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Getting Your Foreclosure Rescinded

There’s a common refrain I hear from (former) owners of foreclosed houses:  they were working on a short sale, or a loan modification, they thought everything was going along fine, and all of a sudden, I show up at the door and tell them the house has been foreclosed on, and are they interested in Cash-for-Keys?

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It’s actually a pretty rare event these days when someone hasn’t been in the process of working with the bank to somehow avoid foreclosure at the time the property gets sold at the trustee’s sale.

There’s often several angst-filled days as the (former) owner makes calls to the loss mitigation department and tries to find out what happened to their short sale or loan mod.  Often times, the borrowers are able to reach the right someone with the lender and the foreclosure is reviewed – as you have perhaps read in the headlines lately, mistakes can happen.  Many (former) owners hope to put their loan mod or short sale back on track and have the foreclosure rescinded.

Does this happen?  Yes, absolutely!  It can happen.  If a mistake truly has been made, then the foreclosure often gets rescinded in fairly short order, within a week or two typically.  And then I close the book on that file and go along my merry way, waiting for my next REO assignment or, more like it, busily servicing the ones I already have.

Sometimes it can take weeks or months for a lender to finish reviewing the case however, in which case I as the REO agent will hang back and wait for further instructions from the client.  That must be fairly agonizing for the (former) owner, I imagine – after months dealing with the loss mitigation department to now stand at the precipice and wait…and wait…and wait some more, sheesh, I don’t envy these folks.

Sadly enough, in almost all cases, the loan modification or short sale was denied, however the denial was not communicated to the borrower, and the file was sent without a murmur to the trustee’s sale.  Usually the borrower is notified, but sometimes it happens that they don’t receive the notice that their home is to be sold at the trustee’s sale, and that’s why it’s often such a rude shock when I show up to do the occupancy check.

But yes, it happens – foreclosures do get rescinded when mistakes are made.  If you ask me, though, the foreclosure may not be the worst thing that could happen, particularly for people who are doing loan modifications. Loan modifications, to me, seem to be kind of a raw deal for the borrower.  Yes, the payments get lowered, but very few loan modifications result in any meaningful principal reduction.  To lower the payment, lenders will lower the interest rate, stretch out the loan term, or add a fat balloon payment.  In most cases, the mortgage payment is still going to be higher than it would be to rent a similar property – except that the borrower is still going to be stuck owing dozens or hundreds of thousands of dollars more than the property is worth.  If we were on the verge of rapid price appreciation, it might make sense to lock yourself (again) into a long-term obligation for massive debt; however, most market watchers are saying that any significant price appreciation is years away.

At least with a foreclosure, the borrower typically escapes that crushing debt, and it’s a chance to start over, live cheaper, and start saving for the future.  Getting your foreclosure rescinded and into a loan mod may seem like victory of sorts, but it’s a pyrrhic victory if you ask me.  In most cases I think folks would be better off cutting their losses and moving on.  So if you find yourself working to get your foreclosure rescinded, I invite you to think twice, since the foreclosure itself may well be a blessing in disguise.

 

Determining Occupancy of a Foreclosed Home

Fortune has dealt me another fine REO listing, this one located comfortably enough just about 3 blocks from where I live – hey, what’s happening to the neighborhood?!  So I cruise on down there – could have walked, but brought the car in case I needed to make a fast get-away (you never know…!).  Very nicely maintained house and landscaping, so nicely maintained it seems more than likely that it is (former) owner occupied.

Since it’s the middle of the day, I hadn’t really expected to find anyone home, and nobody was.  I took a bunch of photographs, and knocked on a couple neighbors’ doors – nobody else home, either.  I left my nice REO Agent note on the door, saying I’d been by to do an occupancy check and to contact me immediately.

The hours ticked by, and no phone calls.  That evening, just around dusk, I had to go to the store for some milk, and I drove by the subject property – even though it was past the time that most people get back from work, the note was still there on the door.  By the middle of the next morning – note still on the door as I drove by on my way to grab BPO pictures and do some routine property checks.  However by late afternoon when I came back – the note was gone, and there was a car in the driveway – bonanza!

