There’s a lot of talk about foreclosures right now. Everyone knows that foreclosure means someone is losing their home. Not everyone knows what the steps are in a foreclosure, so let me outline what the basic process is here in Utah:

First , the Notice of Default . When a homeowner fails to make a mortgage payment, he is in default. The lender can have a Notice of Default filed against the homeowner at any period of time after not receiving mortgage payments. Usually lenders will wait 90 days or so before having a Notice of Default filed, hoping that the homeowner will bring payments current and pay any necessary late fees.

Second, the Equitable Period of Redemption . The homeowner has 90 days after the Notice of Default to bring mortgage payments current (including any applicable late fees). If payments are brought current, the Notice of Default is canceled and the homeowner stops the foreclosure process. If not, however, the process continues with. . .

Third, the Notice of Sale. At this point, a date is set for the home to be sold at a Trustee’s Sale. The sale must be advertised at least once per week for a 3 week period of time in a local newspaper.

Fourth, the Trustee’s Sale . Shortly after the 3 week advertising period, the home is sold at a Trustee’s Sale. This usually takes place on the steps of the county courthouse in the style of an auction. Essentially, the bidding will typically start at whatever amount is owed the lender and will be bid up by any interested buyers. The highest bidder must pay cash to purchase the home. If nobody bids on the home and it remains unsold, the process continues with . . .

Fifth, the Home Becomes an REO Property . The bank now has ownership of the property (also called Real Estate Owned or REO) and will try to market and sell the property on its own terms.

Are there good deals available in the Foreclosure Process?
It depends - sometimes "yes" and sometimes "no". There are opportunities to find and purchase homes for good deals during any of the stages of foreclosure. However, each individual’s resources will usually dictate which stage is best. For example, there are not very many who can participate in a Trustee’s Sale because very few people have the cash on hand to do so.

Also, and perhaps most important, sometimes people think they are getting a deal when in fact they are not. "Foreclosure" is one of the big buzz words in real estate right now and many people are trying to embrace potential foreclosure opportunities. However, with enough demand, foreclosure property prices can be just as expensive or even more so than properties purchased at market value. Every situation is different. Some present good deals but many others just waste time, money, and effort.

If you’re anything like most people, you’ve never even heard of radon before. But in this case, ignorance is NOT bliss! Everyone should learn more about radon and the dangers that it poses to each and every one of us, regardless of where you live, what you drive, or what color of skin you have. Radon is dangerous!

What is Radon?
Radon is a colorless, odorless, tasteless gas that could be endangering your family’s health as we speak. To quote a recent article by Custom Home Inspection’s President, Bruce Kelly:

“Extensive research dealing with this material tells us that radon has been conclusively proven to be the second leading cause of lung cancer, second only to smoking tobacco products. Radon is considered to be the No. 1 cause of lung cancer among nonsmokers. Each year, radon kills thousands of Americans and is responsible for 15% of lung cancers worldwide. Since lung cancer has the lowest survival rate of all cancers, it’s important for us. . . to know what radon is, how it causes lung cancer and what we need to do to prevent exposure to radon. ”

“Radon is an invisible, odorless, tasteless gas. It is considered to be a “complete carcinogen” and is classified as a “Class A” carcinogen, because it can act solely to initiate, promote and propagate cancer. Radon becomes destructive when it undergoes radioactive decay. When radon decays, radiation and radon progeny (daughters) are produced. Some radon particles enter the lungs alone, while others “ride” on dust or smoke particles. Although all radon particles enter the lungs, it is the radon particles that travel alone that get lodged the deepest in the lungs. This is because radon particles are much smaller than dust or smoke particles; therefore, they can travel further within the lungs before becoming lodged. These radon progeny are composed of heavy metal particles of lead, polonium and bismuth that are electrically charged. They are so minute that they become airborne, traveling through the air where they can be inhaled. Some radon particles penetrate only millimeters into the epithelial cells that line the interior of the lungs. Because some radon particles cannot travel any further, they become concentrated and cause severe damage to the lungs. Concentrated radon particles are responsible for over 85% of the damage caused to lungs.”

