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Some tenants are better than others. Yet no matter how ethical a tenant might be, or how diligent in paying the monthly rent, even terrific tenants can get badly hurt by a foreclosure.

Landlords don’t usually discuss their financial problems with their renters. Why would they? If the property owner is falling behind on his/her mortgage payment, they fear that if the tenant finds out, the tenant might just follow suit and quit making the rent payment. And the landlord, headed for foreclosure,  needs money badly. Tenants of rental properties are often among the last to know about a pending foreclosure.

A landlord’s  foreclosure leaves a tenant in a precarious position and can potentially have a lasting effect on the tenant’s future ability to rent as well as throwing the tenant’s life into disarray while they scramble for housing unexpectedly. The scramble for a new home is a short-term problem. There are other pitfalls for renters, that can last for years beyond the foreclosure, and have a much more significant impact on the renter’s future.

When a lender “takes back” a home through foreclosure, the lender’s primary goal is to sell the property as quickly as possible. Empty properties are easier to sell than occupied properties. The lender, determined to sell quickly, must take steps to make the house as sell-able as possible. These steps often include emptying the house of it’s occupants. In other words, and eviction takes place. And here is where tenants can get hurt.

An eviction is a formal, legal action. Many legal actions are part of the Public Records. And Public Records are part of a Credit Report. So a tenant can end up with an Eviction on their Credit report! This can happen even if the tenant does not fight the eviction. Many lenders will “follow protocol” just to be sure future litigation cannot happen. Protocol in this case is a legal eviction. The lender, wishing to have a perfect “paper trail” of documents, can insist on following the letter of the law with regards to an eviction. They insist on following the process to it’s bitter end.

The ripple effects of the current mortgage market continue to surface in unexpected ways.  If you are a renter and find yourself in this unpleasant situation, document everything (make copies of any communications, and make written notes of any verbal conversations). You might want to consider speaking with legal counsel just to be safe. And make copies of all your rent checks (front and back) in case you ever need to prove that you made all your rent payments on time.

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Posted in Credit Bites, Foreclosure, Miscellaneous, Real Estate Bites | 3 Comments »

Tags: bremerton real estate, kitsap real estate, port orchard real estate, poulsbo real estate, silverdale real estate, washington state foreclosure

John and Mary are frightened and more than a little upset. They need to ask for an extension on the closing of their new home purchase because the financing is not ready. They made an offer on their new home 26 days ago and had no idea their Loan Approval Letter was not worth the paper it was written on! Now their Earnest Money is at risk and the money they already spent on a moving company is in question. In addition, they have already paid for the appraisal.

When is a loan approval not a loan approval?

This is not a frequent occurance. It does happen often enough that savvy Realtors® and experienced sellers are somewhat wary of Mortgage Pre-Approval Letters from loan officers they don’t know through previous transactions. The reason they are wary is simple. Experienced Realtors® know that Pre-Approval Letters are written by loan officers, and loan officers can’t approve loans!

The who’s who of a mortgage transaction.

A Loan Originator is the real name for a person like me who is more commonly called a Loan Officer. A loan originator does exactly what the title implies. He or she creates (or originates) mortgage business. A loan originator’s primary job is to supply a never-ending flow of new loan clients. The title of Loan Officer is rather misleading. A good loan originator does not have to work very hard to maintain a flow of business. Previous happy clients and satisfied Realtors® will keep him or her pretty busy without the need to spend much time marketing.

After they find a client to work with, loan originators are responsible for making certain everything that must be done to close the loan, is indeed accomplished. This includes coordinating a Title Company, an Appraisal Company, a mortgage processor, two Realtors® (one for the buyer and one for the seller) and of course, the borrower. But, a loan officer does not approve loans.

The Loan Underwriter is an employee of the bank. The underwriter’s job is to make sure the borrower (represented by the Loan Originator) fits the Lenders Guidelines for Approval. The underwriter is the person who actually approves the mortgage loan. Very few borrowers ever speak with a Loan Underwriter. Many underwriters prefer it that way. They are busy people who want to be able to move quickly from one loan to the next. There jobs are dependent on speed and accuracy. Getting bogged down with client phone calls does not help with either speed or accuracy.

Whether you, as a borrower, are working with a Bank or a Mortgage Broker, your primary contact is probably a Loan Originator, not an underwriter.

How do you make sure your Pre-Approval Letter is worth something?

A Loan Commitment Letter is the document an underwriter sends to the loan officer once a loan is approved. This is the real thing! A commitment letter will detail every aspect of the mortgage. It will include the terms and interest rate. It will itemize the “Conditions” (the items that must be provided or explained for final approval). The commitment letter will be dated and it will have an expiration date. It may be signed by the underwriter. The Loan Commitment Letter is a formal, legally binding document.

