“ Helping Landlords”

NWNorthern WorcesterCL CountyA Association

Volume 55 Landlords Helping Landlords May 2009

fear of unemployment, not being able to get the deal financed, NWCLA President’s May Letter or the end of the Summer buying market - but there was little to no competition for the deals we have landed recently. Dear NWCLA Membership, In contrast, on the very first day of Spring, we saw one listing At our April NWCLA members’ meeting we had we were interested in. It was a six family, plenty of parking, the advantage of having two topics for discussion asking a fair price and right in our buying market. Per the usual, for our members. We featured our very own we booked our showing the very day it hit the market and went NWCLA Board Members, Realtors and up earlier than our scheduled time to take a look around and owners, Jamie Merrill and Jay Johnson. We also had the pleasure tag along if the broker showed up early. We found out there of having representative, Mary Ann Cantu, President of had already been a ton of activity and the broker had booked 9 National Tenant Network, Boston Chapter come out and discuss showings for that very same morning. This was just the first day with the group the finer details of tenant screening. on the market too! We haven’t seen any prices increase much, but there are indicators that there will be bidding wars this season. Jamie and Jay discussed market indicators that are happening in today. They went into detail explaining the workings of We only have two more NWCLA member meetings before the what it takes to negotiate deals and navigate your way around the Summer break and you don’t want to miss these topics in our world of short sales (SS), (REOs), and working open forum. At our May meeting, we have the opportunity to with your Realtor to close these deals. As many of you already sit with officials from the Worcester Housing Courts who will know, patience is the bottom line. The banks holding the paper on discuss new changes in the court system and then open the floor these deals are often out of the market where they hold, unaware to your questions for discussion. This is a rare opportunity to of what condition the property is in, and their desks are buried actually discuss what is going on in the courts - before you need with the weight of hundreds of cases awaiting review. Both Jamie to be in court. I have attended this venue over the years as a and Jay are very excited about the rea; estate deals that are out NWCLA member, and I have to tell you, our members have told there, and compounded with today’s lower interest rates, reaffirm us – this is one of our best speaker presentations. we are in a buyer’s market Phase 1. Work with your Realtors, talk to your lenders, and take advantage of the market while it lasts. Sincerely, Mary Cantu of the National Tenant Network, Boston Chapter, Brian Lucier shared with us some of the practices and experiences she has had dealing with the prescreening of tenants. Mary is not only NWCLA President 2009 – [email protected] the President of the NTN Boston Chapter, but she is a lanldlord right here in the state of Massachusetts with all of us too. She is well aware of the challenges we face and feels our pain being in a tenant friendly state. The National Tenant Network is a service to help landlords get the best tenants and help to avoid some of the In This Issue Page nightmare tenants out there who are working the system to their advantage. The NTN, besides prescreening tenants, can assist you President’s Letter 1 in getting your judgements for collection recorded on the credit NWCLA Useful Notes 2 NWCLA Members’ Sponsor Testimonial Program 2 score of the offender until that judgement is paid in full. They Upcoming Topics, 4 really are there to help you – before, during, and after dealing BUY-SELL-TRADE-FREE 4 with problem tenants. Is Commercial Real Estate the Next Shoe to Drop? 5 Web Site: http://www.diynetwork.com/ 5 On a real estate market highlight, Spring has sprung and the real Lawyer’s Corner with Michael J. Ciota – Reminding Landlords 6 – 7 U. S. Filings Hit Record for Second Straight Month 8 – 9 estate market has picked up quite a bit. Last Fall, we were placing SPECIAL REPORT: Road to Rescue 9 – 10 offers on apartments and many times, we were the only bidder on Appraisals Killing Deals in Many Markets 11 some of these deals. Maybe it was a combination of the recession, Schmidt’s Smorgasbord 12

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NWCLA Board Members “NWCLA – Landlords Helping Landlords” P.O. Box 276 – Fitchburg, MA 01420 – 978-345-1887 – http://www.nwcla.com

President We are proud to serve the following communities: Brian Lucier 978-448-3873 Ashby Fitchburg Lancaster Sterling [email protected] Ashburnham Gardner Leominster Townsend Vice President Athol Harvard Lunenburg Westminster Clinton Hubbardston Phillipston Winchendon Debbie Greelish [email protected] NWCLA Useful Notes NWCLA Members Testimonial Program Treasurer • Summary Process Summons & Tina Miller Complaint Forms are available Every month we are going to extend to you an opportunity to highlight [email protected] for $5.00 NWCLA meetings the positive experiences you’ve had with any of the vendors in our newsletter. Please take a moment to e-mail me a few words describ- Secretary/Clerk • The newsletter committee needs you to E-mail your stories, ads, ing the work that was done for you and the name of the contractor who Theresa Dattolo completed the job. Your affirmative input will let other property owners [email protected] helpful hints, to [email protected] in our group know that working with our advertisers can be a positive Membership Director • The Successful Landlord is avail- experience. This is also a great way to say “thanks” to the business men able to purchase at our meeting. and women who contribute to the Northern Worcester County Landlord Brenda Coveno-Watson [email protected] Cost is $40.00. while supplies last Association and our goal of being the best landlords that we can be!

