Non-hardship short sales on the rise

by Dan Krell ©2012
DanKrell.com

underwater homeowner short saleA March 2012 Housing Wire piece (housingwire.com) indicated that CoreLogic recently reported that there were 11.1 million home owners who owed more on their mortgages than what their home is worth, which roughly translates to 22.8% of all mortgages being underwater. At one time, most home sellers applying for a short sale were experiencing hardships and foreclosure. However, as the housing market continues to recover- an increasing number of short sale listings are from sellers who are current on their mortgage and are not experiencing hardships.

For home owners who are experiencing financial difficulty, there are a number of options available to keep your home; however often a last resort- the short sale is one alternative to losing your home to foreclosure. However, home owners who need to sell their homes (because of a job transfer, divorce, or other reason), but are not otherwise experiencing a financial difficulty nor hardship, are also turning to the short sale process because of depressed home sale prices.

Although short sale horror stories still circulate, much has changed and many lenders have attempted to “streamline” their short sale process. Still, this has not prevented Congress from attempting to force lenders to provide speedy short sale decisions. In 2010, H.R. 6133 H.R.: Prompt Decision for Qualification of Short Sale Act of 2010 was introduced to require a 45 day response from lenders, however it “died” in committee. A recent form of this legislation was introduced in 2011 (H.R. 1498: Prompt Decision for Qualification of Short Sale Act of 2011), but GovTrack (govtrack.us) gives the bill an 8% chance of becoming law. Another bill, S. 2120: Prompt Notification of Short Sales Act, was introduced in February; GovTrack gives that a 2% chance of being enacted.

Beware of the circulated “wisdom” regarding short sales, because it is not always reliable or accurate (e.g., hardships and delinquencies). If your home has negative equity (underwater) and you want to sell, consult with an attorney; there are financial and legal issues that may affect you presently and in the future. The short sale process may seem straightforward, but it can get complicated quickly (especially if there are multiple mortgages involved). Many experienced short sale agents work in tandem with attorneys to make the process much smoother than otherwise would be expected.

underwater homeowner short saleIf you’re an underwater home seller, but have assets and are not experiencing a hardship, your attorney can advise you on the short sale process. The issue pertaining to a successful short sale is not always about the seller’s financial status; but rather, a short sale is more about the amount the lender will accept as payoff for the existing mortgage. Yes, the lender will collect your financial information to use in their short sale determination; but a skilled negotiator may be able to reduce the overall mortgage payoff (even if you have to bring funds to closing).

Finally, an attorney is the only person who can provide you legal advice. Real estate agents advising you to stop making payments on your mortgage or to “fudge” your short sale application could be putting you in a precarious position: your credit can be affected, or your home can go to foreclosure when payments are stopped; providing false or misleading information to your lender is fraud (lenders and law enforcement are working together to stop short sale fraud).

Additional information about short sales:
Short sale is an option
Don’t be pushed into a short sale
House bill proposes 45 day lender response on short sale
Mortgage fraud on the rise

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 30, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

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Severe hoarding affects more than families and communities

hoarding puts homes at riskThanks to reality TV to bring about awareness to the nationwide hoarding problem; however, experts agree that chronic hoarding is still under-recognized. The Montgomery County Task Force on Hoarding Behavior Report (Prepared by Department of Health and Human Services February 2011) anticipates that the number of reported hoarding incidents will increase as awareness increases and the population ages. Awareness and recognition is paramount as there is a consensus that hoarding exists in most communities and has the potential to negatively affect the health and safety of those in the community as well as the environment.

Hoarding is often defined as the inability to discard large collections of possessions that appear to have little or no value/use. Additionally, clutter obstructs the use of the home or spaces within; and can pose a significant health or safety risk, as well as risk the maintenance of the home. Hoarders can accumulate things, trash, and even animals. Animal hoarding is a type of hoarding that is difficult to intervene for various reasons that include personal property issues.

