Sharron Thomas & Nancy Borecky

From the CAR’s Market Matters:

  Los Angeles Business Journal 

Foreclosed homeowners could owe ‘tens thousands of dollars’ to lenders
Facing the possibility of foreclosure, California homeowners may be hit with more than just losing their homes.  Due to a loophole in state law, they also can be sued by their lender.  To prevent this, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is sponsoring Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro), which will extend anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Currently, if a homeowner defaults on a mortgage used to purchase his or her home — known as a “purchase money mortgage” — the homeowner’s liability on the mortgage is limited to the property itself.  Unfortunately, the original law did not extend the purchase money protection to loans that refinance the original purchase debt, even if the refinance only was to obtain a lower interest rate.
  
• Californians who refinance a property currently do not have protection if they default on a mortgage greater than the property’s value. Called a “deficiency” liability, under current California law, the lender can sue the former homeowner for the amount of the deficiency even after taking back the property.  
  
• Recent years of low interest rates and aggressive marketing campaigns by lenders have induced tens of thousands to refinance mortgages.  Few homeowners realized that by refinancing their mortgage, they were forfeiting their protections and now are personally liable.
  

As Realtors we sometimes sell properties for the value of the land even though they may have an old, tear down structure on it.  The advantage to a buyer can be that the infrastructure, such as utilities and site preparation, are already in place.  It’s just a matter of getting rid of the old to build the new.  Here’s a great article from Earth911.com by Amanda Wills that tells how one family recycled an old home for $100,000!

Family Recycles Home for $100,000by Amanda Wills
Published on June 9th, 2009

After tearing down their 2,250-square-foot home in Danville, Calif., Mike and Tricia Barry walked away with more than just a clean slate. The couple received a $100,000 tax write-off as well.

  Photo: Jim Stevens/McClatchy Newspapers

After deconstruction, the only items left to throw away were the asbestos-ridden drywall and the stucco exterior.    

 Instead of tearing down the home and sending it to a landfill, the Barrys opted to have the home deconstructed piece by piece and recycled into new homes.

 California Deconstruction and Building Materials ReUse Network hauled the excess material to organizations such as Habitat for Humanity and Corazón, which builds homes in northern Baja California, Mexico.

 According to The Seattle Times, “nearly everything that made up the house — wood, windows, appliances, flooring, roofing and even the nails — went to nonprofit organizations.”

 “I’d say 80 to 85 percent of the Barry house was reused,” says Gerald Long, of Corazón. “Even the copper plumbing was recycled, the bricks were saved and all the interior fixtures were saved.”

 Habitat for Humanity has found a way to keep thousands of tons of surplus construction materials out of the waste stream, while also raising money for homebuilding through its Habitat ReStores. ReStores sell salvaged building supplies and appliances across the U.S. and Canada.

 “Our primary goal is always to raise money for more homebuilding, but at the same time, we’re able to keep tons of potential trash out of the landfills,” explains Kevin Campbell, Habitat for Humanity’s director of building industry relations. “And the rule of thumb is that every dollar in sales equates to about one pound of debris being saved from the landfill.”