The Short Story on Short Sales
January 25th, 2010 by adminIt has become a fact of life for homeowners, lenders, and real estate professionals, staring us all in the face. It’s the short sale, and this year about 1 in ten home sales fell into this category.
While loan modifications benefit some, there are many homeowners who don’t have the income or debt levels to qualify under the Making Home Affordable program. So what comes next? In the past, foreclosure was the most likely option. However, that tide is turning as lenders are allowing more homeowners to opt for the short sale and sell the property at a price below the actual amount owed on the home. While the bank may still incur a loss, it certainly beats having to foreclose. After all, banks aren’t in the business of owning property if they can help it.
While there are benefits of a short sale over foreclosure, the process has typically been long and cumbersome for everyone involved. Add to that the length of time to actually close these transactions (some can take as long as 8 to 10 months, but the average is 3 to 6 months), and it’s no wonder most people cringe when they hear short sale.
However, there is hope on the horizon. Beginning April, 2010, the Home Affordable Foreclosure Alternatives Program and its recently issued guidelines should help to streamline this process and reduce the backlog that is plaguing lenders now. Not only should the process be shortened dramatically, it will also mean less vacant and vandalized properties, a common problem in neighborhoods everywhere. Closing more short sales will also help neighboring property values, as short sale prices are typically higher than homes that have already foreclosed.
So, without further ado, here’s the short list on the new short sale guidelines.
- Borrowers will now receive pre-approved short sale terms BEFORE listing the property. These terms will also include the minimum net proceeds that the lender will accept. A great time saver for both the seller and the real estate professional.
- The mortgage servicer will now have just 10 days to approve or disapprove a short sale request. Paperwork reduction will also end a lot of the current short sale headaches.
- The new guidelines will now prohibit loan servicers from requiring a reduction in the commission earned by real estate professionals that was agreed on in the listing agreement. Agents no longer have to take a commission cut for all of their hard work.
- For the homeowner, there will be a $1500 relocation assistance incentive. Helps take some of the sting out of losing a home.
- Also for the homeowner, the program requires that the borrower is fully released from future liability for the first mortgage debt. Again, a much better option than letting the house foreclose and having it haunt your credit for up to 10 years.
- Financial incentives will also be in place for the mortgage servicers – $1000 for every completed short sale transaction
- Qualifying properties must be the homeowner’s principal residence, and the homeowner must be either already delinquent on the mortgage, or show that default is imminent. There are also some other qualifiers regarding debt to income ratios; consult with a mortgage professional for the complete list.
Keep in mind that the Home Affordable Foreclosure Alternatives Program applies to loans that are not owned or guaranteed by Fannie Mae or Freddie Mac. But, Fannie and Freddie, which currently cover over half of the mortgages in the US, are already working on a similar program. Details of their guidelines should be released in the coming weeks.
Will the new guidelines turn the tide for short sales overnight? Not likely. However, as we move into 2010, we will certainly see more short sales and foreclosures and this program will certainly help smooth out the process and move these homes much more quickly. And that is good news for everyone!
Scottsdale, Arizona DC Ranch, Grayhawk, and Silverleaf Foreclosures / Short Sales
December 24th, 2009 by adminA short sale occurs when the owner of a home is no longer able to make their mortgage payments, and the mortgage payoff is higher than the market value of the home. In this case, it is imperative to hire an experienced Realtor that will represent your best interest. A foreclosure occurs when the owner of a home stops making their mortgage payment, and does not hire a Realtor. In this case, the bank will re-possess the home and either auction the property off, or they will hire a Realtor to see it for them.
You can view all short sales and foreclosures by clicking on the website associated with this article in Scottsdale, Arizona. Free Arizona MLS access is offered to the public by clicking on the website associated with this article. If you, or anyone you know is thinking about buying or selling property in the Scottsdale area, your referral is greatly appreciated. Experience goes a very long way in Real Estate.
The responsible thing to do is to hire an experienced Realtor. This may benefit the owner by being able to stay in the property while not making mortgage payments. Every case is situational, but banks would rather have someone in the property maintaining the home rather than leaving it vacant. When the property is vacant, the yard usually becomes very unattractive, and the property will become dirty making it less desirable to prospective buyers.
