Real estate news and tips for homeowners that are thinking about selling or refinancing.

$20,000 Short Sale Incentive offered by B of A

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$20,000 Short Sale Incentive offered by B of A

Bank of America is now offering homeowners located in states with high foreclosure activity up to $20,000 at closing (yes, $20,000) to sell their home as a short sale rather than allowing the home linger within the foreclosure proceedings.

Short sales which qualify for the cash at closing much be submitted for approval to Bank of America prior to November 30, 2011.  The closing must occur prior to August 31, 2012 and the home must not have any offers submitted on it currently.

As most know, a short sale is when the bank or lien holder accepts an offer to purchase for less than what is owed against the home.

The Bank of America strategy which has a minimum “cash at closing” payout of $5,000 is a true incentive to homeowners struggling to make their payment and on the brink of losing their home to foreclosure.

The national average timeline for foreclosure proceedings is 318 days.  This said, B of A providing an incentive will help homeowners receive incentive to sell the home prior to it sitting vacant for months—if not years.  Some call it a relocation fee yet it’s basically a “bribe” to make certain that the home owner leaves the home in good condition.  Some would say that providing an incentive of 20K makes sense considering that the bank may need to pay $20,000 (or more) to fix the home up prior to selling.  You see, in many circumstances the home owner which feels “cheated” by the bank will take /stead appliances, fixtures and intentionally damage the home.

Wells Fargo and Chase have similar programs for short sales which they call “cash for keys”.  In fact, Wells Fargo offers up to $20,000 on eligible short sales which are left in tip-top condition.  Although not advertised, these types of incentives are available w/in states with lengthy foreclosure durations.

In a nut shell, banks are now getting creative in order to get the distressed homes “off the books” and get back to a new normal.

Building the Perfect Home Theatre Room

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This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

Adding Granite to Your Luxury Kitchen

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This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind. This is an example of a WordPress post, you could edit this to put information about yourself or your site so readers know where you are coming from. You can create as many posts as you like in order to share with your readers what exactly is on your mind.

10 Markets with Highest Drop in Home Values

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10 Markets with Highest Drop in Home Values

 

California dominates the list of metro areas with the largest percentage of decline in home values since 2006 (6 of the 10 metro areas which lost substantial home values were in the sunny State of California).  Florida metro area’s encompassed 2  cities on the list and the remaining are located in Arizona and Nevada.  The Boise-Nampa Metro area is fortunately not “on the list”.

The declines in estimated values varied from 67% to 55% while the estimated value decline ranges from $383,000-$125,000.

1)  Merced, CA

Value Difference (percentage):  -67%, Value Difference (dollars):  -$222,220

2)  Modesto, CA

Value Difference (percentage):  -63%, Value Difference (dollars):  -$223,800

3)  Stockton, CA

Value Difference (percentage):  -62.9%, Value Difference (dollars):  -$253,975

4)  Las Vegas, NV

Value Difference (percentage):  -61%, Value Difference (dollars):  -$186,000

5)  Vallejo, CA

Value Difference (percentage):  -59%, Value Difference (dollars):  -$277,550

6)  Salinas, CA

Value Difference (percentage):  -57.5%, Value Difference (dollars):  -$382,115

7)  Daytona Beach, FL

Value Difference (percentage):  -56.8%, Value Difference (dollars):  -$125,243

8)  Bakersfield, CA

Value Difference (percentage):  -56%, Value Difference (dollars):  -$153,741

9)  Fort Myers, FL

Value Difference (percentage):  -56%, Value Difference (dollars):  -$162,097

10)  Phoenix, AZ

Value Difference (percentage):  -55.6%, Value Difference (dollars):  -$154,000

Mortgage servicers bypass foreclosure delays with more short sales

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Mortgage servicers bypass foreclosure delays with more short sales

Mortgage servicers moved more to short sales in the past year due to attorney general investigations and lengthy foreclosure delays.

By the middle of 2011, according to Moody’s Investors Service, short sales grew 25% from the 8% August 2009 liquidations of distressed properties level.  In the meantime, borrower default to foreclosure grew to an average of 24 months (the average time to complete the foreclosure process in 2009 was 14 months).

The substantial delays lengthened the foreclosure processes which obviously caused greater losses by the banks and investors.  As you may be aware, the foreclosure processes were halted in October of 2010 to correct mismanaged foreclosures as part of the robo-signing scandal.  New regulations from the government along with negotiations between State Attorney generals are still ongoing and are causing banks and servicers to turn to short sales rather than starting the foreclosure process.

