SF Bay Area Real Estate Lawyer & Attorney : David Winton Law Firm : Mortgage, Appraisal : Marin County, Alameda, San Fransisco, California

Sure, why not. Bargains everywhere right?  Maybe.  I wouldn't say that buying foreclosures in this market qualifies as "contrarian investing" but...

At least do yourself a favor and spend some time learning the ropes first.   It's not--as its promoters would have us believe--like shooting fish in a barrel, especially now that investing in the declining market has become the new vogue.  Here's a blog post by Temecula California realtor article Kathy Neilsen on what to do and what not to do.  I wouldn't say it's the first,  last or only word, but it's a great start and a helpful perspective from a pro if you're thinking of  diving into this shark pond.

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A while back I wrote a piece on the advisability of "short sales," with a reference to TMG West and its principal Bill Gordon.   Wanting to stay current  on the subject I called Bill the other day to see how things in that segment of the market were going, and it turns out that the news isn't great.

Instead of getting easier, short sales seem to be getting more difficult to get done.  According to Bill's experience, some lenders (Ocwen Financial, for instance) are reported to have instituted policies halting them altogether, while still others, like Countrywide, have restricted the review process to the last few days before the completion of the foreclosure sale itself.

To me the most telling news of my phone conversation with Bill is that his company has stopped doing them altogether.  They're just too hard to get done and more often than not they wind up wasting everyone's time. 

For those who are unsure of what, exactly, a short sale is, just today there is an article in the Philadelphia Enquirer describing the process.  It doesn't say much as to whether these things make any sense, but it does give you some of the basic info. 

My own spin on whether they are worth the effort to even attempt is that it depends.   On who the lender is.  On what the difference between your loans and the value of the property.  On whether the property is a principal residence, second home or investment vehicle.  On what the rest of your financial condition looks like.  On whether you stand to gain anything or whether the risks outweigh the benefits.   

Be careful of short sale boosters.  But then that goes for anyone in this market who advocates a one size fits all remedy to a distressed real estate asset.  There is no single solution...except for a market turnaround. 

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For those scouring the Web for a good source of real estate blogs, check out the cleverly and stealthily named Directory of Real Estate Blogs.   It describes itself as  "A directory of real estate blogs and blog sites of industries affiliated with and serving the real estate industry."  The lists are organized by both topic (mortgages, sales, appraisal, insurance etc.) and by geographic concentration. 

Maybe after a few more weeks they'll add my blog to their list.  With several hundred blogs from around the country having made the cut, I'm feeling left out.  

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This topic is a real bugaboo that seems to be attracting quite a bit of attention these days, what with foreclosures, short sales, bankruptcies and walk-aways in full bloom in the garden known as the mortgage meltdown.  Unfortunately, there seems to be more misinformation and urban myth floating around than good professional advice.  If you have any reservations at all about your status, don't make any assumptions about this subject without consulting a lawyer or accountant. 

The short answer is that Congress did pass the Mortgage Forgiveness Debt Relief Act of 2007, which does provide a lot of relief, and will probably benefit most of the folks that are most in need of the relief it provides.  But if you have investment property or a HELOC, keep reading. 
   
First of all, the general rule is that forgiven debt gives rise to "ordinary income" which is a taxable event ordinarily reported on IRS Form 1099.  Historically, there has been an exception that if the taxpayer is insolvent (which means only that their debts exceed their assets) then the forgiven debt is not taxable to the extent of the insolvency.  This means simply that if I owe $100 but my assets are only $80, then I am "insolvent" to the measurable tune of $20, and the amount of the forgiven debt that is not taxable would be limited to that $20.   The filing of a bankruptcy petition gives rise to a "presumption of insolvency" which usually is the end of the issue and the taxpayer won't be taxed on the forgiven debt.  Absent a bankruptcy petition, you would normally have to prove the insolvency to the IRS in order to avoid the tax.

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The 2008 Real Estate Connect jamboree will be held this year in San Francisco.  The dates are July 23 to the 25th, at the old world glamorous Palace Hotel. 

