South Bay Homes and Real Estate

This is a transcription of a live WebTV program in July 2010. Ryan and Mike are fielding questions about missing mortgage payments as part of the loan mod or foreclosure workout.

Ryan Rockwood:  Hello everyone and congratulations.  You have arrived at the call.  You’re in the right spot.  This is the 60-Minute Loan Modification Insider Secret Teleconference Series.  We’re here to beat the bank, to save your home, and help you escape bad debts forever.  My name is Ryan Rockwood.  And as usual, I’m joined by my father and business partner, Mike Rockwood who is kind of breathing into the microphone a little bit there.

Mike Rockwood:  Yes, I think I got to figure out now.

Ryan Rockwood:  Okay.

Mike Rockwood:  Thanks.  Hi, everybody.

Ryan Rockwood:  Before we begin a couple of announcements.  This is a first of our client’s only teleconference series.  As always, we’re adapting and changing the way we do business to better serve you.  And we hope that this smaller, more advanced teleconference each Thursday will prove to be a value to all of you, all right.  Announcement number two, here is something to think about with your lender.  If at first you don’t get the answer you want, try, try again.

Mike Rockwood:  And again.

Ryan Rockwood:  Yes.  Do your best not to get emotional and not to get frustrated that the person on the phone is being slow, rude, or just playing stupid.  Sometimes, you get representatives that are great but most are overworked and undertrained and many say things that are just not true.  I got to say it’s hard to not be emotional.  I mean, I’m not saying you’re going to be a sobbing mess.  But, you know, when it’s me and my property, I get kicked off and I guess that’s the emotional thing.

Mike Rockwood:  Right.

Ryan Rockwood:  Whenever I say emotional, I think it’s about – yes, screw this.  I don’t need this in my life.  Yes.  Yes.  I don’t need this in my life.  But the price doesn’t go to that person, right.  The price goes to the person who can live to fight another day.  They’ll say things like we’re currently not accepting loan modifications from fixed rate loans or things like, “We don’t have a program for people like you.”

Mike Rockwood:  Or you don’t qualify and I can’t tell you why.

Ryan Rockwood:  Yes, or you know there’s some program that’s probably coming up next month that’s going to be good for you.  Call back.  In some cases they will be telling you the truth.  But it’s wise to be skeptical.  Ask, ask, and ask again.  Keep your cool, be polite.  But make sure you’re not getting bumped out of the line just because some trainee happened to answer the phone when you call.

All right also, all of you on this call owns our 60-Minute Loan Modification kit, which means you have critique coupons.  Now, those coupons are good for a full review of your budget at hardship plus a 20 minute one-on-one coaching call with Mike.  So, because of the time constraints, we really can review only one property.  But if you’ve got more properties and you really need help, we have upgrade packages that are completely reasonable and could make a big difference to you.  But of course, if it’s multiple loans on the same property, of course you know, we’ll do everything we can to help you there.  So for more info, e-mail help@60minuteloanmodification.com.

Mike Rockwood:  And Ryan, I got to say that a couple of times this week, I had clients say “Listen Mike, I want you just to forget about the charges because we do have a small fee that I add on when we go over the 20 minutes.”  And a couple of clients this week said, “Hey, just forget about that.  I’d gladly pay for increments of additional 30 minutes.”  Or the way we charge it is 20 minutes at a time and it’s so incredibly reasonable.  But a lot of folks just like to talk issues through and get opinions on this and what do you think about this?  My brother-in-law said that, et cetera, et cetera.

Ryan Rockwood:  They say you’re too quiet.  So, could you move – I guess move it up a little bit or something.

Mike Rockwood:  Yes.  Got it.  Got it.

Ryan Rockwood:  Okay.  The thing that strikes me as, I don’t know, interesting is that a lot of times on the phone, I hear you and me repeating the same things we say here.

Mike Rockwood:  Right.

Ryan Rockwood:  And I think that’s okay.  It’s just a matter of getting it through your stall, getting it or your mind wrapped around it.

Mike Rockwood:  Sure.  Yes, that’s right.

Ryan Rockwood:  Yes.  Okay so anyway, let’s get on with tonight’s call.  Before we do, we might have to swap out your phone or microphone apparently.

Mike Rockwood:  Oh, is it still too quiet?

Ryan Rockwood:  This is terrible.  Why don’t you actually say a little bit here and I’ll try to…

Mike Rockwood:  Okay.  Hey, you know, I’m noticing that you’re forgetting to announce when we have live events and we’re having quite a few live events.  And we do have another one coming up on Monday.  So any of our clients that are on the line that in the Southern California area, we’re having a live event on Monday night upon Silver Spur Drive on the Palos Verdes Peninsula.  So, keep that in mind anybody in the South Bay area.  It’s an hour and a half of really running through the loan modification process really intensely and then we take some time for questions and answers.  So, sometimes live events are kind of fun.

Ryan Rockwood:  Okay, well, the people on the call say that it sounds like you’re in a cave.

Mike Rockwood:  Oh.

Ryan Rockwood:  So, why don’t you swap out that microphone because I think that’s the new variable and I’ll just sing and dance here for a sec and amuse everyone in the meantime.  Let’s see, what’s the latest in loan modification?  Still, battling with Countrywide, haven’t had any success with them and accepting people who are, I guess, not late yet.  No, and that’s the big problem.  Finally, I’ve got this client that I’ve kind of been telling people about from week to week.  And finally they’ve decided to go late.  Each week I’ve been telling them, “I think that if you just hold out, we can probably – Countrywide’s probably going to give in and you don’t have to go late.  Finally that you said enough.  So anyway, still frustrated with that, but however, we are seeing loan modifications get faster and faster.  And in particular, a lot of the applications are getting more and more streamlined.

Mike Rockwood:  Oh boy, is that the case.  Now, see if this might work better now.

Ryan Rockwood:  Okay.

Mike Rockwood:  All right, now, that is definitely the case.  In fact today we went up on IndyMac’s new software online with the client to fill out their application and wow, they have really got a good system.  You know, it’s interactive.  There’s somebody online with you working through your budget.  Put it all together.  You get to see the totals and the ratios, and things like that.  So, it’s really, really getting good.  But you know the better and better the banks get at it, the more and more placed to our do-it-yourself program because you really – this process is getting easier.  But that doesn’t mean you don’t need the street smart tips to know what the right answers are and how to craft your budget and craft your hardship letter to fit in and hit the target, right?

Ryan Rockwood:  Well, you know the thing that I wanted to let people know is that in some ways, the super easy forms we start checking boxes, can actually – well people could start falling under the same traps they do when a person who deserves a loan mod calls and gets rejected immediately.  In some ways, you have to remember that even if they don’t want your budget, you’ve got to have that thing filled out because it’s going to come up.  And if they get too easy, they can low you into [Indiscernible] or this will just sail through.  That’s not going to happen.  It will sail away and they’ll refuse you out of hand.

Mike Rockwood:  Yes.

Ryan Rockwood:  Anyway.

Mike Rockwood:  And you know, just because loan modifications are getting a little faster now that the lenders are starting to make a little headway in terms of staffing and systems and stuff, at the same time rejections are getting faster and they’re rejecting you out of – really fast.  So, you were succeeding fast and failing fast.  But yes, you’re ready for me to move on to the topic for tonight?

Ryan Rockwood:  Well, I have one more thing I want to say because I get excited when I think of something.  I wanted to tell people that there are ups and downs.  And that it’s to remind people that it’s absolutely not fair because we have one client this week, heartbreaking week, lost the house, not only lost the loan mod but lost the house to foreclosure.  One fell swoop, right?

And we have another client who hasn’t paid in over a year and has not received – has not even been schedule for a trustee sale, not a year, like 12 months.  Okay.

