Archive | Foreclosure
New statistics show that 1 in 7 homeowners are facing difficulty paying thier mortgage. Homeowners facing these issues often wonder how they can afford to get help. I am here to tell you that you can get the help you need from an experienced short sale real estate agent and most, if not all, of the costs will be deducted from what is recieved from the sale. There is no need to pay a short sale company or attorney to faciliate a short sale for you. In most cases your lender will agree to pay all the typical seller closing costs and the comission to the agents as part of the short sale approval. In most short sales the homeowner is not responsible for these costs and in turn is not allowed to recieve any proceeds from the sale. The key is making sure you are working with an experienced short sale real estate agent.
Does this mean that homeowners are completely off the hook and won’t have any costs? No, in some cases depending on your financial situation the lender may ask the homeowner to contribute to the loss with a cash contribution or promissory note. An experienced short sale real estate agent can assist you in minimizing these and working on a win-win solution for both the homeowner and the lender. In some cases the cash contribution or promissory note can be the key to having the lender release the homeowner from any future liability.
How can you afford not to do a short sale? When the alternative is foreclosure which can be devastaing to your credit, your future ability to purchase a home again, and result in larger tax consequences – how could you afford not to consider a short sale?
If you are a homeowner facing difficulties making your mortgage payment, consult an experienced short sale agent as soon as possible.
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According to data from the Northern Nevada Regional MLS, sales in the Sparks area (which includes Spanish Springs and Wingfield Springs) had short sales leading in the 3rd Quarter of 2010. Short sales accouted for 35.4% of the sales in the quarter, traditional sales 34.9% and bank owned 29.8%. Compared to 3rd Q 2009 when bank owned sales topped the charts at 41.43%, traditional sales at 26.7% and short sales at 26.5%
The total number of sales for the Sparks area (MLS area 108) dropped slightly from 2009 to 2010, down about 6.1%. In addition, the median price also fell from $170,000 in 3rd Q 2009 to $160,700 in 3rd Q 2010, a drop of 5.5%.
There are currently (as of 10-22-2010) 568 active listings available to buyers in the Sparks area market. Of these 48.6% are short sales, 34.4% are traditional sales and 16.9% are bank owned. Key here for buyers is to make sure you have a buyer’s agent working for you that knows the ins and outs of short sales – doing your homework before making an offer on a short sale is key.
Bank owned properties continued to earn the highest list to sale price ratio. In 3rd Q 2010 bank owned lisitngs got an average of 99.6% of the asking price, short sales 98.9% and traditional sales 97.4%. Fewer foreclosed properties at low prices, continued mis-understanding of short sales and over-priced traditional listings drive these numbers.
As expected short sales have the highest average number of days on market. For 3rd Q 2010 short sales averaged 184 days on market, bank owned 79 and traditional sales 77. As a note the average number of days to close a short sale is relatively the same between 2009 and 2010. We keep being told by the banks that they are improving their processes. Hopefully this will reflect soon in our average days to close a short sale.
According to a Yahoo.com report on 10-20-2010 more than 55% of the active mortgages in the Reno-Sparks area are upside down. I think we will continue to see more and more short sales as homeowners become more educated about short sales as an option to foreclosure. The key is making sure that you select an agent that is highly skilled in the short sale areana and get legal and tax advice as well.
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There is a lot of news out there about the recent foreclosure “freezes” or moritoriums. What does this mean to homeowners in Reno-Sparks area? Nevada is a non-judicial foreclosure state. What this means is that in order for a bank to foreclose in Nevada they do not have to go through a judicial process (go before a judge) to foreclose. When you take out a mortgage in Nevada you sign a Deed of Trust which says you agree to pay and if you fail to pay the lender can foreclose by simply filing a Notice of Default and subsequent Notice of Sale within the State laws. Many of the banks that instititued these foreclosure freezes have lifted in them in the 23 states that use the judicial process because these foreclosure are reviewed by the courts prior to being approved.
These freezes do not mean that homeowners are going to get off the hook. It simply means that you may have a bit more time to pursue alternative options, such as a short sale. Don’t be fooled into thinking that you can hold off until after the holidays to look into your options. If you are facing difficulty paying your mortgage please seek help of a qualified real estate professional as soon as possible. The one thing you don’t have is TIME.