So, if you want to be sure your pre-approval is really an approval, request to see the Commitment Letter! If you are unfamiliar with anything in the letter, have your loan officer explain the unfamiliar portions. It is after all, your loan commitment letter and there is no reason you shouldn’t see it!

In Washington State and many others, the seller has the right to request this proof from the Buyer’s Agent. If the seller has a savvy Agent, the Agent will verify the validity of the Pre-Approval Letter by requesting a Loan Commitment Letter.

In John and Mary’s case, had they simply known to ask for a copy of their Loan Commitment Letter, they would have found out that the loan was not yet approved when the Pre-Approval Letter was written. It shouldn’t have happened the way it did, but this happens often enough that as an educated borrower, you must verify that your pre-approval is a genuine approval.

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Posted in Miscellaneous, Mortgage Bites | 9 Comments »

Tags: bremerton real estate, first time homebuyers, port orchard real estate, poulsbo real estate, silverdale real estate

Real Estate Market Report/Conditions in Kitsap County WA for 12/01/2008 The following is a brief analysis of the combined single-family home and condo market within Kitsap County, Washington for December 2008, provided by Rich Jacobson of Realty Executives Brio, in Silverdale, WA (this includes data for Bainbridge Island WA)

• Properties currently active on the market: 2391
• Properties closed in the last 180 days: 1312
• Average Sales Price: $308,770
• Average List Price: $329,896
• Ratio of List Price to Sales Price: 94%
• Average Days on Market: 103
• Sales Pending this Week: 8

Current Market Conditions: As is typical for our market, homes sales for Kitsap County WA have slowed as we head into the Christmas Holidays. Even though we’re not as susceptible to seasonal influences as most markets, we still experience a noticible decline in activity until just after the 1st of the New Year. With only 8 pending sales for the entire county this week, there really isn’t a candidate for ‘Hot Spot.’ However, Area 150 (East Central Kitsap) continues to lead the pack here in Kitsap County WA with 151 properties sold in the past 6 months. Compared to Area 163 (Gamblewood) which has only posted sales for 7 properties in the same period. Area 166 (Poulsbo) maintains the highest Listing Price-to-Sales Price ratio (99%), and the lowest DOM (Days on Market) with 79. Bainbridge Island Stats separately: (Area 170)

• Properties currently Active on the market: 329
• Properties closed in last 180 days: 127
• Average Sales Price: $657,890
• Average List Price: $703,298
• Ratio of List Price to Sales Price: 94%
• Average Days on Market: 109
• Sales Pending this week: 2

Advice for Sellers: Given our current economic conditions, my recommendation for Sellers would be to hold off on marketing your home right now, if possible, and wait until late February or early March. If circumstances demand that you list your home now, make sure that your Listing Agent provides you with a very thorough marketing plan that includes maximum, strategic Internet exposure. Work closely with your Agent to determine what tasks need to be performed in order for your home to show well, and stand out from among other comparable properties. Don’t be tempted to test the market, but price your home aggressively. Advice for Buyers: If you’re fully pre-approved by a reputable local lender, then you are in good position to take advantage of the current market dynamics. Take your time. In most areas you will have many homes to choose from. Be patient to find the deal that makes the most sense. For Active-Duty military buyers, a home purchase may not be the best strategy if your orders are for less than 3 years. Consult with your Agent and Lender to determine what decisions are most wise and prudent for your future plans and budget. For more additional information and resources concerning real estate in Kitsap County WA and the Western Puget Sound, access my website, Kitsap Life .

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Posted in Kitsap County WA Market Reports | No Comments »

Tags: december 2008, Kitsap County WA, market report, poulsbo real estate, seabeck wa real estate, Silverdale WA Real Estate

If you own or are looking to purchase waterfront property in Kitsap County, better not count on Zillow to get the value right. If the property has a daylight basement, you’ll likely have the same problem with a Zestimate. That’s because Zillow has trouble with these types of property values in Kitsap. The disturbing thing is we have thousands of properties in one or the other of these categories!

Here are the problems. Kitsap County has so much waterfront the Zillow valuation engine gets seriously confused. For example, if you want to see a Zestimate for a property in Manchester, Zillow is likely to include as comparables, property on the South end of Bainbridge Island. As anyone who lives in Kitsap County knows, there is a significant difference in the values of waterfront property between these two communities. Although the two properties may be geographically close (if you happen to be a crow), they are tremendously different in almost all other aspects, and widely separated by road. Zillow hasn’t corrected this yet.

