Fight Foreclosure Through Redemption or Reinstatement

By: Richard Koreto

Published: July 27, 2010

Redemptions and reinstatements are among the rarest tactics to fight foreclosure. Your home must be in a state that supports them; even more important, you must have access to cash.


Your state may be trying to give you a break to avoid or turn back the clock on foreclosure with a couple of special provisions: the right of redemption, which can let you buy the home back from the person who bought it at foreclosure; and the right of reinstatement, which allows you to catch up on payments in default, including fees and penalties, and continue with the same loan.


Know your redemption rights
The right of redemption is not available in every state, and even among states that offer it, procedures vary greatly.

You may obtain a right of redemption only if your state offers a judicial foreclosure—that is, a foreclosure that proceeds through the courts.
The terms vary even among judicial foreclosure states. If you live in Kansas, you may have as long as a year to regain ownership through redemption. In Maine, you’ll have three months. But if you live in New York, you have no redemption rights at all, even though it is also a judicial foreclosure state.
Consult an attorney. Redemption laws are very complicated.
Be prepared to deal with your home’s new owners, as they may take possession of your home even if your right of redemption is still valid.
To check your state’s foreclosure laws, review this helpful guide.

Be prepared to pay
Unfortunately, redemption is only a last chance—not a magic bullet. If you haven’t heard of the right of redemption, it’s because they rarely happen, even in states that allow them. Why? You must come up with the price paid by whoever purchases your house plus associated fees and taxes. The same situation that led you to foreclosure probably will keep you from getting the cash or financing for redemption. So unless you just won the lottery or your rich uncle died and left you a bundle, you won’t get redemption.

Understand reinstatement
Reinstatement is different from redemption, although it’s easy to confuse the two. Reinstatement, available in many states, allows you stop the foreclosure process up to five days before the auction. To do this, you must:

Bring your loan up to date with all fees, expenses, and late charges.
Pay with “real money.” That is, come with a certified check, not a credit card.
Be willing to take a hit in your credit score. However, you keep your house and the same mortgage, and over time you can repair your score. And at this point, your credit score probably already has taken a hit.
Note the important distinction: in reinstatement, you only have to come up with what you missed; in redemption, you have to come up with the entire amount owed on the house.

Again, to find out if reinstatement is available for you, consult a lawyer and a foreclosure counselor. You should talk to your lender about whether it’s invoking acceleration—that is, declaring the entire amount due after several missed payments. Although, based on the terms of your loan, that may be the lender’s right—effectively disallowing a reinstatement—your bank may be willing to negotiate a reinstatement.

Even if you can scrape together money for a reinstatement by pawning some jewelry and borrowing cash from relatives, you can’t do that every month. If sufficient income looks like it will be a long-term problem, you might be better off saving your money for new housing and proceeding with a foreclosure, short sale, or deed in lieu of foreclosure.

Richard J. Koreto, a freelance writer, is the former editor of several professional financial magazines and the author of “Run It Like a Business,” a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y.

This Month in Real Estate

Gwyneth Paltrow Visits Nashville!

Gwyneth Paltrow comes to Nashville and blogs about it on her GOOP Newsletter. She talks about her awesome experience and the different venues, her quest for the best fried chicken, restaurants, bars, etc.

I now have a list of great new places in Nashville to check out that I didn't even know existed! You check it out too!

Also, she had a designer come in and completely renovate her place at The Icon just to fit her right style! The renovations are incredible and she shows you every bit of the experience to the final product! Check it out!

Fight Foreclosures in Your Community

If you think your neighbor's foreclosure doesn't impact you, think again. According to a Center for Responsible Lending report, foreclosures lower the property values of nearby homes by $7,200, on average.

Foreclosures can affect your community in other ways. Vacant homes can invite crime, and public services can suffer as revenue from property taxes dries up. All isn't lost, however. There are ways to fight foreclosures in your community.

Foreclosure activity is widespread

Foreclosures are hard for homeowners to ignore. In 2009, a record high 2.8 million properties received at least one foreclosure filing. At the end of the third quarter of 2009, 4.47% of mortgage loans were in the foreclosure process. The Center for Responsible Lending projects a total of 9 million foreclosures between 2009 and 2012.