You can not conduct a short sale if you have not stopped making your payments. Once you have stopped making your payments on your mortgage, that is the time to contact a Realtor to help you. Once your home is on the market for sale as a short sale, it will be much like selling your home as if it were a normal transaction. Most people that have to put their home up for sale as a short sale do not like being inconvenienced by showing it every day, so the best way to do it is to set up showing times for one hour a week during the weekend. This way, the owner can still live in peace. While the short sale is being negotiated by the bank and the Realtor, contracts on the property should be coming in.
Experienced short sale Realtors should be able to back up the auction date by requesting the bank to submit an extension on the auction date. Some short sales take 6 months, others 3 months, and others up to a year. It might be a good idea to ride the short sale wave as long as possible, if you can stay in your home for up to a year with out making a mortgage payment that may allow you to come up with money to re-negotiate your loan, or make arrangements with the bank to get the property out of short sale position. No body wants to be foreclosed on, and no body wants to put their home on the market as a short sale. We understand that. We make the process as easy as humanly possible and take on all of the work on your behalf. Helping people buy, sell, and lease property in Scottsdale, Arizona every single day. Click the website associated with this article to get more information.
Short Sales: What You Need to Know as a Seller
December 22nd, 2009 by adminA short sale is an option that is available to sellers that will prevent foreclosure. This specific type of real estate sale is becoming more popular as many people are becoming unable to meet their mortgage payments because of the tough economic times. If you’re trying to sell a home in this crowded real estate market, a short sale will allow you to competitively price your home and it may save you from foreclosure.
As a seller, you need to know that completing a short sale will leave you without a profit on your home. The home will be sold for less than the balance of your mortgage and you’ll need to qualify for this type of sale before being able to use it. For this reason, its best to work with a licensed real estate agent who has experience with short sales in order to get the best results with process. Look for a Certified Default Resolution Specialist (CDTS) to handle your short sale. These are special real estate agents who have been trained to handle short sales and other similar real estate transactions. Since they’ve received special training and certification you can be sure that they’ll be able to guide you through this somewhat complicated process.
In order to qualify for a short sale, you’ll have to show the bank that you are under financial hardship. You will also need to show that the value of your home won’t cover the balance of the loans against it. Typically, you’ll need to show income verification and bank statements to a lender to prove that you required a short sale. In addition, you’ll need to turn in a statement that explains your financial hardship. These documents in and of themselves can be hundreds of pages long, which is why having an expert real estate agent is a good idea. The bank or lender will be responsible for the closing costs and the real estate agents’ fees.
Under a short sale, your home will be sold as-is, so you won’t have to make any improvements to the home in order to make it more saleable. You may have to put down some out of pocket money depending on the offer you receive, the deficit of the loan and the lender’s preferences. Your bank or lender will not allow a family member to purchase your home in a short sale.
Contrary to its name, a short sale does not happen extremely quickly. It can take up to four months or as little as two in order to get the short sale complete. This timeframe starts after an offer for the home has been received. Knowing the length of time that these sales normally take is helpful in order to prepare yourself for the process. If you are on the brink of foreclosure, your certified real estate agent may be able to delay the foreclosure sale if there has been a reasonable offer for your home.
Even with these drawbacks, a short sale may still be the best way for you to get out of your current mortgage. Speak with a reputable real estate agent to get started with the process.
What Is A Short Sale And Is It A Good Idea?
December 18th, 2009 by adminAs a homeowner, when your financial situation prevents you from being able to keep up with your mortgage payments, there are a number of options to choose from. Among these is the short sale option. Due to the state of the economy, short sales have become increasingly common among Orange County homes and in some cases, it is the most recommended course of action for homeowners facing financial hardships.
Orange County property management professionals define a short sale as a legally binding agreement to sell the home for less than the amount owed on the mortgage.
One of the advantages of a short sale is that it reduces the negative impact on your credit. A short sale must be approved by the seller’s current lender(s). The process typically takes a minimum of 45 days for the lender to approve the short sale. The Mortgage Forgiveness Act of 2007, which has been extended to 2010, protects OC real estate home owners from debt collectors seeking monies owed beyond the sales price of primary residences.
Qualifying for a Short Sale
Any form of financial hardship may qualify a home owner for a short sale. A short sale is the best option for home owners facing difficult financial times in certain cases. Rather than walking away from a negative asset or losing your home to a bank foreclosure, a short sale will have a less severe impact on your credit. For more information regarding short sales on Orange Count and Newport Beach homes, contact your local short sale negotiators to learn more.