Newsletter Director • Anyone seeking past Jay’s e-mail is [email protected] or mail him stories to: lists please go to our web site to NWCLA, ATTN: Jay Johnson, P.O. Box 276, Fitchburg, MA 01420 Rick Dupuis 978-342-9448 download the latest copy. [email protected] Welcoming Committee NWCLA Membership $80 Theresa Dattolo [email protected] Membership Benefits Include: • Monthly NWCLA Newsletter Advertising Director • Local Drug Arrest List Jay Johnson 978-423-9845 • Housing Court Eviction List [email protected] • Member to Member Support Web Site Director • Informative Monthly Seminars • Association Attorney Brian Lucier 978-448-3873 • Legislative Updates [email protected] • E-mail Alerts on Housing Issues Oil Program Director • Web Site - www.nwcla.com • NWCLA Blog posts at Jay Johnson 978-423-9845 [email protected] www.realestateinvestor.com

Food Committee MA LIC #10588 212 West St., Gardner, MA Dave & Laura Schmidt [email protected] 978-632-1100 • 800-995-6395 Program Manager Full BURNER Service Jeff Landry [email protected] Full PLUMBING Service Legislation Director Full AIR CONDITIONING Service 24-Hour Heating & Plumbing Emergency Service Jamie Merrill 978-407-7174 [email protected] FREE Estimates • Residential & Commercial Work Board Member Heating Oil • Diesel • Winter Blends Matthew Moore 978-345-7971 [email protected] Senior, Active Military AND Volume $$DISCOUNTS$$ Board Member Pre-Pay & Budget Plans • Online Bill Payments • Energy Saving Products Ron LeShane Jr. A Local Family Owned & Operated Business [email protected] “Why Make More Than ONE Call? ...When COUNTRY FUEL Does it All!”

2 www.nwcla.com Volume 55 Landlords Helping Landlords May 2009 DON’T GET RIPPED OFF! You have the right to choose the LOWEST COST Eviction Mover / Public Warehouser See our web site at: www.evictionmover.com for information and licensing or call 1-617-966-6684

The Law Office of NWCLA MEMBER DISCOUNTS David R. Rocheford Jr., P.C. Real Estate Law We hope you will find these discounts helpful for the maintenance of your Our office is a dedicated Real estate Law Office. We strict- ly handle Real Estate matters. Count on us to assist you in your next . Visit Aubuchon Hardware our web site for more information and news updates Group # 1000501 – Membership card required Our clients consist of: 20% off Glidden paint • Real Estate Investors 10% off merchandise • Real Estate Buyers and Sellers • Local and National Mortgage Lenders Grand Rental Station • Private Mortgage Lenders We provide our clients: Cash Acct. # *195 – Membership card and • General Counsel in the sale & purchase Photo ID required 10% off of Real Estate • Settlement & services Maki’s Building Center • Title examinations Cash Acct. # *195 – Membership card and • Title Insurance • Escrow Services Photo ID required 2% - 10% off 100 Erdman Way – Leominster, MA Sabourin Hardware Tel: 978-847-0104 – Fax: 978-847-0105 Membership card and Photo ID required www.myrealestateattorney.net Member of the Real Estate Bar Association of Massachusetts

Please Note: The information in this newsletter is not intended to be construed as legal, accounting, or other professional advice. Seek legal advice from licensed professionals for answers relating to your particular questions and circumstances. Start your own FREE NWCLA Blog discussion http://www.realestateinvestor.com/groups/69/ 3 Volume 55 Landlords Helping Landlords May 2009

