Go to my website www.humboldthouses.com to see a list of Notice of Trustee Sales recorded in Humboldt County. 

Buying a property at a Trustee Sale is not for the inexperienced....proceed with a great deal of caution and do your homework...and be prepared to pay all cash...as is...auction format...no inspections...no due diligence period...most of the time you don't have the chance to view the interior...no guarantee of clear title...you deal with potential occupants in the property after you own it....no financing at a Trustee Sale.  Many (most) properties don't sell at the Trustee Sale and revert back to the foreclosing party because they are over encumbered.

If you have questions about this potentially lucrative but also very risky way to buy real estate, contact me, Jeff Katz, Broker. I have been selling real estate full time since 1986 and will offer free consultations by phone.  (707) 442-5470

People ask why some of our listings are not in the MLS.....if you are a seller asking that question the reason is obvious:  You save thousands of dollars in commissions if our office procures the buyer and there is no other agent/commission involved.  We give sellers the option to put their home in the MLS as well.   Assist-2-Sell is traditional real estate with an untraditional fee structure.

How does the buyer benefit from this?  Because of our flat fee structure, many of our seller clients (we also represent buyers, too) are able to price their homes more competitively, therefore making the property more attractive and appealing to buyers, therefore increasing the odds of getting the home sold.  The buyer does not care how much the seller is paying to sell their home...furthermore the buyer does not care whose for sale sign is in the front yard of the house.

In our local MLS there are over 750 properties for sale.  Statistically approximately 1 out of 5 are selling (20%).  Last year our office sold 3 out of 4 properties we listed (75%) which says we get our listings priced competitively in this tough market place.  After all we are being hired to sell the house, not have it sit there and not sell.  And price is all the buyers initally look at.  Luckily for real estate, the Humboldt County market is overall better than most markets in California and there have been a number of homes sell in the past 6 months locally that had anywhere from 6-10 offers on them (shades of 2004?), so the buyers are out there.

 Thank you for looking at my blog.

Article by: John Fesler, Humboldt Home Loans 

ECONOMIC RECOVERY ACT OF 2008

Will it really help troubled borrowers?

Congress is touting that this legislation will provide housing relief to as many as 400,000 distressed homeowners. Skeptics suggest that this is more about Congress trying to look like they are doing something and that the likelihood of assistance is considerably less than projected.

Here is a quick overview of some of the bill's provisions.

The main thrust of the legislation seems to be to help those homeowners in immediate risk of losing their homes to foreclosure by reducing their mortgage balances and interest rates to a more affordable level. There are several limitations:

• - The program is completely voluntary. Lenders and investors get to decide when to intervene. In other words, if lenders conclude that they will lose less by allowing the property to go to foreclosure the borrower will not be eligible for a government refinance program even if the borrower otherwise qualifies and wishes to participate.
• - When lenders elect to allow a borrower to participate, it is likely to result in significant write-downs of the current mortgage amount and often accompanied by interest rate reductions.
• - Before participating, issues with any secondary lenders (remember those piggy-back 100% loan options) will have to be addressed. It is likely that equity line loans and second trust deeds will have to be modified and/or eliminated.
• - FHA is perceived as the agency that will do much of the refinancing but FHA has indicated a reluctance to be the depositor of what they sense is bad debt. FHA has thus imposed a maximum loan amount to be insured via a new legislatively created fund at 90% of the current market value of the property, not the value of the house when the original loan was funded.
• - FHA proposes to charge a 3% insurance fee to come out of the refinance loan. This translates to less funds for the original lender via the refinance.
• - Borrowers will qualify by demonstrating a lack of capacity to pay their current mortgage but will have to have sufficient income to qualify for the new (presumably smaller) fixed rate FHA loan
• - FHA has announced that they will disallow anyone who "intentionally" defaults on their mortgage in expectation of acquiring a better loan via this program. The legislation anticipates severe penalties, including prison sentences, for those who falsify information.
• - New loan borrowers will have to agree to occupy any refinanced home as their principal residence plus can not own any other homes.