Properties with daylight basements also produce mixed results. If the daylight basement has not been finished for use as living area, Zillow ignores it. If it has been upgraded, Zillow still ignores it! You can tell by comparing the square footage listed on the County Assessor’s website with the square footage Zillow displays. (You can look up any property in the County, by address, here).

Think about how many hills we have here in Kitsap. Properties with finished daylight basements are very common. Bremerton has them, Silverdale has them, as well as Port Orchard, Poulsbo, Seabeck and every other corner of our County.

In a recent conversation with Jim Avery of the Kitsap County Assessor’s Office, I learned that his department has tried to rectify these problems with Zillow. The Assessors Office contacted Zillow’s data provider to point out the discrepancy. Nothing has changed. The Zestimates continue to be innaccurate.

In addition to that, even if the property is not waterfront or does not include a finished daylight basement, the data available at the Assessors Office is data collated in 2007. Our real estate market is moving too fast to rely on data that could be up to 12 months old.

This raises many questions. Kitsap County is a great place to live. We have mountains and plenty of waterfront. But, so do many other states in the US. Do all the states with waterfront properties and daylight basements share the same problem we do?

So, be wary of using free online tools to make large financial decisions. Hire a reputable local Appraiser if you want an accurate idea of local property values. If you are not quite ready to invest several hundred dollars on a full appraisal, check with an experienced local real estate agent. They have access to information that is much more up-to-data than the information Zillow is relying on.

Sellers who rely on a valuation tool like Zillow can also make a costly mistake. Overpricing a property in Kitsap County’s already listing-saturated environment, could cost a seller months of wasted time, while prospective buyers ignore it.

Related Articles

A Zillow thread

Another Zillow thread (our Assessor pointed out the problem to Zillow almost a year ago)

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Posted in Kitsap County Bites, Miscellaneous, Real Estate Bites | 1 Comment »

Tags: Bremerton WA Real Estate, kitsap property values, poulsbo real estate, Real Estate Bites, Silverdale WA Real Estate, zillow

Purchasing a home should be one of life’s simplest and most rewarding experiences.  The process itself represents a right of passage into a world of responsibility tempered by the emotional and financial comfort of homeownership.  The place where you choose to live, after all, is much more than an investment.  Potential buyers, already pressured and rushed, can find themselves unprepared for the uncomfortable questions that often arise before closing.  Regular readers might remember a post that I contributed to this site two months ago.  I graphically recounted the personal behavior that led to my incarceration in a federal prison after many years of working in the title industry.  It’s my intention, through a series of posts, to share consumer-oriented advice that can’t be found elsewhere.  Feel free to contact me with questions via email at edr@rybconsulting.com  or to visit a title industry blog that I host.  Title-opoly deals honestly with a wide spectrum of real estate issues and many of it’s readers are consumers, government regulators, or professional educators.

You’ll find that most of my opinions are very conservative since they were shaped by unique experiences.  For example, most real estate pundits blame consumers for a startling increase in reported fraud statistics and subprime foreclosure rates.  I don’t, and point squarely at the real estate industry and more specifically at it’s self imposed and very complex culture.  Most people working in other careers simply lack the time and ability to learn enough about the system to mastermind a fraudulent deal. Real estate crime requires a great deal of planning and coordination among numerous insiders or others with knowledge and contacts; it takes a team. Consumers blindly following the recommendation of licensed professionals sometimes find their integrity or sensibilities compromised. 

Former Secretary of Housing and Urban Development, Mel Martinez, sought sweeping reform of real estate settlement practices after closing on a home in the D.C. area.  Secretary Martinez, a seasoned attorney and the nations’ top real estate regulator, found himself  both confused and concerned after spending an hour at a table with unrecognizable documents strewn in front of him.  I can’t keep that from happening to you, but I can arm you with an intimate understanding of the pitfalls of any housing transaction and their possible consequences.  I’ll describe the criteria that you need to consider when selecting a real estate agent, loan officer, or title/escrow agent.  You’ll learn enough about the proper progression of events from contract to closing to stop and ask poignant questions when something doesn’t seem right. And, if an unspeakable situation does present itself, you’ll know enough to recognize it as such and will have an exit strategy in place that protects your interests.  A community-based approach to fraud prevention presents opportunities for consumers to avoid exploitation, especially when it’s initiated by industry insiders.

An informed and concerned community of consumers is the fraudster’s worst enemy!

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Posted in Guest Writers | 3 Comments »

Tags: bremerton real estate, poulsbo real estate, real estate fraud, silverdale real estate