You have probably heard about this new mortgage to lease program that Bank of America is touting as the next solution to the foreclosure crisis that is again looming as many more Adjustable Rate Mortgages are coming due. Many people may find this option appealing, in general — to stay in the same home you were in, pay less per month and have the rest of the debt forgiven. However, it results in a worse solution for people than merely just walking away from the home, but allows the bank to continue to profit off of you. You will still have the credit hit of the foreclosure, and instead of living in the house without a house payment, you will be making a monthly payment to the bank. [Read more...]
Glendale’s Westgate City Center Facing Foreclosure
August 6, 2011 By Leave a Comment
Another major bankruptcy and foreclosure looms in Glendale, Arizona according to the Arizona Republic. Westate City Center, the development that anchors Glendale’s Hockey and Football arena’s is about to be foreclosed upon. Like many of my clients, the owners cite a terrible economy and uncertainty about the future of the Phoenix Coyotes.
For more information please find the article here.
Thank you for taking the time to read this post by bankruptcy attorney Glenn Roethler.
Arizona Foreclosures Delayed by Backlog
August 6, 2011 By Leave a Comment
The New York Times reports here that the foreclosure system is overwhelmed by the sheer number of houses waiting to be foreclosed upon. In states like New York the backlog would extend for 62 years at current rates of foreclosure. This, of course, is in states where foreclosure is a judicial action. In other states like California (and Arizona) where it is not a judicial action, that backlog is 3 years.
This certainly coincides with my experience as a bankruptcy attorney. As a firm we have had clients that have lived in their house waiting to get foreclosed upon for over five years. You read that right. Five Years. Of course, that’s an atypical case with most of our clients living in houses that they are surrendering for approximately a year. Further, bankruptcy further slows down the process of foreclosure as well. All of which gives homeowners much needed breathing room in this terrible economy.
As an aside, you may have recently heard that it is now what is termed a “seller’s market” in real estate. This mans that there is less than 3 months of inventory for sale currently. While technically true, I believe that this is not taking into account the stealth inventory that the banks have of houses that they are waiting to foreclose upon. You may ask why they are waiting, the primary reasons are that the banks do not want to own a house, risk the liability of injury, pay the HOA fees, or figure out a way to maintain the property. Finally, and primarily, I believe that the banks are waiting to foreclose because they know about the phenomenon of a seller’s market, which is supposed to increase house prices. In essence, they are trying to create a false market for the properties they need to sell, eventually. Just my 2 cents.
Thank you for taking the time to read this article by Tempe, Arizona Bankruptcy Lawyer Glenn Roethler. The views expressed in this article do not represent the views of all members of Greeves, Price & Roethler, PLC.
Homeowner Forecloses on Bank!
August 6, 2011 By Leave a Comment
In a delicious twist of irony, a homeowner in Florida foreclosed on a bank. A quick summary of events indicates that the homeowner had his home wrongfully foreclosed upon by Bank of America. This resulted in a lawsuit that Bank of America eventually lost resulting in the Judge awarding attorneys’ fees against Bank of America. [Read more...]
Home Prices Facing Double Dip
May 6, 2011 By Leave a Comment
According to a CNBC article found here, the national real estate market is facing a double dip. This includes homes in the Phoenix – Metro area including Tempe, Chandler and Mesa. According to the article, 34.5% of houses are Real Estate Owned (“REO”). This means that they are owned by the banks either due to a foreclosure or a bankruptcy. Those homes are now entering the market after banks have held onto them for a long period of time. On a side note – the banks are finally putting these houses up for sale for tax reasons, otherwise they would take a much larger loss in future.
Fortunately (maybe???) for Arizona homeowners, this second dip is not affecting the home prices as much in Arizona, especially in places like Tempe, Chandler, Mesa, Scottsdale, because Arizona has already been hit so hard. However, according to this article, the national home prices have slid a whooping 4.9% quarter over quarter and 5% year over year. This means that the loss of home prices has occurred in the last three months, and that this loss of price is nearly as much as the entire drop the last year.
