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Monday, October 24, 2011
Foreclosure Market Trends-Oct 2011
Thursday, October 13, 2011
What's the difference between Short Sale & Foreclosure?
What is the difference between a Short Sale & Foreclosure?
One of the most frequently ask questions is, "What is the difference between a foreclosure and a short sale?". Let's take a few minutes to explore this question.
Foreclosure: A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae-backed mortgage for a period up to 7 years with some exceptions based on extenuating circumstances. See: efanniemae.com
Short Sale: A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage within 2 years.
Foreclosure: An investor who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period up to 7 years with some exceptions based on extenuating circumstances. See: efanniemae.com
Short Sale: An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed investment mortgage within 2 years (see page two for LTV ratios).
Foreclosure: With any Mortgage Company on any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks “Have you had property foreclosed upon or given title or deed-in-lieu thereof in the last 7 years?” This will affect future rates.
Short Sale: With any Mortgage Company there is no similar declaration or question regarding a short sale. FHA – If current at the close of short sale, a homeowner may apply for an FHA loan immediately. If homeowner is late before close of short sale closing, will be eligible for FHA loan after 3 years.
Next time we will review how this effects credit scores. Stay tuned.
To Your Success!
Donna Tashjian
www.DonnaHelpsHomeowners.INFO
616-803-9456
One of the most frequently ask questions is, "What is the difference between a foreclosure and a short sale?". Let's take a few minutes to explore this question.
Foreclosure: A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae-backed mortgage for a period up to 7 years with some exceptions based on extenuating circumstances. See: efanniemae.com
Short Sale: A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed mortgage within 2 years.
Foreclosure: An investor who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period up to 7 years with some exceptions based on extenuating circumstances. See: efanniemae.com
Short Sale: An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae-backed investment mortgage within 2 years (see page two for LTV ratios).
Foreclosure: With any Mortgage Company on any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks “Have you had property foreclosed upon or given title or deed-in-lieu thereof in the last 7 years?” This will affect future rates.
Short Sale: With any Mortgage Company there is no similar declaration or question regarding a short sale. FHA – If current at the close of short sale, a homeowner may apply for an FHA loan immediately. If homeowner is late before close of short sale closing, will be eligible for FHA loan after 3 years.
Next time we will review how this effects credit scores. Stay tuned.
To Your Success!
Donna Tashjian
www.DonnaHelpsHomeowners.INFO
616-803-9456
Renewed Trust For Tough Times
Renewed Trust for Tough Times
Does it feel like trust is one of the major casualties of the economic meltdown of 2008 – followed by the “Great Recession,” the “Jobless Recovery” and now the threat of a “Double Dip Recession?”
Weren’t we assured that home values were destined to go up and up and up?
There have been lots of promises that help is on the way—and lots of warnings of scams and schemes that have only served to confuse the matter. So where’s a homeowner who’s underwater or overleveraged to turn?
Here’s the bottom line: the choices that homeowners make when they feel they are at the end of their rope will have ramifications for years to come on their ability to qualify for credit, their job prospects, their security clearance and their overall finances. When a family’s financial trajectory is rapidly heading in a negative direction, there’s no substitute for the helping hand of a knowledgeable expert who has the integrity, the experience and the training to reverse the course—someone who is tapped into regulatory initiatives and can separate fact from fiction.
It is my mission to serve as a credible source of information and perspective to homeowners who have found themselves in a tough situation and need help sorting through their options. That’s why I sought out the Certified Distressed Property (CDPE) designation—the most renowned and recognized credential in the distressed property field, and it’s why I continue to stay on top of regulatory and industry developments that impact options available to homeowners who are struggling with their current financial situations.
My message to homeowners who do not know where to turn: there is hope. Foreclosure is not inevitable and neither the government nor your bank wants to see that happen. No one expected to find themselves on the brink of foreclosure, but I have worked with countless clients who have managed to turn their financial trajectory around and get on a path of financial recovery.
It CAN be done! And it would be my privilege to help.
To your Success!
Donna Tashjian
www.DonnaHelpsHomeowners.INFO
Does it feel like trust is one of the major casualties of the economic meltdown of 2008 – followed by the “Great Recession,” the “Jobless Recovery” and now the threat of a “Double Dip Recession?”
Weren’t we assured that home values were destined to go up and up and up?
There have been lots of promises that help is on the way—and lots of warnings of scams and schemes that have only served to confuse the matter. So where’s a homeowner who’s underwater or overleveraged to turn?
Here’s the bottom line: the choices that homeowners make when they feel they are at the end of their rope will have ramifications for years to come on their ability to qualify for credit, their job prospects, their security clearance and their overall finances. When a family’s financial trajectory is rapidly heading in a negative direction, there’s no substitute for the helping hand of a knowledgeable expert who has the integrity, the experience and the training to reverse the course—someone who is tapped into regulatory initiatives and can separate fact from fiction.