The $7,200 in lost property values in 2009 could be the tip of the iceberg. The Center for Responsible Lending report said the figure didn't take into account the impact of short sales-when a lender agrees to the sale of a home for less than the outstanding mortgage-or the general decline in home values caused by a glut of inventory.

The problem could snowball. Declining home values could presage more foreclosures as homeowners walk away from underwater mortgages that total more than a house is worth. Even if you're current on a mortgage, reduced home equity due to declining property values weighs on consumer confidence. The result: Less consumer spending leading to more job losses leading to more homeowners facing the risk of foreclosure.

Foreclosed homes can languish

A foreclosure doesn't get resolved overnight. Foreclosure laws vary by state, but the process can drag out for months or even years. That means homes can sit unoccupied for long stretches, especially in neighborhoods experiencing multiple foreclosures. Falling property values and tight lending requirements, which make it tough for potential buyers to line up financing, add to the misery.

Blight can follow quickly. A homeowner struggling to keep up with mortgage payments likely sacrificed on routine maintenance. Bank-owned properties aren't receiving much upkeep in situations where the lender knows a quick sale is unlikely. The local government, scrimping to save, could become lax in enforcing code violations. The result can be a collection of foreclosed homes with sagging shutters and overgrown lawns that depresses residential sales activity indefinitely.

Foreclosures can invite crime

According to an Urban Institute report, when a home is vacant and it's clear no one is taking care of it, the property has a greater chance of being targeted by squatters, vandals, and thieves. That can lead to increased crime involving residents living near foreclosed properties.

Rising levels of crime, in turn, can prompt an exodus of residents from a neighborhood. The result can have a domino effect on the local economy. Crime could also be a red flag for potential buyers, indicating that the value of homes in the affected community will decline, according to the Urban Institute.

Local governments, HOAs bear brunt

Foreclosures mean lost revenue for local governments, which rely on property taxes collected from homeowners, not to mention the fees generated by homebuying and homeselling, to fund services. Less money comes in to public coffers as property values decline. To close budget gaps, municipalities can be forced to cut back on services that benefit all homeowners, from trash collection to street repair.

Homeowners and condo associations, private groups that provide services to residents, can suffer too. Foreclosed homes mean lost revenue in terms of dues and maintenance fees. Even remaining owners who aren't facing foreclosure but are struggling to meet loan obligations might sacrifice dues in favor of monthly mortgage payments. Typical HOA fees run about $420 a year, while condo fees can average $2,400 annually.

In some cases, the HOA or condo association might only be forced to skip spring flower planting. But in more serious situations, major repairs can be put in jeopardy. If an HOA doesn't have enough cash on hand, it might not be able to replace your hail-damaged roof, for instance, says Elizabeth Weintraub, author of "The Short Sale Savior."

Recourse for remaining homeowners

You might not be able to prevent foreclosures in your community, but you can take steps to minimize the impact. If there's a foreclosed property on your block that has an overgrown yard, mow it. Well-kept foreclosures don't scare away would-be buyers, says Weintraub.

If crime is your overriding concern, park your car in the driveway of a vacant home to give the impression that it's occupied. You also might want to consider starting a neighborhood watch to rally residents, engage local law enforcement, and discourage criminals.

Donna Fuscaldo has written about home finances for Dow Jones, the Wall Street Journal, and Fox Business News for more than a decade. Like many homeowners, her mortgage is precariously close to being underwater.

Outdoor Lighting for Curb Appeal & Safety

Think about it: Most of your guests (and if your home is on the market, many would-be buyers) see your home only in the evening, when its best features may be lost in the shadows. Well-executed outdoor lighting enhances architectural detail and plays up landscape features, casting your home in the best possible light and adding an abundance of curb appeal.

Outdoor lighting also adds value. Judith Patriski, an appraiser and owner of Quad Realty Co. near Cleveland, estimates that for upper-bracket homes, an investment in outdoor lighting can yield a 50% return. “When you pull into a driveway and see a gorgeous home, you’re going to pay more for it,” says Patriski.

And she emphasizes that it’s not only about aesthetics: “In all price ranges, lighting for security is important”—both to protect against intruders and falls. Here are the elements of successful outdoor lighting.

