NAR Supports Bill in Congress Proposing Short Sale Speed-Up…When Will Everyone Learn?

Okay, so has no one learned yet that the government is not the place to turn for positive effects on the housing crisis?  Seriously, we have now been through a couple of years of highly ineffective programs.  More votes, more bills, more directives….yada yada yada…are not going to fix our housing mess.
Apparently NAR and Congressional Representatives Robert Andrew and Tom Rooney, have not been kept up to speed.   They are trying to push HR 6133, “Prompt Decision for Qualification of Short Sale Act 2010” through Congress.  The Bill would require lenders to provide a response to short sale requests within 45 days.
I have to give the guys props for “caring” about speeding up the short sale process.  I just don’t appreciate more tax dollars being spent to create, manage, and watch-dog a program that will be as lackluster as MHA’s HAMP and HAFA and not to mention the many other programs hanging out there.
Do I think lenders need to speed up their short sale review?  Of course I do.   I get as frustrated as anyone when a lender does not move efficiently to provide a short sale offer response.
According to data released by NAR, the number of properties on the market that are listed as potential short sales is rising.  In Grand Rapids, MI it is increasing like most markets in Michigan and across the nation.
Lengthy lender response times make short sales a MLS pariah.  Buyers hate to wait through the process and worse often avoid them.  Housing recovery will only come through an increase in sales.  If one quarter to one third of available listings are truly short sales, then buyers need to be given some assurance the short sale process will move along quickly to get those properties off the market.  Of course, our omnipotent government has the answer.
Whoa….stop the presses.
As much as I must agree with our Congressional Representatives and with NAR that the lenders need to get moving.  I must also point out some other obvious flaws to timely short sale approval that are simply the fault of un-proactive homeowners, untruthful homeowners, and inexperienced agents.
If it walks like a duck, don’t tell people it’s a horse.  (huh??)    The number one reason that buyers bail on a short sale offer is not the lender’s slow response time.  There are two main reasons that go hand in hand.  One, no one set proper expectations with the buyer about the process.  Two, no one screened for a buyer that would best meet the terms of the transaction.  What do I mean by terms?  They understand the time-frame and have no issues with financing or liquidity to meet the final approval.
To properly vest a buyer to a short sale, an agent should know their lender profiles or work with a third party short sale facilitator that knows how to look at the lenders, number of liens, seller financial issues, and investors behind the note, to analyze and predict the best course of action.
In our personal listings we have a high buyer ‘vest’ rate.  We analyze the deal ahead of marketing and then spend time screening for a buyer that will ‘stick’ to the end of the process.
Should the HR 6133 Bill pass Congress, we can all hope the lenders actually jump to follow its requirements.  No different than other programs, most lenders will be provided too many loop-holes and will not comply.  What desperately underwater homeowners need are highly trained short sale professionals, not more legislation.   You may visit our website for more information.
To Your Success!
Rapid Real Estate Solutions
Donna Tashjian with help from Short Sale Daily News
http://www.RRES-ManageMyShortSale.com

Homeownership in REO's versus Short Sales?

Okay, so I have driven into the ground a hundred times the issue around home ownership in a REO versus a short sale. But, today I have had to do it again twice.
Please people….It is simple. In a short sale, the homeowner owns the home until closing. The bank does not own the home, but has to allow (approve) receiving a net less than they are owed. In a REO, the lender has foreclosed and taken title. In a REO, the bank owns the home…the bank is the seller.
Buyers are the worse for expecting an offer made on a short sale to be submitted to the lender for review whether or not the seller has already accepted an offer. Newsflash, the seller will be shown all offers made on a listing because they own the home. However, once they accept an offer, only the accepted offer is sent to the lender for review for short sale approval because the lender does not own the home.
If a buyer presents an offer at the same time that other offers have been presented, and no offer has yet been accepted, then we are in a multiple offer situation. A multiple offer situation with a short sale is handled no different than in a standard retail sale. The seller chooses the offer to accept. The offer accepted on a short sale listing is the one sent to the lender. It is on the agents to make sure everyone understands this.
This is important to remember in short sale transactions.  As always Rapid Real Estate Solutions helps to simplify the short sale process.  Our helpful website is  www.RRES-ManageMyShortSale.com
To Your Success!

Is the Short Sales End in Sight?

Now is the time to build your short sale business more than ever. Why? Short Sales are NOT going anywhere for a long time to come. As agents, over 50% of your potential closings will likely include a short sale transaction. As investors, a short sale offers more control of the discount process than an REO buy. As investors and agents who have also optimized your business with added income streams through working with loss mitigation for real estate professionals, the next two years will be the catalyst for immense growth.

