to continue.

The percentage of Washington homeowners at least 30 days delinquent on their mortgages has nudged up from 7.1 to 7.5 percent over the year, according to the Mortgage Bankers Association.

And, according to Zillow's latest data, 29 percent of King County single-family homes with mortgages have "negative equity" — their owners owe lenders more than the homes are worth.

That's likely to keep foreclosures elevated, says Stan Humphries, Zillow's chief economist.

But their impact on prices doesn't reach across the board, he adds: Higher-priced houses, which face less competition from foreclosures and short sales, have declined much less in value over the past year than lower-priced stock.

Weitz – this has been true; however, it leads to my prediction for 2012: while the high end has fared better thus far, I expect that the lack of buyers will eventually lead to sellers doing more ‘strategic defaults’ and thus lowering the prices of those properties as well.

That's among the signs of stability in the Seattle market that Humphries says he finds encouraging heading into 2012.

"It's not a terrible time to buy," says Ellis, the blogger. "It depends on your situation."

He bought his first house last year, a short sale in Everett, after looking on-and-off for five years.

That's what Crellin, the real-estate researcher, concluded. He moved recently from Pullman to Seattle when his center switched affiliations from Washington State University to the University of Washington.

He's 61, headed toward retirement. When he considered what the real-estate market might do between now and then, Crellin says, he wasn't certain he'd recoup his investment if he bought.

Considerations like that drove buying decisions in 2011 and will continue to drive them in 2012, experts say.

"It's not 'Buy because you're going to get 10 percent appreciation over the next couple years,' " says Bell, the mortgage broker. "It's not what it used to be at all."

He plans to buy a new house this year — and stay there 15 or 20 years. "I'm not looking for the house to appreciate," he says. "I'm moving for my lifestyle."

Another likely 2012 buyer: Zillow's Humphries. He's not looking to make money, he says. He just wants a bigger back yard.

"With three kids, that's important," the economist says.

Weitz – bottom line: I tell clients the key in deciding whether to purchase a property (from a purely objective standpoint) is to focus on cash flow. If you can buy for the same amount or less of renting, then I think it’s a fine time to buy. If that is not the case, patience is a virtue and will be rewarded.

For more information on your rights in Foreclosure or Short Sale, consider seeking counsel from a Seattle Foreclosure Attorney.

Weitz Law Firm, PLLC

520 Kirkland Way, Ste 103
Kirkland, WA 98033

425 889-9300

weitzlawfirm.com