Buying A Short Sale Home: What You Need to Know

For individuals in the market for a home, current housing market conditions are quite favorable. If you are looking for a property which is more affordable than most existing homes for sale, you might consider a home being offered via a short sale.

Compared to the other homes for sale, you will certainly enjoy more savings as these homes’ selling price are based on current market values. At the same time, the desperation of the owner to sell the property in order to avoid foreclosure means they are more willing to negotiate prices.

But before you start checking out neighborhoods in search of these short sale properties, you need to know there are challenges which you would not usually encounter if you are buying a regular home on the market.

Making An Offer

Since the home is being sold at an amount less than what the owner owes in mortgage, you need to make sure your offer will keep the lender happy. Yes, it is the lender who will decide whether or not to accept your offer. A good way to ensure the lender will agree to the sale is by doing some research and finding out the current value of the home you are interested in as well as the other nearby properties. Your offer should be close to these figures if you want the lender to take you seriously.

Waiting for the Approval

Lenders usually consider many factors when it comes to accepting a short sale proposal. For instance, they have to take into account the market value of the home and the seller’s true financial status. It would help, if along with your offer, you would provide a pre-approval letter from the bank that will finance your purchase. Unfortunately, there is no guarantee the lender will accept and during this time, all you can really do is to wait.

Of course, the entire process will be so much simpler with a seasoned short sale Realtor by your side. And at the end of the day, you will be glad to have waited since short sale homes are presently the best deal in the market.

Lenders: Last Chance for Homeowners Turning to Short Sales

During the housing boom, a lot of home buyers thought they are finally going to live the American dream. But the mortgage industry collapse and the global financial crisis, it is not surprising that for many, the dream has turned into a nightmare.

A considerable number of homeowners now have what is referred to as an underwater mortgage. This is a situation wherein you owe more in mortgage than what the property is currently valued in the market. One way out of this particular mortgage mess is through a short sale. It is a transaction wherein the lender agrees to accept a smaller amount as payment for the mortgage balance. Usually, lenders do not prefer this option but with circumstances in the market changing, a lot of them realized their loss is smaller compared to a foreclosure.

Last year, the Obama administration launched the Making Homes Affordable Program. It is a plan which will supposedly stabilize the market and at the same time, help distressed homeowners enjoy relief from their mortgage. The objective of the said program is actually divided into two: to help eligible borrowers avoid foreclosure with either a loan modification or refinance.

To supplement these programs, there is also the HAFA or Home Affordable Foreclosure Alternative which basically directs homeowners to consider either a deed in lieu of foreclosure or a short sale if they did not meet the requirements for loan modification or refinancing. Under this program, homeowners can receive monetary incentives in the form of relocation assistance.

Based on the latest statistics, the number of short sales is actually increasing as more and more lenders approve short sale proposals. Compared to 2009, the number of short sales soared by 126 percent. Meanwhile, for the 2nd quarter of 2010 the figure increased by 42 percent.

Based on data obtained by the Distressed Property Institute, there were over 96,000 homeowners who managed to avoid foreclosure with a short sale during the first six months of this year. This figure represents only 26 percent of the total transactions involving distressed properties. This means majority still ends up losing their homes to foreclosure or abandoning them.

Ref: http://www.santafenewmexican.com/Local%20News/Long-road-to–a-short-sale

Take Advantage of the Foreclosure Moratorium, Go for a Short Sale

When news spread around that a lot of distressed homeowners are claiming they are victims of faulty foreclosure documents, you can literally hear the entire industry hold its breath. The response of the lenders is even more surprising. Instead of ignoring the claims, they decided to halt all foreclosure transactions so that they can review their processes and paperwork.

Now, if you look at how the industry has been coping with the foreclosure crisis, these discoveries or claims should not come as a surprise. After all, even the lenders themselves have admitted they were not prepared for the volume of homes entering mortgage default and even if they address the lack of manpower by hiring more employees, the quality of their service will certainly be affected with the new employees’ lack of knowledge and experience. Even the news of robo-signers should have been expected.