Real Estate Short Sale
December 18th, 2009 by adminA real estate short sale takes place when the sales price is less than the amount of all the liens against the property. It is not just the original lender who may be foreclosing. It would include anyone who has place a lien on the property such as a home equity loan or line of credit loan.
Here is one scenario. Let’s say Bob want to sell his house. He owes more than it is worth and he has lost his job and cannot afford to make the payments any longer. His realtor advises him he has 3 options. He can let the property go into foreclosure but this will stay on his credit record for a long time which is not a desired result. He can give his lender a deed in lieu of foreclosure but this too could negatively impact him. Finally he can try and sell his property “short”. In a short sale the Borrower/Seller receives no money.
Why would a lender sell short? Because it is costly to foreclose. In some cases it could be several thousands of dollars with attorney fees, court costs etc. Also the property still has to be sold. A short sale can be a win/win for everyone. The lender recoups more money than they would in foreclosure. The seller/borrower/owner can escape without a record of foreclosure on their credit report. The Buyer can acquire a property at a rock bottom price.
Here is a problem with short sales. They take time. If the Buyer is in a hurry & needs a property now, most likely a short sale will not meet their needs. As they say time takes time and in the case of short sales this is very true. I have a short sale transaction still trying to close after 10 months which is the extreme.
They take a long time because of the current economic climate. The lenders are swamped. What used to be done in 45 days can now take several months depending on the lender. Bank of America is the slowest. Most sales require 1 or 2 BPO’s (a Broker’s Price Opinion) and maybe an appraisal to confirm the current value of the property in today’s market. Then the investor…the institution who loaned the money in the first place needs to approve the sale as well. The investor can be a bank or a loan servicing company or any number of entities.
Patience as I stated will go a long way to keeping one’s sanity during a short sale.
Always consult an attorney with all legal concerns with this process.
Verified Short Sale And Deed-in-lieu Results
December 2nd, 2009 by adminA Saint Charles man sued his lender (First Franklin) for improperly trying to foreclose on his second home. First Franklin agreed to a Short-Sale along with debt forgiveness for the $180,000 loss that First Franklin absorbed at closing. The homeowner also walked away with $20,000 at closing that was disclosed in the sales contract and settlement statement to lender, title company and buyer. The entire credit history of the foreclosure was removed from the homeowners credit history. If there is a problem with your loan there may a surprisingly positive solution available.
A Saint Charles man also sued First Franklin for Truth-in-Lending violations on the mortgage for his primary residence. He additionally defended against foreclosure with several mortgage fraud allegations. The foreclosure never moved forward. The other lawsuit settled out of court in a fully disclosed settlement that resulted in the homeowner offering the Deed-in-Lieu of Foreclosure and walking away with $33,000 while the lender suffered a $350,000 loss. The homeowner had no tax liability for the debt forgiveness due to the Mortgage Debt Relief Act.
A Geneva man received $5,000 “Cash for Keys” to hand over the keys to his home rather than fight foreclosure. The house had been on the market for a long time with no serious offers and was worth far less than the mortgage loan amount.
Most of my clients seek mortgage modifications but if you just want out and are looking to not walk away empty handed then maybe one of these other solutions would make more sense for you. Use the free online evaluation at www.illinoismortgagemods.com to see what options are available.
Long or Short Term Mortgage?
November 16th, 2009 by adminSome people who feel financially secure are considering a mortgage for a shorter duration than the traditional 25-30 years. This can drastically reduce your overall payments, but can also mean that if your situation changes, you will be locked in at a high mortgage payment. Is it worth it to take out a longer mortgage and make extra payments?
One definite advantage of short term mortgages is the interest rates, which can be several points below that of a 25-40 year mortgage. If you are confident that the rates are going down or will stay level, a short term mortgage that repeats may be a smart choice. However, it is difficult for even the most knowledgeable financial analysts to completely predict interest rates, so you should be prepared in case rates take a jump.
If you know you will be moving in the next few years or think you may, a shorter mortgage is going to cost you less in the long run. The disadvantage to this is if you decide to stay in your home for longer than you expected or can’t sell by the time the short-term period runs out. For people in a hot home market who are looking at “flipping” a home ? selling it relatively quickly after renovation, a shorter mortgage makes sense, as you know you won’t be keeping the house around for long.
