Issue 33

By admin | Published: December 31, 2009

In This Issue:

Our office staff at Default Research has dubbed this the “year of learning.” With so much changing in the foreclosure world, it was important for us to do our research and then for our savvy clients to be up to date on anything and everything foreclosure.

Easier said than done when you look back at the past year (and we give you that opportunity in this month’s newsletter as we review 2009′s articles). Over this past year, we explored the laws in many of our major markets and saw many states revamp their foreclosure process. The Default Research newsletter also reminded our readers that good things, and homes, come in small packages. Therefore, remember when purchasing a property, people are buying smaller.

We also asked our clients to consider cutting edge alternatives to their marketing methods last January using the Internet. We then took our own advice and have added special promotions for those who follow us on Twitter (click here) and on Facebook (click here).

As we roll into 2010, I don’t think we should ever end the “year of learning” because it has helped Default Research and our clients get even stronger. After surviving one of the largest economical downturns in the economy, Default Research and our clients have become even savvier! So, learn on my friends and fellow deal makers, learn on!

Alternatives to Traditional Marketing (and a way to save money too!)

If you are still marketing to your clients only through newspaper, television advertising, and trade shows — you are showing your age! It is time to get wired to new, less expensive, and technologically advanced methods of marketing.

The traditional way to make a name for yourself in the news is to get in touch with the newspapers, television stations, and other local media outlets. Reporters are constantly looking for fresh news stories and the media is an excellent place to get instant credibility — and best of all — it is free. If you have a client you saved from foreclosure or a home you purchased as an investment and you now have a family living in there, let a reporter know! On most media outlets websites you can find the e-mail addresses of reporters and that is usually the best way to contact these busy people.

Then there is the newer, slightly more expensive method of marketing—The Internet. It is imperative for a company to have a website and a company email address. Both of those inexpensive methods promote your business and increase branding. Web presence offers a sense of legitimacy to other businesses and to prospective clients who want to make sure the company they are working with is on the cutting edge of technology.

Affordable Improvements to Sell Your House

Despite recent improvements in the housing market, home sellers interested in selling quickly for the maximum dollar amount should consider making some small improvements to positively affect the bottom line and decrease time on the market. A home that appears well cared for with recent updates will stand out from the competition. Updates do not have to be a $50,000 newly renovated kitchen. Think small and spend your money wisely.

  • Start with the outside by checking curb appeal. A house that looks well tended on the outside will draw buyers in!
  • On the inside, start at the ceiling and work your way down. Repair or replace broken doorknobs, light switches, etc. If you cannot remember when a room was last painted, consider painting, being sure to choose a neutral color. If your furniture is old or mismatched, consider slipcovers and some new, inexpensive throw pillows. If you have dirty carpets, rent a rug cleaner and get busy cleaning the carpets. This is especially important if you have pets or rooms with high foot traffic because making your house look and smell its best will enable buyers to see themselves living there.
  • Remove clutter and depersonalize because you do not want to distract your potential buyers with personal items. Since you are selling your house and moving, you might as well start packing up personal collections, photographs, and other items for your move to a new home. Packing now will make the stressful time of moving day a little easier by having most of your things ready to go into the moving truck.
  • Turn on the lights! When your house is being shown, do not forget to turn on every light in the house, and open all blinds and curtains to make your home appear light-filled and inviting. Remember, you are selling space—make your entire home look as spacious as possible by placing your overflowing stored items from over-packed closets, basements, and sheds in a storage rental unit. Buyers will be impressed with how much storage space your house has if everything is not falling out of the closet as the door is opened.

There is really no need to break the bank to get your house sold quickly. A few well chosen updates as well as removing clutter by packing up personal items will work wonders in making your home appear more spacious and appealing to buyers.

Slowly Shrinking Home Sizes

For the past decade, it seemed that good things, and especially homes, did not come in small packages. Actually, those big houses came in large packages on small lots, and they looked like they were just dropped and squeezed into the neighborhood.

Now, good things and quality home builders are back in the “good things come in small packages” frame of mind. According to a recent CNN Money article, homes are being built now seven percent smaller and that averages out to a room cut out of each home being built! Therefore, with the smaller homes and smaller price tags, new home buyers are now able to seriously consider purchasing which is a major reason for the rise in new homes being purchased.

What does this mean for our savvy investors? Since this trend in smaller home size is expected to continue, when making long term investment decisions, commercial or residential, it is important to consider what will appeal to most buyers. Smaller packages, in terms of home sizes, will mean larger profits and more deals for you.

COMMERCIAL BREAK; Time to Make Money

Whether or not you have considered growing your business through commercial foreclosures, now is certainly the time to begin! Using Default Research’s state of the art lists, you can easily separate the commercial properties in your area from the residential properties, and you are on your way to a Commercial Adventure!

Here are the top five counties with the current highest commercial foreclosure rate.