If the above restrictions are not enough to discourage borrowers, perhaps the most onerous provision is an equity sharing agreement regarding future appreciation and equity gains from subsequent sale of the property. Time schedule limitations are proposed for future sales and after those time frames have elapsed FHA would be entitled to up to 50% of future appreciation identified from the date of refinancing to the date of sale. In other words, FHA does not intend for this to be a free bail out.

As is often the case with legislation, this bill tackles peripheral issues as well. FHA has tried unsuccessfully in recent years to reign in the seller help programs, where the seller provides the down payment and much of the closing costs for the buyer via a "pass through" of the funds via an organization. The Nehemiah program is one of the better known of these type organizations and was successful in beating back FHA's efforts to discontinue their use during the last couple of years. The elimination of such programs is now contained in this omnibus bill.

Federal Tax credits are proposed for "qualified" first time homebuyers. As if always the case, the devil is in the details and identifying what represents a "qualified" buyer remains unresolved.

The bill makes increased loan limits a more permanent situation than the recent hastily passed stimulus bill. It is still not clear if new loan limits will apply universally across all areas.

So, will the Recovery Act really make a difference? There are a lot of unanswered questions like how quickly will the program be offered, will lenders "voluntarily" cooperate, who will qualify for assistance and exactly what is the criteria for determining qualification?

Finally, critics predict that this legislation will merely postpone any housing recovery. They suggest that the proposals are unlikely to help many current home owners, many will "hope" they will get relief and postpone the inevitable foreclosure process. This, in turn, will lengthen the time required to work our way through the foreclosure difficulties and get on with the market correction we know has to occur.

Word/seminar/recovery act analysis

Article by: John Fesler, Humboldt Home Loans 

HOME VALUATION CODE OF CONDUCT

In return for the termination of a fraud case brought against Fannie Mae and Freddie Mac by the New York Attorney General, the agencies have agreed to establishing regulations to "enhance the quality and independence of the appraisal process". This seems like yet another attempt to deflect attention away from the fact that the agencies did not provide sufficient oversight in the housing debacle. Instead, they are blaming appraisers for having created a false valuation process and "running up" home values during the heyday of sub-prime lending.  The reality is that local appraisers were caught in a spiral in which they were "chasing" home values as property kept selling for ever increasing amounts.

\The proposed new rules governing appraisals is not only onerous but will impact dramatically the way local appraisers, mortgage lenders and realtors do business and will negatively impact the consumer. Under the proposed rules, beginning January 1, 2009, a mortgage broker will no longer be allowed to select, retain or compensate an appraiser. The lender will be charged with the responsibility of acquiring the appraisal, preferably (as noted in the proposal) via an appraisal management company. Ironically, the fraudulent case that spawned this current "regulation" was conducted via an appraisal management company.

The Consumer: The proposal will increase the cost of an appraisal in that the use of an appraisal management company represents a third party entity that must be paid. At the same time, if after ordering the appraisal, the lender denies the loan, changes guidelines or the mortgage broker finds a better loan option, another appraisal (at another cost) would most likely have to be acquired. The current proposal does not mandate that a lender must "assign" the appraisal to another lender, without cost should any of the above occur.

The Lender:      It is likely additional costs will occur as the lender will be:

            - responsible for selecting, retaining and paying appraisers unless they pass on this obligation to an appraisal management company, also with an increased cost.

            - required to maintain a staff that is "independent" of their loan production process and who are trained in the area of real estate appraisals.

            - allowed to create in-house appraisal processes including reviews, quality control and workout valuations.

            - prohibited from "bullying" appraisers or otherwise influencing the appraiser's independence.

            - required to establish a phone hotline for consumers and provide a free copy of the appraisal within three days of the closing of the loan. The borrower, however, can be required to reimburse the lender for the cost of providing the appraisal.