Mimicking the moonlight
Much of the success of exterior lighting hinges on its design. Hang around lighting designers long enough and you’ll hear a lot of talk about “moonlight effect.” That’s a naturalistic look that features light no more intense than that of a full moon, but still strong enough to make beautiful shadows and intense highlights.

Other techniques outdoor lighting designers use:

Highlight trees: Whether illumined from below or given presence by a light mounted in the tree itself, trees make stunning features.

Use uplights: Uplighting is dramatic because we expect light to shine downward. Used in moderation, it’s a great way to highlight architectural and landscaping features.

Have a focus: The entryway is often center stage, a way of saying, “Welcome, this way in.”

Combine beauty and function: For example, adding lighting to plantings along a pathway breaks up the “runway” look of too many lights strung alongside a walk.

Vary the fixtures: While the workhorses are spots and floods, designers turn to a wide range of fixtures, area lights, step lights, and bollards or post lights.

Stick to warm light: A rainbow of colors are possible, but most designers avoid anything but warm white light, preferring to showcase the house and its landscape rather than create a light show.

Orchestrate: A timer, with confirmation from a photocell, brings the display to life as the sun sets. At midnight it shuts shut down everything but security lighting. Some homeowners even set the timer to light things up an hour or so before dawn.

Adding safety and security
Falls are the foremost cause of home injury, according to the Home Safety Council. Outdoors, stair and pathway lighting help eliminate such hazards.

Often safety and security can be combined. For example, motion-detecting security lighting mounted near the garage provides illumination when you get out of your car at night; the same function deters intruders. Motion detecting switches can also be applied to landscape lighting to illumine shadowy areas should anyone walk nearby.

Even the moonlight effect has a security function: Soft, overall landscape lighting eliminates dark areas that might hide an intruder, exposing any movement on your property. Overly bright lights actually have a negative effect, creating undesirable pockets of deep shadow.

Switching to LEDs
Once disparaged for their high cost and cold bluish glow, LEDs are now the light source of choice for lighting designers. “They’ve come down in price and now have that warm light people love in incandescent bulbs,” says Paul Gosselin, owner of Night Scenes Landscape Lighting Professionals in Kingsland, Texas. “We haven’t installed anything but LEDs for the last year.”

Although LED fixtures remain twice as expensive as incandescents, installation is simpler because they use low-voltage wiring. “All in all, LEDs cost only about 25% more to install,” Gosselin says. “And they’ll save about 75% on your electricity bill.”

Another advantage is long life. LEDs last at least 40,000 hours, or about 18 years of nighttime service. With that kind of longevity, “why should a fixture have only a two-year warranty?” asks Gosselin. He advises buying only fixtures with a 15-year warranty, proof that the fixture’s housing is designed to live as long as the LED bulbs inside.

Innovations
The growing popularity of exterior lighting has led to innovative fixtures. Here are some bright new ideas:

Solar lighting: When first introduced, solar pathway lights produced a dull glow that rarely made it through the night. They do much better now that they are equipped with electricity-sipping LEDs, more efficient photovoltaic cells, and better batteries. Still, they have yet to measure up to hard-wired systems.

Hybrids: Porch lights now come equipped with LED lighting for all night use, and a motion sensor that clicks on an incandescent bulb to provide extra illumination as you approach the front door. Hybrids use about 5% of the power a solely incandescent fixture requires.

Barbecue light: Tired of grilling steaks by flash light? Now you can buy a gooseneck outdoor light, ideal for an outdoor kitchen.

Estimating the cost
Total outdoor lighting costs will vary according to the size of your home and the complexity of your lighting scheme. Expect to pay about $325 for each installed LED fixture. LEDs also require a transformer to step the power down from 120 volts to 12 volts, running about $400 installed.

A motion detector security light costs about $150 installed. Porch lights and sconces range from $100 to $250 installed, depending the fixture and whether running new cable is necessary.

Contractor-installed outdoor lighting for an average, two-story, 2,200 sq. ft. house might add up as follows:

7 fixtures to cover 100 feet of LED pathway lighting: $2,275

Transformer: $400

4 LED uplights to dramatize the front of the house: $1,300

2 LED area lights for plantings: $650

2 motion detector security lights: $300

Total cost: $4,925

Dave Toht has written or edited more than 60 books on home repair and remodeling, including titles for The Home Depot, Lowe’s, Better Homes & Gardens, Sunset, and Reader’s Digest. A former contractor, Dave was editor of Remodeling Ideas magazine and continues to contribute to numerous how-to publications.

