Archive | Short Sale
If you have been exploring short sale now is the time to look a bit harder at this option. Why you ask? A couple reasons. First, over the past couple of years the lien holders (banks) have developed systems that streamline the short sale process. Some banks are better than others but overall they have improved. Second, with the passage of Nevada AB284 which went into affect in October 2011 many banks are delaying the foreclosure process while they work to get their paperwork in order. This may afford sellers an opportunity to negotiate from a position of power and with the luxury of time. And lastly, the IRS Debt Forgiveness Act is set to expire in December 2012. This act provides sellers who have had debt forgiven through foreclosure or short sale with some exemptions. Many sellers, especially primary residence owners, benefit from this act. Now is the time to call a real estate professional and explore the short sale option.
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If you answered yes to this question or if your are approaching the 3 year mark post short sale this information if for you. If you closed a short sale and it has been 3 years you may be eligible to purchase another home using FHA or conventional financing. Hopefully you have gotten back on your feet and had the opportunity to repair your credit over the 3 year period. If you have you should consider calling a mortgage lender and getting pre-approved for a new purchase. With current market prices at the most affordable in years, low interest rates and no more “designer” loans becoming a homeowner again may be a great move for you. Not only are home prices affording mortgage payments at or below current rents, the mortgage interest tax deduction could save you a large amount on your income taxes.
If you are under the 3 year mark and would like to repurchase when time allows, you may want to consider visiting with a credit counselor to gauge where your credit is at this time and what you might need to work on. I recommend Consumer Credit Affiliates . They can assess your situation and help you formulate a plan to get back on the path to home ownership.
If you are planning to purchase you will need to save a minimum of 3.5% for an FHA down payment and money for closing costs. In some cases you can get assistance from the seller with your closing costs which typically are about 3% of the purchase price. If you need a recommendation to a good local lender contact me.
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Short sales still are a major factor in the Reno-Sparks market. As of today there are 817 active shorts sales and 1261 pending short sales (Area 100/All residential types). The active short sales only account for 37.2% of the active listings but 62.2% of the pending sales. In May there were 177 short sales closed which accounted for 28.4% of the closed sales. If you look at the first quarter of 2010 there were 433 short sales closed. This year in the first quarter we closed 486 short sales, roughly a 10% increase. The average time it took to close those short sales is relatively unchanged from 2010 when the average was 205 days to an average of 203 days in 2011.
Many of the banks have continued to work on their short sale process and make improvements to speed the process. Many are also starting to roll out new programs where sellers can get “pre-approved” short sales prior to listing the property so that once the property is listed the timeline is significantly reduced which greatly benefits the buyers. (These are programs in additon to the Government HAFA program.)
We still see obstacles when there are multiple liens, mortgage insurance and bond program loans. It is important to know what type of loan you have and if your lender took out mortgage insurance on your loan. Homeowners also need to know that banks are still looking for you to be in default or in danger of default in the immediate future. There has to be a hardship or reason that you can no longer afford your payments.
There appears to be a trend toward more deficiency waivers from servicers, but in some cases it doesn’t come without a cash contribution or promissory note on the part of the homeowner. Many servicers are looking at the seller’s overall financial picture – credit score, other debts, monthly income, other assets etc. to determine if the seller might be required to contribute.
The key is still to seek the assistance of an experienced short sale listing agent as early in the process as possible. It’s best not to wait until a Notice of Default is filed to consider short sale as an option.
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Not if I have anything to say about it!
The FBI reported a jump of 71% in mortgage relief fraud investigations from 2008-2009, and expects this number to have grown in 2010.
That’s why it’s my duty to educate homeowners in my community on the cautions they need to take, and what the government has recently done to protect you from unscrupulous individuals and companies who want to take advantage of their desperate situations.
What you need to watch out for if you are looking for mortgage relief assistance:
- Upfront fees—just don’t pay them! In fact, they are now illegal!
- A request to sign over your deed (this only spells trouble)
- Lots of paperwork without the opportunity for review
- The claim of government-affiliation
These are just a few red flags you need to be wary of. I’ve created a free report on the homepage of my website that details more of what you need to watch for.
I f you are struggling with an unaffordable mortgage and are looking for help, educate yourself. These scammers can be very shrewd and will say almost anything to steal your money.
The Federal Trade Commission has required disclosures of anyone offering mortgage relief services. If you’d like to see an example, check out any of the pages of my website. If a company you are dealing with has not provided these disclosures, please ask why they are not compliant, and proceed with caution!
As a CDPE and a Dickson Realty agent, you can trust that I have the tools to be in full compliance of FTC regulations, and will always work with your best interests at heart.
CLICK HERE FOR FORECLOSURE ALTERNATIVES
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The California Association of Realtors has just launched a new website, http://www.shortsalescalifornia.org/, to help members as well as consumers stay on top of all the latest news and insider tips on the ever-changing short sale process.
With information for both consumers and REALTORS®, the website is full of need-to-know resources about short sales, and provides up-to-the-moment news, legislative information, legal tips, and lender requirements.
Short Sales California is also a place to stay up-to-date on C.A.R.’s activities to enable more families to arrange a short sale.
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In a recent study, the Chicago Booth/Kellogg School Financial Trust Index found that a full 36% of Americans would consider “strategic default”—another term for walking away from your mortgage—if they were underwater (owed more on their home than what it was worth).
Now that more than one in four American homeowners is “underwater,” I feel that it’s important for the community to know the truth about strategic default.