Mike Rockwood:  Yes.  Ups and downs, you’re right.

Ryan Rockwood:  And you’ll hear stories about someone else who got this and that and this and that.  Don’t concern yourself with that.  If we find a strategy, we’ll bring it to you absolutely but you really have to go with what’s here because it’s just crazy how inequitable it is.  You know.

Mike Rockwood:  Yes.

Ryan Rockwood:  Okay.  So, now do it.

Mike Rockwood:  All right, so we want to talk today about missing payments and I know this is a hot topic for so many of you because we talk often about the struggles that we all go through about whether or not we should miss payments.  If I miss a payment, what are the implications?  What happens financially?  What happens legally?  What about FICO damage?  What about Notice of Default, Trustee Sale, all the fees, et cetera, et cetera.  How many payments can I miss, et cetera, et cetera?

Honestly, it probably causes more emotional consternation than it’s worth.  But it’s kind of a testimony to the fact that we all really intend and really are trained to do the right thing, to do the ethical thing, to do the thing that we agreed to do and that is to make payments.  But you got to throw logic and rationale and old ethical paradigms, just what I call them, to the wind.  Because everyday I’m telling you, I craft strategies with homeowners that would have been unthinkable just 12 or 18 months ago.  Missing a payment is unethical on the surface.

But I want you to think for a minute about these three elements in the context of the bailout that is our tax money being given to banks in order to modify our mortgage.  Number two, the fact that so many of our homes, many, many millions are so far underwater that they will never recover the loan value again in our lifetime, and number three, the fact that modifications are not available without missing payments.  Let that one sink in.

Ryan Rockwood:  You know, I think you got to qualify your statement they’re unethical.  But, you know, you’re talking about voluntarily missing a payment, right?

Mike Rockwood:  Yes.  I know exactly.  Yes, missing a payment is unethical on the surface.

Ryan Rockwood:  You wouldn’t feel bad if that’s…

Mike Rockwood:  No, but that’s my point, Ryan.  In light of those three things that I just named; the bailout, the fact that so many homes are underwater, they’re never going to recover that value in your entire lifetime, certainly not in your mortgage lifetime.  And the fact that mods are not available without missing payments.  That is the truth.  So, missing payments, in fact, seem to be a rational approach for over 15 million Americans.

Many clients that I work with are missing payments as a key part of their strategy and I call it a Hide and Seek strategy to get out of line, to get a good modification while the getting is good.  So, it’s something that you really seriously need to think through and need to consider.  If you are still waiting in line when the bailout funds run out and the programs must be suspended for whatever trumped up reason, well, you just miss out.  If you are informed as to the consequences of missing a payment and the processes that you can use, then miss payments to get priority.  And if you’re smart about recovery, you know, working on your FICO score to recover it, then it’s really can be an important part of your strategy to get a good modification.

We are, in fact, playing hide and seek with the lenders.  Many clients are missing payments as a central part of their strategy to dispose off properties in a strategy that I call Cash Max.  And that’s where clients have decided that they’re just way too upside down, they do need to move on but they want to delay the inevitable for as long as possible to try to maximize their cash out of the situation.

So, they and the bank have made a bad bet in terms of investing in this property.  The homeowner thinks of it that way, thinks but I lost all my equity and now let the bank use the mortgage contract that we had to settle how much of the equity, how much equity they’re going to lose in this deal.  So, there really are these two strategies, that’s Hide and Seek and this Cash Max that I use with clients day in and day out to try to figure out how to think about missing payments.

Let’s talk about the nuts and bolts of missing a payment.  And I really have five points that I want to make before we take specific questions.  One is I want to talk about late fees, repayment plans, forbearances, and deferments.  So, it’s kind of the nuts and bolts of what happens when you miss a payment.  Number two, FICO damage and FICO recovery that is.  And then number three is, when does a notice of default happen?  And number four, notice of trustee sale and then additional fees that get incurred at that point.  And then lastly, charge offs.

All right, first of all, when you miss a payment as you all know very likely, after 16 days you incur late fees, and after 30 days you actually get reported late to the bureaus.  You do that three times in California, you receive from the bank a Notice of Default and that’s true in almost all non-judicial states.  And I think there are about 30 of the non-judicial states.

Now, if you’re in a judicial state where they have use the court system to work the foreclosure process, actually the notice of default period is about the same.  So, it’s about 90 days, about three payments late, the bank makes a call to you after your first payment and they’re pretty polite and everything.  And after your second payment missed, they’re less polite.  And after the third payment, they don’t call you.  They just send you a note.

But because things have gotten so swamped especially in California, Arizona, Nevada, Florida, those notices have gotten later and later, and later.  And like Ryan said we have a client working with us now who has not received a notice of default and hasn’t made a payment in 12 months.  Now, she has done some extraordinary things to delay the notice of default and there are plenty of things that you can do.

Okay, but immediately you incur late fees.  And after having missed a couple of payments, you’re very likely to be put on a repayment plan before the bank will commit to considering your loan mod application.  They may also suggest that you apply for forbearance or a deferment, which is a legal opportunity for you to miss payments although financially it’s rarely in the borrower’s best interest because there are tons of fees complete reporting to the credit bureaus.  And so really, I don’t really know why people even go through it with home mortgages and trustees.

With regard to FICO damage, it’s impossible to say how much one payment will hurt your FICO score.  Typically, the first missed payment doesn’t have much impact at all like in the neighborhood of 10 to 25 points.  But it really kind of has to do with how many other factors you have going on at your FICO score because you all know if you’ve read the chapter, I believe it’s Chapter 9 in the book about buckling your FICO seatbelt.  There are so many factors that go into FICO calculation that you can’t really say with any certainty how much any one person’s FICO score will be hurt.  Is it still too soft?

Sorry about that.  Gosh, I apologize if that was – if it was hard for you to hear me.  And what I’m going to do now is just continue.  So, your FICO decline after your first missed payment can be as little as 10 to 25 points.  I’ve seen it where it’s been as high as 50 points.  Most clients who end up going through a loan modification in an aggressive fashion and miss like three to five payments during the course of the loan mod or the short sale, typically we’ll see their FICO score decline by over 100 points and sometimes as much as 150.

Now, declines like that take a year or more to recover from and you have to do really proactive things to recover from that kind of FICO decline.  Now, you all know in chapter 9, the Buckle Your FICO Seatbelt, we talk really, really clearly about what you need to do for recovery.  There are seven steps that we recommend you take to aggressively recover from a FICO hit like that.

Ryan Rockwood:  I should tell people that as we talk, you can send in a question at help@60minuteloanmodification.com or we’ll take questions in a little bit and you guys can just speak up.

Mike Rockwood:  All right, now after you’ve missed those three payments and you get a notice of default, after the notice of default, you have three more months.  You have 90 days to cure that and if you continue to miss those payments, you’ll continue to get reported each and every month.  What a lot of clients do is they miss their first payment and then they stay 30 days late during the entire loan mod process.  And that’s a good enough strategy.  A 30-day late has a certain bearing on your FICO score.  A 60-day late has a bigger impact.  So, it is better convoluted thinking, but it technically does seem to be better to have two 30-day lates than to have a 30-day and a 60-day, all right.

So, it’s a good strategy if you want to minimize the risk.  Now, in terms of FICO damage, my advice that you guys all probably remember is to take all the hurt fast and to get it behind you.  So, my recommended strategy is always stay late for as long as you need to and then get it done and then get out of it and put it behind you because recency or how recently you’ve been late is the key factor in analyzing your lates as they impact your FICO score.

