The Truth about Short Sales

Posted on February 26, 2010 by admin

There are a lot of misconceptions about short sales in the real estate marketplace. Here are just a few of them:

1)  Short Sales are impossible and never get approved.  FALSE

TRUTH: Short Sales are more difficult, but they are NOT impossible.  While there are no guarantees in any transaction, more and more short sales are being approved monthly.  However, a Real Estate Agent MUST be educated on the process, or it will be nearly impossible.  I am tenacious and I don’t take no for an answer but always look for a solution to any problem.

2) Banks are NOT accepting Short Sales; They are waiting on a bailout.  FALSE

TRUTH: The reality is that banks have already been bailed out, and are really trying to do anything they can, within reason, to avoid foreclosing on a property.  More banks are aggressively pursuing Short Sales and Real Estate Agents who understand how to process them.  It is strictly business, it costs the bank (in most cases) far less to short sell than to foreclose.

3)  You must be behind on your mortgage in order to negotiate a short sale.  FALSE

TRUTH: At one time this was true, but today, this has almost all together reversed.  Today lenders are looking for verifiable hardship, monthly cash flow shortfall or pending shortfall and insolvency.  If you meet these three requirements and are in a position where you can not or will soon not be able to afford your mortgage, now is the time to pursue a short sale.   There are a few lenders who still hold on to this rule, but they are few and far between.    In fact, most lenders in any circumstance would rather sell short than foreclose.

4)  Buyers are not interested in short sales and avoid them.  FALSE (mostly)

TRUTH: Some buyers are not interested because of the time it takes, especially with time constraints like the  First  Time Homebuyer Credit.  On the other hand, many agents are getting calls from buyers who say “I only want to look st foreclosures and short sales.”  These have become synonymous with the term ” Good Deals”.

5)  Listing a home as a short sale is an embarrassment.  FALSE

TRUTH: Most sellers don’t want the world to know they can’t pay their bills, but according to recent estimates, 1 in 5 homeowners in the United States owe more on their house than it is worth.  Even wealthy owners have to stop the bleeding somewhere.  Most sellers are to be congratulated for admitting they need help, taking action and finding a professional who can work toward a solution.

6)  The bank would rather foreclose than bother with a short sale.  FALSE  FALSE  FALSE!!

Truth: This myth started with collection people working for lenders on commission.  The reality is that banks do not want to foreclose on property, it costs too much.  An average foreclosure can cost the bank up to $40,000 and they still have holding costs, insurance, real estate brokerage fees, etc. and then they still get less than market value.  Do the math, which would you do?

7)  There is not enough time to negotiate a short sale before a foreclosure.  FALSE

TRUTH: This is a myth that hurts homeowners.  Many don’t realize that the foreclosure process is lengthy.  It can take a year or more, and if an attorney gets involved, it can be stalled far longer.  Almost all lenders will stall a foreclosure with a legitimate contract for short sale.  So if  Lis Pendens has been filed, no worries, that’s just the beginning.  If it is slated for the courthouse steps, hurry up, if there is an offer you may be able to stall.  Don’t wait that long.  Go get it on the market today with a competent Real Estate Agent who knows how to work short sales and avoid foreclosure.

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Problems Facing Housing in 2010

Posted on February 8, 2010 by admin

1. Short sales and REOs will continue to dominate the national real estate markets. (Expect Short Sales to be seen as ‘the solution’ for the foreclosure crisis)

2. In some markets…in the lower end price ranges…the home values have hit bottom. There will continue to be significant depreciation in homes that cost over the FHA lending limits.

3. THE FIRST HALF of this year will be stronger vs the second…why?:

4. The ‘Home Buying Stimulus’ expires in April.

5. The government is going to stop buying mortgage backed securities (MBS). This WILL result in rates increasing.

6. The FHA has made it clear that they will RAISE lending standards. (This has already started).

7. 25% of all Americans with mortgages are now upside down in their home. In many areas of Florida that number is significantly higher. There will be more homeowners deciding to rid themselves of their own ‘toxic assets’.