Watch for These Signs of Short-Sale Fraud

With short sales on the rise, California’s Department of Real Estate warns consumers to watch for four signs of short-sale fraud.

In a short sale, the seller receives an offer from a buyer that is less than the amount of the mortgage loan(s) on the property. The seller asks the lender to accept less than what is owed.

While short sales are a popular alternative to foreclosure, like all real estate transactions, they are complicated and sellers need to lookout for the pitfalls, said California Real Estate Commissioner Jeff Davi.

For example, in some instances a seller may be required to pay taxes on the forgiven debt.

In addition, a seller may be an unwitting participant in a fraudulent transaction in which an unscrupulous short-sale negotiator working with a straw buyer makes a lowball offer to the seller and, in turn, misrepresents the true market value of the property to the lender.

If the lender accepts the offer, the straw buyer immediately re-sells it at the true market value, with the profits split among the conspirators. Had the property been sold for the most amount of money that the market will bear, the potential tax consequence to the seller is diminished and the lender would have received fair market value.

The signs of fraud a homeowner should look out for:

An unlicensed short-sale expert. Short sale negotiators must be licensed real estate brokers (or a licensed real estate salesperson where that person is working under the supervision of his or her broker).

Requests for payments outside closing. Any and all payments must be fully disclosed and made part of the escrow documents. If there are any fees to be paid “outside” of escrow, this may be the red flag that the payment is illegal.

Buyers who aren’t people. If your agent explains that the buyer is a fictitious person or entity, or your buyer is purchasing the property under a power-of-attorney or is a limited liability company (LLC), this may be a red flag that fraud is involved in your transaction.

An unlicensed negotiator. If you are told that an unlicensed processor, negotiator or facilitator is handling your short sale, this is a red flag that unlicensed activity is taking place.

Only real estate licensees, California lawyers acting as lawyers and investors acting on their own behalf can engage in short sale negotiations.

For more information about DRE and its programs visit www.dre.ca.gov.
Publish Date: 2010-05-05
Source: California Department of Real Estate

Adding Universal Design Features to Your Bathroom

Universal design features aren’t just for the elderly or disabled—the term “universal design” simply means common-sense design that accommodates all users. If you’re adding a new bathroom, incorporating universal features ensures that your bath is comfortable, safe, and will adapt to any lifestyle changes.The cost of universal design isn’t prohibitive. In terms of a new 6x8-foot bathroom, you’ll pay an additional $1,000 to $2,500 for universal design features.

Deciding to add universal design

As smart as universal design is, it can be a tough sell. Ninety-five percent of home builders report that buyers aged 55 or older can be resistant to purchasing a home with universal design features, according to the National Association of Home Builders (NAHB). That’s interesting when you consider that two-thirds of those buyers also say they plan to stay in their own homes after retirement.

There are two reasons for this disconnect, says remodeler Dan Bawden of Houston, founder of the NAHB’s Certified Aging-in-Place Specialist (CAPS) program. First, buyers don’t like to face the prospect of getting older. Second, there’s the notion that a universal design bathroom will look institutional, like a hospital facility.

Los Angeles bathroom designer Sarah Barnard battles both these misperceptions frequently. “No one ever asks me for universal design features up front,” Barnard says, “but I recommend them to every single person I consult, even if they’re 25 years old.

“It’s funny—the closer people are to retirement, the less they want universal design. They say, we’ll cross that bridge when we come to it. I tell them, even if you’re perfectly healthy and able-bodied right now, if you have an accident or develop a health problem, the last thing you’re going to want to deal with is a three-month remodeling project to retrofit your bathroom.”

Most important, contemporary universal design features are aesthetically pleasing, even hip. “A bathroom with universal design does not have to be ugly!” Barnard says. “In fact, a well-designed accessible space can be spa-like and luxurious. There are attractive high-end finishes out there, such as luxurious grab bars with beaded escutcheons. They’re not like the grab bars in public restrooms.”

If you’re thinking about adding universal design features, consider consulting a CAPS-certified contractor. CAPS builders are trained specifically on which building features accommodate certain disabilities.