Now, when you miss enough payments to get a Notice of Trustee Sale, so now you’re probably six months late, you’ve missed six payments.  You get a Notice of Trustee Sale.  Now, they’re going to send that file to their attorneys.  And that means you’re going to start to rack up fees in a hurry.  And a lot of these fees are almost impossible to argue your way out of.  Certainly, the attorney’s fees are because they actually incur those fees.  They very often send them to attorneys that are on retainers outside of their own company.  So, they actually do incur those costs.  It’s not just internal.

Mike Rockwood:  So, that’s another implication of getting that Notice of Trustee Sale.  Now the fees are going way up.  Okay.  Then last thing I want to talk about charge offs after you have missed up to six months.  Now, if it’s a second mortgage or a Home Equity Line of Credit, you are now a candidate to have your loan charged off.  And that means that the bank is going to take it off their books as a good loan and technically they write it off.  And that sounds like good news but it isn’t really good news because what they do is they either sell it to a collection agency or they assign it to a collection agency.

Either way, you’re going to continue to get hounded for it.  And either way, if there is a lien on your property or if they do have recourse and can pursue a judgment against you, they will continue to do so.  So, it isn’t really good news for you.  And you know it’s seen lately as a lot of second mortgages going to extreme lengths like offering modifications to zero percent interest and only $90 or $100 payment per month just to keep the loan active while they go through the modification on the first or while they go through the short sale.  All right, let’s see what else do I want to say about that.

Ryan Rockwood:  We’ve got some advanced questions waiting in the wing.

Mike Rockwood:  All right.

Ryan Rockwood:  Whenever you’re ready but the subject of the call is The Truth About Missing Payments.  But you can ask questions about anything.

Mike Rockwood:  All right.  So, I guess that’s it.  The truth is that some clients are using missing payment as a real central part of their strategy to dispose off their property in a strategy that I call Cash Max others are using in Hide and Seek fashion in order to get the attention of their lender and get a good loan modification and then put this behind them.  Let’s go to questions about missing payments.

Ryan Rockwood:  First of all, we got to got – you know what — this one is not about missing payments but it is an advanced question, so let’s go handle it.  This is from Paul.  Paul is with Countrywide having big problem with his Real Estate Owned sheet.  Countrywide is not accepting his Schedule of Real Estate.  And they’re forcing him to list all the debts, the houses as debts and it’s killing his DTI.  Now, he also adds that the rentals are held in an LLC.

Mike Rockwood:  Okay.

Ryan Rockwood:  So, it seems to me that they can’t have it both ways, right?  Like if they say, he has to put it on his budget but it’s in an LLC, why should he even be involved?

Mike Rockwood:  Yes.  You know, I don’t think it matters Ryan that it’s in an LLC.  Wherever it is, he owns it and it’s his debt.  Yes.  So Paul, first of all, I would – you know what, I would escalate that to a supervisor first of all because here’s what I’m afraid of.  I’m afraid you’re just getting jerked around by someone that doesn’t know what they’re doing.  And if you accommodate them, which you might have to do, and you can certainly do and show exactly the same DTI, exactly the same DTI as showing it separately.  Then if you go through all that hassle and rigmarole and it sounds to me like they’re just going to get tripped up on something else because I think they don’t know what they’re doing.

So, my first recommendation is that you escalate that to a supervisor and tell them that friends of yours who are doing loan modification say that this is absolutely not the way to do it.  Are you sure you guys want to do it this way?  Or tell them your attorney said it for that matter.  But at any rate, if they insist on it, you can accommodate that.  And it’s always best to do it their way.  So, if they, for whatever reason are asking you to do that, then you just have to torture those numbers and put them in your budget in a way that causes them to give you the same DTI that it would have otherwise.  In other words, you have to use your other expenses to manipulate.  Even as I’m talking, I’m realizing what you’re going to run into is the…

Ryan Rockwood:  Is their debts.

Mike Rockwood:  Yes.  Debts versus income.

Ryan Rockwood:  It blows him out from 47% to 72%.

Mike Rockwood:  Now that’s a deal killer.

Ryan Rockwood:  Although he’s not.  I mean, 72% is not that.

Mike Rockwood:  But 72% you could still – yes, we’ve done, Paul, we’ve done deals as high as 78% but anytime over 70%, you are on thin ice.  But you know what Paul?  Just mush on with that.

Ryan Rockwood:  You know, maybe they’ll actually accept it.  It’s 72% and you’re just hesitant to let it go forward.  You might just let it go forward and tackle it at the next level, you know, negotiate or something.

Mike Rockwood:  Paul, maybe that’s the best advice, Paul.  Just press on with it.  You got to make sure that your cash flow at the bottom of your budget is plus or minus $500 like we always advise.  So, make sure you’re right there.  And then if you’re at 72%, well so be it.  The way they’re looking at it, what else do they expect?

You know, the other thing you could temper your rental income by your vacancy calculation.  Because very often people use at least a 10%, you know you figure you’re probably going to miss one month at least every year or maybe every two years or something.  So, most landlords use a 10% vacancy factor.  I know we certainly do in terms of calculating cap rates.  So, go ahead and use a 10% vacancy and cut down your rental income.

Ryan Rockwood:  The second, how [phonetic] low is it?

Mike Rockwood:  Yes.

Ryan Rockwood:  Have you touched down [phonetic] his income?

Mike Rockwood:  Or increase your income.  In that way manipulate your debt-to-income ratio.

Ryan Rockwood:  Okay.  All right.

Mike Rockwood:  Paul that made a ton of sense.  So, if you didn’t catch it, ask for more clarification at help@60minuteloanmodification.com.  Thanks, Paul.

Ryan Rockwood:  Got another question.  If late on the second only, can they foreclose, 2.5 months late now?  The answer to that is certainly.  They’re able to foreclose not in 2.5 months but they’re certainly able to do it.  Now, the question you have to ask is, will they?  If there is a spec of equity, if there is a spec of equity position like they could possibly get $500, they probably will.  However and here’s how you look at it, okay.  Let’s say the property is worth $400,000 and the first is for $300,000 and the second is for $100,000.  You’re late in that second, absolutely they’ll foreclose on you, right?

Mike Rockwood:  If the property is worth $400,000 you mean, Rock?

Ryan Rockwood:  The property is worth $400,000.

Mike Rockwood:  Okay.  Yes

Ryan Rockwood:  Yes.  Now, let’s take that further and say that the property is now worth $400,000 but the first is $400,000 or $350,000 and the second is $150,000 above that.  Okay, so they have – you know, let’s say they get the house back and they sell it at $400,000 minus $50,000 off of that, they net is $350,000, they would actually have to pay the first off out of their own pocket.  So, they’re not going to do that, okay.  You won’t even get a Notice of Trustee Sale.

Mike Rockwood:  And I think, Ryan, most of the lenders figure it’s going to cost them at least 10% to sell the house.

Ryan Rockwood:  Yes.  So, I mean the people that we talk to are asking these questions, most often are in a very good – typically most commonly are in good position in terms of not having to worry about it.  Now, it’s not going away.  If you get charged off, they might never decide to contact you again but that lien is still on the house.  And borrowing bankruptcy or something like that or some new federal program rolled down a couple of years.  You know, you’ll eventually have to pay the piper.  You’ll never make a dime on that house.

Mike Rockwood:  You know, this person is thinking exactly – thinking real clearly though is if you can’t bank your mortgage payments, miss the payment to the guy who can’t hurt you.  The second mortgage, we get kind of skewed because we do most of our work in Arizona, Florida, Nevada, and California.  And so we just think in terms of 25% to 50% reduction in values.  So, most of the second mortgages that we deal with are completely out of luck, out on a limb.  They have no equity and they’re going to get shutdown someday.