NWCLA Program Schedule 2009 BUY-SELL-TRADE-FREE

May 14, 2009 Representatives from Housing Court FOR SALE REAL ESTATE that will address our landlord/tenant 2 Stoves 2 Refrigerators LOOKING FOR INVESTORS!!! questions in a casual open forum. 1 Washing Machine Seasoned real estate investor 1 3-bay metal sink seeks other like-minded investors June 11, 2009 Representatives from State Police will 1 plastic utility sink to partner on large apartment address our landlord/tenant questions Great for your apartments! complexes. Call Brian at 978-448- Starting at $100.00 3873 for more information or in a casual open forum. Call Tim Damon @ 978-297-5254 e-mail. [email protected] ______July 9, 2009 No meeting, Summer Break http://www.forrentorsale.net/ Looking for Property in Gardner, 3 different Ken Roberts training Leominster, Athol Areas. Any Aug 13, 2009 videos, and tapes complete with and all calls welcome for 10+ No meeting, Summer Break the manuals. Call Mark @ multi-family units. Have financing 978-502-5723 or e-mail: approved and ready to go. Call [email protected] 978-448-3873 and mention this ad ______from the NWCLA Newsletter for NEW, sliding glass door unit for more information. Ask for Brian. a 4 foot tub enclosure. [email protected] Hard to find. Paid $200., Will sell ______for $100. Call Marria @ Timeshares Available For Rent 978-534-5982 in Aruba, Florida, Las Vegas. ______Any and all calls welcome 1.) Used HP MX.70 17 inch 978-448-3873 and mention this ad desktop monitor color grey apx 4 from the NWCLA Newsletter for yrs old not used for 2. Complete more information. Ask for Brian. with box manual, pwr cord [email protected] Excellent condition like new. ______Asking $65.00 or BO. First $50.00 Ad listings are free to members. takes it There are three ways to submit your 2.) Also have HP 845c color ad: (all ads are subject to review and ink jet printer (grey) excellent editing) condition like new with pwr 1.) Bring your classified ad(s) to the adapter, no ink. Asking $35.00 or meeting and post on the bulletin Bo. First $25.00 takes it. board 2.) E-mail your classified ad(s) to: Will sell all items above for $75.00 [email protected] cash. All items are in working 3.) Mail your classified ad(s) to: order and sold as is. I have all Attn Terry NWCLA PO Box 276 boxes; will deliver for slight fee Fitchburg, MA 01420 w/i 30 mile radius of Fitchburg. a.) State classification – Wanted, For These are my sons units - I need Sale, Free, etc. the room, he needs the money. b.) Describe the item – color, size, Call Ken @ 978-342-0639 or e-mail: condition, age, model number, [email protected] price, etc. ______c.) Contact name – first and last name 36” x 80” outside door, please (must be NWCLA member) hardwood with 6 windows, d.) Contact information – telephone with frame. Dead-bolt lock and or e-mail address included. $50.00 or BRO call Ken Anderson at 978-534-9533 or All ads subject to space limitations in 508-641-1559 our newsletter. ______4 COLOR MONITORS!!! 19”& 20”VIEWSONIC Each in excellent condition. Left overs from recent professional graphics studio upgrades. Asking $80 each or BRO call Brian at 978-448-3873 or [email protected].

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While interest rates have declined, Is Commercial Real owners are having difficulty refinancing their loans because Estate the Next credit markets remain frozen. And that’s what is worrying people like Kyle McLaughlin.

Shoe to Drop? Overall, some $270.5 billion commercial property loans are By Alex Veiga expected to come due this year alone, said McLaughlin, a financial analyst for Reis. And it’s likely many borrowers Even as banks grapple with rising , many won’t be able to refinance. That’s what snagged General lenders have something else to worry about: A rising tide Growth Properties, the nation’s second-largest shopping of potential losses from commercial real estate loans that mall owner. Unable to pay or restructure its debts, the could reach into the billions. company sought shelter from creditors last month, making it the largest U.S. real estate bankruptcy in history. Delinquency rates and defaults on office and retail Real estate experts are concerned that financially strapped buildings and hotels have more than doubled in just six landlords from General Growth to General Motors may months. For apartments and industrial buildings, the rates have to sell property at bottom-dollar prices. have increased more than 80 percent, according to real estate research firm Reis. While homeowners are defaulting at almost four times Useful Web Site of the Month the rate of commercial landlords, the sudden spike in late payments has many industry insiders worried about http://www.diynetwork.com/ the collateral threat to the economy and financial system. Nearly $73 billion worth of commercial real estate loans From the makers of HGTV and Food Network, DIY Network is are in some level of financial distress, according to Real the go-to destination for rip-up, knock-out home improvement Capital Analytics. television. DIY Network’s programs and experts answer the most sought-after questions and offer creative projects for do-it-yourself The risk to the economy is unknown, but probably un- enthusiasts. The site features broadband video channels including derestimated in the government’s stress test of 19 major home improvement, crafts, automotive, gardening, and wood- banks. The results released last week projected that should working along with step-by-step instructions totaling more than the recession worsen, the losses from commercial real 20,000 projects online. estate loans could hit $53 billion, or 8.5 percent of their overall loan losses over the next two years. The exercise notably left out the majority of the regional and local lend- ers, which hold a big chunk of the nation’s $3.5 trillion NWCLA Members – Did You Know?... commercial property loans on their books and remain vulnerable. That Legislation Director Jamie Merrill has been tracking pending legislation that effects all of us as land- “Because of the severity of the economic downturn, now lords including helping members deal with out of town the pressure ... for commercial real estate is much higher,” landlords? Be sure to visit the Legislation page on the said Hessam Nadji, managing director at Marcus & Mil- NWCLA Web Site for this information and more related lichap Real Estate Investment Services. The economy legislation topics. Take Action!!! http://www.nwcla.com/ has forced many businesses to downsize and others like Linens ‘N Things and Circuit City to go out of business. That’s left behind empty storefronts, office buildings and warehouse space.