Life changes affect everybody and it makes sense to be prepared. A death or birth in the family, relatives or friends in need and personal life events can make previous plans for a home suddenly less feasible. While no one wants to dwell on the loss or worsening condition of a loved one, it behooves you to consider how this will affect your home mortgage plans. The loss of your job; how do you plan to pay for the mortgage if you have a drastic reduction in income for several weeks or months? A birth may be a joyful occasion, but it is also an expensive one and one that may make you rethink moving. These things need to be taken into consideration
It seems obvious that shorter-term mortgages are best for people who keep track of interest rates and current events and know what they plan to do with their home. It is also wise to have liquid assets that can be used to cover your living expenses in case of loss of income, unexpected events and the possibility that interest rates will go up when you need to refinance.
Make Money With Short Sales
November 16th, 2009 by adminToday, everyone is trying to find the best and easiest way to make money in the real estate industry. With so many foreclosures in every state across the US, most people believe this is a dream come true as they can purchase a home that is bank owed for a fraction of the cost, however, there is another way to make huge amounts of money in the real estate business without bidding on foreclosed properties. The answer is through short sales.
The steps involved in short sales are finding real estate that may be a possibility for a short sale. If you know of a house that you are interested in purchasing, but are not sure if the owners would consider selling their home, you need to do some research. A short sale is one that is done shortly after the lending company sends a default loan notice to the homeowners. You can truly find many great deals and purchasing property with a short sale and turn it around and resell the home for a profit, however, you must know the process. The best way to learn about the entire process is by talking with a real estate agent that has experience with short sales.
The things you need to do once you find a property you are interested in buying with a short sale is to first check out the property. Look at the condition of the property and the home; you do not want to purchase a home that needs major expenses such as a new roof. Once you have expected the property, you should then learn if there are liens on the property, how much is owed on the mortgages, and what financing options might be available. You should contact the lending company and fill out a short sale application. Once all of this is completed, you will have to negotiate with the lending company and the homeowner. This is where a real estate agent and even an attorney will come in handy.
A real estate agent will be able to give you a wealth of information so you will know where to look to learn about the property. You should learn the value of the home, what other homes are worth in the area with the same amenities, and more. You should never fill out an application prior to learning what you are getting into with the home. Negotiating of course will be the hardest part after you have done all the legwork, however, if you have an experienced real estate agent by your side, you will soon have the keys to your new property in your hand and be ready to move in or fix up and put on the market for sale.
Understanding Negotiations in Short Sales
November 9th, 2009 by adminFor anyone that knows that a foreclosure is just around the corner, a short sale should at least be considered. A short sale can protect you in a few ways that might just help your credit, as with a short sale, a foreclosure will not be placed on your credit report. A short sale does not always wipe the slate clean, though, you may still owe the lending company money. The reason is that the lending company will be accepting less than what is owed on the home and in some cases will expect you pay the difference. This is where negotiations come into play.
You may be confused when it comes to talking with your lending company; however, you should know that every type of lending company has a department that works directly with their customers to negotiate short sales. The department is usually known as loss mitigation. Talking with department before you receive a foreclosure notice may not be your best option, as they will more than likely turn a blinds eye to your problem. The reason this is true is that all lending companies would like to receive the money that you borrowed including all the interest, this is the way they make money.
After you have received a notice of default, you should then make an appointment with the loss mitigation department of your lending company. In some cases, you may wish to bring with you an attorney to ensure your rights are not violated. In most cases, the process is easy as the lending company normally has a predetermined criteria for short sale negotiations. A lending company, by law, has a right to deny a short sale, this is where you will need your negotiating skills to kick in. this is one reason having an attorney by your side will do wonders. The lending company will of course want to receive as much money as they possible can, however, most will take reasonable offers.
If you have found a person that wishes to purchase your home at a lower amount than what you owe, you may be able to negotiate with the lending company, but if the amount of money is quite a bit lower than the amount you owe on the existing loan, you may have a hard time convincing the lending company that this is a good deal. If you cannot afford to pay your mortgage payments, you are headed toward foreclosure, then you must do something or the foreclosure will be on your credit report and you will have a hard time buying a home for a very long time. On the other hand, the lending company does not wish to lose money. If they can sell your home at auction, or put it up for sale and gain more money than you are offering, they will more than likely deny your short sale offer. Be prepared to negotiate and provide the lending company with a reasonable offer.