According to recent reports, there are nearly 2.4 million prime loan Borrowers across the U.S. that are seriously delinquent on their mortgages. According to the Center for Responsible Lending, there are 9 million homeowners predicted to go to foreclosure between the start of 2009 and the end of 2012. Realtytrac predicts 3 million foreclosure filings by the end of 2010 and over 1 million bank repossessions.

RealtyTrac just reported that residential foreclosures fell in the first half of 2010 by 5% from the last half of 2009, but only because the percentage of lender APPROVED short sales and loan modification applications went up during the same time period. Despite this perceived decrease in foreclosures, the total number of properties up for foreclosure for the first half of 2010 is 8% higher than the first half of 2009.

Last month, June 2010, was the 16^th straight month that foreclosure filings exceeded 300,000. Since the beginning of the year there have been over 1.9 million foreclosure filings.
The 10 states with the highest rates of housing units receiving at least one foreclosure filing in 12 months: Nevada at nearly 6% of housing units, Arizona at 3.36% of housing units, Florida at 3.15%, California at 2.54%, Utah at 1.91%, Georgia at 1.79%, Michigan at 1.73%, Idaho at 1.68%, Illinois at 1.61%, and Colorado at 1.4%.

With unemployment still hovering in a bad place and consumer and business confidence still on shaky legs, housing prices will not regain and more and more borrowers will remain with few options should they ‘must’ sell.

Borrowers who do not qualify for a loan modification or other repayment option when in default should always weigh the benefits of a short sale before allowing foreclosure.

As real estate professionals, it is our job and advantageous for our business to educate consumers in our area about their options. The more consumers deem you a credible authority the more homeowners will turn to you when they need to sell.

NOW IS THE TIME to work with a loss mitigation company and help more people. Short sales are a means to income for a long time coming!

To Your Success!
excerpts from Short Sale Daily News

What does the future show for Short Sales?

It’s official. Foreclosures have lost their luster at the same time that the banks are going to unload piles of them onto the market.

According to a Trulia and RealtyTrac on-line survey, the number of U.S. consumers who would consider buying a foreclosed property has dropped from 55% in May 2009 to only 45% this year.

This is just as banks are getting ready to dump thousands of properties into the market. In the first quarter, banks repossessed a record of nearly 258,000 properties. Last year’s annual total of 918,000 properties repossessed was a record on its own. At this pace the lenders are going to blow past the last year’s annual number before the World Series final game.

We have already reported on the 4+ million homeowners who are in a seriously delinquent position right now. Of those that actually avoided foreclosure last year using the HAMP program, 10 families lost their home. How many will it be this year?

Now, too many foreclosures will water down the drinks.

Buyer hurdles: Lending restrictions are still tighter than you know what, no more tax credits, and despite a few local buyer grant programs it is tough to find a buyer that out-right qualifies.

Now those that do qualify are losing interest in the properties we are flush with. Why? I gander that the decrease in interest in likely due to non-responsive contract processes, bidding wars, hidden costs, repairs needed that limit available financing, and possible renovation costs. The groups most likely to still buy a foreclosure despite the issues are first time buyers or investors.

The more properties entering the market while consumer interest wanes, means longer days on market or the servicers will have to sell them at investor levels. Buying a foreclosure can mean dramatic savings. Investors will always buy for the lowest percentage, as they should.

Short Sales are Still the Way to Go

For those of us in the short sale business: An REO flush market and low investor purchases will definitely justify discount offers. Buyers who are unhappy with the risks of an REO purchase should be encouraged to buy a short sale. Short sales are often still cared for by the owner-occupant, come with a seller’s disclosure, do not come with long-winded bid processes, all while providing the buyer the most controlled opportunity to buy at true market value.

Is Tax Credit warping the view?

Thank you National Association of Realtors for keepin’ it real. According to data released today, April saw a 7.6% increase in resale of homes. In a rush to beat the tax credit deadline, there are currently 5.77 million buyers rushing to the closing table. But, before touting “economic health regained”, NAR also reported that available inventory jumped 4.04 million, or 11.5%, in April too.

April’s inventory surge cannot just be blamed on the season. The rise was much higher than normal. At the April sales pace, that means an 8.4 month supply of homes is just sitting on the market.