Landlords are finding it hard to attract new tenants. Increasingly, they are slashing rents or offering incentives like money for tenant renovation. Tenants, likewise, have also become more aggressive about demanding conces- sions from landlords. Starbucks, for example, recently pressed its landlords to renegotiate the rents for at company operated stores.

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LAWYER’S CORNER be applied. Of course the court award- its return. (citation omitted). The com- By Michael J. Ciota ed triple damages to the tenant. mencement of an action may properly be deemed a demand. (citation omitted). RECENT CASES The second claim has the landlord The landlord’s noncompliance with REMIND LAND- committing the exact same legal er- the statute resulted in the forfeiture rors. The difference is that the court of his right to retain the deposit and LORDS OF awarded judgment to the landlord. imposed upon him the duty to return SIMPLE BUT The difference is crucial and is the les- the deposit on demand. “Where the IMPORTANT son to be learned from this case. The landlord discovers or acknowledges court restates the purpose of the law his error and returns the deposit, and INFORMATION and reminds us just how strict it is. the tenant is not forced to resort to “The law is unequivocal. Neither igno- litigation to vindicate his rights, the n several cases, the appellate rance, nor the absence of bad faith, on multiple damages and attorney’s fees courts have decided cases based the part of the landlord is justification provisions of subsection (7) have no on the small but all-important for noncompliance. (citation omitted). application.” Ipoints of law that landlords need to It falls to the landlord to demonstrate remember. strict compliance with statutory terms. Contrast this situation with that in (citation omitted). The overarching Davila v. Boston Realty Works, Inc. 71 In Cote v. Sylvia, 2008 Mass.App. objective is the protection of the tenant, Mass. App. Ct. 11112008, 2008 WL Div. 27, 2008 WL 217396 (2008), who rarely has real bargaining power 583695. The landlord that “in good the Appellate Division of the with the landlord. The landlord holds faith” returned the security deposit just 1District Court had two separate secu- the deposit in trust for the tenant and after the tenant filed the small claim. rity deposit claims before it. In each is strictly accountable for both its safe- This did not convince the court be- separate claim the landlord had taken keeping and its prompt return to the cause the landlord had not only failed a security deposit and failed to place tenant within 30 days from the day the to return the deposit after the tenants it in an interest-bearing account in a tenant vacates the premises. (citation vacated, he had also failed to return it Massachusetts bank, located in Mas- omitted).” in response to the many requests they sachusetts under terms that protect it had made before filing the small claim. from the landlord’s creditors. Having taken the pains to remind the The court stated wryly: “The land-

landlord how strict the statute is, the lord’s return of the security deposit ... The landlord had also failed to inform court did not allow an award of triple can hardly be deemed prompt.... Even the tenant in writing of the location of damages to the tenant because the more problematic for the landlord’s the bank and the account number; ei- landlord did one simple thing - he purposes ... no formal demand by ther pay interest on the account to the returned the deposit within a reason- Davila was required at the conclusion tenant annually, or give the tenant the able time after the tenant requested it. of their landlord-tenant relationship. option of an interest credit against rent In the circumstances of this case, where accruing; return the deposits to the ten- The second step in the process is to statutory deductions were not permis- ant within 30 days of the termination determine whether there has been sible, the landlord was required to of occupancy, § 15B(4); and provide a failure, or refusal, to return the return Davila’s $1,900 to him within the tenant with a written statement of deposit on demand. The landlord thirty days of the termination of the particulars itemizing damages to the promptly returned the deposit in this tenancy [by statute]. The landlord’s rental unit to which the deposits are to case upon the tenant’s demand for failure to return the security deposit –

