Grant Haas\’s Blog

As most people who follow this type of thing know, there is a foreclosure freeze in effect in this country by many of the large banks.   It stems from allegations that they have not been following proper procedure in the filing of the foreclosures.   Lets put these allegations in a little context, we don’t have to look far, and we’ll see how jacked this whole thing is and how much better, we the American people, deserve.   Government is getting too big and inefficient.

It all started with the bailout of the big banks, Bush was leaving the whitehouse, stocks were in a free-fall, people were still losing homes at unprecedented rates.   Understandably, the real estate meltdown of ’06-’07 was driven mainly by the sub-prime mortgage market and the greed of both the banks and the borrowers.   When it came time to face the music, the banks and insurance companies got government bailout sponsored by taxpayers while the the homeowners (many of the same people bailing out the banks and insurance companies) were losing their homes, pride, and drowning in debt.   Now that they have been given a new lease on life what have the banks done to make things work out?   They cut corners on document signings and procedures.   Instead of learning a lesson, taking their dirty bailout money and moving the economy forward, they took the easy path, cut more corners, and have got us in a difficult again.   If banks don’t suffer from the doing irresponsible, culpable, things then they need to suffer consequences or they will never learn.

In the great real estate meltdown there is plenty of blame to be passed about.   Subprime lending made the market into such an unsustainable monster.   Plenty of people borrowed money they had no business borrowing to buy houses they had no business buying.   And banks allowed it, putting their own money on deals they should not have.   Some people may ask the question ‘who should be blamed?’ and I think both the borrowers and the lenders are equally to blame.   Both the borrowers and lenders should have known better, both are at fault but banks got bailed out while the borrowers were out on the cobblestones or deep underwater on theuir mortgages all the while funding the bailouts.   Both parties are to blame but only one party (borrowers) suffered any sort of fiscal consequence.

Now lets look at the events of the past few weeks in the foreclosure wing of the mortgage industry and let me tell you business is booming.   In fact the banks have been so busy foreclosing on houses that they haven’t able to go through all the trouble to do the foreclosures properly.   They have so many properties coming on to their books that they have not been able go through the required documentation to make sure the foreclosure is legitimate.   So while people are losing their homes, having their credit destroyed, watching retirements and nest-eggs go up in smoke, the banks can’t even get their paperwork straight.   This is what happens when people or corporate entities are not held responsible for their actions.   They don’t learn any meaningful lessons and fail to correct negligent practices that get us into trouble in the first place.   Lets not waste this opportunity to punish them for their actions and teach them that actions have consequences.

Perhaps they didn’t want to get their paperwork straight.   Today a new development about the MERS, mortgage electronic registration, reveals that many banks here in California and across the country were stating MERS as the owner on record.   There is a big problem with that; MERS is a company commissioned to keep electronic records about mortgages not a legal entity capable of holding title.   It seems the banks gave ownership to MERS to make their lives easier and avoid having to pay the fees associated with filing a foreclosure.   The banks cut corners with robo-signers, and put unauthorized data keeping companies on record as legal note holders, all to save time and money.   And through their murkey bookkeeping its difficult to even follow and see who has fair title to the home, the foreclosure freeze came about as a direct result of title insurance companies not being able to give clear title to buyers of foreclosed property.   We have all suffered due to the irresponsible, criminal, activities of the bank and they have put us all in a huge mess… its time to demand punishment that fits the crime.Please feel free to comment and if your are pursuing any further information, please visit my website here, its a nice place to search the MLS

The information contained in the website is strictly the opinion of the author

Promissary notes are one of the most if not the most important document in most real estate transactions.   Promissary notes are only used when the buyer takes out a loan or a mortgage to buy the piece of real property.   Promissary notes are a lot like an IOU, the only deifference is that a promissary note has a promise to pay where an IOU simply states that a debt exists.   Promissay notes usually contain the promisor, promisee, and terms of repayment.   As an example if one was to buy a house for 200,000 and he only put 20,000 down he would go get a mortgage.   A mortgage is a monitary debt secured by a piece of real property.   A mortgage is almost always secured by a promissory note.