8. The banks are now releasing their “so-called Shadow Inventory”. Elizabeth Warren (Chair of the Congressional Oversight Committee) thinks there are as many as 15,000,000 homes that could become foreclosures…and REOs.

For these reasons we are expecting there to be a double dip in housing. What this means is that for the first half of 2010 there will appear to be a housing recovery…to be followed by more home value depreciation. Expect the most significant depreciation with homes that are above the FHA lending limits.

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Fannie Mae Offers Subsidy For REO Purchases

Posted on February 2, 2010 by admin

Fannie Mae says it will cover the closing costs on purchases of its REO homes – an incentive the GSE hopes will help it pare down a bloated supply of repossessed foreclosed properties.

The nation’s largest mortgage financier has announced a temporary seller-assistance program under which people purchasing a property through HomePath, Fannie Mae’s REO disposition operation, will receive up to 3.5 percent of the final sales price, which can be applied toward closing costs or used to purchase appliances for their new home.

The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010, the company said. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing,
with as little as 3 percent down.

“Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover,” said Terry Edwards, EVP of credit portfolio management for Fannie Mae. “Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help.”

Recent data from Fannie Mae show an increase in the acquisition of foreclosed properties and an escalating rate of seriously delinquent loans, which means even larger volumes of REOs could be coming down the pipeline.

According to the GSE’s most recent quarterly filing, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year and sold 89,691 REO properties during the same period. But at the end of September, Fannie Mae still had 72,275 REO properties on its books, marking a 7 percent increase year-over-year.

Furthermore, Fannie Mae’s monthly summary shows significant growth in seriously delinquent single-family mortgages held or guaranteed by the company. Up from 2.13 percent in November 2008, loans three or more months behind in payments or in the foreclosure process soared to 5.29 percent in November 2009.

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Stop The Banks! The Banks Are Trying To Change The Foreclosure Process!

Posted on February 2, 2010 by admin

The Banks’ Lobbyists Are Trying To Change The Foreclosure Process!

It is not a good thing to give the banks more power.

If you are a real estate agent or a homeowner in the state of Florida please contact your Congress men and women today, please contact your state Senators today! Do not let this plea go unanswered.

If you are in the business of real estate you need to be involved with the political process and this call to action is NOW.

If you are a short sale agent, if the banks get their way with this, this will directly impact your short sale closing ratios. This will also put more of your sellers at risk of losing their homes to foreclosure. Make sure you read the 53 page bill.

Get your Board of Realtors® involved with defending the very essence of NAR and state boards- the protection of homeowners’ rights.

Already Palm Beach County has stopped the foreclosures “on the courthouse steps”. Actually the foreclosure sales were held in the court’s cafeteria but now in order to facilitate so many foreclosures, the county clerk has put all the foreclosure auctions online. This is yet another hurdle to us agents who are scrambling to get the foreclosure stopped because we have a bank that does not know how to talk to their other departments!

The Florida Supreme Court just made a ruling that all banks that are filing foreclosures must offer the homeowners mediation from now on. This new rule started to be in effect on January 1, 2010. Well, this bill slaps the Florida Supreme Court right in the face! It would be a mute rule.

So the banks have now pulled their resources together and are lobbying the Florida house and congress to get this new bill passed. The Florida Bankers Association is a 400 member lobby.

They are trying to undo decades of Florida law by undoing our judicial foreclosure process and change it to a non judicial foreclosure process where homeowners could be foreclosed on in as little as 3 months. Florida has been a judicial state for decades. They want to get this on the books by July 1 of 2010. This would been that they could bypass the judges. Of course they want to bypass the judges. After all, the judges are making the banks show proof of ownership of notes and making the banks obey the laws of service in the state of Florida. The judges will 99.9% of the time rule in favor of the homeowner postponing the foreclosure when we have an offer for a short sale.

37 states have fast track foreclosures. But Florida is and has always been a state where homeowners’ rights matter.

 172,894 South Florida homeowners were served with foreclosure lis pendens notices last year.