You can look at the consequences of the foreclosure moratorium from three perspectives. From the point of view of distressed homeowners, it is good news since they can still explore short sales. Many lenders have become more accommodating and lenient with short sale applications ever since the moratorium started since they basically do not want to be swamped with foreclosure homes once the moratorium is lifted.

Buyers, on the other hand, show mixed reactions. There are those who groaned out loud since they have to wait longer for the foreclosure sales they are involved in to close. There are also those who welcome the moratorium and give them a chance to look at short sale properties, which may be a bit pricier but are in much better condition than foreclosed properties.

Lastly, there are the Realtors. For those dealing with foreclosure sales, the moratorium is indeed bad news. For short sale Realtors, it is a different story. Hopefully, with their help, more underwater homeowners are able to prepare short sale proposals properly and be able to avoid foreclosure once and for all.

Lenders Approving More Florida Short Sales

Right now, short sales in Southwest Florida are enjoying a huge presence mainly due to the decision of the country’s largest mortgage servicers to halt foreclosures amidst discoveries of erroneous and faulty documents.

But there are signs the logjam is clearing. Last Monday, Bank of America announced it will resume its seizure of over 100,000 homes located in 23 states in the coming week. But even if this is the case, the decision of the other giant services, JPMorgan Chase and Ally Financial, has already made a positive impact in several Florida counties including Sarasota, Charlotte and Manatee. The housing market in these counties is currently composed of more than 50 percent distressed property sales.

The halt in foreclosures may have caused a lot of Realtors to lose sales and resulted to buyers in limbo. But for those involved in Florida short sales, things have never looked as good. Many lenders have decided to approve more short sales since there are no options left for them if they want to get rid of their ballooning inventory of distressed houses.

Before, a typical foreclosure can take as long as a year but with the way things are, closing can be done in as short as six days. Many short sale Realtors and attorneys are amazed at how fast lenders are moving. In some cases, the banks are doing the calling and asking agents to prepare a short sale proposal for homeowners in distress.

There are speculations that the foreclosure problem could take as long as six months to clear up and during that time, Florida short sales will be the preferred foreclosure alternative.

As for homeowners who thought that a foreclosure is imminent, it is the perfect time to talk to a short sale Realtor. You should take advantage of the moratorium to find a buyer, prepare all the documents needed for the short sale proposal and sit down with your lender. Such opportunity might not come again and you should definitely grab it with both hands.

Short Sales Benefit All Parties Involved But Takes Too Long

The sheer volume of properties entering some stage of foreclosure has made short sale the best option for most distressed homeowners. A transaction in which the seller/owner and the lender agrees on a selling price for the property that is not enough to cover the mortgage balance.

All parties involved benefit from such agreement. The seller avoids a foreclosure, the lender saves more and will not have to worry about adding to their inventory of repossessed properties and the buyer gets to enjoy a great deal. Time and again, it was proven it is an attractive solution but you have to realize it can be delayed and there would be lengthy periods with no response which could eventually be the reason for its slow death.

Before the housing crisis, a short sale was not as popular as a loan modification and other foreclosure alternatives. With more and more homeowners suffering from underwater mortgages, it has become the most viable option. The problem is when the number of short sale applications tripled in the last couple of years, banks found it hard to handle the paperwork. Since the transaction is more complex than a regular home sale, it exposed deficiencies which the banks and even agents have trouble addressing. For some analyst, it is the disorganization happening in most banks. In fact, JP Morgan just recently suspended thousands of transactions involving foreclosure because of documentation errors.

In an effort to attend to the massive number of short sale and foreclosure transactions, most lenders were left with no choice but to expand departments which handle loss mitigation. For instance, JP Morgan hired about 6,000 new employees starting 2009 while Wells Fargo added 12,000 new employees during the same time frame. Banks were found to have little experience with short sale transactions and it is taking some time for them to adjust to the new demands.

Inexperienced agents also add to the problems since they fail to provide the banks with the complete documents and therefore, cause the entire transaction to be delayed. When this happens, it is not surprising if the buyer gets tired of waiting and moves on to other properties.