6 www.nwcla.com Volume 55 Landlords Helping Landlords May 2009 an act considered a particularly repre- minated.2 The message from these cas- hensible statutory violation – subjected es is always helpful to repeat. Once the Buyers Wage Bidding Wars it to liability for an award of treble tenancy has terminated, acceptance of damages. the rent creates the presumption (dif- as Real Estate Bottoms Out ficult to overcome) that the landlord In Alicea v. Pinero, 77 Mass. App. has established a new tenancy. In each Boston Business Journal - by MIchelle Hillman Ct. 1127, 2009 WL 652381, the of these cases the landlord showed that Appeals Court explained that the assumption was not supportable. Jessica Ye has tapped into a segment 2although federal requires that federal In the Dolben case, the court noted that of the real estate market that gets little regulations “shall be judicially no- the landlord’s notice to quit saved the attention today. It’s a market where sell- ticed,” 44 U.S.C. 1507 (2000)1, a party day for the landlord: ers receive multiple competing offers relying on a Federal regulation “must to buy their homes for more than their bring it to the notice of the trial judge.” “Dolben’s notice to quit included the asking price and buyers are entering Mastrullo v. Ryan, 328 Mass. 621, 622 following language: ‘Any money paid by counteroffers. (1952). The tenant was a section 8 you to your landlord after your receipt of tenant who was relying on a federal the Notice will be accepted solely for use On the surface, the return of bidding regulation to make her case. The tenant and occupancy of the leased unit pursuant wars doesn’t add up given the resi- dential real estate market is in one of committed a fatal error. “The Federal to the Notice and without any intention the worst slumps in decades. But with regulation now urged as applicable of reinstating your tenancy, establishing home prices back to 2002 levels, savvy by the tenant was not brought to the a new tenancy, or waiving any rights to buyers are snapping up unprecedented trial judge’s attention. We do not proceed with eviction.’ On that basis alone, bargains — and to a growing extent, consider it. Moreover, the landlord evidence of Dolben’s reservation of rights competing with each other to get them testified at the hearing that it was his could not be clearer. See Corcoran Mgt. Co. — before the market hits bottom and understanding that notice to the BHA v. Withers, 24 Mass.App.Ct. 736, 745, 513 prices start rising broadly. was unnecessary where the BHA N.E.2d 218 (1987). To submit otherwise is, already had provided the landlord at best, careless and, at worst, disingenu- Ye, a real estate broker with Keller Wil- notice that the tenant’s benefits were ous and dishonest.” liams Realty in Cambridge who repre- to be terminated.” If you are going to sents buyers and sellers, has witnessed rely on federal regulations in a court In the Rizzo case, a commercial ten- bidding wars on both sides of deals. case, make sure you bring a copy of the ancy, the landlord showed that the Buyers are competing for aggressively regulations to the court. money accepted was properly applied priced properties in exclusive Boston to part of the tenant’s arrears and not neighborhoods and bedroom communi- Equipment Exp., LLC v. Rizzo, 71 for periods of time after the tenancy ties in the inner suburbs where steep Mass. App. Ct. 1110, 2008 WL terminated discounts have rarely been found. The 482397, (2008) and Dolben Co., Inc. sales range from traditional single-fami- ly homes, to short sales, to properties in 3v. Friedmann, 2008 App. Div.1, 2008 W 1 The court has to accept them as federal law and be bound by L 81549, 2 -3 (2008), remind landlords them and they can be proven without introducing them into foreclosure that are being unloaded by about acceptance of rent after termina- evidence. banks. Regardless of the property type, tion of the tenancy. In each case the buyers are after deep discounts and 2 Landlords need to be wary because this principle works differ- finding pockets of the real estate market tenant argued that the landlord had ently in terminations of residential tenancies based on a 14 day to be hotter than ever. unwittingly reinstated the tenancy by notice. A tenant, especially under a , has the right to “cure” the non-payment by paying. Story continued on Page 8 accepting the rent after the tenancy ter-

Start your own FREE NWCLA Blog discussion http://www.realestateinvestor.com/groups/69/ 7 Volume 55 Landlords Helping Landlords May 2009 Story continued from Page 7 “It’s almost like a market within a mar- for properties because they are tired of at Harvard University in Cambridge, ket,” Ye said. “If you are well-priced waiting for the bottom of the market Massachusetts, said in an interview. and your condition is great, these and want to seize the chance to own “Until we stem the job losses, we can (homes) are moving.” condos in trendy neighborhoods like expect to see continuing foreclosures.” the South End and brownstones on Ye ticked off a half-dozen properties picturesque Back Bay streets. Unemployment is hampering the hous- where she’s been involved in bidding ing market as property prices fall. The wars on behalf of clients. In some cases, Brian Rugg of Rugg Realty and for- U.S. jobless rate rose to 8.9 percent, the the bidders are proposing prices that merly of ERA Boston has a client who highest in more than a quarter century, are thousands of dollars above the ask- was outbid twice in the last month. the Labor Department said May 9. ing price. The first offer was made on a Wayland Home prices fell the most on record in home that was on the market for ap- the first quarter to a median $169,000 Recently Ye sold a three-bedroom, proximately $389,000 and sold within amid sales of foreclosure properties, the one-bath home at 186 Bainbridge St. “cents” of the asking price. His client National Association of Realtors said in Malden where the winning bidders then bid $376,000 on a home in Reading yesterday. paid $14,000 above the asking price. that was listed for $410,000. The offer Ye said she received seven offers on was rejected even after Rugg’s clients Foreclosure filings jumped 32 percent the 1,344-square-foot Colonial, which increased their bid to $395,000. Rugg from the year-earlier period, RealtyTrac was listed for $265,000. The buyers believes the home sold for $399,000. said. Filings were little changed from paid $279,300 after their original offer March as some states delayed seizures. of $285,000 was reduced following the Rugg said people are watching the Ten states accounted for three- quarters home inspection. market intensely. In highly sought-after of all foreclosures in April, with Califor- areas from Boston to the inner suburbs, nia leading the nation. Across the state buyers and their agents Rugg encourages clients to make offers are finding themselves in a contest for as quickly as possible. Declines Slowing? homes that are selling for much less than the assessed value. “We clearly saw this kind of behavior U.S. Housing and Urban Development back in the heyday in 2003, 2004, 2005,” Secretary Shaun Donovan and former Scott McNeill listed an 809-square- Rugg said. Federal Reserve Chairman Alan Green- foot condo in Boston’s inventory-con- span said yesterday there are signs the strained North End and received three real estate market is recovering. offers. The property — which features granite kitchen countertops, travertine U.S. Foreclosure Filings “Since January we’ve seen both home bathroom tile and rooftop rights — is sales moving up and down around a under agreement for above the $489,000 Hit Record for Second relatively stable number and we are asking price. McNeill, a sales manager seeing the first signs that the rapid at East Coast Realty in Boston, didn’t decline in home prices is starting to disclose the price because the deal will Straight Month abate,” Donovan said at an NAR con- not close until June. By Dan Levy ference in Washington.