This 53 page bill states that the non judicial foreclosures must be completed in no less than 3 months and no more than 1 year.

Here in Florida in a judicial process it takes 18 months or more to foreclose on a property and longer if you hire an attorney for foreclosure defense.

I love how they try to sell this bill as doing some good for the people. That is a bunch of loaded boloney. The bankers also put in the bill to keep their right to deficiency alive and well in the state of Florida. But then the bank throws a little morsel to the homeowners saying they will waive the deficiency if the homeowners do not wreck the house.

It amazes me how they package this bill. The name is so deceiving. They must hire a marketing company to come up with the names for bills so that they sound good to the people.

The name of this bill is:
The Florida Consumer Protection and Homeowner Credit Rehabilitation Act!!!!
What a joke! How in the world do they get to put a name like this on a bill that is just there to protect the banks’ interests?

They mask this with pretending that this bill is really helping! The sponsor of the bill said that this is to help break a foreclosure crisis caused by mortgage fraud. Excuse me? How is taking away judicial rights helping break through fraud?????

He also said that this bill protects the innocent victims- the neighborhoods. How is that going to happen? Agents- please send your congress men and house representatives photos of homes you drive by that are BANK OWNED!!!!

The bankers spokesperson said that getting the foreclosures into the hands of the banks and out of the homeowners’ possession will help with blighted urban neighborhoods and help relieve the judges who are overworked and have too many cases. He also said that this will help the HOA’s and keep the houses nice and neat. What a good scam to get you to believe that taking away more rights is somehow a good thing.

Governor Charlie Crist would also have to sign this Pro Banker bill if this bill becomes law. He is under a lot of pressure from the populist movement and they are not happy with the bankers right now. This may not be a move he is willing to take to risk the Senate race he is in.

The Florida legislature resumes again on March 2. Please get the word out to all the attorneys you know, all the homeowners you know to stop this bill. You never know when you may be in the same situation as these people we are helping to save from foreclosure.

This post is from Katerina Gasset at www.Short-Sales-Florida.com

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Don’t expect these low interest rates to last

Posted on February 1, 2010 by admin

According to Dr. Mark Dotzour, chief economist for the Real Estate Center at Texas A&M University, mortgage interest rates are low right now but don’t expect that to last. When the government quits buying mortgage-backed securities, rates will head up and away.

Dotzour says that mortgage rates were low at the end of 2009 because “the global consensus among bondholders appeared to be that inflation will remain low in the United States for an extended period. This caused the ten-year U.S. Treasury rate to fall to between 3.2 and 3.6 percent for much of the second half of 2009.”

With extraordinary levels of federal deficit spending, Dotzour says it is unlikely that the low-inflation scenario will be popular when the economy starts to rebound. Consumers should expect mortgage rates to rise when signs of improvement appear.

A second factor contributing to the low mortgage rates is the Federal Reserve Bank’s unprecedented purchase of nearly all the mortgage-backed securities issued by Fannie Mae and Freddie Mac in 2009, he adds. Totaling more than $1 trillion for the year, this program has been extended through the end of March 2010.

“The Fed has never done this before in its history,” says Dotzour. “They are doing this to stimulate the economy by keeping mortgage rates as low as possible. When the Fed stops buying these securities from Fannie and Freddie, mortgage rates are likely to increase, and possibly quite abruptly.”

How far will rates go up when the Fed terminates its buying program? Dotzour says that question is difficult to answer precisely because this has never been done before; but many experts think that rates could move up one-half to 1 percent.

“The combination of extraordinarily low mortgage rates and current price levels are making homes extremely affordable to American families. In fact, national and Texas housing affordability indices indicate that homes are more affordable than ever. But this will not last. When the economy recovers and the Fed stops purchasing mortgages, rates will rise.”

To read more on the subject, see Dotzour’s article “Rate Expectations” in the January 2010 issue of Tierra Grande magazine at http://recenter.tamu.edu/tgrande/.

© 2010 Florida Realtors®

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