The event is described on the Inman News website as follows:

Real Estate Connect San Francisco 2008 is Inman News 12th annual gathering; where the leaders in real estate, finance and technology come to promote change and innovation within the industry. Big name speakers, topic-driven panels and practical workshops combine to provide attendees with the tools and techniques they need to compete in a rapidly changing landscape.

Since it's in my own backyard, maybe I'll go and see what all the buzz is about. 

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My compliments and gratitude to Lincoln Hobbs, Esq., author of the blog Utah Condo Law for alerting me to an online publication of the US Dept. of Justice's ("DOJ") March 5, 2008 Joint Statement of the Department of Housing and Urban Development ("HUD") and DOJ on the Fair Housing Act and what sorts of structural modifications may be required on the part of landlords in order to comply with that statute. 

Lincoln goes so far as to suggest that the pub may be so groundbreaking as to be required reading for several categories of real estate professionals.  It may be.  But I'd suggest watching Lincoln's blog for his spin on the subject.   He indicates that he's going to be extracting and digesting the nuggets for his readers, who, I guess, are mostly Utah HOA's.  Since it's a Federal statute, the rules in Utah will be mostly identical for those in the Bay Area or elsewhere in California.

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In what has got to be one of the most absurd cases of political window dressing from an administration renowned for its absurd political window dressing, someone very clever inside the Beltway, together with six of the nation's largest mortgage lenders, has come up with what they're calling "Project Lifeline."  As a solution to a problem it's about on par with putting a band aid on a severed limb. But as an act of political theater? I can't help but think "Karl Rove." Anything so useless, so hollowly symbolic, so hostile to the lower middle class...and so appealingly named, has gotta have his finger prints all over it. For two analyses of this proposed legislation, here's how it was reported by Business Week, and here's kind of a wonkish economist's analysis of this blunderbuss. And these critics aren't even part of the liberal media.

For a discussion of why this is more comedy then remedy, read on...

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On her award winning daily radio program Fresh Air, NPR's Terry Gross recently interviewed NY Times financial reporter Gretchen Morgenson.   It's most definitely worth a listen if you, like me, are trying to figure out a way to wrap your brain around how this whole thing happened and why it's having the ripple effects it's having.  Unfortunately, Morgenson concludes that it's not over yet, and we still have quite a way to go before the hemorrhaging stops.

One interesting observation she shares is why the Fed's recent interest rate cuts don't seem to be finding their way into the mortgage rates that you and I go looking for when we want to refinance our mortgages.  (For purposes of simplicity, we'll skip the discussion of the relationship between short term discount rates and long term mortgage rates.)

Basically, says Morgenson, it boils down to nothing more mysterious than the need for mortgage lenders to make back on the new "good" loans what they're losing on the bad loans they already made.  She predicts that, eventually, the cuts will trickle down (remember that term?) to street level, though she doesn't suggest when that might be.

Meanwhile, here in Bay Area, while we are "blessed" with residential markets that seem to defy gravity better than most, we are still not completely exempt.  Back in January, Carolyn Said, of the San Francisco Chronicle, penned a very tight summary of the current condition of the nine-county Bay Area,  pulling her data from the real estate economics research firm Dataquick and Zip Realty.

Here are the bullets:

• Median home price:  Down about 5% from a year ago, and about 11% from its July 2007 high.
• Sales volume down about 40% from its previous year's high.
• Inventory levels?  Well, that question is hardly even worth asking given the answer.  They're just up all over the place, from 23% to 99%, depending on location.

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So I was doing a Google search to see if this blog was showing up yet (it's not), and what do I find?  The SF Real Estate Blog.   No competition for us here though, as theirs is more marketing driven and thus more likely to get tons of visitors.  Whereas my little effort here?   No danger of breaking the doors down.  What with the legal emphasis, as riveting as that can be, I suspect I'm doomed to relative obscurity.  Maybe if they have a legal question they'll send it over this way.   They also accept advertising.  I wouldn't think of such a thing. 

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