Screech go the tires, I park a couple houses down and walk up to the door – ring the bell.  Wait. No response.  Knock.  Wait.  No response.  Knock again – nothing.  I leave a business card, hop back in my car, and drive away – hmm, are they playing ostrich, what?  But a couple hours later, just after dusk, I happen to drive by again – and the car is there, but no lights are on.  Very mysterious!

Quickly determining who occupies a foreclosed property is the first and a very important task when getting an REO assignment.  Often times, it can be surprisingly difficult to determine this.  Many neighbors today literally have no idea who is living next door to them – they can usually tell you if a neighboring house is vacant or not, but who the actual resident is – pfft, a lot of folks have no clue.  And if the occupant doesn’t call you, and you can’t find him at home – what to do?

I have a lot of good luck using whitepages.com – it has a handy reverse-lookup function, you can type in the property address and do a reverse-lookup.  Probably about 40% of the time, it will come up with both a name and a phone number.  Also using whitepages.com, you can enter in the former mortgagor’s name, and the city and state, and you may find a match that way – either at the subject property address, or at some other address in the vicinity.  One of my favorites too is using pipl.com – you can type in the former mortgagor’s name and it will do a “deep web” search – pipl.com searches whitepages.com and that’s usually where the best matches come from, but sometimes you can find other ways of possibly contacting the former mortgagor – e-mail, facebook, their place of business, etc.

A lot of links from pipl.com will take you to paid searches – PeopleFinders.clom, Veromi.net, Intelius.com, etc.  I have not had a great deal of luck with these paid services.  What I am usually looking for is a phone number, and I have found typically, if the phone number does not appear in whitepages.com, it’s not going to appear on any of these paid reports, either.

Then of course, there’s a good old-fashioned Google Search. When you are search via Google, remember to put the occupants’ full name together in quotation marks for most accurate search results.  So for example if I was looking for a Joe Smith in San Jose, CA – I would type this into the Google search:  ”Joe Smith” + “San Jose, CA”.  This kind of search will usually result in some very concise search results, maybe just a page or two of results, versus the dozens or hundreds of pages if you were to search just for “Joe Smith San Jose, CA”.

I hope this information is useful to you dear readers, if you have any other ideas about how best to determine occupancy of a foreclosed home, please leave a comment!

REO Inventory on the Rise

A few weeks ago, I posted a blog entry about it looked as though lenders were stepping up foreclosure.  Since that time, I’ve continued to see a steady stream of REO assignments – kind of like in the good old days (all of 2008 and much of 2009).  That explains a bit about why it’s been a while since my last blog post – I’ve been busy doing occupancy checks, re-keys, negotiating cash-for-keys, overseeing trash-outs and initial services, all that fun stuff.

Housing Flood

Yesterday, the venerable and still-somewhat-respected Wall Street Journal chimed in a piece informing us that housing inventory climbed again in September – for the ninth straight month!  It’s a pretty nifty article and it gives stats from 26 metro areas throughout the United States.  In California, they provide data for Los Angeles, San Francisco, Orange County, and San Diego.  For San Francisco, the chart they provide shows that the available inventory increased by 5.4% at the end of September compared to the previous month.  Their interactive chart also has a cool feature where you can see the inventory level rise and fall for any of the metro areas over the past 18 months – and looking back, you can see that from January 2009 through December 2009 the inventory in the San Francisco area slowly declined – but it’s been rising ever since, and is now back at about the same level.

What, pray tell, could this mean?  I think it’s clear that given the overall anemic demand from buyers for most types of residential real estate that we are going to be seeing a lot of price pressure over the coming months – it could be a very cold and dreary winter for a lot of people trying to sell their houses.  And they’ll have to compete with REO sellers, who are often in great competition with each other, who absolutely-positively-gotta-sell-it and will mercilessly reduce the asking price until the right buyer comes along, although this process can take months (they don’t just give away these REOs you know – not usually, anyway).

Interestingly enough, the Wall Street Journal’s chart also provides one other interesting piece of data:  the percentage of homes that have had a price reduction as of the end of September.  In the SF Bay Area, the figure stands at 44% – which may seem high, but compared to the other 25 metro areas surveyed, it’s probably a little bit below average.  I wonder, though – will we be seeing that number pick up over the coming months?  With the way things are going, I don’t see any way around it.