This clearly indicates that the housing market is in a sharp decline nationally. The government attempted to artificially prop up home prices by introducing the first time homebuyers’ tax credit. This tax credit has expired and no one is buying homes anymore. This creates a loss of demand and therefore a sharp loss in price.
It remains to be seen if the government will attempt to prop of home prices again by offering another incentive. Personally, I believe that the housing market will only recover once the actual market value has stabilized naturally. By naturally, I mean that once the houses reach the true fair market value of the property that reflects the amount of demand for those houses on the market. Government interference with this natural balance point causes false balance points to arise and will continue to prevent the actual natural price point from being reached. An obvious example of this is the recent housing boom that was created by the government “printing” arge amounts of money and giving it to banks with no interest rate.
In any event, it is clear that this is even more bad news for the national real estate market and also for those real estate markets closer to home.
Thank you for taking the time to read this article by Tempe Bankruptcy lawyer Glenn W. Roethler. The views expressed in this article are his alone and do not reflect the views of all the members of Greeves, Price & Roethler, PLC.
Arizona Short Sale Law
April 21, 2011 By
Here’s some information on Arizona Short Sale Law. Many ask, “Should I short sale my house is Arizona?” As attorneys, we usually replay with the short answer is “probably not” — it is usually NOT in the seller’s best interest to do a short sale.
Typically, the only parties to benefit from a short sale are the Realtor, the first mortgage holder (the bank), and the buyer. The Realtor gets a commission, the bank has you working for free to get more money for the bank, and the buyer gets a cheap house.
First, you may ask: what is a short sale? When the amount owed on a home loan (the mortgage) is higher than the sale price of the house, this is called a short sale. The “deficiency” is the amount left over that the seller still owes the bank. Many home owners in Phoenix, Tempe and outlying areas like Chandler, Queen Creek, Mesa, Maricopa, and Apache Junction are faced with the prospect of having to do a short sale or let their home be foreclosed. Of course, other options include bankruptcy, mortgage modification, or to “beg, borrow or steal” to continue paying a mortgage you simply can’t afford.
The disadvantages of an Arizona short sale are many:
(1) It will take a lot of time and energy on your part. First, you must get the bank’s approval which involves submitting tax returns, financial records, and a hardship letter. Then you have to hope the bank doesn’t lose your documents — which it will once or twice. Next, you have to show the house, which, as you know, involves keeping the place immaculate and letting strangers traipse through your home. This entire process will take months.
(2) If the short sale is completed, you run the risk of receiving from the bank a 1099-C tax form that shows debt forgiven. The IRS may consider this forgiven debt to be taxable income – colloquially referred to as ”phantom income.” Therefore, we suggest you have a lawyer review your short sale contract to attempt to avoid this income tax burden.
(3) No one can say exactly what the effect of a short sale in Arizona will be on your credit report. Everyone’s case is different and the credit reporting system is simply too secretive. Suffice it to say, the “ding” on your credit report will be in the neighborhood of 100 to 300 points if you do a short sale.
(4) You cannot stay in your Arizona home after a short sale, unless you rent from the new owner. On the other hand, if you file bankruptcy, you may be able to stay in your home for several months (possibly a year or two) for free.
(5) Will you be able to get a new mortgage loan after a short sale? I’m a lawyer, not a mortgage expert. But here’s what I know. Different people will give you different answers. A quick Google search led me to several Realtor websites that all said “Come on down, do a short sale and we’ll get you a new loan in a few months.” I doubt it. Remember who profits from your hard work in a short sale — the Realtor. ”Official” figures I’ve seen from the government say it takes 2 to 7 years before you can get a new mortgage loan after doing a short sale (depending on the type of mortgage).
As you can see, short sales in Arizona are complicated. Maybe a short sale is right for you, but you need to explore all your options. It may be better for you to “walk away” from the house or reorganize your debt via a Chapter 13 bankruptcy. The lawyers at Greeves, Price & Roethler, PLC can review your situation and help guide you through this complex and critical situation. Please call us at 480-345-8100 to set up an appointment.