“To reduce their expenses and mitigate the high loss severity on liquidated loans, servicers are increasingly opting to bypass the foreclosure process and liquidate properties more quickly through a short sale,” Moody’s analysts said.

Short sales used to cut into “shadow inventory”

In order to cut into the “shadow inventory”, servicers of mortgages are using short sale transactions and Standard & Poor stated that short sales did actually decrease the shadow inventory within the 2nd quarter of 2011.

The average short sale took just under 12 months to sell while the average REO took 17 months in the middle of 2011.  Losses dropped, as well, with banks witnessing a 70% loss rate on REO property sold in comparison to just 60% for short sales sold.

Short sales also allow borrowers to purchase a home again within 1-2 years while homes which are foreclosed upon do not allow the previous owner to purchase again for at least 5-7 years.

Even so, short sales are still difficult due to investors arguing whether or not to provide an approval for the short sale.

“Short sales, like other servicer loss mitigation strategies, may stir a fierce ‘class warfare’ between investors in different parts of the deal capital structure,” Deutsche Bank researchers said.

Short sales are the new REO

Analysts from Moody’s stated that short sales helped with the severity of losses through the market turmoil as foreclosure problems continue to hurt the recovery process.  Moody’s also stated that the stabilization of average loss is helped by reducing the liquidation timeline

Do you have any additional questions about short sales and the processes associated with them?  If  so, please call me directly to discuss the “in’s and out’s” of short sales.  208-869-3469

SHORT SALES–THE NEW “NORMAL”

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SHORT SALES–THE NEW “NORMAL”

Short sales are now becoming more and more appealing to banks throughout the greater Boise-Nampa Metro Area and the United States.  Larger banks, such as Bank of America, are ramping up their short sale departments by adding 3 additional servicing locations in order to help facilitate short sales and avoid additional inventory weighing down their books and cutting into the servicers and investor’s bottom line.

Finally, banks are getting smart (or smarter).  The foreclosure process through the re-sale of the home as a “bank owned property” takes a substantial amount of time and money.  Banks avoid the legal, maintenance and re-selling costs by approving a short sale rather than allowing the home to be sold at a trustee auction.

A short sale could take as long as six months approximately 1 year ago.  Today, the short sale process from the submission of the offer and seller financial documents to the approval letter ranges from 30-60 days—depending upon the servicer of the loan.  This said, banks are going to greater lengths to review and approve short sales in a timely manner.

Proceeding with a short sale rather than allowing a home to go through the foreclosure process is good for the owner, the purchaser and the local real estate market.  Homes sold as “short sales” typically are in better condition than bank owned property and also help keep the banks inventory low.  In turn, the lack of additional foreclosed upon property hitting the market helps to maintain current property values.

Although short sales do damage credit (minimally, however), the damage done to credit if a home is foreclosed upon is very substantial.  In fact, an owner that has his/her home foreclosed upon cannot purchase a home for at least 7 years.  However, those who complete the short sale process may be able to purchase again w/in 2 years (depending upon the circumstances of the short sale and credit scores).

Short sales aren’t difficult as long as you have an experienced Real Estate Broker helping with the process.  Items needed to submit for short sale approval are as follows:

1)      Hardship Letter

2)      Most recent 2 bank statements

3)      Most recent 2 tax returns

4)      Most recent 2 pay stubs

5)      Financial Analysis (document which states your monthly income and expenses)

Please call me directly if I can answer any additional questions for you about short sales or assist with the sale of your home.  Also, the following link contains a recent video which discusses the lending institutions stance on short sales.

http://kcmblog.com/2011/06/22/are-short-sales-getting-easier/

MORE ON FORECLOSURES

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MORE ON FORECLOSURES 

FHA lenders can now allow homeowners to go 12 months late before a mortgage is declared in default.  The old requirement was 120 days.  This has advantages and disadvantages to the homeowner.

The main advantage is more time for homeowners to try and work something out, and thereby save their home.

It is still three years (at a minimum) after a foreclosure (or “foreclosure type event”) before they can qualify for a new mortgage.  This is measured from the time the old home is lost, not from when they go into default.  So if the old home cannot be saved, this longer process delays a fresh start.

 

My advice to the homeowner in trouble?  Make every effort to make good on all obligations.  At the first sign of trouble, contact the lender, and be up-front and honest.  If a workout arrangement is made, make sure it is something you can do, based on your circumstances at the time.  Do not bet on something down the road.  And get everything in writing.

