17 Sep 08 Buy and Bail: How to Avoid Any Negative Consequences!

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Buy and Bail: How to Avoid Any Negative Consequences!

So you own your home and your loan is upside down and the prices of homes are SO low that it’s hard not to consider moving into a bigger home for less than what you owe but you are concerned of what the repercussions may be.

Read through this email and response to see how things work and how you can apply it to your situation:

Hi Brent,

Read your article on your website and thought you might be the right person to answer some of my questions.

I have a property in M. CA, which I bought for $410k and now values $200k. I am thinking of the “buy and bail” option. I know it’s going to hit my credit which I am willing to take. What apart from the credit are other consequence should I look out for and can the bank come after my new house? Can they start taking income out of my paycheck? Can they put a lien on my new property? What are the tax consequences? Any help would be highly appreciated.

Thanks,

=Sabi=

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Here is my response!

Hi Sabi!

Thanks for the email and for reading my articles!

Just like most people in our area who bought in the past 24-36 months you are experiencing the impact of 50% decreases in the housing market!

Ok, so if I were in your shoes and wanted to avoid any and all consequences for “buying and bailing” I would first be sure I could buy before I even considered the “bail” side of things!  In this market banks have eliminated what you might consider normal by not allowing someone to buy unless they meet certain criteria.  Here are some points I wrote for another format but they apply here:

• To buy while owning and renting another property you simply need to qualify for both payments! This can be done by either having enough income or by adding a non-occupant co-borrower on an FHA loan to buy your new property.
• The other way is a bit more drastic and risky but you could sell your home and then qualify for the new one.  This would take timing and negotiation skills but it can be done.  Short-sale the current home and buy the new one before your credit reflects a settled account. (not perfect but possible)
• Both situations are not fraud, not illegal and pretty much moral!

Now on the consequence side of things, you really just need to be smart when “bailing” on your home.  What I mean is you need to go about it in a way that will limit your exposure to banks by actively looking for “win-win” solutions for you and the bank.  This would be in the form of a Short-sale or deed in lieu of foreclosure.  It’s very important to approach the “bail” aspect properly because if you do that you will have the highest level of success and all your concerns will go away!

Read my posts on Loss Mitigation Negotiations and I look forward to putting it all together with you moving forward!

Let me know your thoughts.

Brent Lane
The Lane Group
www.thelanegroup.blogspot.com
www.brentlane.wordpress.com

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I hope this information was useful. As always I am here to help so please let me know your situation and I will do my best to help you the best way I know how.

Tags: buy a new home, buy and bail, credit score, decreased land value, fha loan, foreclosure, housing market, lien on property, non-occupant co-borrower, own your home, short sale, tax consequences

17 Jun 08 Bus Tours of Foreclosed Homes

As more and more homes are reportedly being foreclosed on, there has been an increasing need for banks to deplete their inventories. It appears that several real estate agents have stepped up to the plate and have begun introducing tours of foreclosed homes in their areas. Real estate agents from the east coast to the west coast have adopted some form or another of bus tours that features homes that have foreclosed.

In Massachusetts, DCU Realty charges bus riders for the privilege of viewing homes at bargain prices. The fees range between $20 for members of its affiliated Digital Federal Credit Union, and $25 dollars for nonmembers. Homes are reported as ranging between modest foreclosed homes and more upscale foreclosed homes.

In the Bay Area surrounding the Contra Costa county area of California, foreclosures have been the highest throughout the entire state. This area is also seeing one of the most frequently run tours of foreclosed homes. Foreclosure Finder Tours will bring potential buyers on a tour of foreclosures in Antioch, Byron, Pittsburg, and Brentwood. There is no charge for this service and there are reportedly four tours scheduled every weekend.

While many of these homes are in need of minor repairs, most commonly due to damaged walls and missing fixtures, they are in overall good condition. Most homes will likely end up costing the buyers a considerable amount of money to have the home returned to its original condition, so this is something that buyers should keep in mind when considering buying a foreclosure.

Tags: bank owned, California Real Estate, contra costa county, dcu realty, digital federal credit union, foreclosure, foreclosure finder tours, Homes for Sale, massachusetts real estate, reo

03 Apr 08 A Changing Market

Real estate experts are suggesting that the housing market around the country is less than two years away from a turnaround. Now I know that everyone has heard this before, but the statistics now show that this may be true. Recently released from the California Association of Realtors, are some facts that I think everyone should know about Orange County real estate buyers and sellers. With the current changes to the lending practices and available jobs continuing to increase, it is believed that the mortgage crisis may be coming to an end or at least beginning to stabilize in Orange County and the rest of the United States real estate market.

• The Federal Reserve has reduced its lending rate six times since September, and did so twice in January by 1.25 percentage points. On March 18 the Fed made another cut of three-quarters of a point.
• With more homes on the market for longer periods of time, buyers have more choices and leverage when choosing a home in today’s market.
• The foreclosure crisis has motivated the government to create more consumer protections against predatory lenders. This led to the drafting of several bills in the works that will make a significant difference in future lending.
• A temporary increase in the conforming loan limit means consumers will be able to borrow money at lower interest rates even for higher priced homes. Prior to the increase, the conforming loan limit was $417,000.

Tags: california association of realtors, California Real Estate, federal reserve, foreclosure, housing market, interest rate cut, Orange County real estate