Promissary notes are important because they dictate how much one owes on their house and how much interest they pay and for how long.   Promissary notes, in the promise, contain not only principle and interest amunts but also the time in which it needs to be paid off.   So if a time machine was invented, then promissory notes would lose a lot of value.   Promissory notes can be bought and sold like any other commodity.   As a matter of fact, the two largest buyers of promissory notes; Fannie Mae and Freddie Mac, were created to help increase the market for buying and selling promissory notes.   It’s a trip to think that you can have your debt bought and sold multiple times and have no say in it, nay no knowledge of it!

Promissary notes are in themselves unsecured debt, like an IOU.   Some people like to say the word collateral here.   A solution to this is to secure the note to the piece of real property or something else of value.   It just makes sense if your going to lend money to get some collateral, right?     A mortgage loan contains a promissory note amoung other things, but the PN is exclusevly the crux of the deal.

To all those who have any interest in real estate please go out and have a look at a PN, it is a powerful little document and usually very short.   Short and sweet, baby.

please comment and don’t forget to visit my website   http://granthaas.yourkwagent.com

1031 is a way for real estate investors to defer paying taxes on their real estate.   It is not a magic potion that means no capital gains will be paid on real estate investments (wouldn’t that be nice), but to the savvy buyer it can be a way to defer taxes indefinitely until death even:)   That’s awesome, apparently death can stop you from having to pay taxes, that old addage about “death and taxes” shows why it stands the test of time.
Anyhow, heres how it works.   If someone is selling their home they can exchange for a new property and defer paying capital gains tax by spending all the profit on a new home.   It’s not a perfect situation but it may work for some, some people seem to like the idea of deferring their taxes interest free, but if you can’t touch the equity and put in your bank account, then is it really there.   If a tree falls in the forest, does it make a sound?   A couple of rules are in place for 1031′s, technically it must be like for like properties.   As far as I can tell this just means both properties must be income producing properties.   It can be commercial real estate, vacant land, rental properties, apartments.   Anything but primary residences, vacation homes, and land under development.
Once Mr. investor decides to sell the land, you sell it like normal and the deal closes.   Once the deal closes, before the investor can touch the profits, the money is transferred to a qualified intermediary.   Within 45 days of the closing the investor MUST identify at least one property of greater or equal value to the property that’s been sold.   After the 45 days the list of homes identified as potential swaps is recorded with the qualified intermediary.   Then the new purchase, (partially funded by the profits from the original deal) must be closed within 180 days from the date the first property was sold.   also if the second deal is closed for less than the profit derived the the investor gets some red meat and that is taxed.
Boom, bam then when the second property is sold the sales price minus the price the investor paid for the first property is created as taxable income, so tax is eventually paid but it is deferred.   The investor also could continue to defer payments until the cows come home but the problem with doing that is they could never spend their equity on anything except real estate.   Personally, not my style, I like to do what I got to do and not run away from my problems, but that’s just me, and there are many situations where deferring taxes interest free can be a good idea, maybe you can explain them to me!-Grant Haas

http://granthaas.yourkwagent.com

If you qualify as a first time home buyer and you buy a house in 2009 then you are eligible for the government stimulus of 8,000.00 dollars for the first time home buyer!   It acts like an extra 8,000.00 dollars on your tax return and if you have already filed your taxes that is no problem.   All you do is amend your taxes and prove that you are taking out a mortgage then bam! 8 grand in the mail.   Any questions call your lender or contact me.

http://granthaas.yourkwagent.com

Hi there, Grant Haas here… today’s blog is about section 8 tax reassessments.   If you bought your home in the last five years or so then it is quite likley that the home is worth less now then what is owed on it.   And it is also likley that the last time the property tax was assessed was when the home was purchased. So if the purchase price is greater then the current value then the the property is eligible for a reassessment for taxation purposes.   If you need a reassessment or if you know someone who bought a home in the last five years and you think they may be paying too much in property tax please contact me, my contact info can be found at my website.

