Vallejo homeowners get much needed help

March 9, 2008 4:39:03 PM PDT
The high number of home foreclosures in Vallejo is one of the reasons why the city is facing budget problems. Today, on Mare Island, homeowners in danger of losing their property are getting help from real estate experts.

Here in Vallejo, the American dream of home ownership is turning into a nightmare for the city council. There are so many foreclosed properties, the city is losing money and borrowing power.

The mortgage crisis is quickly becoming a disaster in cities like Vallejo, already deep in the red.

"We expected higher sales tax and property transfer tax in the city and it's not coming as we wanted it to be," Vallejo City Council Member Hermie Sunga.

Sunga says Vallejo ranks 97th in the country for foreclosed properties. He helped organize a seminar with the National Real Estate Council to teach residents how to stay out of foreclosure.

"From a lender's standpoint, if you can make the payments, even if it's a strain, continue making it," says real estate expert David Lal.

Tonie McGee and Matthew Criswell are trying to hold onto their 1,200 square foot condo. Their adjustable mortgage just went up two points and will rise again.

"It's either we're going to afford it, we're going to lose it, or we'll be getting second jobs," says Criswell.

They bought the condo eight years ago for 1$60,000. Over the years, they borrowed on equity and now owe $294,000. Similar condos next door won't even sell for that much.

"There's plenty of hope and the biggest issue is that a lot of people just don't know what to do. The statistics are out that about 60-percent of the people in a foreclosure situation just don't know what to do and there's lots of different options," says Lal.

One option is a so called short sale. Let's say you bought a home for $700,000.

"We would negotiate with the lender to take less of a payoff and allow the property to be sold for $500,000. The lender takes a loss and then the owner is able to sell it and move on," says Lal.

More desirable, but less easy to obtain is a loan modification, where the lender actually lowers the principal and the interest rate.

Local homeowners can also seek help from Solano County. Their offices is automatically reassessing the tax basis in the Glenn Cove development that is a part of Vallejo. Elsewhere, loaners can re-apply for assessment, based on the value of their homes.


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