EYE ON INTEREST RATES

Last month I reported that mortgage rates hit a high of 6.73%. Well, the upward trend continued this month as rates now stand at a 4 year high according to a survey conducted by the Mortgage Bankers Association (MBA). The average contract interest rate for 30 year fixed mortgages increased to 6.86% and is now at the highest level since April of 2002.  Need help getting pre-approved for a loan?  Just call (310)306-6525 x166 or email me dan@danmayrealestate.com  

FORECLOSURE 101

Last month's  May 2006 Marketwatch E-Newsletter had a article on Notices of Default and how they have increased to their highest levels in 2 years in California. As a result of the article,  I received several inquiries from people inquiring about NOD's and the foreclosure process.  So I thought I should share it with everyone as there were many who are unfamiliar with the process or who have it confused with the process for purchasing Probate properties. 

Did you know that California Code Section 2924 outlines the Foreclosure process? The foreclosure method most used in California is called the "Non Judicial Foreclosure Method" and it usually takes around 4 months.  The foreclosure process begins with the Notice of Default (borrower is 3 months behind on mortgage payments).  The lender or Beneficiary notifies the Trustee in writing that the borrower is in default.  The Trustee prepares the above mentioned NOD and records it in the county where the property is located.  10 days or sooner, the Trustee mails the NOD to the borrower.  The borrower then has up to 5 days prior to the Trustee Sale Date as a "Reinstatement Period".  If 3 months have passed since the recording of the NOD and the borrower has not reinstated the loan, the next step is the preparing and recording of a Notice of Trustee Sale.  The Trustee Sale cannot be scheduled any sooner than 21 days after 3 months from the recording of the NOD.  

Trustee's Sale - is held like a public auction in the county where the property is located.  The property is sold to the highest bidder.  What if nobody bids?  The property reverts to the foreclosing beneficiary (the lender -- it becomes an "REO"). The opening bid represents what is owed, but in order to get the property, one must overbid. You must bring enough cash to cover the opening bid plus overbids.  Cash and cashier's checks are accepted.

You are the Winning Bidder -- Now What? The winning bidder receives a "Trustee's Deed" which contains no warranties as to title, encumbrances, possession or condition of the property.  The successful bidder takes the property subject to all liens senior to the trust deed that was foreclosed,  all junior liens are wiped out. 

Dangers of the Trustee's Sale

The Trustee's Sale is one of the MOST DANGEROUS ways to buy real estate.  But remember, the greater the risk, the greater the reward. 

1. Rarely get to see the inside of the property before the sale therefore have to guess on repairs.

2. If property is owner occupied be prepared to go through a lengthy and costly eviction process.

3. The property could be severely damaged by the occupant before vacating.

4. The winning bidder receives a Trustee's Deed which has No warranties nor guarantees as to Title, Possession, Encumbrances or Condition of Property.

5. All Cash. That's right you MUST HAVE ALL CASH to purchase.  This is not just for the downpayment, ALL CASH FOR THE ENTIRE AMOUNT. 

***** Investors Corner*****

1. Atlanta, GA  4 units 6,000 sq. ft. of living space (4) 2+1's built in 1969 generating $36,000 annual income. Asking $379,500 Call (310)306-6525 x166 for more details.

2. Marina Del Rey, CA Condo Conversion opportunity.  8 apartment units and 14 parking spaces can be converted to 7 condos.  Many new developments happening in this area just east of Lincoln and South of Washington .Call (310)306-6525 x166 for more details.

3. West LA, CA  "Pocket Listing" 1,000 sq ft. Single Family Residence (SFR) on an 6,000 sq. ft lot zoned LARD1.5. Opportunity to build 4 condos or more.  Property is not on MLS. Call (310)306-6525 x166 for more details. 

"Links of the Month” See below for the (3) real estate related websites you should visit: 

1. California Department of Real Estate

2. Foreclosures.com

3. Google Earth Want to know more about a specific location? Google Earth combines satellite imagery, maps and the power of Google Search to put the world's geographic information at your fingertips.  It's really cool so check it out!