Bidding wars are taking some buyers March prices fell less than in February by surprise. McNeill said another client Foreclosure filings in the U.S. rose to a record for the second consecutive month and 17 states showed sales increases, of his was outbid on a one-bedroom, yesterday’s NAR report showed, as 789-square-foot condo in the Fenway. in April as banks increased efforts to seize homes from delinquent borrowers. buyers took advantage of mortgage His client eventually won when the rates below 5 percent. The Federal previous bidder walked away from A total of 342,038 properties received a Reserve is purchasing mortgage-backed the deal. The property was listed for securities to spur lower rates. $389,000 and is under agreement for default or auction notice or were seized close to the asking price. last month, RealtyTrac Inc. of Irvine, California, said today in a statement. While price declines are slowing, it’s likely bank seizures will increase in “The reason she lost out is because she One in 374 households got a filing, the highest monthly rate since the property the coming months, RealtyTrac Chief didn’t believe the market is as hot as Executive Officer James Saccacio said. it is,” McNeill said. “She just couldn’t data service began issuing such reports in 2005. believe there was actually someone bid- “Lenders and servicers are beginning ding against her.” “What you’re seeing is the inevitable foreclosure proceedings on delinquent result of severe job losses,” Nicolas loans that had been delayed by legislative McNeill said he believes buyers are and industry moratoria,” Saccacio said. willing to pay over the asking price Retsinas, director of housing studies

8 www.nwcla.com Volume 55 Landlords Helping Landlords May 2009

California was No. 1 in April with New Jersey’s Rate 96,560 filings, a 42 percent increase SPECIAL REPORT from a year earlier, RealtyTrac reported. New Jersey had the 22nd highest rate, Florida climbed 75 percent to 64,588, one in 695 households, and filings fell 4 Road to Rescue Nevada rose 111 percent to 16,266 and percent to 5,034. New York ranked 36th Arizona rose 40 percent to 16,245. at one in 1,420 households, and filings By Les Christie fell 1 percent to 5,591. State Rankings Foreclosures: ‘April was a shocker’ Las Vegas had the highest rate for A record number of foreclosure filings Illinois ranked fifth in filings with metropolitan areas with populations of took place during April, but the number 13,647, up 54 percent from a year ear- 200,000 or more. A total of 14,073 prop- of repossessions fell 11%. lier. Other states among the top 10 were erties, or one in 56 households, received Ohio with 12,324, Georgia with 11,521, a filing, almost seven times the national NEW YORK (CNNMoney.com) -- Texas with 11,314, Michigan with 10,830 average, RealtyTrac said. Foreclosures in April exceeded even and Virginia with 6,254. March’s blistering pace with a record Cape Coral-Fort Myers in Florida 342,000 homes receiving notices of Nevada had the highest foreclosure rate ranked second at one in 57 households. default, auction notices or undergo- as one in 68 households there received a The city also had the steepest price ing bank repossessions, according to a filing, more than five times the national decline in the first quarter, down 59 regular industry report. average. Bank seizures dropped 44 percent from a year ago, the NAR said percent from the previous month, Real- yesterday. Miami and Orlando ranked One of every 374 U.S. homes received tyTrac said. ninth and tenth. a filing during the month, the highest monthly rate that RealtyTrac, an online Florida had the second highest rate at California cities ranked third through marketer of foreclosed properties, has one in 135 households, almost three eighth: Merced, Modesto, Riverside-San recorded in four-plus years of record times the national average, and bank Bernardino, Bakersfield, Vallejo- Fair- keeping. seizures fell 7 percent from March. field, and Stockton, according to Real- California ranked third at one in 138 tyTrac, which collects default data from “April was a shocker,” said Rick households, and Arizona was fourth at 2,200 U.S. counties representing about Sharga, a spokesman for RealtyTrac. “I one in 164. 90 percent of the population. would have bet on a dip because March foreclosures were so high. Utah, Georgia, Illinois, Colorado and “The housing problem is now an eco- Ohio were among the other with the 10 nomic problem,” Retsinas said. “On the Instead, filings inched up 1% from highest foreclosure rates. margins you have some investors who March and rose 32% compared with think they may have found the bottom, April 2008. Connecticut had the 19th highest rate, but on the other side are foreclosures.” one in 662 households. Filings rose 25 There were 63,900 bank repossessions, percent from a year earlier to 2,174. the last stop in the foreclosure process. More than 1.3 million homes have now been lost to foreclosure since the mar- Top 10 states ket meltdown began in August 2007. Where rates of foreclosure filings are the highest.1 The increasing foreclosures will force RealtyTrac to rethink its forecasts, Rank State Households per foreclosure according to Sharga. “We had been pre- 1 Nevada 65 dicting 3.4 million filings for the year,” he said, “but we’ll blow those numbers 2 Florida 135 out of the water.” 3 California 138 4 Arizona 164 The lion’s share of April’s filings were 5 Idaho 255 ones in the early stages of the process, 6 Utah 312 such as notices of default, according to 7 Georgia 344 James Saccacio, RealtyTrac’s CEO. 8 Illinois 384 9 Colorado 387 Bank repossessions actually fell 11% 10 Ohio 411 for the month, compared with March. 1Source:RealtyTrac Story continued on Page 10