“Large concentrations of radon are not necessary to cause lung cancer. A single radon atom alone can cause lung cancer. Radon particles damage cells by altering their genetic material. The damage typically kills or disables cellular reproduction. However, in some cases, the damaged cell may survive and continue to reproduce in a mutated state, forming cancerous tumors that will eventually affect the health of the person affected.”

Where does radon come from? What do I need to do?
With radon, it’s not of question of where is it, but how much of it is there. You see, radon is everywhere! Radon forms naturally from radioactive decay of uranium deposits within the soils of the earth’s crust. It then rises and seeps upward through the soil and into your home through spaces and cracks in the foundation or walls. No home is completely air-tight, which means radon can be in any home at any time. In fact, even when your next-door neighbor’s home has extremely low levels of radon, your home may be just the opposite. Logically, the areas most susceptible to higher radon levels are in basements.

The EPA recommends that radon levels be below 4 picoCuries per liter (pCi/L) of air. This is a measurement to determine how much of it there is. If your entire home has less than 4 pCi/L, you can breathe easy. If your home has areas with levels higher than 4 pCi/L, you’ll want to take action to mitigate these higher levels of radon.

Radon test kits can be purchased from home improvement centers. Make sure the kit you buy is approved by the EPA. You can also seek out professional radon lab testers to have radon tests performed professionally for you.

If you have high levels of radon in your home, call construction contractors certified by the EPA with the training and skills to correctly mitigate the problem. They can inform you of solutions and estimated costs to correct the problem. Contact David Neville for a list of approved contractors at 801-536-0091. Additionally, you can contact a radon hotline at (800) 458-0145 to ask questions and learn more.

Fires are perhaps the most destructive and hardest to predict. They can occur anywhere at anytime. People are often the cause of fires. Teenagers, boy scouts, and "pyromaniacs" have started many large and destructive fires throughout the years, often on accident (usually because of negligence). Certain conditions can also create simultaneous combustion, resulting in unwanted fires: hot weather and dry, combustible materials (like pine needles and dead trees).

You can’t always mitigate all fire risks surrounding your home, but you can implement safety precautions within the walls of your home. The U.S. Fire Administration reports that "American homes suffer an unwanted fire every 10 seconds, and every 60 seconds they suffer a fire serious enough to call the fire department. Most importantly, every 2 1/2 hours someone is killed from a fire in a home fire - that’s over 3,500 people killed in 2000 alone. Another 20,000 people are injured in home fires in a typical year."

Most Common Causes of Fire Within the Home
Most home fires happen in the kitchen while cooking. Leaving clothing or combustible materials near appliances that heat up (such as a water heater or wood-burning stove), can also encourage a fire. Dry Christmas trees are another common culprit. Keep them fresh, water them frequently, and don’t place candles (or too many lights) on their branches.

How Can I Protect My Family from the Threat of Fire Within My Home?
Installing smoke detectors throughout your home is a must. One for every bedroom and hallway, plus one for the kitchen. Remember to regularly check your detectors and replace the batteries often. You’ll also want to have a fire extinguisher nearby - one for the kitchen and at least one more for each level of the home. Practice fire safety by role-playing where to exit the home under different fire situations and know where your family gathering place is. Practice the "stop, drop, and roll technique" with your children - so they will know how to react if their clothing catches on fire.

Lastly, double check your insurance to see what type of fire insurance coverage you have if ever you need to use it. Make sure you are adequately protected. With the right precautions and correctly applied knowledge, you can significantly mitigate or even eliminate the danger of fire in your home. And in the case of unpredictable fire circumstances still damaging your home, you can rest assured that you have the coverage to protect and even rebuild your home.

The three most dangerous threats to homes in Utah County are destruction by fire, water, or earthquakes. Today I want to focus on floods. Floods can happen anywhere at any time to anybody. And just because you don’t live in a higher risk flood zone does not mean that you are exempt from flooding. There are certain flood zones mapped out by FEMA (Federal Emergency Management Agency) that show locations with a greater risk for flooding. If you live in one of these zones and have a mortgage, you are required to have flood insurance. However, there are many people who live in areas where flood insurance is not required. Some may ignorantly believe that their homeowner’s insurance protects their home from any type of disaster. This is simply not true. Flood insurance is additional coverage that everyone should get on top of their homeowner’s insurance to protect specifically against damage caused by flooding.