Lawrence Yun, NAR’s chief economist, pointed out that “distressed” sales, including foreclosures and short sales, accounted for 33% of sales in April. This was actually down from 45% a year ago. He suggests that the increase in available homes is likely due to investors needing cash flow or homeowners who may have been apprehensive to sell are giving selling a whirl.

Housing prices have risen 4% over the last year and the trend in sales price has stayed stable over the last four months. However, current numbers are still sitting at or near the bottom. REO inventory is on the rise and tens of thousands of homes are in the default pipeline. So, there will be dips in future pricing or at least prices will be weighed down.

Without the tax credit incentive, mortgage applications are down. In fact, the Mortgage Bankers Association reported purchase applications down 27% last week despite low rates.
It is painfully evident that the surge in “pending” home sales in April was directly related to the tax credit. I think the rest of the spring buying season was spent early.

Some cool NAR stats to define your business direction:

• Single-family home sales rose 7.4% in April and are up 21% from last year
• Condo sales went up 9.1% in April and are up 42% from last year – bring back condos!
• First-time buyers were 49% of April sales, BUT all-cash buyers accounted for 26% of sales.
• Existing home sales are up 23% over last year.

Overall we are not out of the woods. Keep your compass handy and we work to help people together!
To Your Success!

The Federal Reserve board voted Wednesday to keep the target range for its federal funds rate at 0 to 0.25 percent and maintain that level “for an extended period.”

The central bank has said since December 2008 that economic conditions call for the benchmark rate to beheld “exceptionally low,” and its board continues to hold true to that stance despite concerns among some economists and policymakers that if the rate doesn’t rise, the near-zero level will give rise to inflation.

At least one board member agrees. Thomas M. Hoenig, head of the Kansas City Federal Reserve Bank, was the only dissenting vote on the interest rate action. Hoenig said that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted” because it could lead to a build-up of future imbalances and increase risks to long-term financial stability, while limiting the Fed’s flexibility to begin raising rates modestly.

Analysts were looking for any kind of semblance of change in the central bank’s wording of its monetary policy statement, but it was déjà vu as the Fed remained guarded in its outlook and careful phrasing. One area, though, that did get a bit of a lift was the jobs market.

At its March meeting, the Federal Reserve board said: “…economic activity has continued to strengthen and…the labor market is stabilizing.”

By Wednesday, that assessment had shifted to: “…economic activity has continued to strengthen and…the labor market is beginning to improve.”

Fed officials cautioned that the pace of economic recovery is “likely to be moderate for a time,” and noted that while bank lending continues to contract, financial market conditions remain supportive of economic growth. They pointed to the same economic stumbling blocks as posing the biggest risks to improving stability – declines in commercial real estate investing, modest income growth, lower housing wealth, and employers’ reluctance to add to payrolls.

In emailed commentary regarding the Fed’s policy meeting, IHS Global Insight pointed out that the central bank’s exit from the mortgage debt markets at the end of March went surprisingly smooth.

“In fact, there was no evidence of any sustained upward pressure on mortgage rate spreads during the transition – on the contrary, risk spreads on average continued to edge downwards,” said Brian Bethune, IHS’ chief U.S. financial economist.

The Fed’s statement, though, made no mention of what it plans to do with the $1.25 trillion in assets it added to its balance sheet from purchases of the GSEs’ mortgage-backed securities (MBS) over the past year.

Some Fed officials in recent months have spoken out in favor of selling off the mortgage bonds into the marketplace a little at a time, up to $25 billion each month.

A panel of financial experts from academia called theShadow Financial Regulatory Committee put forth their own proposal for the Fed’s MBS disposition this week. The group says the central bank should consider transferring the securities back to the GSEs.

Given that Fannie Mae and Freddie Mac have been placed in conservatorship and the Treasury has confirmed that their debt is now guaranteed by the U.S. government, the Shadow committee says, “The Treasury could simply issue Treasury debt to Freddie and Fannie with the offsetting accounting transaction being an IOU to the U.S. Treasury. Freddie and Fannie could then swap the acquired Treasury debt for MBS held by the Federal Reserve.”

The group outlined several benefits to this type of transaction. First, it would place housing debt on the books of Freddie and Fannie where it belongs and remove the Fed from financing U.S. housing policy, the members of the Shadow Financial Regulatory Committee said.

“This would also help to re-establish Federal Reserve independence from the Treasury and fiscal policy,” they said in the proposal.

And secondly, “it would free the Fed to device strategies to reduce its balance sheet by engaging in more traditional asset sales in the much deeper Treasury market where the pricing impacts would be smaller and would accommodate a more rapid reduction in excess reserves,” according to the Shadow Financial Regulatory Committee.