Hello....I thought I would write a little something about the area I live and service...Eureka, California is a beautiful part of the country located in the northwest part of California about 275 miles north of San Francisco (a beautiful 6 hour drive on highway 101 or a 1 hour flight), and around 80 miles south of the Oregon border.  Eureka is Greek for "I have found it!"   There are also direct flights to LA (hell A) from the local airport on Horizon Air.  Eureka is coastal and is located near the ocean and Humboldt Bay.  The main industries historically have been lumber and fishing, both of which are declining sad to say. There are a lot of cattle and dairy ranches, with grass fed beef being a big seller.  The cows must love it here because the water and air is clean and its always green.  The weather is temperate on the coast all year round.  Eureka is the county seat for Humboldt County.  The county has a population of around 130,000 people covering 3400 square miles...compare that with Orange County, CA (where I moved from), only 800 square miles but over 3 million stuck in traffic souls) not counting the other 1/4 million who commute from neighboring counties LOL).  The people live mostly in the Eureka, Arcata, McKinleyville and Fortuna areas. There are many microclimates in this area.  For example you could be on the coast near Humboldt State University (located in Arcata), and drive 5 miles east to Blue Lake.  It may be 20 degrees warmer there in Blue Lake in the summer.  You could go cross country skiing about 45 minutes away in the winter.  It rains about 40 inches a year, (same as Houston), but clean air and no humidity. The ice cubes are clear that come out of the tap!

The main lumber export here has been redwood.  Sequoia sempevirens.  The redwood tree is an amazing tree.  It is the tallest living thing with trees known to be close to 400 feet in height, and one of the oldest, with some trees over 2000 years old.  Its seeds are only a few centimeters... It is only found in the northern part of California along a strip that runs roughly from Santa Cruz in the south to Crescent City in the northern most part of California, a distance of around 450 miles or so.  Redwoods State and National Parks are visited by many...check out the Lady Bird Johnson or Rockefeller groves if you plan a visit.  Fern Canyon is also spectacular.  The small coastal city of Trinidad is one of the most beautiful in this country, and only about 30 minutes north of Eureka.  There are three Indian casinos in Humboldt County,  located in Trinidad, Blue Lake and Loleta.

There are many families that have lived here for generarations.  The first known expidition of this area was around 1806 by a Captain Winship, and around 1850 the gold rush in neighboring counties started to bring the white man in.  The gold in Humboldt turned out to be in redwoods, not rocks.  The area was and still has many native American tribes such as the Wiyot and Yurok.  Humboldt County was named after a famous German explorer of the era, a Mr. Humboldt, who to the best of my knowledge never visited his namesake county.  There are several counties in the United States named Humboldt, closest in Nevada and many cities named Eureka in the US. 

One of the most unique characteristics of this area is the Victorian architecture.  This area is totally unique to California and probably on the west coast given the amount of homes still standing homes that were built from the 1880's through the 1940's.  Some are in wonderful restored condition, and some have been converted into apartments in years past, and some have vanished over time.  Some need TLC...  Entire cities such as Ferndale, CA have been designated a national historical landmark.  Ferndale was founded around 1852 by the Shaw brothers, and their original home is now a beautiful bed & breakfast.  There was an article in the Auto Club magazine this month featuring Ferndale.. The city of Arcata is celebrating its 150 year old birthday this year.... I really appreciate the history, and in many areas in southern California and other parts of the country, the "history" has been obliterated in the name of "progress." My office is located in a 1900 Victorian with a view of the boats on Humboldt Bay, and the most amazing gingerbread craftsmanship.