Ryan Rockwood:  Yes.  The thing you have to remember though, we were kind of talking about this the other day, and I was thinking the thing that someone has to remember if they’re in the situation again, go back to the rental income.  Can you rent for somewhere else?  If not, if you can, if you can rent for seriously cheaper, short sale this, get out.  If you can’t, you could sit on it and only pay the first for the next couple of years while you get by.  However, I really don’t think you can ever expect to make any money on that house at all because with that second sitting there, accumulating interests, fees, penalties, and the principal, no matter that house eventually appraise that let’s say $500,000 or $600,000, you’ll be pretty much toast.  Before they’ll release that lien, you’re not going to make a cent on it.  So, it is an exit strategy only.  Okay.  You have to mentally give up on that house.  No more renovating kitchen, in other words.

Mike Rockwood:  Hey now, one thing I’m doing on my seconds up in the high dessert in Southern California is I am aggressively asking the holder of the second mortgages on two properties to accept the 10% buyout.  And they’re not listening, not listening, not listening.  I’ve asked in four different ways by four different methods.  And I keep sending them pretty sophisticated calculations of projections of real estate values, et cetera, et cetera.

But I have heard from folks around the country that there has been some limited success with this strategy.  So, I’m trying it like crazy.  And when I hear of successes, I’ll let you know.  Now, certainly at 40% and 50%, seconds are easily bought off.  But I don’t want to spend that much.  I’m willing to spend $10,000 just to get rid of this $75,000 second.  But I’ll report those successes as I hear them but that’s another strategy to keep in mind.  And more and more as time goes on these next six months are so we’re going to really hear a lot about second mortgages and what to do about it.

It seems to be kind of the tip of the spear in terms of principal reductions and in terms of ways of dealing with the problem.  Second mortgages are kind of coming into focus.  So, you’re doing right by using that one.

Ryan Rockwood:  Here’s another one.  Once you miss a payment, what kind of language do you use with the bank?  Does it change your tone?  Do you talk about foreclosure?  Do you talk about other options?

Mike Rockwood:  Yes, good one.  Yes it changes.  Unfortunately, here’s how it changes the tone.  All of a sudden, you get treated with respect.  Isn’t that a shame?  Yes, so all of a sudden you get treated with respect.  They see you’re serious and I never hesitate to say that I wish I could keep the house.  I want to keep the house.  I always tell clients to be real forth coming about the emotional part of it and the fact that if you’re talking with the bankruptcy attorney at that point, it’s not bad to mention it.  So at that point, any of those things are fair game.

Ryan Rockwood:  And through this, I don’t think you have to actually bring it up because it’ll be in there and read on your file.  You know what I mean?  Yes.  So Steve asks, “How does bank look about making a partial payment?

Mike Rockwood:  Yes.  Partial payments are tricky.  You would think that they would be a sign of goodwill and good faith and negotiating in good faith.  But in fact I think they kind of work against you.  First of all they won’t apply them to the loan.  They hold them in an escrow account and it seems to not matter to anybody.  It doesn’t slow the foreclosure process.  It doesn’t get you any goodwill.  So, it really seems like a wasted effort unless you make one complete monthly payment.  So, that’s the strategy to use.  Unless you can make a complete monthly payment, don’t send them any money.

Ryan Rockwood:  Another client says, “My bank won’t even accept a payment from me now.”

Mike Rockwood:  Yes.  They say they won’t accept it.  If you send it in, they hold it in an escrow account to be applied when you get your repayment plan or anything like that.  So, it’s really not smart to be sending them money when you’re late in the negotiations like that.  Better to keep in a bank account somewhere else or under your mattress or something like that.  So it’s there available when they present the deal to you because when you’re late in the negotiation for one of these things, they might put you on a repayment plan that requires that you pay as much as like two times your normal mortgage payment could be.

Very often, it’s the down payment or the first payment on the repayment plan that is so high.  Like I was negotiating on one this morning where they want $8,000, 30% of the past due amount in one initial payment and then they’re willing to give the client three lower payments before they modify the mortgage.  So, it’s nice to have that stash of cash. So, when you do feel like you’re getting somewhere and you’re getting a good modification, you can move on it quickly.

Ryan Rockwood:  Kurt asks, so he says his corporate bank accounts with his lender B of A, Countrywide, “Should I also move my business checking account to another bank?”

Mike Rockwood:  Yes, if you are the sole signatory.  If anybody else is on it, they won’t touch it, they can’t touch it.  But if you are the only person, then they can.

Ryan Rockwood:  And the other thing is we’re assuming this is your business.  And I wouldn’t risk it if I got my wife on there or whatever.

Mike Rockwood:  Oh, yes.  Good point.

Ryan Rockwood:  You know, the thing is that it also assumes that you have some money in there, okay.  Now, you can’t get caught out if maybe, let’s say, 30,000 comes in each month but 32 go out.  You could actually get caught and actually I did.  That’s how we learn that.

Mike Rockwood:  Yes, so you get a big deposit coming in and then boom, it’s gone.

Ryan Rockwood:  It’s gone, whack.  And believe me, there’s no getting that sucker back.  But if it’s pettily in and out, you might not even bother with it.

Mike Rockwood:  But you know it’s going to get uglier.  So, I would be more cautious than less.  I would really encourage you to be cautious.

Ryan Rockwood:  What if you miss one payment and then pop back on track?  You send in both of them the next month or something like that.  Can that still count as a missed payment and you’re better in terms of your loan mod?

Mike Rockwood:  Yes.  I see what you mean.  So in other words, do you get the impact of getting the attention of the lender by being late once?  And I guess my answer to that would be – I think you really do.  I think once you are late for those next 30 days, you will be treated seriously.  You will be considered for a loan modification.  And honestly, if that’s all you need, that might be all you want to do.  If that’s all it takes is to get them to seriously accept and process your loan mod, then that’s good.  Most people find though that they need to miss more than one payment because honestly, it’s taking longer than 30 days.

Ryan Rockwood:  Okay.  Let’s jump online here and take a few calls.

Mike Rockwood:  All right.

Melanie:  Okay, hi, my name is Melanie.

Ryan Rockwood:  Hey, Melanie.

Melanie:  Hi, you guys.  I’m so very thankful having you guys to help guide us through this process, guide me.  I’m actually over 30 days late on the payment right now.  I had a problem with my car and my house, one old clunker.  I live in the dessert and I had to get it fixed, so I was stranded.  So, I am late.  My payment was due, well, I told you the first of the month and this is my made payment.  So, I’m over 30 days late from my made payment.

So, I’m really a newbie.  I just signed up with you guys.  I haven’t received any of my materials yet but I signed on for this first call.  So, my first question is – because it makes me really nervous to be late.  I have good credit or at least if I had good credit.  But something happened.  Number one, I couldn’t prevent [phonetic] and number two, I was told that if you don’t miss a payment, then you’re never going to be considered for a loan modification at this point.

So, my first question is, as a newbie, when can a bank start foreclosure process against you.  After how many missed payments?  And number two, are you saying that once we miss a payment, if we’re going to go and try to do this loan modification, we shouldn’t be sending in other payments while we’re in process?

Ryan Rockwood:  Okay, any other questions that you have, Melanie?

Melanie:  Oh, that’s me for basis.  I didn’t even read your material yet.  I haven’t gotten anything.  So, I’m just listening.

Ryan Rockwood:  No problem.  Thanks for joining us and…

Mike Rockwood:  Wait a minute, Melanie, are you in California?

Melanie:  I’m in Arizona.

Mike Rockwood:  Arizona, okay.  Yes.

Ryan Rockwood:  Okay.  Well, I’m going to mute you and answer the question so that everyone can hear.

Melanie:  Okay.