Essential features

Most universal design features are simply modifications of products and design specifications that you would consider for any bathroom space.

Wider doors

A 30- or 32-inch-wide interior door is considered standard, but universal access requires 32 inches of clear space when the door is open, which usually means specifying a 36-inch-wide door. Expect to pay $20 to $30 more for a 36-inch-wide door over the cost of a 32-inch door.

Be sure to check how much space a larger door requires when it swings open. Bathroom doors should swing outward.

Grab bars for shower, tub, and toilet.

Bawden recommends covering the framing of the entire tub, shower, and toilet surround with ½-inch pressure-treated plywood so that you can install grab bars anywhere on the wall, either immediately or at any time in the future.

Adding the plywood costs about $250 for labor and materials per area; grab bars cost from $50 to $300, depending on the quality of the finish. Expect to pay $50 to $100 per grab bar for labor.

If you have restricted mobility, consult a CAPS-certified builder about how many grab bars you need, what sizes they should be, and where they should be located. Because different health issues require different bar placements, it isn’t a good idea to add more than one bar now if you’re healthy.

A curbless shower.

These showers have no lip at the floor and can be accessed by those using a wheelchair or other mobility device. The floor slopes down toward the drain; a swing-out door or a shower curtain keeps water contained. From a design standpoint, the minimalist lines fit seamlessly into a contemporary spa-style bathroom.

A curbless shower requires that the shower pan or drain be slightly lower than the surrounding flooring. Typically, your building contractor lowers the shower floor area by trimming the tops of the floor joists (and strengthening them if necessary), then installing a concrete shower floor (for tile) or a curbless shower pan.

Installing a curbless shower costs about the same as installing a “regular” fully tiled shower stall. However, expect to pay an additional $200 to $300 in labor for modifying floor joists.

Lever-style door handles and faucets.

Lever-type handles are easier to use than twist-type knobs or handles, and they’re especially convenient for those with arthritis or with limited dexterity in their hands. They’re available in as many styles and finishes as other faucets and handles, at comparable prices.

Hand-held shower.

These versatile shower heads attach to a flexible hose that makes them easy to use while sitting. “I convince people to consider these because they’re great for cleaning the tub or shower,” Bawden says. “Plus they have a ‘trickle’ or ‘pause’ setting that allows you to shave or wash your hair without wasting water.” Hand-held units are no more expensive than fixed shower heads.

A shower bench.

“A triangular bench in the corner of a shower has multiple uses,” Bawden says. “If you need to sit in the shower, you can, but the able-bodied can use it to store stuff or balance while shaving.”

Choosing an acrylic shower surround with a built-in bench costs no more than a plain stall, and adding a built-in corner bench to a tiled shower costs around $150 extra. A folding, waterproof shower seat that attaches to the wall costs $150-$500.

Tall toilets with no-slam seats and lids.

“I put these in every bathroom unless the bathroom is for small children,” Bawden says. “People love them; they’re easier to sit on and more comfortable.” Test-drive one in a showroom to see if you agree; tall toilets are 16 to 18 inches high compared with the standard 14 or 15 inches. Additional cost for a tall toilet is minimal, around $50 more for comparable styles.

Wall-mounted sinks.

To provide space beneath a bathroom lavatory for wheelchairs or other mobility devices, consider a wall-mounted sink. Wall-mounted sinks have no vanity cabinet or supporting legs underneath, yet they’re designed for strength and durability. Depending on the style, some have shrouds that conceal drain traps and water supply tubes under the sink. Expect to pay $200 to $1,000 and up.

If cabinets are desired, mounting them at least 9 inches off the floor allows room for a wheelchair footrest to pass underneath.

Wheelchair clearance.

Wheelchair-accessible bathroom dimensions require clear space of at least 5 feet (60 inches) in diameter to allow a 180-degree turn. If space is at a premium, consider keeping the room open rather than compartmentalizing the toilet so that a wheelchair’s turning radius can be accommodated.

Karin Beuerlein has covered home improvement and green living topics for HGTV.com, FineLiving.com, and FrontDoor.com. In more than a decade of freelancing, she’s also written for dozens of national and regional publications, including Better Homes & Gardens, The History Channel Magazine, and Chicago Tribune. She and her husband started married life by remodeling the house they were living in. They still have both the marriage and the house, no small feat.