If more and more short sales fall through, the consequences can be bad for the entire industry. Banks will lose more since foreclosure cost is considerably higher and homeowners will have to deal with a lower credit score. Of course, the impact to the communities and neighborhood is just as bad with the abandoned homes becoming vandalism targets and property values declining.

Wells Fargo: No More Short Sale Extensions

Wells Fargo & Co has decided to stop granting extensions to homeowners looking to complete a short sale. With such decision, it is expected that foreclosures will soar all over the country.

The said decision was done amidst revelations involving faulty documents from mortgage servicers, Ally Financial Inc and JP Morgan Chase, which resulted to the suspension of thousands of foreclosure cases in order for their processes to be reviewed thoroughly. Wells Fargo claims they do not have problems similar to these servicers.

According to the company, its decision to change its short sale policy was actually made as per instructions by the investors, which include government-sponsored enterprises, it services. Last September, Fannie Mae encouraged its servicers to speed up foreclosure process and avoid unnecessary delays. If the servicers were found to delay decisions involving foreclosures and short sale, the penalty would involve fines as well as on-site reviews.

In a memo from Wells to their short sale vendors, the company said it will proceed with the foreclosure sale of homes which were not able to close the short sale transaction by the approval date. Also, it will only honor extensions approved from September 14 and earlier.

A spokesperson of the company said the said memo was genuine but created confusion among those who read it. To clarify, Wells will still be granting extensions in cases allowed by its investors as well as cases involving its portfolio of loans. For the said categories, foreclosure can be postponed only once and if certain requirements are met, that is, the short sale proposal was approved by the insurers, junior lienholders and by Wells; the transaction will close within a month of the scheduled foreclosure sale; and the buyer shows proof of approved financing or availability of funds.

In addition, the latest policy adjustments were deemed necessary considering the numerous investor changes, which include HUD and GSEs. Also, servicers are becoming reluctant when it comes to approving short sales since most falls through, which delay the entire process further.

http://www.americanbanker.com/bulletins/wells-curtailing-short-sale-extensions-1026657-1.html

Short Sale Tips for Realtors Working with Distressed Sellers

In real estate, sellers considering a short sale are not the only ones being stressed out by the situation. You should not be surprised to learn Realtors also feel the pressure and the stress of such a complicated and lengthy transaction.

Short sale Realtors have the tough job of making sure the seller understands what is going on. It is understandable that during this time the sellers are a bit emotional and will sometimes be difficult to communicate with. Worse, if the Realtor failed to show remorse or empathy, they will be thought of as being insensitive.

For Realtors who would like to avoid the so called “dramas”, consider the following helpful tips:

1. Do Your Job. It is important the client understands what kind of assistance you are providing and make sure your deliver results personally. Make sure you support your suggestions with facts. For example, if you are convincing the seller to sell the home for $300,000 but the buyer wants $400,000, you should provide them with a comparable market study or listings to show how you arrived at the said amount. This will certainly get your point across.

2. Communicate at a Personal Level. At this point, you will be considered a friend rather than an agent. If the seller is having a hard time deciding on a particular issue, you should not try to convince them. Instead, empathize and you might be surprised at how receptive most sellers will be to suggestions.

3. Show Them the Real Picture. If you and the seller are arguing about certain short sale details, you must be able to show what will happen if the transaction falls through. Sometimes, a reality check is in order for these sellers to realize that you are there for one reason and that is to help them avoid a foreclosure.

4. Step Into the Lender’s Shoes. If you want to be good at your job, you should not only understand the buyer’s and seller’s but also the lender’s perspective. You must be able to anticipate how the lender will receive your short sale proposal and head off any problems or issues you can think of.

5. Listen. One of the things many short sale Realtors fail to do is to hear what the seller wants. Make sure you sit down with the seller, listen to their objectives and repeat them so you know you understood exactly what they want and need. You will be much more efficient and effective as a Realtor if you just learn how to do this.