Ryan Rockwood:  Okay.  For those of you that didn’t hear, Melanie from Arizona asked a question.  She has just missed her first mortgage payment.  She’s probably in that new state of mind, like, “Oh my god, I never thought I’d be one of these people who don’t make their mortgage payment.”  But she has something come up.  And in her case, it was a car in other people’s case, medical bills, something like that happens, lose your job, reduction in pay.  You know, the story is going on.

So, what happens here is that she had something that, frankly, she was going to pay before her mortgage.  Now, she’s wondering, now she’s late for the first time, she’s wondering what she should do.  Should she not make any more payments until she gets through with this loan mod thing?  Is that what she should do?  And also, how soon can a foreclosure happen?

Okay, so let me just handle the foreclosure question first.  I believe Arizona is the same as California, right?  So here’s the timeline, Melanie.  Is this the date of your first missed payment or the date of…

Mike Rockwood:  You need to go 30 days late.

Ryan Rockwood:  As soon as you go 30 days late

Mike Rockwood:  So, now you’re in default.

Ryan Rockwood:  Okay, so now 90 days.  Now the 90-day period starts.  So, Melanie, it’s 90 days from the default until your bank has the option of filing something that is known as a Notice of Default.  Okay.  And what that says to the – it’s a public record so then you start getting calls and door knocks and mailings and stuff like that.  But what will happen is at that point, either just going through the legal process and they’re just saying now we can take the next step.  And so Arizona, what is the next step beyond that?

Mike Rockwood:  Well then, she’ll get a Notice of Default after an additional three months.

Ryan Rockwood:  Well, she’ll get a Notice of Default after the first three months.

Mike Rockwood:  Yes, and then 90 days later, she’ll get the Notice of Trustee Sale.

Ryan Rockwood:  Yes, 90 days later.

Mike Rockwood:  Yes. So, really Melanie…

Ryan Rockwood:  And then 21 days later after that

Mike Rockwood:  The house is gone.

Ryan Rockwood:  In the earliest sale.  Okay, so if you’re talking – to put that all into – let’s say you never paid another thing, another dollar, and you never even called them back, it would take a minimum of six months before anyone could do anything about it.  And so you don’t have to really worry about that but you do want to be checking your mail.  Okay, because when you get that Notice of Default, when you get a Notice of Trustee Sale, it’s all a ball game.  Okay.  And you really got to be on it because they might not care; they might not even file it.  It just depends on your bank.  You know, like that one woman that I said 13 months now hasn’t made any payments, but other people smack right on three months, boom, Notice of Default.

Mike Rockwood:  Yes, so Melanie, also to keep in mind now you seem concerned about your FICO score, which is admirable.  If in fact this is your first missed payment, you probably will see a very little impact on your FICO score or maybe 25 points or so.  And that’s pretty easy to recover from.  I mean, you can lose 25 points just by having too many inquiries.  Well, that might be an exaggeration.  But you won’t have much damage to your FICO score after this first payment.  And if you can, you should just continue – you should make your June payment if you can.

But certainly, what I would recommend is that you stay late until you submit your application.  And if you have ordered the kit and it’s on its way to you, then you should get it by – Arizona is just a two-day so you should have it by tomorrow, then you can submit it by Monday, so then you’d be in good shape.  You could do it your pre-qual on Monday and just get off to a fast start, so you may only have to miss one more payment.

Ryan Rockwood:  So, it’s going to be a loan mod weekend for Melanie.

Mike Rockwood:  Yes.

Ryan Rockwood:  Now, let’s talk about the other issue.  What was her other question?

Mike Rockwood:  How many missed payments and then do you continue to make payments?  That we answered them both.

Ryan Rockwood:  Oh we did?

Mike Rockwood:  Yes.

Ryan Rockwood:  Are you sure?

Mike Rockwood:  Yes.  She says, how many – before you get a Notice of Default and then should I continue to make payments?

Ryan Rockwood:  Okay, got it.

Mike Rockwood:  So, we’re good.

Ryan Rockwood:  Okay.

Mike Rockwood: Hey, you know, Arizona is a judicial state.  So, the process is largely the same.  It will take longer.  It takes longer in Arizona to speak as the courts are involved.  And honestly scheduling because Arizona is one of the top states in foreclosures right now.  Numbers of foreclosures, those courts are backlogged.  So, everything we said is even slower in Arizona than in California.

Ryan Rockwood:  Yes, in California they don’t actually have to go through the court to take back your home.  We don’t actually have mortgages here.  What’s it called?

Mike Rockwood:  Trust Deeds.

Ryan Rockwood: Trust Deeds, okay.  We use – prefers them as mortgages but they’re not.  And so that allows the banks to circumvent the courts and just take your properties back at a certain timeline anyway.  Okay so got another question here.  “I faxed all the docs to Countrywide in January and have not heard anything back.  Is this too long?  What can I do?”

Mike Rockwood:  Yes.  It’s way too long.  So, something’s a miss.  And you got to tell us what’s going on, have you received a Notice of Default?  I bet you have.  And I kind of bet that you think that you’re application is in process.  I bet you it isn’t.  I bet it was lost, misplaced, it’s been overlooked.  I bet if you contact them now they’ll go, “Oh, we sent you notice that we canceled that application because we hadn’t heard from you in 90 days or something like that.

Ryan Rockwood:  You can’t do anything about that.  You can’t argue them on that point.  You can never make up that time so don’t…

Mike Rockwood:  And you know what, you’re so much better off now than you were in January.

Ryan Rockwood:  Oh, assuming that it’s not on foreclosure sales in [Indiscernible] or something.

Mike Rockwood:  Yes.  You got to move real quickly and find out first of all.

Ryan Rockwood:  Let’s give her actionable stuff or him.  He’s got tomorrow, tonight, is Countrywide open until 9:00 tonight?

Mike Rockwood:  Yes.

Ryan Rockwood:  Call Countrywide.

Mike Rockwood:  And just ask them what the status is.

Ryan Rockwood:  The numbers listed in our book and if you don’t have it handy.

Mike Rockwood:  No.  These are all clients so they’ve got the number.

Ryan Rockwood:  Yes, but maybe he doesn’t have the book handy.  Google will tell you in a sec.

Mike Rockwood:  Yes.  First thing you do is call Countrywide anyway.

Ryan Rockwood:  And you’re going to have your account number.

Mike Rockwood:  This is where you call 800-669-4578 and give me your account number.  Say, what do you think is the status of my account is?

Ryan Rockwood:  Do you see my loan modification application?  Hopefully you know what day you sent it in because for some reason that makes a difference for them finding it.  You have to find out if your loan modification is there, is in process, where it is.  Now, if it’s in process on its way to negotiator and it looks complete, good deal.  Super.  You know what I mean?  Just keep doing what you’re doing.  So yes, you’re in real danger.  Assuming you have stopped paying, you’re in real danger here of foreclosure.

And I’ll tell you, unless you’re watching that mail like a hock, it can really sneak up by then.  So, don’t let that happen and e-mail us at help@60minuteloanmodification.com.  If you find that you are that close to – because we can help you take some dramatic steps or something.  Is it important to move quickly after missed payment?  What does it mean to move quickly?  Like what can we do to make it go fast to ask someone?

Mike Rockwood:  Yes.  The sweetest deal is when you submit that application shortly after having gone 30 days late because now when they receive it, it gets treated with respect.

Ryan Rockwood:  Some banks require you to be two months late, though.

Mike Rockwood:  I don’t think that’s true, is it?

Ryan Rockwood:  It certainly was.  Maybe it’s changed.

Mike Rockwood:  Yes.  No, I think we’re good with 30 days late.

Ryan Rockwood:  I guess you’ll know, though you’ll find out.

Mike Rockwood:  Yes you’re going to find out.  But there simply will not be programs for you if you are not late.