Economic difficulty is a fact of life for many people these days.  But some old rules are still valid – do the best you can, communicate well, and keep good records.

Ada County Real Estate Update

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In Ada County, there were 623 homes which changed hands in June—a decrease from June 2010 of 6%.  June of 2011, in comparison to May of 2011, had 4% more homes change hands.  Historically, however, May sales increase somewhere between 1% and 6%.  2011 sales are within 3% of sales in 2010 for the same time of year.

47% of the total sales in June were distressed—down six percent from May of 2011 (REO’s 31% & Short Sales 15%).  Although distressed sales continue to encompass the market, they have fallen below the majority of sales for the 1st time in 2011.

The end of June had 957 homes in pending status; a decrease of five percent from May.  Pending sales are typically at the highest point of the year in May.

Homes available for sale at Calgary MLS fell below 2,600 in June for the first time in the last 4 years and available inventory rivals the year 2006—the height of the real estate boom.

The percentage of active homes for sale which are distressed dropped almost 2% from June and is the 4th consecutive monthly decrease in distressed sales currently on the market.

There is currently 4 months of inventory within Ada County which historically means that we are in a “seller’s market”.  The lack of inventory is mostly seen in the lower end price range (below $120,000).  This particular # is the lowest seen in over a year!

June’s median home price went up $10,500 to $152,500 which is the highest median price increase seen year to date while the median of new home pricing increased 48% from June of 2010!

The local market continues to benefit from current inventory levels that are lower than the national average.  Is the pendulum swinging to a buyers’ market??  Only time shall tell . . .

When Can I Buy Another Home After a Short Sale Or Foreclosure?

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The waiting periods in order to qualify for a home loan after a foreclosure, deed-in-lieu, short sale and bankruptcy varies both by the government agency purchasing or insuring the loan as well as the dollar amount of the loan.

Federal Housing Administration (FHA)

1) Foreclosure is 3 years

2) Deed-in Lieu is 3 years

3) Short Sale is 3 years

4) Bankruptcy is 2 years

Veterans Administration (VA)

1) Foreclosure is 2 years

2) Deed-in Lieu is 2 years

3) Short Sale is 2 years

4) Bankruptcy is 2 years

Conventional Conforming (FNMA/FHLMC)

1) Foreclosure is 7 years

2) Deed-in-Lieu is 4 years < 80% LTV and 5 years > 80% LTV for primary residences. 7 years for second homes and investment properties regardless of LTV.

3) Short Sales is 2 years < 80% LTV and 5 years > 80% LTV and 7 years > 90% LTV

4) Bankruptcy is 4 years

Conventional Non-Conforming (JUMBO)

1) Foreclosure is 7 years

2) Deed-in-Lieu is 7 years

3) Short Sale is 7 years

4) Bankruptcy is 7 years

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Short Sales in Idaho

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Many sellers across the country are having trouble making mortgage payments.  Many purchased their homes using adjustable rate mortgages and the “Teaser Rates” lured thousands.  Many of those adjustable rate mortgages are now reaching their anniversary date and the rates on these loans are going up. 

For those that had marginal credit to begin with the interest rates their loans is headed to double digit territory.  The foreclosure rate in the country is now reaching all-time highs with many unable to make the payments on the promissory notes they signed.  There is another option for homeowners facing foreclosure.

What is a short sale in Idaho?

  • An Idaho short sale is when a lender accepts a “discount” on the money that is owed to them by a homeowner.
  • This discount allows the homeowner to offer their home at an attractive price to potential buyers at prices below area averages and becomes one of many Short Sales in Idaho.

Why would your lender accept a discount?

  • Foreclosures are costly to lenders.  I takes a long time for a lender to foreclose on a home and the interest and legal fees can be very high.
  • If your lender has a high inventory of foreclosures the last thing they want is more foreclosures added to their inventory. 
  • Loss mitigators have an incentive to work with homeowners and give them a viable alternative to foreclosure.

Short Sale determining factors

  • Whether the homeowner has a proven “hardship” case caused by layoffs, divorce, injury or illness.
  • The homeowner is unable to make future monthly obligations.
  • Whether the homeowner has other assets or any co-signers.
  • How many homes the lender has in inventory at the current time.
  • Whether it is more financially advantages for the lender to offer a short sale or allow the property to go to foreclosure.