Homeowners: No to Foreclosure, Yes to Short Sale

It is a sad fact that most underwater homeowners accept their fate without lifting a finger. When the notice from the bank comes informing you of the foreclosure case filed against you, you can actually do two things: ignore it and hope the problem will go away on its own or fight it.

Most homeowners do not realize that foreclosure is not the end of road. Although it is understandable you will feel panicky and anxious about your future, you still need to keep it together and confront your problem head on. Instead of simply handing over your home to your lender, you might want to consider looking at other options such as a loan modification or a short sale. These two options will surely stop foreclosure and allow you to keep you home.

On the other hand, if the lender is not agreeable to either option, you will need to hire a lawyer or Realtor who can assist you in fighting the foreclosure. If you think that lenders always win these cases, you will be surprised.

For instance, a Florida homeowner decided to fight the foreclosure and his lawyers found out that the signatory of the affidavits filed by the lender was a robo-signer, an individual who signs 6,000 or more foreclosure and bankruptcy-related documents per week. Such volume means the documents are not being reviewed properly — a clear violation of the law.

It was also found out the mortgage was no longer owned by IndyMac, the original lender but by another company, which led to the judge throwing out the case since Indymac no longer has the right to foreclose. They were also ordered to pay the homeowner’s legal costs. After the decision, the homeowner and his lawyers decided to get the new loan owner on the negotiating table and agree to a fixed –rate mortgage.

Before, lenders will usually not go for these kinds of negotiations, but with the present administration prodding lenders to lower interest rates as well as lengthen the payment period, most lenders find themselves bargaining with the distressed homeowners. Of course, there are still banks that choose to foreclose.

In Florida, lenders are scrambling to drop cases against troubled homeowners and withdraw affidavits signed by their so-called robo-signers. Consumer advocates believe lenders actually have the power to keep people in their homes. As it is, more and more homeowners are being thrown out their homes illegally. If you are worried if you could be next, talk to a Florida short sale Realtor at once.

http://online.wsj.com/article/SB10001424052748704029304575526182962738098.html?mod=googlenews_wsj

Short Sales Benefit All Parties Involved But Takes Too Long

The sheer volume of properties entering some stage of foreclosure has made short sale the best option for most distressed homeowners. A transaction in which the seller/owner and the lender agrees on a selling price for the property that is not enough to cover the mortgage balance.

All parties involved benefit from such an agreement. The seller avoids a foreclosure, the lender saves more money and will not have to worry about adding to their inventory of repossessed properties and the buyer gets to enjoy a great deal. Time and again, it was proven it is an attractive solution but you have to realize it can be tricky and there would be lengthy delays that could eventually be the reason for its slow death.

Before the housing crisis, a short sale was not as popular as loan modification and other foreclosure alternatives. With more and more homeowners suffering from underwater mortgages, it has become the most viable option. The problem is when the number of short sale applications tripled in the last couple of years, banks found it hard to handle the paperwork. Since the transaction is more complex than regular home sales, it exposed deficiencies which the banks and even agents have trouble addressing. For some analyst, it is the disorganization happening in most banks. In fact, JP Morgan just recently suspended thousands of transactions involving foreclosure because of documentation errors.

In an effort to attend to the massive number of short sale and foreclosure transactions, most lenders were left with no choice but to expand departments which handle loss mitigation. For instance, JP Morgan hired about 6,000 new employees starting 2009 while Wells Fargo added 12,000 new employees during the same time frame. Banks were found to have little experience with short sale transactions and it is taking some time for them to adjust to the new demands.

Inexperienced agents also add to the problems since they fail to provide the banks with the complete documents and therefore, cause the entire transaction to be delayed. When this happens, it is not surprising if the buyer gets tired of waiting and moves on to other properties.

If more and more short sales fall through, the consequences can be bad for the entire industry. Banks will lose more since the foreclosure cost is considerably higher and homeowners will have to deal with a lower credit scores. Of course, the impact to the communities and neighborhood is just as bad with the abandoned homes becoming vandalism targets and property values declining.