Lately I've been somewhat consumed by the amount of press about mortgage fraud and foreclosures. The Phoenix real estate market is not what it was 2 years ago and many are starting to feel the effects of over-extending themselves with 'investment' properties and boutique mortgages.
Scanning the blogs led me the the story of Casey Serin who got himself in way over his head with the purchase of multiple properties using stated income mortgages and cash-back at close deals. He is now in the process of losing (mostly through foreclosure) the 6 properties he purchased over the past year. His wife, who appears to have had little to do with the purchases, will also suffer the long-term effects of Casey's mis-judgment as her credit is being destroyed in the process.
Reading his blog reminded me of a seller who contacted me near the beginning of this year. He had a townhouse a few doors down from one I currently had listed. He asked me to stop over and give him an idea of what his house would sell for. The house was larger then the one I had listed and was nearly complete in being renovated. It did have a huge flaw...cat odor. You know what they say, "If it's smellin, it ain't sellin". I talked with him about the value and the need to eliminated the smell, gave him my card and told him to call me when he was ready.
As I walked out the door he said he had one more question. He handed me the copy of a one-page bill of sale on a property he said he owned north of Phoenix. I had never seen anything like it before and asked him to explain what exactly I was looking at. This is where the story goes really, really bad.
He had fallen behind on his payments and a Notice of Default (NOD) had gone out on his property. This automatically triggered the avalanche of mail and door knockers which inevitably come when ones property is facing foreclosure. One of the people who knocked on his door made him an offer he could not refuse. Full market value, cash back to help him get caught up on his other bills and close of escrow in five days. He was thrilled. This was too good to be true. And it was.
In a nut shell, he signed over the deed to his house. In what seemed to me to be a bizarre chain of events, the buyer returned the next day with a Notary and had the seller sign over a deed to his house. The buyer gave the seller a bill of sale and went on his merry way. Buyer didn't agree to pay the outstanding mortgage, didn't use a title company. The buyer was successful in securing a lien against the property. The seller still had a mortgage to pay and still faced foreclosure. Once I heard this I gave him the name of a real estate attorney and explained to him this was something best addressed by an expert in this type of situation.
The rest of the story about this particular seller is worthy of a separate post. Needless to say, it isn't pretty. My purpose of telling it has little to do with the actual conclusion and a lot to do with what happens when you find yourself in a hole. Stop digging.
The coming months in real estate cause me much concern. So many purchased using adjustable rate loans with no money down. So many cannot barely afford their payments now. How are they going to handle their finances as their monthly payments increase?
If you are in fear of your adjustable rate mortgage and don't know your options, do not be embarrassed or ashamed. Get help. Call your lender, call more then one lender. Explain your situation. Be honest. Ask for help. You can even contact your real estate agent. You can contact me. The most important thing to remember is you are not alone. In fact you are one of many. Whatever you do, don't just sign your property over to someone who knocks on your door.
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