Start your own FREE NWCLA Blog discussion http://www.realestateinvestor.com/groups/69/ 9 Volume 55 Landlords Helping Landlords May 2009 Ginny’s FOOD DRIVE Invite NEW MEMBERS to Join NWCLA Bucks Up for Grabs Bring your canned goods or non-perishable Do you know someone thinking of For each new member that you refer to food items to the next NWCLA meeting becoming a landlord or ? NWCLA , you will receive $10 (ten) dol- If so, invite them to become an NWCLA lars in NWCLA bucks. You may redeem Get involved and make a difference to what member. It is the mission of the NWCLA these dollars at our monthly meetings to Ginny has been doing for years for the local to educate, inspire and assist landlords buy items that will be available for sale community. This is also another way to get the in their business. The membership of the or… you may save them up towards your word out about how our landlord association is NWCLA is filled with knowledgeable, ex- yearly membership fee. helping our community perienced and helpful people. Meetings are held the second Thursday of each month By participating in the food drive at the monthly at 7:00 PM. Contact Brian Lucier via email The Successful Landlord meeting, you also get a free raffle ticket for our brian @bhbgroup.com at or call Is a must have for your landlord library monthly member’s incentive program raffle for (978) 448-3873 for more info. and is now available to purchase at meet- door prizes. ings. Cost is $40.00.

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That’s due, according to Saccacio, to and California, with one for every 138, to draw on should to pay for unexpect- the many legislative and company was third. ed expenses such as big medical bills or moratoriums that have prevented the major car or home repairs. That’s makes foreclosure process from starting on Las Vegas continued to be the worst-hit them more likely to miss payments. delinquent loans. metro area. It had more than 14,000 fil- And when home values fall far below ings in April, one for every 56 house- mortgage balances, homeowners often Because fewer loans entered the process holds and 20% more than in March. walk away from their loans. in past months, there had been fewer getting all the way to repossession. But The Cape Coral-Fort Myers, Fla., area “There has been much more ‘-in- now that those moratoriums are over, was second with one in 57, a 31% lieu-of foreclosure’ activity lately,” said the volume of foreclosure filings is month-over-month rise. Merced, Calif., Sharga. This is a transaction in which increasing. where home prices have plunged borrowers simply tell their banks that almost two-thirds from their peak, had they’re not going to pay their mortgage “It’s likely that we’ll see a correspond- the third-highest rate. and hand back their keys, and , to ing spike in [repossessed properties] as their lenders. these loans move through the foreclo- Five other California metro areas sure process over the next few months,” ranked in the top 10: Modesto was “People are making the rational finan- Saccacio said in a prepared statement. fourth, Riverside-San Bernardino fifth, cial decision to walk away from under- Bakersfield sixth, Vallejo seventh and water homes,” he said. Ten states accounted for 75% of all fore- Stockton eighth. Miami and Orlando closure activity, and they fell generally rounded out the list. into two categories: one-time bubble Raised expectations To contribute stories or articles for markets and the rust belt. the newsletter or the web site contact Not helping, of course, is the steady Brian Lucier [email protected] California, which easily outpaced every erosion of home prices. The National other state with with 96,560 filings. Association of Realtors reported record Brian Lucier also maintains online Other hard-hit former boom towns home price losses Tuesday. forums, blogs, and posts at were Florida, Nevada and Arizona. http://realestateinvestor.com/brianlucier “[The home price decline] will lead to and at http://brianlucier.wordpress.com/ Those rust belts towns with the most fil- more foreclosures,” said Mike Larson, a ings were Illinois, Ohio and Michigan. real estate analyst for Weiss Research. Our NWCLA group can be seen at http:// Georgia, Texas and Virginia filled out www.realestateinvestor.com/groups/69/ the rest of the top 10 list. The loss of home values put many more mortgage borrowers underwater, mean- Nevada, with one filing for every 68 ing they owe more on their loans than http://www.nwcla.com households had the highest foreclosure their homes are worth. That increases Members are given a password to access rate in the land. Florida, with one for foreclosure rates in two ways: Under- the member’s only section. We welcome every 135 households ranked second; water borrowers have no home equity feedback and hope you find it informative.