  1. Los Angeles, CA
  2. Miami-Dade, FL
  3. Maricopa, AZ
  4. Cook, IL
  5. San Bernardino, CA

It is important to remember that commercial properties are not bought or sold like residential properties, and they can be a long term investment for you. They are rentable to companies who do not want to buy a property in the current climate, and can be bought low and sold high at a later time when the market has regained its normal behavior. Also, commercial properties have the potential of selling for remarkably less as a foreclosure than they would if they were sold on the conventional real estate market.

This commercial break is over for now – let’s go make some commercial deals!

California Foreclosure Law Review

Due to the recent burst of the so-called housing bubble, and the subsequent economic crisis, foreclosure law in California has recently changed. Here we will focus on the primary method of foreclosure in California—Non judicial. The state of California passed a new law that imposes an additional delay on the filing of a Notice of Trustee Sale. This change applies only to loans originated from January 1, 2003 through December 31, 2007. This new law requires that the lender contact the borrower in default at least 30 days prior to initiating foreclosure proceedings in order to assess the borrower’s financial condition and avoid foreclosure, if possible.

Regardless of whether or not your loan falls between the above mentioned dates, there are still certain rules that must be adhered to in a non-judicial foreclosure in California. On day one of this process, the Notice of Default is recorded. Within ten business days the Notice of Default must be mailed and published (when required). The next step required is that within one month the Notice of Default must be mailed to all junior lien holders and other parties. After three months the Notice of Trustee sale date is set. Once the date is set, the Notice of Trustee Sale date needs to be sent out 25 days before the actual sale date. Twenty days prior to the Trustee Sale Date, you may be required to notify the IRS. Next, within ten days from the first publication of the Notice of Sale, the Beneficiary must be sent a request for directions to the property. Fourteen days prior to the sale date, the Notice of Sale must be recorded. Seven days before the sale date, if it is a court action, the seven-day rule may apply before the sale can occur. Finally, five days before the Sale Date, the Right to Reinstate expires, and on the Sale Date, the property is sold at auction to the highest bidder at public auction.

Florida Foreclosure Laws

All foreclosed mortgages in Florida go through judicial proceedings, unlike some states where most foreclosures are realized through non-judicial measures (Arizona for example).

A lawsuit is filed by the lender after the owner has been consistently delinquent and they and the lender are unable to resolve the issue. After the suit is filed via a Lis Pendens, the court determines whether a notice of sale should be publicized. If ordered to do so, the lender who is suing for the foreclosure is responsible for placing this notice, following the terms set forth by the court. The property owner is also notified of the suit and given opportunity to respond within a certain set amount of time. If they do not, the County Clerk rules against them, and finds them in default.

Foreclosure on a property usually takes between 180 and 200 days to bring to sale. But, since all foreclosures in Florida are suits in equity, the only chance for the home owner to gain back rights to the property after the suit has been filed is to contest the sale. In order to successfully do this, they must be able show proof that they were not served correctly, or that there was some other error in the proceedings prior to the suit being filed. Nothing short of that will stop the court ordered judicial sale.

The indebted property owner served with notice of the suit is given the chance to appear and defend themselves. Should the property owner choose to contest the suit, a separate trial is held. The property is auctioned at sale on the day of foreclosure, and the winning bidder must follow certain rules set down such as time and amount to be considered paid in full. It takes approximately 10 days for the successful bidder to receive a certificate of sales, and once that is issued, the previous owner has lost all rights to the property.

New Michigan Foreclosure Laws

Michigan foreclosures are primarily non-judicial, although judicial foreclosures may occur. Michigan foreclosures are done by advertisement, which is the preferred method of foreclosure by lenders in that state.

Foreclosure by advertisement begins by the homeowner defaulting on their payments. The lender then begins the foreclosure sale process by setting the date for the foreclosure sale and posting an advertisement or notice in the local newspaper, along with a posting on the property itself. Please note that prior to July 5, 2009, the lender was not, in most cases, even required to send the homeowner a notice of default. The foreclosure process prior to July 5, 2009 generally took 4 – 6 weeks. The homeowner could stop the foreclosure at any time before the sale by paying all outstanding arrears on the mortgage, including other fees incurred by the lender bringing the property to sale.

On July 5, 2009, the new Michigan Foreclosure law went into effect, amending the above regulations as follows:

  1. Lender must send a notice to the homeowner with details including the reason for foreclosure, identifying information about the mortgage holder, and their contact information.
  2. While you reach out to the good clients, determine those who are costing you time and money. Think about the clients who do not pay and need constant prodding on your part before they do so. Consider writing them a nice letter thanking them for their business, but explaining that you are not the best fit for their needs.

The inclusion of these amendments to the Michigan foreclosure laws gives the property owner not only more time, but leads them toward education and help in their current circumstances.

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