The truth is the foreclosure process carries with it credit issues, current and future employment challenges, issues with security clearance and possible debt collections.
That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:
- There’s nothing strategic about defaulting on purpose, especially when you have options like short sales, mortgage modifications, and refinance (just to name a few) that may keep you from foreclosure.
- The waiting periods to apply for a new mortgage loan are at least five years less in a short sale vs. a foreclosure.
- A foreclosure will show up on your credit report every time you apply for a home loan, car loan, new job, etc., and will affect your financial situation for many years to come.
Foreclosures in Washoe County increased by 16% in January 2011 over December 2010, and up 23% over January 2010.
If you are underwater and can no longer afford your mortgage payments, you need to create a genuine strategy to avoid foreclosure, helping to provide stability for you and our community.
If you have any questions about what steps you or someone you care about should take next, contact me today – 775.813.2387!
I offer a free report at http://www.KevinBown.com
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A very common misconception in the short sale world is that you must be behind on your payments to be considered for a short sale. This isn’t necessarily the case as I have assisted homeowners with short sales that were current on their payments. The key factor is are you facing a financial difficulty. If you can show the bank (your lien holder) that you have a legitimate hardship (loss of job, loss of income, change in financial circumstance, death of a spouse, medical hardship, divorce etc.) and that you no longer want to keep the home you may be able to complete a short sale while current on your payments.
From the bank’s perspective, the homeowners who are delinquent have the most immediate need to receive their assistance. In addition, if you are able to continue making your payments they may request a cash contribution or promissory note from you at the closing of the short sale in order to approve the short sale. Your lender will consider your entire financial situation when making this determination.
There is an exception. If you have an FHA loan on your home and you want to do a short sale you will be required to be 31 or more days delinquent at the closingof the short sale. You do not have to be delinquent at the time you apply to the FHA Pre-Foreclosure Sale Program.
Working with an knowlegable short sale listing agent is key.
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One of the biggest issues with getting a short sale closed has been timeline from the point where the buyer’s offer is submitted to the lien holder (bank) to getting an approval. BofA is introducing a “cooperative short sale” where the homeowner is evaluated for a short sale, the property value and list price are determined by the bank and the homeowner is approved prior to offering the home for sale. Once the home is placed on the market and an offer recieved, BofA is saying it can provide a response within 10 days. The key will be the quality of the offer presented.
The benefits is that once a buyer has made an offer they no longer will wait 60-90 days to get an answer as the underlying approval process was completed prior to listing the property for sale. This will greatly increase the stigma that has been placed on short sales and make these listing more attractive to buyers.
There are several other programs that follow a similar model. The HAFA program designed by the US Treasury is available to borrowers who qualify and provides for an upfront approval. Also, if your mortgage is FHA insured the FHA Pre-Foreclosure Sale Program requires homeowners to get approved into the program and sets the list price prior to the marketing/listing of the property.
The key for homeowners in the Reno-Sparks market is to contact an experience agent who can make you aware of all your options when facing a possible foreclosure. When a short sale is the best solution for a homeowner, hiring an agent who is knowledgable about all the programs available to them is crucial.
For more information on the Bank of America Cooperative Short Sale please contact me.
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Effective Februray 1, 2011 updates to the Home Affordable Foreclosure Alternatives (HAFA) Program will take affect. These guidelines may help increase the number of approvals for homeowners seeking assistance under this program.
Here are the key changes:
- Monthly Gross Income Requirements- Servicers are no longer required to verify any financial information to determine if the borrower’s total monthly mortgage payment exceeds 31% of the borrower’s monthly gross income. This being said, the servicer is still required to verify the borrower’s hardship and may request financial documents to evaluate the hardship.
- Vacant Property Requirements – Properties can now be vacant or rented up to 12 months prior to the Short Sale Agreement as long as the borrower can prove that the residence was their primary residence and they have not bought another home in that time. Relocation no longer is limited to work related relocation and the relocation distance requirement has been removed.
- Release of Subordinate Liens (Paying Off Second/Junior Liens) - the 6% cap to pay off junior liens has been eliminated. The servicer determines the percentage going to each junior, but the $6,000 cap is still in place.
- Timing For Issuance of Short Sale Agreement – now for both HAFA short sales initiated by the servicer and those requested by the borrower, the time line for the servicer to respond to the borrower is 30 calendar days. (Please note that many servicers are not adhering to this guideline simply because of the volume of HAFA requests. There does not appear to be any penalty to the servicer for not meeting this timeline.)
- Timing For Response To Alternative Request For Approval of Short Sale – if the borrower submits an executed sales contract, Alternative RASS and signed Hardship Affidavit or RMA, the servicer must communicate approval or disapproval, or a counter within 30 calendar days.
- Real Estate Commissions – the 6% cap remains, but servicers must now include a statement in the Short Sale Agreement that they will not deduct 3rd party vendor fees from any agent commission.
- Alternative Deed-In-Lieu (Deed for Lease) Programs – these programs did not previously qualify for the borrower to receive relocation incentives. They now are included but only when the DIL is final.
- Borrower Notices – Servicers can now consider a borrower for HAFA while the borrower is considering HAMP.
Servicers are not required to, but may re-evaluate borrowers who were previously ineligble before the guideline were changed.
For more information contact me for the full Supplemental Directive 10-18.
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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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Monday, January 30, 2012 By: Amy Shocket
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