10 www.nwcla.com Volume 55 Landlords Helping Landlords May 2009

the local area. Many lenders no longer have their own, in-house ap- Appraisals Killing Deals in Many Markets praisers; many are relying on large nationwide appraisal services to provide appraisal services. What to do if value comes in below negotiated price If the appraiser can’t be convinced that the appraised value is low, By Dian Hymer and the buyers and sellers want to make the transaction work, it requires a compromise. Finding the right house to buy is never easy; selling a home today is also challenge. It’s best to prepare yourself for Let’s say a listing sold for $1 million, but appraised for only obstacles that could cross your path so that you’re prepared $950,000. One way to resolve the problem is for the buyers and sell- should they arise. ers to split the difference. In this case, the sellers lower their price by $25,000 and the buyers put an additional $25,000 cash down. In some markets, one in three transactions doesn’t close. This is a high ratio compared to the fallout ratio in previous years when the For the cash-strapped, this is not an option. In this case, the sellers housing market was stronger and financing options were plentiful. would have to lower the price by $50,000 to keep the deal together. In past years, most transactions fell apart over inspection issues. The Some sellers might be willing to carry a second mortgage as long as biggest hitch today is financing, which is not to say that property it doesn’t exceed the lender’s loan-to-value (LTV) limit and the loan defects don’t come into play. isn’t due for at least five years.

For some time, lenders have tightened up on their qualifying crite- THE CLOSING: Check with your lender before attempting to nego- ria, making it more difficult for buyers to obtain the financing they tiate a seller carry-back; some lenders won’t allow it. need to close a sale. Recently, appraisals have become problematic, particularly in low-inventory, higher-priced neighborhoods. Dian Hymer is a nationally syndicated real estate columnist and author of “House Hunting, The Take-Along Workbook for Home There are three components to lender approval. The borrower must Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” be financially qualified. This requires a good credit score, sufficient Chronicle Books. *** cash for a down payment and closing costs, as well as verifiable income. The lender also needs to approve a title report on the prop- erty to confirm that the seller has marketable title to the property. And, the lender needs an appraisal of the property to confirm that the buyer is not overpaying.

Previously, lenders’ underwriters required three comparable sales in the area that occurred within the last six months to validate the purchase price. Due to the soft housing market, lenders now want to see comparable sales information on listings that sold and closed within the last three months. The listing inventory in some areas was very low from December 2008 through March 2009, making it difficult for appraisers to come up with enough comparable sales Michelle Schmidt information to satisfy the lenders. Realtor

To complicate matters, some appraisers and lenders automatically Cell: lower the appraised value by a certain amount if the property is in 978-828-0817 an area that is deemed as a declining market. This can result in an appraised value that is lower than the price the buyer and seller Email: agreed to in the purchase contract. [email protected] HOUSE HUNTING TIP: What can you do if an appraisal comes in under the negotiated price? Your agent should talk to the appraiser to find out which properties were used as comparable sales. Your “Call me today! agent might be able to provide the appraiser with comparable sale information that can support the contract price, particularly if the appraiser is from out of area. I’m glad to help with all of your real estate needs!” The most accurate appraisals are done by appraisers who know the local market well. Unfortunately, changes in the lender’s practices are resulting in more appraisals done by appraisers from outside

Start your own FREE NWCLA Blog discussion http://www.realestateinvestor.com/groups/69/ 11 Volume 55 Landlords Helping Landlords May 20092008

Schmidt’s NWCLA MEETING NOTICE • SPECIAL GUEST SPEAKERS

Smorgasbord May’s meeting will feature NWCLA Monthly Meeting Menu Representatives from Housing Court

May, 2009 3 types of sandwiches, Chicken salad, Egg and that will address our landlord/tenant Tuna salad, and a potato salads,. For desert we have fruit cups and pudding; questions in a casual open forum. Coffee, tea, hot chocolate – decaf also

June, 2009 Beef Stew, bread rolls and butter; Dessert as- sortment; Beverages – Coffee, tea, hot choco- Thurs., May 14th, 2009 7 PM – 9 PM late – decaf also ALL Members are welcome to attend the meeting at Dave and Laura are new to this post and want to The Monty Tech Cafeteria hear from you. If you have menu suggestions or located in Fitchburg, MA ideas, kindly talk with David or Laura Schmidt at the food table! We welcome your comments.

NORTHERN WORCESTER COUNTY LANDLORD ASSOCIATION

Fitchburg, MA 01420 MA Fitchburg, for 2003 for

P.O. Box 276 Box P.O. year the of

Association NWCLA