Article on short sales I was quoted in

Although a small quote at least I am mentioned. http://www.palmbeachpost.com/news/content/business/epaper/2009/03/05/0306foreclose.html?cxntlid=inform_artr

Equity back in Florida

I am often asked how long do I think it will take to get the equity back in my home. I often answer with a very long time and used 10-15 years as a range. Here is the truth put together by a company who did the study. Scroll down to the bottom for Florida. Of course the Cape Coral – Fort Myers area used in the example got hit much worse than other areas in Florida but even so this means the rest of Florida is not too far behind. Sorry I wish it wasn’t true but we have to face the facts.

This is why I say unless the lender is going to reduce your equity by a significant amount what sense does it make to get a principal reduction. If you owned a home you bought for $400,000 and it is worth $200,000 and you owe $350,000 you are under water $150,000.If the lender reduced the principal by a full 30% ($105,000) which is the top amount Bank of America will do, you’d still be under water $45,000.Based on the study of a increase of 3% a year in value it would still be another 7 years to break even.If you can call it break even since you’ll still have closing costs you’ll have to pay.Again I do not know how Bank of America is going to structure their plan and frankly think only an extremely small percentage will ever see this 30%.When have they implemented anything that made sense?

Florida Luxury short sales and strategic default

We now have created a page on the website for Florida luxury short sales and strategic defaults. Many homeowners who have jumbo mortgages are being left out of any help. Just because you have money doesn’t mean you have to hold assets that are a sinking ship. I have personally sold several high end properties where the homeowner wanted out through a short sale. They were in fact a strategic default.

One item you must understand when you are shorting a luxury property or strategically defaulting. You will be under the microscope when it comes to what you earn, how much money you have in the bank and assets. There is a 99% chance the lender will want you to pay a note. This note is a lot better than holding the property and continuing to pay a mortgage every month. Plus you’ll have to wait for the equity to come back as well. See my other blog posting on how long it will take for equity to come back into your home.

We can help you sell the home so you can move on. Our approach of experienced agents and an attorney’s office who provides all the negotiations of the short sale provides the level of service you would expect.

Property goes to foreclosure becuase of past HOA dues

We had a property go to foreclosure recently because of back HOA dues not being paid. There were over $20,000 owed and the lender nor the seller would pay them. The buyer wasn’t going to pay them unless they could get the property for $20,000 less. The main reason to pay the HOA fees is to prevent this from happening to you.

BPO’s VS Appraisals – FAR Picked up on the local story too

The same article I mentioned the other day has made it’s way to the Florida Association of Realtors press channels. I do understand why banks don’t order full blown appraisals. It has to do with cost. It seems to me a smart business person would order a full blown appraisal since it is to give value to a property in many cases worth hundreds of thousands of dollars.   If you were selling an antique car would you have someone who does not specialize in specific evaluation of antique cars do the appraisal of the auto? I think not. You would want the best person for the job. The article says one agent had 25  BPOs in one day and they take an hour each. Again, I said it before, an appraisal usually takes hours to complete. Which one will give a more accurate value.  How about a side by side test to see who values it more accurately? Please note not all agents and brokers who do BPOs are in question. I believe there are plenty who are providing proper valuations.

Today’s Palm Beach Post article I was quoted in

Today’s paper speaking about what I have been telling all my clients for some time now. BPO’s  (broker price opinions) are not always the best way to get a value for a property. Full blown appraisals are the way to go in my opinion.

http://www.palmbeachpost.com/money/appraisers-say-cheaper-valuations-open-door-for-short-518735.html

Notes and short sale. A recent event.

We had been working with a seller who had his primary residence up for sale as a short sale. The negotiator for our seller who works for an attorney’s office had done some amazing work to get the deal to approval status. This file was worked on for months and months to resolve the back fees owed to the HOA.

  1. Back hoa fees paid by the lender
  2. Assessment of roughly $12,000. Paid by lender.
  3. Buyer on board waited for 6+ months
  4. Seller had to sign a note payments about $100 a month for 5 years interest only

The deal killer was the seller said they would not sign a note period. The seller is letting the property go to foreclosure. This is obviously the worst case scenario since now the owner is going to have a foreclosure and a court ordered judgment against them. Credit will be destroyed with a foreclosure on it and now there are real issues with building credit back up quickly. With the short sale roughly 2 years and your credit can be back to reasonable.