Ryan Rockwood:  Okay, “What can you do to make it go faster?”  What you have to do is just follow the instructions in the book but cliff-notes version.  You need to submit a complete application.  You need to call three days later to make sure they received the application.  You need to call two weeks later to make sure that the application is on its way to a negotiator.  And you have to call back two weeks more when you should have a negotiator assigned to you but you don’t yet.  So, you’re asking why isn’t there a negotiator assigned to you and continue in that.  Do you think that’s right?

Mike Rockwood:  Yes.  But I still do recommend and I tell all the clients to follow that daily fax follow-up program because I don’t say I stand by it.  A lot of people say, “Oh, it’s too much work.”  But I stand by it.  I think it’s really worth doing and what does it take you?  Maybe a minute and a half everyday just to send the fax.  I recommend that you do it because it also reminds you to think about it everyday and stay on top of it because honestly, part of expediting this thing is staying in their face, is bringing to their attention routinely.

So, I really want to reemphasize what Ryan said about the best way to get a great modification is to do a complete and smart application upfront.  Know what the ratios are.  Know what the qualified hardships are.  Hit the target and do it right the first time.  And then with tons of followup and missing that payment and you’ll get a good modification as fast as you possibly can.  And it seems like the fastest ones these days are about 30 days.

Jeff:  Ryan, this is Jeff.  How are you doing?

Ryan Rockwood:  Hi, Jeff.  Go ahead.

Jeff:  Listen.  You guys are doing wonderful job and I did receive your application and everything.  It’s fantastic.  Thanks for all the help.

Mike Rockwood:  Hey, Jeff.  How can we help you now?

…Another in a real-time series of correspondence regarding all aspects of interesting real estate tidbits. If you would like to be considered for this or similar deals be sure you are on my email list. Better yet, give me a phone call at 310-809-0203:

Need to dump a South Bay home w/a Short Sale?

By Ryan Rockwood: Today another short sale listed and ’sold’ through our professional network of clients and investors. For us the work has just begun. But for the homeowner, there is literally no hassle with showings and bother whatsoever. Just a little peace of mind in order to graciously move to the next stage of their life. Contact me if you know someone who might benefit from our services.

To:	****@****.net
CC:
Subject:	Copy of MLS Listing
Body:	***** - Here is a copy of the MLS listing that went live today for about 1 minute. I immediately put it into Backup Status. This is designed to provide the least hassle for you. I clearly asked agents not to show, drive by or contact you. But there is always a few goof-balls – so be ready for that. Often some folks ’show up’ at your door. I recommend you do not let them in the house – for safety reasons. Also, please refer them to me for all questions, offers and proposals. To the general public this should look just like any ordinary sale. Best regards, Ryan 310-809-0203 Visit www.RockysMLS.com for interesting real estate info and every home listing in the South Bay.

…Another in a real-time series of correspondence regarding all aspects of interesting real estate tidbits. If you would like to be considered for this or similar deals be sure you are on my email list. Better yet, give me a phone call at 310-809-0203:

Via email:

Dear *** ;

If you are interested in going outside the S. Bay (I know it’s not your first choice) I’ve got a possibility for you – Beaumont!

I have a client who wants to dump **** **** **, Beaumont, CA. I don’t have pics but I’m sending some comps from the same street. It’s 4/3 1970 sqft / 6900 sqft, 2002 built.

It is a short sale. (Offer now…go see the home and decide whether to commit in a couple months if I can negotiate a deal with the bank).

You could get it for $150,000 – $200,000. It would probably be immediately cashflow neutral/positive. Good property to hold forever as a monthly income machine. Property Mgt is 50% of 1st month and 20% thereafter. Rent approx $2,000/mo. Figure 1/mo yrly vacancy and 5% repairs yrly. Not a bad hands-free investment for 20% down.

Have a great day, Ryan

Visit www.RockysMLS.com for interesting real estate info and every home listing in the South Bay.

How can I make this go away with the least amount of work, expense and disruption to my life?

a. Well, no surprise here, the simplest solution is to Pay-up. Often that means everything – arrears, penalties. fees. If that simply isn’t in the cards, here are the various solutions ordered from least to most dramatic: 1. Loan Modification. 2. Short Sale. 3 Bankruptcy 4.Walk away.
b. To learn more about the pros and cons of each solution, contact me today for a free consult.

How can I get a true overview of my situation – not just the solution put forth by someone who stands to benefit from selling that solution?

a. That’s a tough one, for sure. Here is the solution I’ve come up with to overcome this problem: 1. Contact me for a free 20-minute consult (in person or on the phone) – No obligation. 2. Buy an in-home 90 minute educational workshop from me. I present every single option, explain them thoroughly and leave you with a list of referrals and recommendations. The cost is just $149. This appeals to folks who know the value of expert advice but don’t want to take advantage of an expert’s time without fair compensation. There is no further obligation and I don’t sell any services.

How much time do I have before a default becomes public record? …before my house can be sold at auction?

a. As soon as you are 90-days late your default becomes public record and is available to anyone at the County Registrar’s office. Actually that’s probably how you and I got in touch! Unfortunately, it’s also how hundreds of scammers and loan sharks will also probably get your name and attempt to take advantage of you.
b. Once the NOD is filed you have 90-days before your home can be scheduled for auction. Please, move quickly as your options dramatically diminish as the deadline approaches.

What exactly is a Notice of Default and a Notice of Trustee sale?

a. Both are fancy names for very simple documents. The Notice of Default or NOD is just a public notice you are at least 90-days late on your mortgage and officially you are now in foreclosure.
b. The Notice of Trustee Sale or NTS is simply a public notification that your home has been scheduled for sale. It can be filed no sooner than 90 days after a Notice of Default or NOD.

Who knows about my situation and how do they know? Do my neighbors know? Are my relatives notified?

a. Anyone that tracks public records is alerted when an NOD is filed against your home. Unfortunately, other than myself, almost everyone that tracks these records does so because they hope to take advantage of you. That is why I am so committed to contacting you and providing a trustworthy source of info to homeowners who live near my office. As for your neighbors, relatives and friends – they probably do not know yet. However, take action soon or your neighbors will soon be contacted by scammers trying to get information about you and your situation.

Who are these people sending me letters and knocking on my door? Can I trust them?

a. 99% of the mail solicitations, doorknockers and phone callers are from ‘professional investors.’ These folks have all kinds of agendas that range from downright bizarre to flat-out illegal. They are not trying to help you. The other 1% are Realtors and Bankruptcy attorneys and so on. Unfortunately, the folks who can actually help are the rarest and the least aggressive in efforts to contact you.

Can I do this on my own? Should I hire a realtor, a loan modification firm, an attorney?

a. Sorry to be opaque, but the answer is, ‘it depends.’ You can get through this yourself but not without some very sophisticated knowledge. It’s your choice if you educate yourself or leverage the knowledge and experience of an expert. In response, I’ve developed a multi-pronged approach – with books, audio and video available for the Do-it-Yourselfers and a full service branch designed for executives who prefer to pay for the tsunami of experience and expertise that only a professional can deliver.

I have received a Notice of Default. What happens now?

a. Now you are in foreclosure. Foreclosure is a process, not an event (as it is mostly commonly misunderstood). Now your mortgage default is public record. Additionally, a 90-day countdown has begun at the end of which your home will be scheduled for auction. Unless you can send the bank a lump sum of all the money you owe …you now need a professional to stall the foreclosure because no option available to you can normally be completed before the auction date.