What drew me to this area is the idea of small town living, quality of life, excellent schools, the weather, and the real estate is the lowest priced coastal area in California. I was tired of the whole so Cal lifestyle.  Many transplants live here from southern Cal or San Francisco bay area....  There is a tremendous arts and music scene.  I have heard that Eureka has been named one of the 100 best small town arts destinations in the country...First Saturday night of each month is Arts Alive in Eureka and the streets of the Old Town area fill with people and music  Lots of artists drawn by the spectacular natural beauty.  Humboldt State University is the oldest university in the state system, with around 7000 students.  Surprisingly we get many great musicians visiting the area.  Last fall the great BB King played at HSU.  I saw Joan Baez a few years ago, and many talented and famous musicians find their way to this part of the world...small town living with bigger city amenities.

I can go on and on and no, the chamber of commerce is not paying me to write this.....I wanted to write something different other than real estate, although I must add the market here is a lot better than in so cal and many other places because it has not been overbuilt. One house in Arcata sold last week had 7 offers in 24 hours after hitting the market.  I had to say that, LOL!

A few good websites to check out if you want to learn more about Humboldt County:

http://redwoods.info

www.humguide.com

http://co.humboldt.ca.us

www.humboldthouses.com

I have had a few people email me regarding the story of the transaction that started out as a short sale - and closed as a regular sale last week.

How did that happen?  The deal started out as a short sale - the seller owed more on the house then the sales price, thanks in large part to a nearly $10,000 prepayment penalty (more on that later).  With most prepayment penalties, they are typically put on some loans (usually the infamous sub prime variety) to discourage payoffs or refinancing.  Most prepayment penalties are equivilant to 6 months of mortgage interest.  In this case, that prepayment penalty, which Countrywide refused to remove, was the difference between the short sale and a regular conventional sale.  The fact the seller had a unique property on land in what is a lower price range in this area worked in the sellers favor.

Luckily, the seller's two year limit on the prepay was up, so during the course of what turned out to be a 90 day escrow, that was removed.  In the meantime, it was my opinion the seller would be able to sell the property for more than the original price, and in fact given the number of calls I received on this particular property during the escrow period, that the seller was justified in asking for a higher sales price, not to make money, but to eliminate the need to go short sale.  I know this is an unusual situation that would not happen to most properties.

Long story short....the buyers to their credit who hung in there, agreed to a higher price, and with the skills of two very experienced professional Real Estate Brokers, an easygoing seller, and patient buyers, we were able to close what turned out to be a learning experience for all involved.

If you are a buyer reading this, my advice is make sure the loan you get DOES NOT HAVE ANY PREPAYMENT PENALTY attached to it.  Ask your loan officer, and make sure when you are signing loan papers at the closing, that you read the fine print.  I have heard stories of buyers finding out the hard way what they were told and what they signed were two different things.

The other piece of wisdom I want to impart to buyers:  Get preapproved, and you were preapproved already, contact your loan officer again because the financing world is upside down at the moment and loan programs are vanishing; buyers that were qualified a month ago are finding that loan programs are no longer available.  Stated income loans are still there (minimum 20% down and 700+ credit) but going bye-bye.  Stated income, stated asset, gone.  100% financing, going, going...

Thanks for reading my blog.

It's 8:00 AM and I had my first call of the day from an inquiring buyer of one of my listings that is pending and scheduled to close tomorrow (that story will be my next blog).  I get lots of calls from prospective inquiring buyers on my listings.    All the doom and gloom one reads about the world of real estate and two facts unarguably remains: 1).  People have to live somewhere  2).  They ain't building more land, especially along the coast. 