6 Short Sale Myths Rectified in short order

Short sales can be a tall order, but as their numbers increase, better trained professionals working the deal are getting wise to what's needed to make them a success -- in short order.
More competent short sale professionals are also helping bust some of the myths that have surrounded the lesser-used foreclosure alternative, according to Grand Rapids, MI based
Rapid Real Estate Solutions-Manage My Short Sale helps Homeowners, Realtor’s, Lenders, Attorneys and Investors negotiate and close short sale transactions.
If done right, the short sale is a winning proposition for all, including the lender because the costs involved are certainly lower than that of foreclosing.
A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, typically provided there's a qualified buyer in the wings. Such homes are often held by home owners struggling with "underwater" mortgages -- mortgages with balances larger than the value of the home.
First American Core Logic says more than 11.3 million home owners are underwater on their mortgages.
Mortgage modifications and federally sponsored refinancing programs, to date, have been the go-to tools to help struggling home owners.
All are strategies to avoid foreclosure, but banks have been more likely to refinance, modify or foreclose, rather than taking the short sell route.
That's because short sale bids can come in well below the last appraisal and banks don't want to take a loss. After sellers seal the deal, they can be left with a bill that's the difference between the selling price and the mortgage balance. Real estate agents and buyers fear a six month or longer transaction period that could end in a no-sale scenario that comes with the cost of lost time.
A major reason why a short sale fails is the length of time it takes to get the lender’s approval. Long delays frequently cause the buyer to drop out of escrow and buy another home.  Also it is vital how the purchase offer is submitted; missing documents cause delays as well.
However, as their numbers have grown, more attention is making the deals easier to close.
First American Core Logic's first monthly Distressed Sales Report released in April reveals January's short sales nationwide were 8 percent of all resale home sales, up from 7 percent in December and 5 percent a year ago.  Their numbers are much higher in areas hit hardest like Michigan.
Effective April 5, the Obama Administration rolled out Making Home Affordable Plan  Home Affordable Foreclosure Alternatives (HAFA)streamlined short sale effort to give qualifying home owners up to $3,000 to defray the cost of moving. Servicers can also get $1,500 each for short sale deals that pencil.
With short sales getting more federal support and greater know-how from professionals who work them, myths about short sales are flying out the window, according to Rapid Real Estate Solutions, which is helping to set the record straight on common short sale myths.

Myths Rectified:

1. You must be default on your mortgage to negotiate a short sale. Short sales are not a function of default status on a mortgage. They are the result of the bank mitigating a potential default situation that, in the long run, will cost more money to the investors. Defaulting is not a short sale requirement under the HAFA plan.
2. Short sales are embarrassing. Home owners who "avoid" short sale "embarrassment" could face a foreclosure disaster and much greater heartache. Emoting through tough financial situations won't make the problem go away, says RRES.ManageMyShortSale.com
3. Buyers aren't interested in short sale properties. Perhaps not as many as are interested in foreclosures, but the number of short sales is up, according to First American Core Logic. That's because short sale properties are often available at bargain prices compared to similar homes on the market and given the owner remains until the sale is closed, short sale properties may also be in better shape than abandoned foreclosures.   "Search for a buyer, especially those who have expressed an interest in buying short sale properties. The buyer must be willing to deal with extended deadlines and additional demands made by your lender," said Donna Tashjian a Keller William Realtor and of the new Certified Short-Sale & Foreclosure Professional (SFR) designation.
4. There's not enough time to negotiate a short sale before foreclosure. Federal guidelines come with paid incentives for lenders demand that lenders consider a short sale before moving to foreclosures, especially if a refinance or mortgage modification hasn't worked out. A good negotiator takes into account the timeline affiliated with a foreclosure. There is always a chance that a short sale can be negotiated. However, the only way to know for sure is to try.  An organized and complete short sale proposal minimizes the back-and-forth delays," said Donna Tashjian.
5. The bank would rather foreclose than complete a short sale. The bank would rather have the full mortgage paid on time. If a lender can strike a better deal with a short sale than a foreclosure, they'll go for the short sale when possible. It costs the bank money and liability risk to carry foreclosed homes. The sooner a home is off the books for the most amount of money, the better. Wherever possible, banks are seeking other loss mitigation options before foreclosure.
6. Short sales are impossible and never get approved. Short sales can be complicated, but again, according to First American, short sales are increasing.

"We negotiate short sale approvals every day," reports Rapid Real Estate Solutions-Manage My Short Sale.