What will happen if I simply do nothing and ignore the problem?

a. 90-days from now you will receive a Notice of Trustee Sale…21 days after that your home will be sold at auction. Soon after, the sheriff will be dispatched to escort you off the property. The locks will be changed. Doing nothing needlessly and seriously damages your credit scores as you will get an “F” on your record (Foreclosure) that stays there for 7 years. Even if you do not care about that right now…believe me, in the future you will regret it – especially because there are better options available for you now.
How much does a loan modification cost? How long does it take? How does it work?

a. The only price of a Loan modifications is the time and energy required to get the modification. With preparation you can apply in as little as 60-minutes. But count on 30-90 days before you can expect to get a response. A loan modification is basically a mutual agreement between you and the lender to change the original terms of your mortgage.

How much does Bankruptcy cost? How long does it take? Will it stop foreclosure?

a. Costs vary greatly – it seems to me that most folks pay $3000-$4500. It definitely stops the foreclosure … but only temporarily. It is not a permanent solution in and of itself. Courts are increasingly sensitive to abuse of the BK system as a simply foreclosure stalling tactic.

How much does a short sale cost? How long does it take? What is it?

a. The good news is that a short sale is free to the homeowner. It’s kind of ridiculous but currently lenders require full payment of arrears for a loan modification but they will cancel the outstanding debt and the arrears if you sell your home. Talk about a broken system, huh? If you have no equity (or negative equity) in your home selling your home short is by far the best solution. The bank even pays us to actually sell the home for you. You don’t bring a dime to the closing table. It is incredible. Short sales do take time. Count on at least 90-days. The good news is most people stop paying their mortgage when they decide to sell short. So most people get to live 3-4 months w/no mortgage payments.

What is involved in simply ‘walking away’ from the property?

a. Letting the house go to foreclosure – letting the bank take the property – can be the best course of action, depending on the situation. But should always be a last resort. The biggest downside is that you incur a foreclosure on your credit report – probably the worst mark of all…I call it the credit report “F” word. Also, in some cases lien-holders retain the right to pursue deficiency judgments against you. In other words, even after the house is gone it might not be over.

14. Can I somehow stall the foreclosure process?
a. Yes. There are several legal administrative ways to delay the foreclosure process. In this housing meltdown the banks are so swamped with “loss mitigation” activities that they are willing to delay the process for many good reasons. This is an area where an expert’s knowledge can literally save you from losing your home.
15. What is the least public (least embarrassing) solution?

a. Pay-up catch-up. Immediately. Next, a loan modification. Next, a short sale. Next, foreclosure auction and or bankruptcy.
16. Can I refinance?
a. I can almost say with near certainty the answer is, ‘no.’ These days no lenders will refinance more to more than 80% of your homes current market value…and trust me, your home’s current market value will probably shock and anger you. Also, in the past year have you been late in your mortgage? If Yes than forget refinancing. It’s not an option.

17. Does the Notice of Default hurt my credit score? What are the credit score implications of the various solutions?

a. The NOD does not, in itself hurt your score. In fact, it is not reported to the credit bureaus. Your credit is marred when you miss payments or pay late.
b. A loan modification usually requires at least a 60-day late and takes 1-3 months…so count on at least a 100 point credit hit.
c. A short sale can actually be completed without being late on one’s mortgage…theoretically it’s possible to complete a short sale without hurting your credit. But that depends on how the bank reports your cancelled debt.
d. A bankruptcy is a credit score nuclear bomb – depending on real estate involved, assets and liabilities.

Will the bank reduce the principal on my home?

a. No. Sorry but please don’t hate the messenger. Commercials, advertisements and solicitations that promise to negotiate a principal reduction are misleading at best and bold-faced lies at worst.

I am embarrassed. Am I the only one around here going through this?

a. Over 1 Million Notices of Default have been mailed in the last 90-days…so, no, you are not the only one. And yes, that includes thousands of people right here in Palos Verdes and the South Bay.
b. The housing meltdown has set us back to pre-2002 prices – and that is being conservative.
c. I recommend you take those strong emotions…embarrassment…and use them to motivate you to take action to get through this tough time and not fall victim to it. Taking action will not only make you feel more in control, it will also open-up workout solutions for you that passive, complacent homeowners will not have.

Should I worry about the bank garnishing my wages?

a. Yes. You should worry about that…it is humiliating. However, it’s probably a long way down the road from where you are now. By taking action now you can reach a workout solution with your lender WAY before it gets to that. Garnishment of your accounts / wages is legal only after the lender has actually gone to court to get a judgment against you and you have appeared to clarify your income and assets to the court AND has given you formal notice of their intent to apply the garnishment order.

Can the bank take my other assets? Boat, Car, 2nd home, 401K, etc?

a. That depends largely on where you live! Here in Southern California (and 33 other states) we live in what’s called a non-judicial foreclosure state. Among other things, this means the lender on your home loan does not have recourse to assets other than the home itself. Now, there is an important caveat to that. Home Equity loans or HELOCS are considered lines of credit – basically a credit card. They do have the ability to seek recourse – even after the house is long gone.

I have heard that banks do not want to own my house? Why won’t the bank agree to just give me 6-months w/no payments or let me pay just a couple hundred or a couple thousand dollars per month?

a. In effect, that is what they are doing with loan a modification.
b. Much has been made of banks not wanting to own property. While this is true it’s not the whole story. While banks may not prefer to own property, believe me – they don’t mind it a whole lot either. For them it’s just another day at the office. Banks have long had entire departments dedicated to disposing of REOs – basically real estate the bank owns. While imperfect, REO departments are well oiled machines that dispose of properties predictably.

What are the tax implications of the various solutions?

a. For a loan mod and bankruptcy there are no significant tax implications.
b. In the past, short sales have resulted in large amounts of taxable ‘forgiven’ debt. However, new laws and several important exclusions now have reversed that for most of our clients. It is very much possible to sell your home short and incur no negative tax consequences. But this isn’t legal advice and you MUST consult a licensed CPA.

Lomita Real Estate: Quiet and Charming

South Bay Real Estate had a meteoric rise and (recently) a spectacular crash but the City of Lomita remains surprisingly consistent in its home. A big reason for this is the community is deeply rooted to the area. The city some of the longest term residents in the area. Many Lomita residents live in the very homes where they grew up. Second and third generation townsfolk are not uncommon. 

It always surprises me how few Lomita homes are offerred for sale yearly. But maybe it shouldn’t – it’s a lovely town after all and few folks are eager to leave. 

Lomita is a city in Los Angeles County, California, United States. The population was 20,046 at the 2000 census. Lomita is Spanish for “little knoll”.

This page is undergoing major construction. But please bookmark this site right now as your main source of information on Lomita homes for sale. This page will soon offer the most comprehensive information available on the homes for sale in Lomita and Lomita real estate news. 

Interested in learning more about current events in the City of Lomita? Visit the local newspaper, Lomita Harbor Connection. Of course Wikipedia’s Lomita page is a great place for stats, maps and even info on famous Lomita residents!

Local newspaper columnist John Bogert’s article in today’s Daily Breeze touched me and my family. I learned about a group of kind folks based right here in the South Bay dedicated to helping children: 

“I am talking about the all-volunteer, no salaries, run-on-donations-and-kind-hearts Redondo Beach-based charity started more than two decades ago by the late, great Pam Edwards. Pam, thousands will attest, was a saint who – unable to have children of her own – dedicated her life to helping others with her homegrown, all-South Bay charity.” 

Cheer for Children sounds like an amazing organization. I include their contact information here and encourage everyone who is financially able give significantly to the poor this holiday season. 

These are strange economic times and everyday the forecast seems to get worse. Long gone are the days of cheap, easy financing and 30% yearly property inflation! My own industry has suffered terribly and I am under the impression that 30-50% of my colleagues are (for all intents and purposes) out of business. Add to that the thousands of South Bay residents who made their living in construction, remodelling, flooring, plumbing, painting, yard work and insurance.