Over the past several years we have seen the lenders institute foreclosure freezes in the 4th quarter simply because it is not good press to foreclose on homeowners during the holiday season. Although the issues seems to be more focused on “robo-signing” for the current freezes, historically this isn’t uncommon.
Again, call an experience real estate professional today…
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Introducing Dickson’s Fresh Start – a program to help restore your financial stability and buying power.
We understand the devastating effect that being forced to leave a home has on families in our community, both financially and emotionally. If you’ve lost your home through a short sale or foreclosure, or have recently gone through bankruptcy, we can help.
Dickson Realty has partnered with The Grupe Company as the exclusive provider of Fresh Start in the area.
- Rent-to-own program designed to help families get back on the home ownership track
- Lease for up to 5 years in the neighborhood you want to live
- Re-establish credit and financial stability
- Buy in 3 to 5 years at pre-set pricing
Contact Dickson Realty today and speak with one of our Fresh Start specialists to find out how we can help you with your Fresh Start.
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If you are struggling making your mortgage payments you need to seek help as early as possible to avoid foreclosure. Fannie Mae, an insurer of home loans, has released a new interactive tool online to help you determine what your options are. KnowYourOptions.com The website is designed to be a virtual one-stop-shop for anyone facing financial hardship and in need of foreclosure prevention solutions.
The site is available in both English and Spanish and includes tools like educational videos, mortgage calculators, financial forms and checklists. A virtual assistant will walk you through the site.
Not all mortgages are insured by Fannie Mae, but this is a great general resource. The site does provide a Fannie Mae Look-up Tool so you can find out if your mortgage is insured by Fannie Mae so you can take advantage of the Fannie Mae specific programs that are detailed on the site.
Again the key for anyone homeowner who is facing difficulties or anticpates that they may have an issue in the near future is to seek help as early as possible. This website is a great first step.
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The National Association of REALTORS released some updated infomation on the affects of short sale, foreclosure, bankruptcy and deed-in-lieu of foreclosure on FICO scores and the ability to purchase another home.
Short Sale (Deed-inlieu of Foreclosure Guidelines are similar) – According to the report the affect on your FICO score from short sale depends on how the sale is reported to the credit bureau. If reported as “not paid as agreed” the score could go down 100+ points. Late payments will also affect the FICO score and are reported for 7 years, with thier impact lessening over time. Buyers looking to purchase after a short sale will have to wait to purchase another home. If purchasing using FHA financing the wait is 3 years (possibly less if not in default at time of short sale). For a Fannie Mae insured loan buyers need only wait 2 years if putting 20%+ down, 4 years if putting between 10%-20% down, and 7 years if putting less than 10% down. If getting a Freddie Mac insured loan the wait is 4 years, 2 years if extenuating circumstance are documented.
Foreclosure – A foreclosure stays on your credit report for 7 years, with the impact lessening over time. A foreclosure could lower your FICO score 100+ points. Buyers looking to purchase after a foreclosure will again have to wait. If purchasing using FHA financing the wait is 3 years. If getting a Fannie Mae insured loan the wait is 5 years from the foreclosure sale date, 3 years if there are extenuating circumstances. Additional underwriting requirements may be required. The wait for Freddie Mac insured loans is similar with a 5 year wait, 3 years for exentuating circumstances.
Bankruptcy – Bankruptcies stay on your credit report for 7 years (10 if there was a full discharge of debt). Bankruptcies generally have a greater negative affect on the FICO score in comparison to the above mentioned issue. Buyers looking to repurchase after a bankruptcy using an FHA loan will have to wait 2 years from discharge date with a chapter 7 BK and 1 year with a chapter 13 BK. If getting a Fannie Mae or Freddie Mac insured loan there is a 4 year wait for chapter 7 or 11, and 2 year wait if chapter 13. Some allowance are made for exentuating circumstances.
Extenuating Circumstances – include serious illness or death of a wage earner, but do not include an inability to sell a house due to job transfer or relocation.
For a full copy of this report please feel free to contact me.