According to the National Flood Insurance Program (NFIP), historical data shows that about one in four flood claims come from homeowners in low to moderate risk flood areas. Last year alone, one-third of flood claims paid by the NFIP were policies in low-risk communities. Additionally, the average home has a 26% chance of being damaged by a flood during the course of a 30-year mortgage compared to only a 9% chance of fire. I highly recommend flood insurance, regardless of the area where you live. You never know when your area could become the exception to an unforeseen flood disaster. In Utah County, many of our homes are lower in elevation to Jordanelle and Deer Creek dams, which could cause terrible damage if they ever burst.

I remember driving up Spanish Fork canyon as a child and seeing deserted homes in odd places - the result of the Thistle flood of 1983.

Another flood disaster hit a little closer to home to unsuspecting communities in Idaho. My family, among thousands of others, lived through the flood caused by the Teton Dam breaking. The cities downstream suffered terrible losses. Thousands of homes and businesses weren’t just damaged, they were destroyed by the unexpected gush of water. The basement to my grandparent’s home was flooded, destroying countless heirlooms and personal belongings. Fortunately, their home still stands today. With a lot of hard work the mud and water from the flood was emptied from the basement and the carpet, walls, cabinets, etc were rebuilt.

What’s the average expense of a small flood? Can you give me a ballpark estimate of what it costs for the average person to get flood insurance?
According to the NFIP, estimated total losses to replace damage done on an average home by a 2 inch flood equal $7,800 or $18,930 for a 12 inch flood. The higher the flood, the more extensive the damage. Flood insurance coverage is relatively inexpensive and is backed by the federal government to entirely cover potential losses. For many people, estimated coverage to protect their home and all of its contents would cost $26/month. This premium amount will fluctuate depending on the extent of the coverage you desire as well as the value of your home and contents. Although paying for any type of insurance is something that you do to protect yourself, you hope that you never have to use it! But it is always better to be prepared than to be sorry…

As I mentioned in an earlier entry, the greatest threats to our homes here in Utah County are the catastrophes of floods, fires, and earthquakes. Today I’d like to elaborate on the threat of earthquakes.

The Wasatch Fault
In Utah County we live very near the Wasatch Fault, at places right on top of it! We are at a high risk for earthquake damage. In fact, Utah experiences several hundred small earthquakes every year - most are very small and go undetected by the general public. Geologists have long warned that it is not "if" but "when" a big earthquake will strike in our area.

The Deseret News reported the following earthquake information on April 19, 2006:

"earthquakes of about magnitude 7.0 occur on average every 200 to 300 years somewhere on the broad Wasatch Front area, according to Walter Arabasz, director of the University of Utah Seismograph Stations.

He also said they occur on average about once every 1,300 years on the Salt Lake City segment of the Wasatch fault.

When did that last happen? "About 1,300 years ago," Arabasz said back in 2006.

But such quakes are not uniformly spaced and could occur any time enough pressure has built."

"New estimates for what a 7.0 earthquake could do to the Wasatch Front are scary: It could kill more than 6,000 people, injure 90,000 and cause a billion economic hit."

Now, I’m certainly not implying that a big earthquake will happen today, tomorrow, or even 5,000 years from now. If it did, would your insurance cover damages to your home? Personally, I don’t even like to think of how devastating such a disaster would be, but I do believe in being prepared against potential dangers. Suppose there were a relatively small earthquake in Orem tomorrow - everyone’s okay but the nearest 200 homes to the epicenter now have substantial damage.

Earthquake Insurance Coverage
Earthquakes are very hard to predict. Rating areas based upon their likelihood of experiencing an earthquake is also extremely hard to determine. A standard homeowner’s insurance policy does not include earthquake insurance. Actually, many companies don’t even offer coverage against earthquakes, largely due to how hard they are to predict. Of the companies that do offer earthquake insurance, it is often provided only upon request. Deductibles and premiums will vary so talk to a few different companies. Also, when asking about earthquake insurance make sure the policy includes some sort of time frame that covers the original earthquake plus any aftershocks that occur (so you are not charged a separate deductible for each successive aftershock).

As with all insurance, you’ll hopefully never have to use it; but if you do, you can at least have the peace of mind knowing that your home is protected.