In-home risks for hoarders and their families include: tripping, injury (or death) from falling objects, health issues that arise from pests and mold, delayed emergency care. As a result, utilities are often inoperable and the home can become condemned. Although neglect and abuse issues come to mind when you think about hoarders; however, Cristina Sorrentino Schmalisch, PhD, LICSW of the International OCD Foundation (ocfoundation.org) claims that hoarding is also a public health and fire safety issue “that can put the home at risk for condemnation.”

Of course, according to Dr. Schmalisch, the consequences of hoarding are not limited to the hoarder; the effects of hoarding often spill over on surrounding homes and the neighborhood, especially if the hoarder lives in a multi-family building (such as a condo or apartment). Pest infestation, structural problems, flooding, and electrical fires are just a few of the potential problems that have the potential for property damage and possibly lower the property value. In fact, long term effects of hoarding can also shorten the operational life of systems within the home as well as threaten the structure itself.

hoarding puts homes at riskThe national hoarding problem is very much a local problem as well. Because local incidents of hoarding have been increasing, the Montgomery County Task Force on Hoarding Behavior was established in 2009 by the Department of Health and Human Services to address the complex issues associated with the disorder. The mission of the TFHB was to “coordinate all County actions related to severe hoarding cases in Montgomery County and develop comprehensive long term, proactive strategies to prevent and remediate hoarding situations.”

If you’re unsure how to tell if someone has a sever hoarding problem, common signs include (but not limited to): clutter that blocks windows and doors; clutter that makes it difficult or impossible to use the kitchen, bathroom, or bedroom for their intended purposes; repairs are not made to the home to avoid having visitors; clutter/trash related pest infestations; clutter is unsafely stored close to heating and cooking areas.

Hoarding intervention is commonly approached through both mental health services and building code enforcement. Although it is often difficult to force a hoarder to receive mental health services, the home condition can be addressed through code enforcement citations. For more information or seek help contact the Montgomery County Department of Health and Human Services.

Original published at https://dankrell.com/blog/2012/03/14/severe-hoarding-affects-more-than-families-and-communities-homes-and-real-estate-at-risk/

By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice.  Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

Disaster prepardness

The seemingly daily reports of floods, tornadoes, and severe weather events are a reminder that we should be prepared for disaster. Although we may not live in “tornado alley” or by the shores of the Mississippi, we do experience our share of natural and man made disasters.

Most people don’t typically go about their daily lives thinking about how to protect their homes and family from a tornado, hurricane, or even- zombies; however, taking the time to be prepared when a disaster strikes could mitigate your losses as well as possibly improving your recovery efforts.

Disaster preparedness at home

The Federal Government offers many resources to assist in disaster preparation. Agencies such as the Federal Emergency Management Agency (FEMA.gov), the Department of Homeland Security (dhs.gov), and the Centers for Diseases Control (cdc.gov) have preparedness programs that offer public education, training, and resources. Additionally, multi-agency programs such as Citizen Corps (citizencorps.gov) maintain local offices to assist volunteers as well as providing local education and response efforts.

One of the most widely offered free preparedness guides is published by FEMA. “Are You Ready? An In-depth Guide to Citizen Preparedness” (which can be downloaded at: disasterassistance.gov) is an instructional guide to preparedness, response and recovery. The guide is not only an informative manual on preparing and protecting your home and family from disasters, it is also a guide to help you recover from a disaster.

The guide recommends that you have a preparedness kit and a disaster plan. Among the pages of FEMA’s “Are You Ready?” is direction on securing your home, preparing a meeting place and/or an escape route, preparing anyone with special needs (i.e., dietary, medical, physical, etc), as well as caring for pets.

You most likely have some type of home owner’s insurance (or renters insurance if you don’t own a home) to help you recover financially from a disaster related loss. Because many home owners don’t know the extent or limitations of their insurance coverage until it’s too late, experts recommend that you review your home owners’ insurance policy with your insurance agent (or insurance company representative) to make sure your coverage is up to date and is able to replace your home and/or possessions in case of a catastrophic loss. Having the proper coverage may help you recover from a disaster quicker than those without coverage.