The Short Sale process

  • Acquire the services of a knowledgeable Realtor with a Certified Short Sales Specialist designation and a knowledgeable attorney, if necessary.
  • Contact the loss mitigation department of your lending institution and determine what the process is for starting a short sale and requesting a copy of their “short sales package”.
  • Sign an “Authorization Letter” which authorizes your Idaho Short Sales Specialist to begin negotiations on your behalf. This authorization will not change the terms of your loan, it simply allows your representative to negotiate on your behalf.  A complete financial statement will also be required which is a snapshot of your financial condition.
  • Prepare a “Hardship Letter” which outlines the reason you are unable to make the monthly payment obligations and what other factors will keep you from making future monthly obligations.
  • Your lender will request a broker price opinion from your representative which includes condition of your home, comparable sold properties, and the overall condition of the current real estate market.
  • A HUD settlement statement outlining the proposed selling price and all associated costs is provided by your representative.
  • The lender will look at any offers made by ready, willing and able buyers and see if the offer makes economic sense compared to allowing foreclosure.
  • If your lender decides the short sales process is the best avenue available they will approve your proposed short sale and schedule the final process with your representative.

Elements of a Short Sale (required from homeowner)

  • Hardship Letter
  • Financial Statements
  • Income Tax Returns
  • Bank Statements
  • Pay Stubs
  • Other Documents (any other documents required from your lender)

Short Sales pitfalls to avoid

  • Do not low ball your offers. Lenders are loosing money when they discount your loan.  If you low ball your offer your lender will have no incentive to approve an Idaho Short Sale and will likely just allow your home to go into foreclosure. 
  • Never assume your lender has your best interest in mind.  They are looking out for themselves and themselves only. Their only goal is to limit the amount of loss to the bank. Only you and your short sales specialist have your best interest in mind.
  • Do not hire just anyone to represent you.  An inexperienced Realtor or attorney can cost you any chance of doing a short sale.  There are many Realtors that are attempting to do short sales in Idaho but do not have the experience to do them correctly. Short sales in Idaho are time consuming and require a strong and talented negotiator to negotiate on your behalf.
  • Many homeowners assume since they will be receiving now proceeds from their short sale that they should not continue maintaining their home. This is not true! Buyers are influenced by the condition of your home and if you keep your home maintained well it will expedite the sale of your home which is what you want. Neglect your home and you will likely be facing foreclosure.
  • Do not delay doing your part of the short sale process. Providing the hardship letter and financial statements in a timely manner will keep things running smoothly.  Lenders are processing thousands of short sales across the country and will not take any homeowner seriously that does not provide information on a timely manner.

Advantages of a short sale

  • It is a proven fact that a foreclosure can have a severe affect on your credit that cannot only lower your credit rating by an average of 200 points but the foreclosure will stay on your credit forever.
  • A short sales in Idaho are considered similar to a credit card “charge off” and will lower your credit rating by an average of around 100 points but in most cases you can repair your credit in a reasonable time frame.
  • Lenders will allow you to stay in your home even though you cannot make your payments until a short sale is finalized.

Mortgage Lenders rights

  • Mortgage lenders have “Deficiency Rights” in Idaho which means that if a mortgage lender deems the seller has the ability to repay a portion of the lenders loss they can ask a seller to sign a “Promissory Note” where the seller agrees to pay a certain amount of the loss back in the form of monthly payments. The lender may also file a “Deficiency Judgment” against a seller or file a 1099 which means the short sale seller would have to claim any loss the bank suffers as income in the year the Idaho Short Sale Closed.
  • If there is a serious “Hardship” involved in an Idaho Short Sale due to job loss, substantial loss of income, injury, etc. it is unlikely a mortgage lender will excersize any “Deficiency Rights”.

Hiring a Short Sales Specialist

If you are having trouble making the payments on your mortgage I would highly advise you to start communicating with your mortgage company, an experienced Idaho Realtor with strong short sale experience, and a qualified real estate attorney. The more you plan for a potential Idaho short sale the better off you will be when the day comes you will have to put the process into action.

You worked hard for your home and establishing your pan card seva credit line and identity.  If you can keep your home from going into foreclosure you will be in a much better position to buy another home.  Short sales in Idaho may be the best solution if you are unable to make your payments.  There are so many things that go into a successful short sale in Idaho.  I offer free consultation with you to discuss whether or not a short sale is the best option for you and your family. If you decide to work with me to market your home you will pay no fees to me.  Any real estate commission will be paid for by your lender if they approve your short sale.

Source:  searchidahohomes.com