I understand people are nervous about the economy.  Gas today is $4 a gallon in Humboldt Co. Food prices going up.  War, economy, unemployment going up.  Lots of negative press. Financial markets in turmoil.  Is this the first recession in the 232 years since our country was founded?  NO.  Will it be the last.  No way.  It was much worse in the 1990's in so cal....people were losing their jobs by the thousands and subsequenty losing their houses....different dynamic today.  Agree with me or not, its all about confidence in the economy.  I sense the country is tired.  It needs new energy.  My humble opinion is no matter who gets elected, a fresh change will help get the confidence level back and right the economy.  As I say to buyers, buy in a buyers market now because prices are down and interest rates are still very attractive.  Financing has dried up for marginally qualified buyers but that means lenders are going back to basics of credit, income, and down payment....that will help the real estate market in the long run once this sub prime mess washes out, which it eventually will.  Am I unrealistically optimistic?  No.  I have been around long enough to remember different ebbs and flows of the economy and real estate markets, unlike many in this business who never experienced a "buyers" market.  I just fall back to points one and two above, and add a third:  The population in California is getting bigger, not smaller.

 Thank you for reading my blog.

I have been following a little bit of the politics behind the foreclosure "crisis."  While I have empathy for people who lose their property because of circumstances sometimes out of their control, is it reasonable and fair to expect the government to bail people out?  In an election year I guess the answer falls somewhere between maybe and yes.  Hillary proposed spending $30 billion so the government could buy back foreclosed properties and as I recall, she did not say whay they would do with those properties, how they would maintain them, who would buy them, and how the sale of government owned properties would affect (it would kill) property values in surrounding areas.    Every bargain hunter would salivate at the thought of government owned repos.  I have not followed what the others have said because I am fundamentally against the idea of government bailouts of any kind in any industry.  Bear Stearns CEO earned $38 Million in "compensation" in 2006.  Government bailed out Bear Stearns recently cost tax payers $30 BILLION.  The average person could'nt be happy with that trade.

In the real estate business like many sales jobs, we work on straight commission - if we don't sell we don't get paid.  If we have a bad few months and no income coming in, does anyone feel sorry for the realtor?  I doubt it. I don't expect or want sympathy.  Would I expect the government or my mortgage company to bail me out?  Hardly?  What happened in southern California in the early to mid 1990's is happening nationwide today - people in foreclosure losing their home, markets soft, and things in some turmoil.   What will happen eventually:  Markets will recover, confidence will improve (watch after the election for confidence levels to go up - the people want change), sellers will be able to sell and buyers will complain that prices are too high and that homes are unaffordable.  The one big difference I note between so Cal and now is back then people were losing their jobs and losing their house.  From what I have read, many of the people losing their houses these days are still working (exceptions in Midwest), they just got bad loans.  I do like the idea of people in these sub prime loans being able to refi into an FHA government insured loan.  That would be an excellent option. 

One bit of advice I give to buyers who are nervous and influenced by the negative press: Buy in a buyers market like today's market, plan to hold the property for 3-5 years minimum.   

Thank you for taking the time to read my blog.

Most Realtors in today's market at one time or another will get requests for foreclosure properties.  The vast majority of people who ask about foreclosures have little to no experience about the nuts and bolts of the foreclosure process and assume that foreclosure property is the equivalent to stealing property or at least getting it dirt cheap with little to no cash out of pocket.

This blog is meant to be a quick primer on foreclosures.  In California, the timeline on getting a house foreclosed in goes like this:  1). Owner misses payment.  2). Company servicing loan send out Notice of Default (NOD) letter to owner. 3). NOD letter starts 90 day clock ticking.  4). If owner does not pay back payments within the 90 days then. 5).  Lender or servicing company sends another letter, a Notice of Trustees Sale to owner starting another 21 day clock and. 6). After 21 days if owner has not paid back what is owed then lender takes back or forecloses on property.  So there is a 90 day clock plus a 21 day clock in the foreclosure process in California.  That timeline can get delayed if the owner files Bankruptcy or is trying to work out a repayment with the lender.

So, how does one purchase foreclosed properties?  There are typically 3 ways to do this.  The riskiest way by far is at the end of the 21 days at the Trustee's Sale, which is typically held on the courthouse steps in public or at the offices of the title company, and another way is through the typical channels of a local realtor and the third is directly from the bank.

