Realty World Northern California & Nevada

An 83 year old woman in Ramona, California found out that she won’t be spending her remaining years out in her home due to foreclosure. Although she’s lived out a full life, nurturing dozens of foster children and abandoned animals over the years, she never quite imagined her life would turn out like this.

She signed for a loan three years ago. Just one year earlier, her husband, a Navy Chief passed away leaving her a fixed income of $1,200 month. The man who convinced her to refinance assured her it would be a sure way to hang on to her home. But it was not a sound decision. Her daughter found out about the loan too late and felt that her mother’s age and situation were taken advantage of. Her mother had agreed to take out more than $500k in debt. The monthly payments became impossible to make.

A Ramona real estate agent tried to help, approaching the bank with offers to buy the property, but the bank declined. They weren’t even willing to negotiate. The highest offer was $315,000 and the bank wanted at least $340,000 — a $25,000 difference between an elderly woman able to keep her home and live in peace, or lose everything she’s known.

So, considering that the bank would probably be wasting a lot more money in the whole process of a foreclosure sale, what’s your opinion? Was it fair for the bank to decline to negotiate an offer over $25,000? Should a person’s age be taken into consideration when it comes to foreclosure on a home?

Buy, fix, sell… buy, fix, sell… buy, fix, sell… better known as “flipping” is something the local government may be getting into soon. In these times, when foreclosures are flooding the market, it’s difficult for people to find the money (or credit) to participate in flipping for profit.

Some East Bay counties like Alameda and Contra Costa will receive $24 million to “buy, fix, sell” abandoned and foreclosed homes. The goal is to stabilize neighborhoods by cleaning, fixing, and selling houses that sit vacant to lower-income buyers. This program, due to begin early 2009, may also receive more funding from the housing recovery bill that President Bush signed earlier in the year.

Several agencies plan to join forces with non-profit groups as Habitat For Humanity to buy ravaged, unwanted homes from willing banks. However, the downfall remains that agencies are going to have to make incredibly low offers to the banks (approximately 10% to 15% below today’s market value) with no certainty that these homes will even sell. Another concern is that if the government pays more to buy and fix homes than they can sell them for, it may prevent buyers from seeing any profit when home values increase. And on top of that, the government is unsure if banks or lenders are even going to participate at this point.

Contra Costa County will be allocated $6 million and county officials say they plan to flip 50 to 100 properties in a five-year timeframe. The county has had approximately 4,000 foreclosures just in the last few years.

Too little too late? Do you know the same amount of money one year ago by the federal government could have been spent keeping millions of families in their homes?

Get more details on State and Local Neighborhood Stabilization Program Allocations

We visit the doctor for check-ups to ensure our bodies are healthy and also as a preventative to avoid a potential emergency down the road. Doesn’t your home insurance (and wallet) deserve the same care?

Give your insurance policy a check-up:

• Given today’s market, know what it would cost if you needed to buy a comparable home and adjust your policy accordingly. Find out how much you’d be paid if you decided to move to a different location.
• Your possessions should have replacement coverage. Maintain a list of what you own and know the actual value of your belongings. It’s also a good idea to be aware of how much you might be paid on the depreciated value of your items.
• Know that if you’re in an area susceptible to strong winter storms, you may need flood insurance. Damage from rising water isn’t covered in standard polices, so ask an agent for help to get the proper coverage. You will most likely pay a higher premium, but it’s definitely worth it.
• If a claim is ever denied by your insurance carrier, ask them to provide you with a written explanation. You have the right to dispute it; however, if that doesn’t work you may take it a step further and file a complaint with the state insurance department. If you suffered any loss from a natural disaster, try to find other people who were also denied claims from the same insurer and challenge it together.