I had a conversation recently with a friend about title insurance. This friend expressed his opinion that title insurance companies provided useless service and were just out there ripping people off. I was shocked by his attitude because I feel like title insurance is a very important and vital part of purchasing property. As I thought about it more, I came to the conclusion that he did not understand exactly what title insurance does. For the benefit of any other people out there who do not know what title insurance does, let me explain:

Title companies perform a title search on property to determine what types of liens and/or judgments are recorded against a parcel of property. It will also show which tax districts can levy taxes against the property, which will generally include cities, counties, fire districts, water districts, and school districts. By determining this information, a seller will know what he/she needs to do to pass "ownership" to a potential buyer and vice versa. For example, if you decide to sell your home this title search might show that you have several things recorded against the property that need to be addressed and/or paid off before you can pass title (ownership) on to someone else. You may have a $135,000 first mortgage, a $10,000 second mortgage, unpaid taxes of $1200, and two mechanics liens of $5,000 each that are all recorded against the property, all of which must be taken care of before you can sell it to someone else. Ideally, you will have lived in the home long enough that you can sell the home for more money than the $165,200 recorded against it. As a side note, there are sad situations when people have taken out second and third mortgages to the point where they owe more than the property can be sold for. People facing this situation must have other means to pay off any remaining balance owed or they simply cannot sell their home.

This brings up my second point regarding title companies: they also handle the escrow and settlement papers of your transaction, including the calculation of pro-rated taxes and pre-paid interest so that it is fair for everyone involved. They figure out exactly who owes what to whom and work it all out in one smooth settlement transaction. The money coming in from the buyer’s loan is disbursed in a way that pays off the seller’s mortgage lien, etc and any leftover amounts are transferred into the seller’s bank account.

Lastly, the title company will issue title insurance for the property according to the title report that has been generated through its assessment of who "owns" the property . This title insurance will cover potential losses up to the policy amount (which is usually the purchase price). The actual title or ownership of a home can have unseen defects that could challenge the new owner’s rights to possess the property. Although these situations are rare, they could exist with any property at any time. For example, what if you bought the house from Mr. Smith’s estate after he passed away and 2 years later Mr Smith’s grandson comes along with a valid will that states the property should have legally passed on to him upon his grandfather’s death. As you can see, there is a problem here. For reasons I won’t go into now, this is highly unlikely, although remotely possible. At this point the title company will defend you in court, if necessary, and pay you up to the policy amount if the property is taken from you. Other hidden defects in a title could include impersonation of the real owner, forgery, misplaced or forgotten legal documents (such as the example of the will), etc. Although unlikely, these types of things could easily ruin anyone’s life. Title insurance gives you peace of mind that the home you own is really your own and if someone comes down the road in the future to argue that, you will be protected up to the amount that you invested.

There’s a lot of talk these days about credit scores, which are becoming more and more important in today’s society. Logically then, the more important credit scores become, the more important it is that we understand them. Let’s explore a few different questions: What is a credit score? How are credit scores calculated? And what can I do to improve my credit score.

What is a Credit Score?
Credit scores are calulated using complex mathematical formulas in an effort to determine a potential borrower’s likelihood of making payments on a loan. The foundational idea behind a credit score is that a borrower’s previous payment history is the best indicator of that borrower’s future payment performance and dependability.

How are Credit Scores Calculated?
The specifics of how credit scores are calculated is kept confidential and varies among each scoring entity; however, credit professionals estimate the following compositional elements and weights of a credit score:

1. Payment History (35%)
This evaluates how well you have been paying your bills and shows any late payments, collections, past due accounts, judgments, bankruptcies, and tax liens that you have had.

2. Outstanding Debt (30%)
This takes a snapshot of how much total debt you have on all of your credit accounts and what percentage of available credit you are using. As part of this, it shows if any of your credit accounts are maxed out.

3. Length of Credit (15%)
This shows how long each of your credit accounts have been open and which ones are being regularly used. It will also show if anyone has been added to your credit accounts.

4. Mix of Credit (10%)
This displays the credit types you have: mortgage loans, car loans, credit cards, etc.

5. New Credit and Inquiries (10%)
This shows information on any newly opened accounts, how often you apply for new credit, and credit inquiries made on your behalf.

These credit score elements are only estimated values but give a general idea of what things are reported and recorded on your personal credit score.