It is my mission to serve as a credible source of information and perspective to homeowners who have found themselves in a tough situation and need help sorting through their options. That’s why I sought out the Certified Distressed Property (CDPE) designation—the most renowned and recognized credential in the distressed property field, and it’s why I continue to stay on top of regulatory and industry developments that impact options available to homeowners who are struggling with their current financial situations.
My message to homeowners who do not know where to turn: there is hope. Foreclosure is not inevitable and neither the government nor your bank wants to see that happen. No one expected to find themselves on the brink of foreclosure, but I have worked with countless clients who have managed to turn their financial trajectory around and get on a path of financial recovery.
It CAN be done! And it would be my privilege to help.
To your Success!
Donna Tashjian
www.DonnaHelpsHomeowners.INFO
Wednesday, April 13, 2011
U.S Treasury Updated HAFA Guidelines
This timeline is now no more than 45 calendar days (not business days) from the date of the borrower’s request. Within that 45 days, servicers have to give the borrower a written approval, denial or alternative offer as well as a copy of the executed sales contract and any supporting documents dealing with subordinate liens. If the mortgage loan servicer fails to do this, it must at least send the borrower a written status notice within that same time period, along with written updates every 15 calendar days until the final decision is made.
In addition, servicers will now be able to approve short sales to non-profit organizations with the stated purpose that the property will be resold or rented to the borrower. This was previously prohibited by the program’s “arm’s length” requirement.
So Realtor's, what do you think of these changes? Will it help make HAFA more effective? Or are these new guidelines just words on paper until they get fully implemented?
Stay tuned we will keep you updated!
Tuesday, April 12, 2011
Why Do Short Sales Take Sooo Long?
Learn what goes on behind the scenes in short sales.
Most folks these days know what a short sale is, but here’s a quick review: A short sale is when a home is bought for less than what the seller owes the bank.
The lender being “shorted," or getting paid less than they are owed, has to agree with the terms of the new buyer and the purchase price being offered. For more information, check out Mortgage News Daily’s explanation here: What is a Short Sale and how do they work?
Simple?, right? Wrong.
Anyone who has ever been involved in a short sale, regardless of whether they were the buyer or seller, can tell you that there is nothing easy, quick, or short, about a short sale.
A typical short sale will probably last between three to six months (after a new buyer has made an offer) and there have been cases where the transaction lasted close to two years.
No, that is not a typo. Two years.
Most people don’t understand the biggest question related to the long length of a short sale, which is: Why does it take so long? "Short sale" seems like a misnomer.
There are many reasons why a particular short sale would take so long. Some examples include the amount of sales transactions an individual bank negotiator might have in their pipeline at any given time. I’ve heard the stack can be several hundred at a time.
It could take days, if not weeks, for this person to get to the file. Another reason is the amount of documentation required (er, requested) by the lender.
It could take another couple of weeks sending emails and overnight packages back and forth before the bank accepts(not yet even approved) the new submitted offer initially, simply because the “package” isn’t how they want it to be.
The reasons above are the obvious examples of why a short sale takes so long. And, quite frankly, the perception is that these reasons are the dominant factors. There is another cause, though, that is actually more important and “eye-opening” than any other reason listed here. It's one that most people never even conside, or are even aware exists. It is, in fact, the most important reason for the delay of a short sale.
For the explanation, I’m going to use Bank of America as the example, primarily because these statistics are actually their numbers. Of the millions of home loans that Bank of America services, it is reported that only 15 percent of them are actually “held” by Bank of America. The other 85 percent are sold on the Mortgage-Backed Security (MBS) secondary market.
The secondary market allows Bank of America to replenish the cash reserves so they can originate more mortgages to more consumers. The 85 percent of “sold” loans are comprised of approximately 500 investors on Wall Street. Of these 500, only about 50 are the big public banks and thrift institutions. The other 450 are private investors and hedge funds.
Confused yet? Now, let’s go back to the beginning of a short sale transaction.
After the buyer’s offer has been successfully submitted to the bank for “approval," the bank negotiator has to then turn around and hand it to the entity holding the note. So, in Bank of America’s case, only 15 percent of the time can they keep this negotiation in house and get an answer quickly. Some 85 percent of the time they have to go outside the institution to get the approval from the investor holding the note.
Once the offer has been taken outside Bank of America for approval, the negotiator now has to deal with this third party investor and convince them that the offer on the table is the best they’re going to get, and to validate the value of the property (and the offer) to the investor.
Now, for those investors with hundreds of millions or even billions of dollars under management, having to lose some cash on a short sale is not a big deal, or at least it’s an acceptable loss under the circumstances.
But what happens if the investor is not a big bank? What if the investor is a smaller entity? For example, picture this scenario: Back in 2005, the Hillside Unified School District pension fund (made-up school district for our illustration) decided to invest in the MBS market, sold on the great returns that the MBS market was achieving as home values continued to skyrocket. The HUSD Pension fund took $2 million of the cash and invested into the market.