-Grant Haas

http://granthaas.yourkwagent.com

There are a lot of people hiring lawyers for around 2 grand to help them modify their mortgage these days.   Don’t pay a lawyer to modify your loan until you have tried to modify it yourself, seriously.   Once in default many times banks are willing to work with their clients to help them keep their homes and you don’t need a law degree to do it.   All you need is a telephone.   Call your lender, if and only if you are in default, and see what can be worked out.   If that does not work then hire a lawyer if you wish.

I have seen many people work with their banks and have great success, I have also seen the banks contact their clients with a letter or a phone call to get the whole process started.   I have yet to hear of anybody getting help from a lawyer, and if they did it probably could have been worked out without them.   It’s really very simple, why pay for something you can get for free?

http://granthaas.yourkwagent.com

All the talk latley in the US is about bailout this and stimulus that, and most people I know are pretty upset about all of this.   Why should our hardworking dollars be paid to failing banks and financial institutions.   And it is very upsetting to see all these large sums of money 787 billion here, 45 trillion there, sometimes it seems like a reverse Robin Hood effect; they are stealing from the poor and giving to the rich.   This would all be a lot more easy to swallow if there were some tangible signs of bailout money being applied to helping out the people who are struggling to make ends meet.

The stimulus plan enables banks to receive money if they want, but if they choose to receive money there are specific guidelines that restrict the usage of the money.   The program is explicit in that it states that if a bank chooses to get stimulus money, they must use the money to help those who are in default (late on their payments).   So it seems the government is rewarding those who are behind and offering no help to those who struggle to stay current.   I have even seen some real estate professionals intentionally go into default because they feel confident that they will be eligible for a loan mod.

Some banks did not elect to recieve stimulus money, these are the smaller banks.   All the larger banks, in particular the ones who do a lot of mortgage banking, the now defunct Wa Mu, B of A, Citibank, and the other large banks all participated in the stimulus package.   If you are not sure if your lender participated in the stimulus, then give them a call.   If they did, then there is a good chance that they will modify your loan if you go into default.

This will affect short sales in the simple respect that many people who would be selling their homes as a short sale are now being able to keep their homes under new terms, often very generous terms.   This does not mean the end of the buyers market though. There are still lots of inventory and credit is tight.   Interest rates are at all-time lows and there is federal money available for first time home buyers.   So have we reached bottom here in the Inland Empire?   It seems we have, but the bottom has been created by government policy and not letting the market run it’s natural course.

Comments? Questions?   contact me personally at:

http://granthaas.youkwagent.com

If you believe that your home is worth less today than the day you bought it you are probably paying too much in property tax! section 8, not to be confused with the section 8 regarding same sex marriage.   Homes in the Inland empire have been declining for the past three years and homes are assessed for value by the local tax assessor when they are last sold.   If your Home was sold was sold at a price that is higher than it is worth right now you are eligible for an ‘application for decline in value reassessment’.

The official wording found on the formal application is as follows:

Under California Law, the taxable value of real property is the lesser of its base year, compounded annually by an inflation factor (not to exceed 2%) or its full value on the lien date January 1.   This allows the Assessor to take into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property, or other factors causing a decline in value.
If you have evidence to indicate the full value of your propertyon the last lien date (january1) was less than the assessed value, please complete the information requested below and return this application to your local Assessment Office.   You will be notified by mail the results of our review.
If you disagree with the Assessor’s decision regarding this application, you will have the right to file an Assessment Appeal.

The beauty of this is that if you get approved for a decline in value you will have lower taxes not only for this year but for the foreseeable future because homes are rarley, if ever, reassessed.   So you will be paying a lower rate of taxes for the remainder of time that you live in the home.   And if you decide to spend the money you saved on taxes to pay your principle down you can save much more on interest, provided your home is not already paid off.

So if your home is worth less than what you paid for it contact your lender today for a reassessment.