What Can I Do to Improve My Credit Score?
1. Periodically check your credit report and score. You can check your credit report for free without negatively affecting your score through the Federal Trade Commission’s authorized website: www.annualcreditreport.com . Once you receive your free credit report, your actual credit score (the number that can range as high as 850) will not be given; however, each credit bureau will provide you with your calculated score for a small fee. By doing this you can make sure that your credit is being reported accurately and have any mistakes corrected. You can also monitor against ID thieves who may have someone stolen your account numbers or social security number and done fraudulent things in your name.

2. Pay your bills on time, even early if you can. This shows that you are creditworthy. Lenders can extend you money and feel confident that you will make the necessary payments to pay them back.

3. Pay more than the minimum payment on your credit card accounts. Don’t use more than 50% of the available limit on each of your credit card accounts. In fact, keep the balance on your credit cards at less than 30% of their available limits, if possible. You may even request to have your credit card limits increased to help achieve this purpose. The idea behind this is that is shows you have plenty of available credit you can use, but are not stretched to the limit in having to use it all. For this same reason, do not max out your credit card accounts.

4. Keep a manageable amount of your credit card accounts active (perhaps 3-5 credit cards) by using each of them on a fairly regular basis. Use them every 6 months to a year, even if it is only for very small purchases. This keeps them active and shows that you use them and have them available - but don’t have to push their limits to the max. Sometimes people decide then to consolidate all of their debt onto one card. Don’t do this, either. You want to show that there is a mix of different lenders and loan programs that validate your creditworthiness.

5. If you are planning on making a big purchase in the near future and want to finance it through some type of loan, don’t do anything drastic to change the landscape of your credit accounts without first running it by your lender.

By following these credit-improvement techniques consistently, especially the months before you make large purchases such as a house, you will be able to improve your credit score and qualify for better loan rates and terms.

The new scare for the mortgage industry is the growing trend of consumers with exceptional credit scores to lend their credit to borrowers who have less-than-perfect payment histories. This type of arrangement is usually facilitated by companies that bring the two consumers together and charge a fee for their services.

So how is this possible? Let’s look at an example. Credit King Carl has exceptional credit. Pam has poor credit due to a difficult period of time during which she lost her job, couldn’t pay her bills, and declared bankruptcy. Friendly Facilitators, Inc, is a credit restoration company that specializes in improving consumers’ credit scores. In our scenario, Pam speaks to Friendly Facilitators and they connect her to Carl for a 1500 dollar fee. Carl adds Pam as an authorized user on 5 of his credit cards, but never gives her any account numbers, credit cards, or any other verifying information for her to be able to access those credit card accounts. Ultimately, Pam is added as a user on his credit card accounts, but can’t actually use them. The result: Pam’s low credit score piggybacks on Carl’s high credit score and within a short period of time Pam’s score jumps 162 points higher than it was before. Once this higher score is calculated and reported, Pam is taken off of Carl’s credit accounts and they part ways. Realistically speaking, most of these consumers never even meet each other - the process is accomplished through companies like the Friendly Facilitator, Inc. Carl gets paid a handsome sum for lending his credit, Friendly Facilitators keep a profit for aiding the transaction, and Pam qualifies for a mortgage loan with a low interest rate and favorable terms that she otherwise would not have been able to obtain.

Sounds like a win-win situation, right? Wrong! Currently, this is a major concern for the mortgage industry because it doesn’t paint an accurate picture of a potential borrower’s creditworthiness. Lenders may be extending loans to borrowers with artificially inflated credit scores, believing that they are making a sound loan investment when, in fact, their borrower’s true credit history may actually qualify them as being at serious risk for loan default. The resulting consequence could jumpstart a domino effect creating even higher loan defaults and foreclosures throughout the nation, which would harm the mortgage and real estate industries, which would harm consumers by making them pay higher interest and insurance rates and thereby slow the economy, etc.

Currently, federal officials have not specifically banned this practice. Although technically it may not be illegal, it is certainly not ethical. At its root, I believe this practice of credit lending/borrowing is loan fraud. Borrowers, when obtaining a loan, are required to disclose material facts about their ability to repay that loan. By borrowing someone’s credit to artifically inflate your credit score, and not disclosing to the lender that you have done this, you are fabricating the true picture of your ability to pay.