I always explain to all clients if you sign a note there is nobody forcing you to pay it. Think about it. If you don’t pay the note it goes to collections just like the defaulted mortgage. It is unsecured debt like a credit card. It is not secured to property or assets.

The solution…avoid foreclosure sign the note and move on.

New help for homeowners

I believe this new plan will help some homeowners in Florida. The problem is property values went down so much unless principal is cut significantly most homeowners will still have lots of negative equity.  Again, this is specific to Florida property owners. If you think you qualify then go to your lender and try. There is nothing wrong with trying to see if you can get something that helps you stay in your home. A Florida short sale should be the last report.

Government unveils plan to shrink some home loans

WASHINGTON (AP) – March 26, 2010 – After months of criticism that it hasn’t done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.

The multifaceted effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

That would be funded by $14 billion from the administration’s existing $75 billion foreclosure-prevention program. But it could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom. In addition, their existing mortgage companies will be able to receive incentives to lower their principal balances.

The program also includes assistance to help unemployed homeowners keep paying their mortgages.

But the administration cautioned that the plan isn’t intended to stop all foreclosures or assist all troubled homeowners.

A Treasury Department document said, “investors and speculators should not be protected under our efforts, nor should Americans living in million dollar homes or defaulters on vacation homes.”

“Some people simply will not be able to afford to stay in their homes because they bought more than they could afford,” the document said.

Mark Zandi, chief economist at Moody’s Analytics, estimated the plan could help between 1 million and 1.5 million homeowners avoid foreclosure. That compares to 4.5 million that are already in foreclosure proceedings or 90 days delinquent on their mortgages, he said. There are another 10 million homeowners who owe more than their homes are worth, Zandi estimates.

“The changes are wide-ranging and significant and have the real potential for bringing the foreclosure crisis to a much quicker end,” Zandi said.

The plan is the latest effort by the Obama administration to tackle the foreclosure crisis that has continued to grow under its watch. Home foreclosures have soared despite the administration’s effort to prevent foreclosures, a complex and problem-plagued endeavor involving more than 100 mortgage companies. Only 170,000 homeowners have completed that process out of 1.1 million who began it over the past year.

“We remain dubious about government mortgage modification efforts,” wrote Jaret Seiberg, an analyst with Concept Capital’s Washington Research Group. “So far none have lived up to expectations and we see little reason to believe the latest effort will turn out any different.”

The plan announced Friday will also require the mortgage companies participating in the administration’s existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

It also includes three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans – a problem that has blocked many loan modifications.

The four big holders of second mortgages – Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. – have now joined the government’s program to modify second mortgages. That program was delayed for months but with Citi on board, the major players in the industry are now on board.

Critics have complained that the Obama administration has done little until now to encourage banks to cut borrowers’ principal balances on their primary loans. Nearly one in every three homeowners with a mortgage is “underwater” – they owe more than their property is worth – according to Moody’s Economy.com.

Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. AP Economics Writer Christopher S. Rugaber contributed to this report.

Federal aid in Florida. Where is the money?

Florida has until the end of September to use the federal aid money for foreclosure relief. This article talks about the typical red tape for the money to get to the local level where the funds will go to use.

http://www.floridarealtors.org/NewsAndEvents/article.cfm?id=236847

Why lower is better – Offers on short sales

On a short sale property I always say a lower offer is better. Why? When representing a seller if an offer comes in high on a property it can create problems since the lender now has this great offer for a nice high dollar amount. What happens if this buyer walks away before the short sale is complete? I’ll tell you, now you are stuck with trying to find a buyer to replace the offer that was previously submitted to the lender. The lender may now have an expectation it is the high price everyone will pay. I’ve seen personally this delay a short sale. It now is very tough to find a buyer who will come in with the same offer. We end up excepting a lower offer and presenting it to the lender but usually we are having to at least partially start over with the process. This is very frustrating but we will do everything we can to keep working the sale until it gets sold.

For more information about how a short sale in Florida works please review our site.