Buying a property at a Trustee Sale is not for inexperienced buyers and requires a great deal of homework and knowledge of the market in the area as well as cash on the barrelhead.  First of all, let's say the foreclosed property has a market value of $250,000 and there was a loan balance of $300,000, the negative equity is <$50,000> and no one will bid on the property at the Trustee's Sale since more is owed on the house than its worth.  If no bids are received, the property reverts back to the lender who eats the $50,000.  The lender will typically list the property with a local Realtor.   Most foreclosed properties are subsequently purchased this way because once the lender takes the property back then sometimes they clean it up, title is clear, and the house becomes easier to market and sell and conventional financing is available at this point.

Here is the other scenario.  Trustee Sale, loan balance of $250,000 and house worth $300,000, so there is positive (+) equity of  $50,000.  Saavy investor's look for properties like this to bid on at Trustee's Sales, although most properties that are foreclosed on have negative equity. 

At the Trustee Sale (which is held the same as an auction) the bank representative will announce whether anyone is there to bid on the property.  Since it is an auction format, one or more bidders could bid, raising the price and lowering your return quickly since in this example the starting bid was $250,000.  Let's assume there is only one bidder.  Congratulations.

Here is where buying a property at a Trustee's Sale requires a great deal of experience, knowledge, and cash.  Using the above example, the winning bidder must procure a cashier's check on the spot for $250,000, since properties bought at a TS can't be financed (unlike properties purchased after they are listed).   So you must pay with cash.  Unless the property had been on the market, you are buying the property sight unseen.  What if the foreclosed parties are still in the house?  Now getting them out is the buyer's problem.  You can see buying property this way at a Trustee Sale auction is not for the faint of heart or inexperienced or undercapitalized.   

There are many books and websites on this subject.  In most areas there are Realtors who work REO's (real estate owned) bank properties.  There are buyers who track REO's and then try and contact the lender directly before it goes to a Broker for sale.  Unless the foreclosing lender is a small local bank, it's hard for the public to get to the decision maker, and easier to wait for the properties to get listed or sale.  I could write a lot more on this but this is a basic primer on different ways to buy REO's.

Lastly, if you are a buyer in this or any market, getting pre-approved is more important than ever.  Don't even consider making an offer on a bank owned (or any property) unless you have done your homework, because there are a lot of buyers looking for "deals" and the ones who get the deals are the ones who are prepared and ready and qualified. 

A few folks have been following the saga of a short sale transaction I have been involved with since January....what makes this unsual is the seller was short but not tens of thousands short which is typical.  In addition, the seller had a prepayment penalty which expired giving the seller more wiggle room to negotiate.  The bottom line was in order to avoid the short sale altogether required renegotiation and flexibility on behalf of the buyers and their agent.  Luckily also the market in Humboldt County is better than most and the property is unique enough that I could resell it if need be.  Maybe the moon and stars will align on this deal.

So the bottom line is we are back in escrow as a standard transaction and can hopefully close in 30 days.  Waiting on appraisal and inspections.  I hope this has a happy ending. I will keep y'all posted.  What this deal reminds me of brings back memories of the 1990's real estate in southern California when short sales and difficult transactions were the norm.....This is my feeling regarding working short sales:  I like helping people as much or more than the next guy, but I also want to get paid for my work.  I don't think that is unreasonable.  My plumber makes $75 an hour, a good attorney in this area makes $300-$350 an hour.   I have 21 years experience in the real estate business and offer clients a great deal of skill at what I do. With short sales, the odds of getting paid as well as the odds of closing the short sale for the buyer are against them.  Personally, if a buyer wants to make an offer on a short sale property against my reccomendation, I believe the buyer compensate me for my time and expertise if the deal does not close.  Its only fair.  Who wants to work for free?  I would be interested to hear what buyers and other agents think.  Thank you for reading my blog and visit my website www.humboldthouses.com to see great listings in Humboldt County, CA.