Credit scoring bureaus are working on tweaking their credit calculation models to compensate for borrowers who use this method to bump up their credit scores. But the honest and best thing for consumers to do is put hard work and dependability on the line by improving their credit score in traditional, proven ways.

Because real estate contracts can be very tricky and highly complex, the law (according to the Statute of Frauds), requires all transactions dealing with real estate to be in writing. This protects both buyer and seller because it forces them to specifically outline, in writing, all pertinent conditions of what exactly is being sold, what is expected of each party, etc.

In conjunction with the fact that real estate deals must be in writing, a 1997 court ruling outlined that ". . . Licensed real estate brokers and salesperson, when completing earnest money agreements, are required to comply with the standard of care of a practicing attorney ." Earnest money agreements go hand in hand with real estate offers that, when accepted by a seller, become legally binding contracts. As a REALTOR®, I am held to the same high standards of professionalism and care as a full-fledged lawyer when it comes to writing and negotiating the purchase or sale of real property.

An invaluable service that I provide as an exceptional REALTOR® is in filling out and explaining all legally binding forms and paperwork when clients decide to buy or sell real estate. In this way, I help clients set realistic expectations so they know exactly what they are getting. No surprises. No worries.

But what if there are what ifs ? Every real estate transaction is different. Some are smooth and simple and go through without a hitch. Others are extremely complex and seem to hit every bump in the road. What if the stainless steel refrigerator you saw when you first walked through the home is now mustard yellow and only half of its original size? What if the person who said he’d buy your home suddenly can’t get financing? What if the seller asks you to do him a favor but you question the legality his request?

There are innumerable what ifs for innumerable situations. The value of an exceptional REALTOR® is that you can trust him to know the legal issues at the heart of your real estate contract and professionally deal with any situations that may arise, without you having to worry about them.

For many people, the summer season often means leaving your home alone to visit family or friends. If you leave for an extended period of time, here are some things to remember:

Put your mail on hold . Fill out the form at the post office or go online at www.usps.com to put your mail on hold from 3 to 30 days.

Call your newspaper to place a vacation hold .

Use programmable timers to turn lights on and off throughout your home . Make sure to alternate different lights at different times to give the appearance that someone is home.

Eat or throw away perishable food .

Take out the garbage so it doesn’t rot while you are gone.

Find a reliable pet-sitter . Perhaps take pets to a nearby kennel.

Water your plants before you go . If you will be leaving for an extended period of time, you may want a reliable neighbor to regularly water them or even take them during your absence.

Save energy by closing curtains, unplugging appliances, and turning down the thermostat . But don’t turn down the heat too low - you don’t want problems with freezing. 55 to 60 degrees is low enough.

“There is a slight crack in the ceiling...”

I recently spoke with Curtis Bullock, the state legal attorney for the Utah Association of REALTORS®. He told me that approximately 80% of all real-estate-related court cases are due to misrepresentation.

Misrepresentation occurs when someone falsely portrays some part of the process in a real estate transaction. The most common misrepresentations come from plain old deceit, even if no harm is intended.

The law requires that a seller discloses known material facts about the home he is selling. When working with a REALTOR®, this is done through a copyrighted form known as the Seller’s Property Condition Disclosure - a five page document wherein a seller describes everything he knows about the property he is selling. It contains questions about the current and past condition of the roof, sewer services, heating & cooling systems, appliances, property boundaries, mold, water leakage, etc. Basically, it asks the seller to define any problems the property has - both presently and in the past.

As an example, one seller may make the justification that even though the basement floor used to have a terrible leak, since it was fixed over 5 years ago he shouldn’t have to disclose that the basement flooded twice. Another seller may not disclose the fact that the dishwasher only works 80% of the time - the buyer should be happy that it works at all, right? Still another seller may rationalize that even though she had to replace a portion of her roof due to termites last year, she had pest control take care of the termites and hasn’t seen any more since then. Why tell about the roof when the problem has been taken care of and full disclosure might hamper the sale of the home?

Because otherwise such sellers might end up in court. Hiding material facts is wrong and leaves sellers vulnerable to being sued.

The best advice to avoid possible misrepresentation: tell the truth, the whole truth, and nothing but the truth!