The real estate market in Redlands, San Bernardino, Highland, and the rest of the Inland Empire is in a unique situation.   There are many factors contributing to what we are now experiencing and   these are tough times for some.   The inflating bubble of three years ago inspired many to make offers on homes they couldn’t afford on the assumption that values would continue to rise.   As the values stopped rising and began to fall, many lost it all.   Lost thier home, down payment, and thier savings too.   Others became victims of confusing loans, with adjustable rates and baloon payments and other factors that proved too difficult to deal with.   If you or someone you know is experiencing this then contact my team now, we may or may not have the solution for you but we can educate and let you know what options are best. The sooner you take action the more options you will have open to you. Together we can make the best out of a tough situation.

This post is not about that though.   It is intended for those of you who did not buy a home during those turbulent times.   It is about the market that exists right now.   The reason I was harping on the factors that caused the current situation is to illustrate how we got so many unsold homes on the market.   In addition to the regular sales ( a home-owner selling thier home for whatever reason) we have a lot of short sales and foreclosures on the market.   Basic law of supply and demand says the greater the supply the lower the price.   Combine the supply of unsold with the low interest rates and now is a good time to invest in your future.

The lenders have been tightening thier practices too.   Making sub-prime loans or making loans to people who are not qualified has proved to be an ineffective business practice, consider indymac and countrywide to be good examples of what happens when questionable lending goes wrong.   Now, it is considerably tougher to qualify for a loan, lenders will no longer lend money to someone who is a risk to not pay it back.   So if you qualify today you are If buying a home and taking advantage of to-days market make sure you use a real estate agent you trust, one who will discuss all important information about your property and the lender funding the transaction (if any) and one who will make the prospect of living the dream a reality.

Grant Haas

http://granthaas.yourkwagent.com

As the intrest rates increase across the country the rates on ARMs move upward. Combine this with the housing prices declining and many Americans find themselves trapped in a situation where the cannot afford to pay yhier monthly mortgage payments and they can’t sell thier houses for as much as they owe on them. According to Aaron Wood from First American Title “This year, more than $300 billion worth of hybrid ARMs will readjust for the first time.”

James Gaines, a research economist at the reasearch economist at the Real Estate Center, has pointed out that although California’s default defalt notices arerising by the thousands, actual doreclosure sales remain in the hundreds. Because of Californias Active housing market, homeowners can sell thier properties before going into foreclosure.

If your gross monthly housepayment does not exceed 40% of your gross monthly income, it should be possible for you to keep the property. But if the monthly payment is still increasing or is more than 40% of your monthly income you should consider selling or transferring the property as soon as possible in order to avoind negative hits to your credit score and the eventual fate of a foreclosure. The objectives in order of importance ought to be:

1-Keeping the property if possible. Ask about the loan modifications your lender can provide.

2-If you have equity, sell your house and keep the profit.   This is much better then letting the lender take your home and all your equity with it.   If you are unsure of whether your house is worth more than you owe, call a real estate agent and they will be able to tell you where you stand.

3-Minimize damage to your credit, if you are upside-down on your home and you cannot make the payments, consider a short-sale as an alternative to traditional foreclosure.

Before looking for other options, try and work things out with your lender. Lenders don’t want a foreclosure either, no one does. Call your lender or consult a real estate agent if you feel like you can stay in your home with or without a loan modification. Ask about a deed in lieu of a foreclosure. Your lender will want to work with you to help find a solution if there is one. if the one really wanted too keep thier home and they knew that the would be able to pay off the additional debts, then this is a viable option. A good real estate professional may help make some sense of the situation and educate on the possible options, but rember that a Realtor’s opinion is not guaranteed to solve all financial hardships, but it can help turn the tide back in your favor. I know that everyones situation is unique and there is a solution that is right for everyone. But the first thing someone should do when facing the possibility of defaulting on a house payment is to educate themselves of the facts and procedures so they may take appropriate action.   The sooner you act the better, so call your lender and/or real estate professional today and take the power back.

-Grant Haas

http://granthaas.yourkwagent.com