PACIFIC COUNTY The phrase in the aftermath of the housing crisis is prevalent in the national news, but in Pacific County the number of new foreclosures continues to rise.
In 2009, trustee sales, the classic sale of property on the courthouse steps, hit 116. In 2010, the number rose to 127. And the number of trustee sales for 2011 appear to be heading up to the same levels: between the first of January and Feb. 25, there were already 19 trustee sales in county records.
When asked about whether county real estate sales have turned an economic corner, Wayne ODell, owner and broker of Anchor Realty, said, Were bouncing along the bottom right now.
The increasing number of foreclosures was also confirmed by Neal Mackeever, financial counselor with the Community Housing Resource Center in Vancouver, a non-profit that provides loan modification counseling and other services.
Foreclosures were at their highest levels in 2010 and 2011 will be worse, Mackeever said. We are still getting 20 to 30 people in our offices every week.
How to lose your home
There are many ways to lose your home or property in the labyrinthine financial services industry, and these sales options go by a variety of names: short sale, foreclosure, real estate owned or REO sale, repo (short for repossession) or trustee sales. Each has a different set of legal steps and happens at different times in the transfer of property ownership after a problem arises. But, basically, a foreclosure is the result of a default of payment by a borrower to a lender.
In fact, the story is so complex that Long Beach lawyer James B. Jim Finlay, the soft-spoken gentleman whose name often appears on the notice of trustee sales documents recorded and archived on the Pacific County auditors site, was reluctant to speak on the record about the process. Im not willing to be quoted by someone who does not understand the process, he said by phone.
Finlay suggested taking a seminar to understand the difference between a mortgage, which is not much used anymore, versus a deed of trust to secure a loan. He also mentioned that a foreclosure for failure to pay property taxes is different than a loan foreclosure. Its one of those things that if you dont understand the whole process, I dont know how I can talk to you.
The computer told me, Sell your home
What Finlay makes clear, and many homeowners have discovered, is that nothing is simple when you are trying to stay in your home after stumbling to keep up with either property taxes or loan payments, or both. You need expert and often expensive legal advice, and many of the remedies offered by financial institutions are only promises. It can seem that everyone except the homeowner holds the knowledge and power.
Larkin Stentz, owner and manager of Green Angel Gardens, has been caught in a refinancing merry-go-round for months.
Another result of the economic downturn is the potential for my loss of Green Angel Gardens, the only organic certified farm on the Peninsula, said Stentz.
Ive been working to restructure the loan and also working with an advisory group to keep the farm as a citizen-owned community resource.
When you hear about Wall Street executives getting $150,000 in cash bonuses and then homeowners struggling to refinance Stentz trails off, unable to find the right words.
The frustration in his voice is clear as he describes his documents being lost time and again, having to retell his story over and over as he speaks to a revolving door of different people at Bank of America. Stentz even relates that he received a FedEx package from them with the request to send in a series of documents which he did but even these documents became lost. Another time, he faxed a set of 17 pages to a specific person at a specific fax number and they all disappeared and had to be re-sent.
At one point Stentz said that one of the myriad financial representatives he spoke with said simply, The computer told me that you should sell your home.
Sam Mundell, who was once a professional in the real estate market in Southern California, tells a similar story about his home in Long Beach.
Ive been through a living nightmare. We moved here five years ago and then my wife got breast cancer and we lost everything but this house. At one point I had $150 in my pocket.
Mundell has a story so similar to Stentzs that it is eerie. Every time I called Bank of America, I talked to a different person. And Ive had every answer under the sun Youve been approved, You havent been approved, Your loan documents are on the way, No, we havent seen any loan documents for you, Youre not eligible, and then finally The holder of your note does not participate in refinancing.
When Mundell asked who was the holder of his note, he was told it was Fannie Mae. Weve given them millions of dollars and I just read today that theyre asking for more money. Ive been at this for one and three-quarters years, Mundell said. Finally, I went in to talk to someone in person at the Bank of America in Astoria and was given the extension of Andrew Burns. The last time I called his number I was told this extension was not available.
Other home or property owners are less willing to talk about these painful situations in detail, except to say, The process is a nightmare, Im bruised but not broken, and We finally just gave up.
Holly Beller, associate broker in the Long Beach ReMax office, confirms, from a slightly different point of view, the horror stories relayed by unfortunate property owners.
Beller is a specialist in what the real estate world calls REO sales or real estate owned sales, which means that the bank has taken possession of a property and is attempting to re-sell it. Generally, the bank is represented by a third party, which specializes in the legal aspects of this type of sale. The third party could be a lawyer or a firm that handles home auctions, like Williams and Williams, a firm that recently conducted an auction at 24208 Birch Place in Ocean Park.
These REO sales can be found by scanning the Multiple Listing (MLS) services and are generally indicated on the real estate information sheet. REO auction firms also list upcoming sales. Both ODell and Beller have waded into this sales market and confirm that the process can be lengthy and frustrating for both sellers and buyers.
Sometimes you are working with an owner on a short sale and, at the same financial institution, there is another whole department that is also trying to foreclose on the property, said ODell. Beller concurs, Sometimes you can be close to closing a short sale when the foreclosure takes place.
Beller indicates that she has been involved in 20 to 30 REO sales in the last year.
The best deals can usually be had after a short sale falls through. A REO sale is maybe 75 percent of the value of a property, she continued. Usually by the time a property becomes a REO sale, the lender expects to get a lesser value for the property than may have been owed on it.
A short sale is a different animal altogether, although some of the players are the same. Basically, for a short sale an owner attempts to sell a property in order to pay the lender and recoup as much as possible on the value of the home.
Short sales can take six months or more, said ODell, who has been certified with the National Association of Realtors to handle short sales. The process is complicated by the fact that the current lender is brought into the negotiations and must approve the new potential buyer of a property. If the sale does not cover enough of the current debt, the negotiations can break down.
Remember, too, that because short sales and foreclosures are handled by different departments within the same institution, quite literally the left hand does not know what the right hand is doing. While the short sale process continues, often a foreclosure unit is working to take the property out of the hands of the homeowner.
As soon as a homeowner stops making payments, the foreclosure process can begin. Your bank notifies you and puts a notice in the newspaper, ODell said.
There could be different lenders involved in a short sale as well. The primary lender, in first position, has the right to be paid first; but if a line of credit was taken out by the homeowner, these lenders with liens in second position also have a claim on the property.
One basic difference in these types of default sales is who is actually the owner of record for the property. In a REO sale, the ownership has already reverted to the lender.
Great misfortune and great opportunities
There are definitely great opportunities out there, said Beller. But you need to have either cash in hand or confirmation of your revenue source.
In any case, one familys misfortune can be anothers good deal. Most property defaults are the result of maybe a divorce, or a medical emergency, said ODell. When we work in the short sale market, we try to set a price that is acceptable to the bank. Im generally working with the client that is having the problem.
Were seeing an uptick on demand in sales for second homes, said ODell. There are people who have savings in money market funds and they say, Were only getting one percent on our money, thats just not enough interest. If I bought a property, I could at least get some pleasure out of it as a second home.
Or some people are buying an intended retirement home for down the road, he said.
Mackeever has some advice for folks struggling to keep their homes. Weve found that there are two important things on the list that make a difference, he said. Number one be organized. Number two work with a certified counselor.
If you have a refinance, short sale or foreclosure story you would like to share with the Chinook Observer, please contact Cate Gable at firstname.lastname@example.org. Our next in this series will discuss local banks and credit unions and counseling assistance for homeowners in trouble.