Tuesday, November 10, 2009

A Word to the Wise:

As we continue to move through the tough economy with all of the ongoing news of foreclosures, short sales and loan modifications, a few of things are becoming very clear. It's not going to go away any time soon; you need to be very careful about what terms you agree to if you do a loan mod; and sales appear to be picking up slowly but steadily!

On the first item, there are still many homes that will be foreclosed upon due to a combination of circumstances. Many loans that never should have been made were made and are only now appearing as ogres on the horizon of many owners' lives. What is starting to happen in this regard, is that a sector of the economy up to now largely unscathed by the crisis appears to be falling into it. That is the high end home--those above $1 million. In the past month alone, I have personally witnessed Notices of Sale on at least two homes with over $3 Million owed, both in one of Marin's highest priced communities. This is not a good thing, and for more than the individual owners. If the trend continues, it can affect the market more broadly. If you fit into this category, run-don't walk to your lender and start discussions about loan mods. If he drags his proverbial feet, keep after him until you get into a thorough discussion of what, if anything can be done for you.
Which brings us to the second item mentioned above--mod terms. If you are fortunate enough to be able to obtain a loan modification, be sure the terms are something you can comfortably live with. There is nothing worse than getting a mod and finding out only one or two months into it that you can't afford these terms either. Consult with your accountant and lawyer just to be sure of where you are and where you're likely to end up with the mod.
Third, sales: on an encouraging note, both numbers and prices appear to be continuing their recent slight upswing. We're not talking about increases like we saw in the early few years of the decade, but, largely due to the price reductions absorbed over the last couple of years, and the prices on foreclosed homes that the banks are selling, buyers are out in force and their presence in the market is fueling these encouraging trends.


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