Archive for September, 2012

How Does Strategic Default Affect Short Sale Approvals Involving MI Companies?

by: Maria Hass –

Have you heard of a mortgage insurance (M.I.) company denying approval for a short sale because the sellers opted for “strategic default”? Yes, it can happen. In one particular case, involving morgage insurance company Triad Insurance, the seller bought a bigger home with a larger mortgage – and a month after closing on the new home, defaulted on the old mortgage.

Triad Insurance did not look on this favorably and is not forgiving about the situation. They argue that there is NO hardship and a short sale in this instance would be unethical.

So, if you have clients who have a loan with a mortgage insurance company and a seller who is seeking a “strategic default” on their home, be cautious about taking on the short sale unless there is very good reason for justifying the strategic default.

In some cases, the mortgage insurance company is not known to the seller. The lender may have bought the insurance during the course of the loan without notifying the seller. In this case, you won’t know until you get further into the short sale process. That was the case in our example; the seller was not aware of the existence of the mortgage insurance until a negotiator was assigned.

Mortgage insurance can sometimes “make or break” the short sale. The M.I. cost on a short sale or foreclosure is similar. Therefore, expect that M.I. companies will ask for a seller contribution in order to come out ahead in a short sale. In some rare occasions, if the investor is known and responsive, the investor may allow for a claim reduction in lieu of a seller contribution. However, it is common for servicers not to lift a finger to make this happen. It is an extra step that a negotiator is NOT required to do and NOT paid to do – so, they figure, why bother?

The lesson from this story is this: Be cautious of taking on a short sale with M.I. company involvement and where the seller is making a strategic default. It could result in a lot of work without reward.

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September 20, 2012 at 2:42 pm Leave a comment

TOP 12 BAD REAL ESTATE INVESTMENT

By: Maria Hass –
1. Home that Backs out to a Busy Road – When it comes time to sell, this home will sell last for 10-15% less than the other homes in the neighborhood. It is an inherited problem that you cannot change.
2. Very Small Backyard or NO Backyard – Most buyers would like a decent size yard for their pets to roam, kids to play or entertain guests. Unless it is a condominium, a good size yard or bigger yard adds to the value of a single family detached home and is more marketable.
3. Homes with one Bathroom less – Most buyers would like 2 Bathrooms for a home that has 2 or 3 bedrooms. A 4 or 5 Bedroom home is expected to have at least a 2 ½ baths. Anything less than this would require bathroom addition that can be costly.
4. Do It Yourself Projects Gone Wild – Many homeowners try to save money by doing home improvement projects themselves. In some cases, the workmanship is inferior and or unfinished. It will be costly and twice the work for the new homeowner to correct the mistake and to redo the home to a level that is tastefully done.
5. Funky Layout – An open floorplan is a popular layout liked by many buyers. On the other hand, a choppy floorplan with many walls dividing the rooms is a waste of space and makes the home look smaller than it really is. If you own a home built in the early decades, it is a good idea to tear down some non-bearing walls to make for a bigger home.
6. Mold – Existence of mold that is significantly present in a large area or wall is costly to repair and maybe viewed by potential buyers as a health hazard. The price has to be reduced significantly to sell.
7. Swimming pool Backyard – A backyard that is taken up by a swimming pool and nothing else is a hard sell. Most buyers would like a pool with a decent size grassy play area to make it a fun place to entertain. A grassy backyard is more desirable than just a swimming pool backyard or a desert landscaping backyard. However, a rock landscaping is appealing to investors looking for minimal maintenance.
8. Home that backs out to Commercial, Industrial or low income neighborhoods – Home buyers perceive this as an eye sore or unsafe.
9. Home located next to a huge power structure – Home buyers look at the power structure as a health hazard that could develop cancer. Although, studies may prove otherwise, buyers don’t really care to know because there are many other homes that don’t sit next to a huge electrical pole. It may also be viewed as an eye sore by many buyers.
10. Bad Neighborhood – Due to safety reasons. Every buyer would like to live in a nice neighborhood with low crime and where people maintain their homes . You can always change the house, but you cannot change the neighborhood.
11. Homes with significant cracks and foundation issues – Be prepared to sell this home at clearance price. The home can shift as the crack continues to extend. Be sure to consult a residential engineer , builder and other resources before buying this home. You may get it for a darn cheap price but the headache that comes with it might be more costly than you paid.
12. Flood Area – Homes located in a flood zone will require a flood insurance. Flood zones are classified into different levels. The good news is, Arizona does not rain as much. Consult the flood department to find out the details on flood restrictions and flood history of the home.

*It is undeniably a seller’s market. The inventory is low and buyers are competing for houses. This is a great time to sell homes with real estate issues. As a buyer, be cautious of the resale value of the home you purchase. Best of luck to house hunting!

September 13, 2012 at 12:16 pm Leave a comment

Gilbert and Chandler Named Among 2012’s Top 100 Best Places to Live

Money Magazine recently reported the “2012 Top 100 Best Places to Live”. It comes with great pride to know that two cities in the Southeast Valley of the Phoenix metro area made it to the top half of the list. Gilbert, AZ, was ranked No. 33 and Chandler, AZ, took the 50th spot. Gilbert, with a population of 216,400 and Chandler, with a 247,100 residents, continue to grow and provide a great quality of life for their residents.
According to Money Magazine, “These terrific small cities offer what American families care about most — strong job opportunities, great schools, low crime, quality health care, and plenty to do. And they’re true communities too.” For a full list of the Top 100 Best Cities to Live, go to:
http://money.cnn.com/magazines/moneymag/best-places/2012/top100/index.html.

In other local headlines, Chandler newspaper the San Tan Sun News reported Chandler’s unemployment rate is 5.9 percent as of May, compared to 7.5 percent for Metro Phoenix overall and 8.2 percent for Arizona (8.25 percent nationwide). Chandler’s office vacancy rate is only 5 percent compared to a metro Phoenix rate of 28 percent. For the full article, go to: http://content.yudu.com/Library/A1y9py/STSNewsComm9112/resources/index.htm?referrerUrl=http%3A%2F%2Fwww.santansun.com%2F.

September 3, 2012 at 6:24 pm 1 comment


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