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REALTORS Care Nevada will be hosting a Housing Counseling Event for homeowners in the Reno-Sparks and surrounding areas on Saturday, May 8th from 10 a.m. to 4 p.m. The event will be held at the Reno Sparks Association of REALTORS which is located at 5650 Riggins Court, Reno. Homeowners will have the opportunity to hear from a panel of local counselors, an attorney and a CPA. After the panel discussion they will have the opportunity to meet one-on-one with these HUD-approved housing counselors. Panel members include: Jill Perry, Northern Nevada Director, Counsumer Credit Affiliates; Jeni Temen, Branch Office Mangager and Certified Housing Counselor with NID Housing Counseling; Rhea Gertken, Esq., Nevada Legal Services;Tim Nelson, CPA with Evans, Nelson & Company CPAs; and Elizabeth Fielder, Attorney with Jones Vargas. For more information visit foreclosurehelpfornevadans.org
Homeowners should come prepared with the following documents:
- Monthly mortgage statements.
- Information about other mortgages on your home if applicable.
- Two most recent pay stubs or other income documentation for all borrowers, if self-employed a profit and loss statement.
- Two most recent bank statements.
- Account balances and monthly payments for credit cards and debts.
- Estimates of monthly expenditures (medical, utitilies, insurance etc.)
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The new Home Affordable Foreclosure Alternative (HAFA) program introduced by the Treasury starts today. This program was designed to help homeowners who did not qualify for the Home Affordable Modification (HAMP) program or were unsucessful at completing a trial modification. The new HAFA program allows the homeowner to apply for and get a pre-approved short sale on their FIRST MORTGAGE.
The key to the new HAFA program is that the homeowner must meet the HAMP guidelines to be considered, which are as follows:
- Property must be the homeowner’s primary residence.
- The first mortgage must have originated before 2009.
- Mortgage payments must be delinquent OR default is reasonably foreseeable.
- Unpaid balance is not more than $729,750.
- Homeowner’s TOTAL monthly payment (principle, interest, taxes, insurance and HOA dues) MUST EXCEED 31% of thier GROSS MONTHLY INCOME.
Timelines for this program are set at much shorter periods than traditional short sales.
- Within 30 days of the request to be considered the servicer must respond to the homeowner.
- 14 calendar days from the servicer’s response the homeowner must sign the “short sale agreement” and return it to the servicer.
- At this point the homeowner then lists the property.
- Once an offer is recieved the homeowner must submit it to the servicer within 3 business days.
- The servicer then has 10 business days to accept or reject the offer.
If the servicers can meet these deadlines it will greatly improve the market for these short sale properties. (I for one am currently in the watch and see mode.)
Here are some other key points that must be considered….
- Homeowner gets a $1500 incentive for relocation assistance at the conclusion of the sale.
- Homeowner must negotiate separately with any second mortgages etc.
- If there is mortgage insurance the insurer must waive their rights to recieve additional payment.
- Must be an arms-lenght transaction.
- Servicer/Investor must agree not to pursue a deficiency balance against the homeowner (this is huge!)
Contact me for more detailed information and to see if you might qualify for this program.
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With a new decade just begun, it’s interesting to look back at where we’ve been these past 10 years. In 2002, there were 1023 single family homes sold in the Truckee/Lake Tahoe area, with a median price of $397,500. By 2006, we reached the peak of market value, at a median price of $680,000. Now, at the end of 2009, we’re down to a median price of $512,000, a total decrease of 25% in median value from the high in 2006, yet a 29% increase since 2002. However, this year has also seen an increase in number of homes sold (787), up 20% from the low in 2008 of 655.
In looking at the Tahoe Donner subdivision in Truckee, which comprises the largest percentage of the sales in the overall area, the statistics are similar. In 2002, there were 302 single family homes sold, with a median price of $495,000. The highest median market value was reached in 2005, at $765,000. At the end of 2009, the median price is at $568,500, again, a 25% drop since the high in 2005, yet still a 29% increase from where we were in 2002. And similar to the picture for the entire area, the number of homes sold in 2009 in Tahoe Donner (225) was up 16.5% from 2008.
During the past year, we’ve seen our share of distressed properties come on the market, although not near as many as many areas of our state and country. Of the 787 single family homes that sold in 2009, 127 (16%) were foreclosures and 85 (11%) were “short sales”. We currently have only 23 foreclosure properties active on the market (3% of the total inventory available), and 102 “short sales”, comprising 14%.
As we look towards this new decade, we’re excited about the opportunities in our industry that will hopefully allow many more buyers to realize their dreams of home ownership, be it here in our mountain paradise, or wherever their dreams may take them.
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Wednesday, November 10, 2010 By: Amy Shocket
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