The American Insurance Association (aiadc.org) offered these tips for home preparedness and recovery in a press release issued during last years’ hurricane season (Sept 2010): Home preparedness can be achieved by: securing doors and windows; ensuring that exterior doors should have at least three hinges and a deadbolt length of at least one inch; replacing older garage doors and windows for systems that are certified for wind and impact; considering storm shutter installation; repairing any cracks or leaks around windows, doors, roof, exterior walls and foundation; ensuring that gutters and downspouts are secure and can drain water at least five feet from your home; inspecting the roof and repair if necessary; removing loose debris from around the home; removing dead or dying trees and shrubs; trimming back tree limbs from your home’s exterior and roof; compiling an inventory of your home’s contents by taking pictures or video.

To get your attention about preparedness at home, the CDC published a recommended preparedness kit (“Preparedness 101: Zombie Apocalypse”; blogs.cdc.gov/publichealthmatters/2011/05/preparedness-101-zombie-apocalypse).

by Dan Krell
© 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

Verify all contractor licenses

If your real estate agent says, “I have a guy to do the work…,” you might want to check if those contractors or handymen are licensed by the Maryland Home Improvement Commission (MHIC). The Maryland Real Estate Commission warns consumers that it is illegal for unlicensed contractors and handymen to do home improvements for a fee.

The Montgomery County Office of Consumer Protection website states that anyone who repairs, maintains, restores, or improves real property (homes) is required to be licensed by the MHIC. The MHIC regulates home improvement contractors, subcontractors and salespersons. If a handyman is altering, remodeling, or making repairs to your home- then the handyman is required to have a license too.

The MHIC issues licenses to contractors who have least two years trade experience; provide proof of financial solvency; and pass a test on the home improvement law and general business competency. Additionally, licensed contractors are also screened for serious criminal convictions and are required to make regular contributions to the Maryland Home Improvement guarantee fund.

If you selling your home, make sure that any completed repairs are performed by a contractor or handyman that is licensed by the MHIC. The Maryland Real Estate Commission and the Montgomery County Office of Consumer Protection (OCP) recommend that you ask contractors and handymen for their MHIC license number to verify their license status and complaint history before they begin working on your home. You can verify MHIC licenses by either calling the MHIC or through their website (www.dllr.state.md.us/license/occprof/homeim.html). Additionally, it is recommended that you check with the OCP (240-777-3636) and the Better Business Bureau (202-393-8000) for any filed complaints against the contractors.

Additionally, verifying that your contractor or handyman is actively licensed prior to any home improvement will ensure that the contractor can obtain the proper permits (if required) as well as protect you from shoddy or incomplete work. The Maryland Department of Labor, Licensing & Regulation (DLLR) has made an effort to have permitting offices require all contractors present their licenses when applying for permits. Additionally, the MHIC investigates all consumer complaints (some complaints result in an award for monetary damages from their guarantee fund); the MHIC will also pursue and aid in the prosecution of violators of the Maryland home improvement law.

Two specific MHIC investigations of consumer complaints last year resulted in a revoked license, a fine and jail time. The first investigation (as reported by WBAL TV in Baltimore on October 21, 2008; wbaltv.com) resulted in a revoked license from a contractor who had numerous consumer complaints of shoddy work (one home owner complained that after he paid the contractor for an addition, the addition was ordered to be torn down for being unsafe). The second investigation (as reported by the DLLR on December 16, 2008) was of the deeds of an unlicensed contractor, which resulted in a $65,000 fine and thirty days in jail.

Even though you trust your real estate agent, the fact that a real estate broker was fined by the Maryland Real Estate Commission last year for allowing the use of an unlicensed contractor (to perform repairs that were listed in a contract addendum) should be motivation enough to check out any contractor before they begin to work on your home.

Original published at https://dankrell.com/blog/2009/03/17/verify-all-contractor-licenses-its-the-law/

By Dan Krell

This article is not intended to provide nor should it be relied upon for legal and financial advice. Copyright © 2009 Dan Krell