I feel blessed that my father & I continue to make ends meet in our business. But speaking for myself, I have been forced to make changes. Last year my wife and I sold our home, a condo in Rancho Palos Verdes, because we could no longer make the payments – our financial safety net being long depleted. We found ourselves in an increasingly common situation, owing more on our home that it was worth. We had to ’short sale’ our home (pre-foreclosure) with the bank taking a $95,000 loss. Obviously, it was a very big deal for our family. 

The silver lining I found: 

1. We now rent a home in Torrance with a real yard for our 2-year old son! 
2. Our monthly payment is 30% less
3. I’m out of the housing market for now
4. I became a Short Sale / Foreclosure Specialist and have helped many many South Bay families move past complete financial devastation and sell their over-borrowed homes. 

Obviously we are heading into a challenging period as a region, a nation and possibly worldwide. My analysis of home sale prices, home inventory, unemployment trends and foreclosure notices indicate that the real estate market will continue to decline dramatically (possibly catastrophically) before it stabilizes. 

My strategy is to make changes in my own life rapidly as the situation changes. After all, no government bailout is on the way for ordinary folks. We have to fend for ourselves. But I believe there are new opportunities in every setback and blessings abound if we are brave enough to see and acknowledge them. 

But enough about me! 

What are your thoughts and experiences? How are you dealing with changes? Where do you think South Bay housevalues will wind up? Please use the COMMENT feature below to leave your thoughts and experiences.

And once again, please remember that many folks would love to have your financial problems (or mine!). And many families will go without what most of us would consider basic food stuffs this holiday. Please give to charity whatever you can. Here is the contact info: 

For more information, go to www.cheerforchildren.net. Send e-mail to cheerforchildren@mac.com. To speak to a human, call 310-540-2494. Or, if you like, send a tax-deductible donation to PMB 280, P.O. Box 7000, Redondo Beach, CA 90277.

 

Happy Thanksgiving!

Ryan “Rocky” Rockwood

Torrance Real Estate: Weather the Weather Here!

 

Description:  Most people don’t remember to think about the weather when they are purchasing Torrance Real Estate.  Here are a few things to keep in mind.

 

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When you buy your first piece of Torrance real estate you probably aren’t taking the weather into consideration.  Most people don’t.  Torrance is known for having mild weather conditions most of the time.  That does not mean, however, that you shouldn’t always keep potential disasters in mind.  Here are a few weather-centric questions to ask about the piece of Torrance real estate you are thinking about purchasing:

1.  Has the outside of the home been waterproofed?

2.  How well does the roof stand up against rain storms?  

3.  How recently has the roof been replaced?

4.  In the event of an earthquake, how stable is the ground surrounding the house’s foundation?

5.  Does this piece of Torrance real estate meet current earthquake codes?

6.  Is this piece of Torrance real estate well insulated against extreme heat and cold weather conditions?

7.  How much does it cost to insure this piece of Torrance real estate?

These are just seven questions to ask the current owner of the piece of Torrance real estate that you are thinking about buying.  To make sure that your future home can withstand most inclement weather conditions, make sure to have the home appraised.  An appraiser will tell you whether or not the house is up to code and what, if any, changes need to be made to make it weather-ready.

The Torrance real estate experts at Rocky Rockwood are South Bay residents and have been working with the Torrance real estate market for years.  For your weather related and home buying questions, call the Torrance real estate experts at Rocky Rockwood! Initial consultations are always free and new clients are given a free Starbucks coffee card!  Call 310-809-0203 or e-mail ryanrockwood@kw.com to set up your appointment!

Tenants granted foreclosure help.

The Los Angeles City Council approved a new law Wednesday that puts a one-year moratorium on banks evicting tenants when they foreclose apartment buildings and houses used as rental property.

The law, proposed by City Council President Eric Garcetti, came after Countrywide pressured tenants to leave their apartment units in violation of the city’s tenant protection rule.

After the banks complained that they did not understand that tenants protections applied to them, Garcetti’s office said, the councilman proposed the law to protect tenants.

The law could apply to thousands of families; the Inner City Law Center estimated that more than 3,800 rental units are in buildings that were foreclosed upon this year. 

Apartment owners had  the expressed concerns that the law represented an attempt to expand the city’s controversial rent-control laws, but city leaders said they were only trying to protect tenants during the foreclosure crisis.

 

Article found in The Los Angeles Times, December 18, 2008.  Writen by Jessica Garrison

 

If you have any questions regarding foreclosure, contact Rocky Rockwood, 310-809-0203 or at ryanrockwood@kw.com.  Rocky Rockwood can provide answers and solutions to your foreclosure problem. 

Buying a Rancho Palos Verdes condo can seem like the best deal-you’ll own a piece of Rancho Palos Verdes real estate and have a built in support system when you need to have maintenance and repairs performed. But what many condo buyers do not consider or maybe just don’t know is, underneath all the perks there is a little thing known as The Homeowners Association.

The Homeowners Association can be a blessing and a curse when it comes to owning a condo.  Make sure you understand how your condo’s homeowners association operates before you agree to buy your condo. Here are some of the questions you need to ask:

1.  What are the Homeowner’s Association bylaws? These bylaws can govern anything and everything from what plumber to call or what colors your curtains can be. The bylaws are legally enforceable so you need to make sure you agree with them before you agree to purchase your Rancho Palos Verdes condo.

 

2.  What was the breakdown of the association’s last financial report?  You are allowed to view this report before you buy your condo.  Make sure you agree with how the association spends its money! 

 

3.  Ask how meetings are run.  There are minutes taken at every meeting of a homeowners association.  Ask to read the minutes from the last few meetings and find out if attendance at those meetings is mandatory.

 

4.  Make sure you can afford the monthly HOA dues.  The association has the right to foreclose if your dues become delinquent.

 

The real estate experts at Rocky Rockwood have plenty of experience selling Rancho Palos Verdes condos. For a free Rancho Palos Verdes or any South Bay Condo consultation, call 310-809-0203 or e-mail ryanrockwood@kw.com!

Here are the top ten reasons NOT to wait for the “4.5%” loan program.                                                     

                       1) This program may never happen.

                       2) What will be the terms if it does?

                       3) No idea how long it may be before we ever find out.

                       4) High demand on product if it becomes available.

                       5) Rush to use this product will drive home prices UP!

                       6) Higher price pressure reduces or eliminates Seller concessions.

                       7) You may lose first time buyer tax credit.

                       8) FHA down payment increases to 3.5% in 2009.

                       9) Loss of all ownership tax advantages between now and when you buy.

                       10) If the program does actually happen, you can always refinance!

 

Has waiting on the government to fix anything ever been a good idea?

Home prices are at great right now. Home buyers have the ability to ask for seller concessions and can really negotiate terms. A rush of home buyers will eliminate that and help push up prices!

Do the math! If a home rises in price just 10%, the resulting payments at 4.5% are higher than if you just closed today at 5%. Not to mention the higher closing costs on a higher sales price, along with a higher down payment requirement!

Don’t give up your ability to get the best deal possible! Buy that Rancho Palos Verdes home or any South Bay home today! If a new program does appear, you always have the ability to refinance. But what if it doesn’t? Can you risk waiting for the government?

Go out and negotiate the best possible deal on a house TODAY!

Great terms are available TODAY!

Tax benefits and low down payments are available TODAY!

Waiting for the government to fix anything has never been a great idea. But if the government should come up with a great program, you can always look to see if it makes sense for you then.

 

Why wait?  Call Rocky Rockwood today! Or if you have any question regarding this program, call 310-809-0203 or contact Rocky at ryanrockwood@kw.com.