Now, fast-forward to March this year, where home values have dropped by as much as 50 percent or more nationwide. And now, you have a homeowner needing to sell their home “short," say, $200,000 less than the mortgage owed.
The nice polite bank negotiator from Bank of America now has the lovely job of trying to convince the HUSD pension fund that they are going to have to accept a big loss on their investment.
What do you think the HUSD Pension fund says to the negotiator? NO.
That’s right, the retirees of the HUSD don’t want to agree to losing $200,000 (just on this one deal), and so they decline the first offer they get, hoping to get more.
The negotiator then comes back to the listing agent with the official decline, telling them to up their offer. The listing agent turns around and tells the buyer’s agent, etc.
The buyer, of course, says, “but the comparables in the neighborhood don’t support anything higher…” and may decide to walk away.
OR, even if the buyer is willing to up their purchase price, the appraisal probably won’t support the new, revised offer, and the run-around starts all over between buyer, buyer’s agent, seller’s agent, bank negotiator, and investor. Ugh.
While this little scenario doesn’t relieve the utter anguish involved in today’s new short sale process, I hope it certainly explains the "why" a little better.
With all of the red tape, Rapid Real Estate Solutions and many professionals are closing short sales every day. It is important to work with professionals who know the system and what each lender is looking for in their packages.
To Your Success!
Tuesday, February 1, 2011
2010 Foreclosures up 1.7%
Foreclosure data company RealtyTrac recently released its 2010 year-end data indicating a 1.7% increase in U.S. property foreclosure-related filings. Sorry, Las Vegas, but you received the dubious honor of being #1 for foreclosure filings, with a whopping 1 in 9 properties.Foreclosure activity also increased in 149 of the 206 metro areas exceeding a population of 200,000.
RealtyTrac CEO James J. Saccacio said in a statement, "Foreclosure levels remained five to 10 times higher than historic norms in most of those hard-hit markets, where deep faultlines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond."
Agents, turn this into an opportunity to help distressed homeowners BEFORE they get to the point of foreclosure. It is Rapid Real Estate Solutions goal to help agents assist distressed homeowners facilitate short sales in Grand Rapids and all over Michigan.
You may visit our website for solutions.
Let us know your questions!
To Your Success!
Friday, November 5, 2010
7 Million Homes in Shadow Inventory Will Take 40 Months to Clear
Global rating company Fitch Ratings has released its figures about the amount of shadow inventory in existence. It estimates 7 million homes make up the shadow inventory. Based on the current liquidation trends, an inventory of this size will take 40+ months to clear. That’s nearly three and a half years! And the U.S. housing market has already been absorbing these distressed properties for the last two years.
For the 23 judicial foreclosure states, it will take more than the 40 months estimated due to the lengthier foreclosure process. For nonjudicial foreclosure states, the inventory will clear slightly faster than the projected 40 months.
Fitch defines its shadow property supply as any loans which are delinquent, in foreclosure or are already bank-owned (REOs). The firm acknowledges that the volume of newly delinquent mortgages has started showing signs of improvement. However, the rate of liquidation for already existing distressed properties has not improved due to limited demand and expanded initiatives by mortgage servicers to attempt loan modifications for homeowners in trouble.
“While the reduced volume of distressed sales since 2009 has temporarily helped home prices, Fitch believes that the extension in foreclosure and liquidation timelines is simply prolonging the housing correction underway,” the agency said in its report issued at the start of November. “Recent concerns about the title-transfer process for foreclosed homes could further weigh on demand.”
Real estate investors will also be happy to note that Fitch is estimating an additional 10% home price decline nationally before this market correction can completely work itself out.
Rapid Real Estate Solutions serving in Michigan located in Grand Rapids
To Your Success!
For the 23 judicial foreclosure states, it will take more than the 40 months estimated due to the lengthier foreclosure process. For nonjudicial foreclosure states, the inventory will clear slightly faster than the projected 40 months.
Fitch defines its shadow property supply as any loans which are delinquent, in foreclosure or are already bank-owned (REOs). The firm acknowledges that the volume of newly delinquent mortgages has started showing signs of improvement. However, the rate of liquidation for already existing distressed properties has not improved due to limited demand and expanded initiatives by mortgage servicers to attempt loan modifications for homeowners in trouble.
“While the reduced volume of distressed sales since 2009 has temporarily helped home prices, Fitch believes that the extension in foreclosure and liquidation timelines is simply prolonging the housing correction underway,” the agency said in its report issued at the start of November. “Recent concerns about the title-transfer process for foreclosed homes could further weigh on demand.”
Real estate investors will also be happy to note that Fitch is estimating an additional 10% home price decline nationally before this market correction can completely work itself out.
Rapid Real Estate Solutions serving in Michigan located in Grand Rapids
To Your Success!
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