Archive for the 'Default News' Category
Sacramento Short Sale Buying Tips: Qualifying the Short Sale
December 31st, 2009 Categories: Default News, National Real Estate Trends, Pre Foreclosures, Sacramento Home Buyers, Sacramento Real Estate Trends, Shortsales
Buying a Sacramento short sale will definitely become easier and easier in the next several months and the process will continue to evolve, change, and morph into a more traditional transaction for years to come.
Buying A Short Sale
Contact a Certified Short Sale Agent about buying a short sale.
However; your Buyers Agent- if they are at all experienced with with todays market- will know that there are some short sales will never close!Secondary Mortgages (any Junior Liens) that have been added after the purchase or have been refinanced (any non purchase money loans) are full recourse in California– the first will go away with the house– no matter what; if it goes to foreclosure, closes as a short sale, whatever… but non-purchase money seconds may stay intact and become non-secured debt… just like credit card debt.Short Sale qualifying is just asking questions; the right questions will allow yor agent to find shortsales that have a high chance of being approved: Your Short Sale Specialist will find out things like:1) The Kind of loans involved; recourse or non-recourse.2) If recourse; the sellers (think homeowners) financial situation, hardship status and/or their willingness/ability to make a contribution, sign a note, or otherwise pay off any secondary note holders demand (which may be full recourse).3) Which banks are involved and their policies regarding first liens, secondary liens, recourse debt, hardship rules etc.4) Know the market, the absolute market value of the home– (banks don’t like to leave money on the table) what the Broker’s Price Opinion, or Appraised value of the home will be and the amount of money the first will be short; and the policies of each bank involved–If you don’t know these things gong in, you will find them out during the process, usually weeks or months into the short sale process… Contact a Certified Short Sale Agent about buying a short sale right here. Many, many times, the short sale you have fallen in love with and cannot live without may very well become an REO.There is also the chance that your short sale will, at the eleventh hour, not be approved because the banks or servicers suddenly want to include language stating the seller agrees that the lender has the right to pursue a deficiency judgment or the balance unpaid on the promissory note… Many homeowners, when they realize this problem is not going away, file bankruptcy– again, at the eleventh hour- after you and your family have been waiting months for the home of your dreams.Make sure your Buyer’s agent is also a Sacramento short sale listing agent and a Sacramento Short Sale Specialist and works with a team that specializes in these complicated and ever-changing transactions!Short sale negotiating is definitely a moving target– it is nearly a full-time job just to stay on top of educated of all the different banks, servicers, secondary investors rules of procedure and the institutional/political policy changes.Some short sales will never close! Find out why!By the way…here’s where I remind everyone that I am NOT a lawyer, and that if you have any questions or concerns about your legal situation– get an attorney! I have several great Real Estate Law, Mortgage Law, Contract Law and Bankruptcy Law specialists that I can refer you to!
Contact a Certified Short Sale Agent about buying a short sale.
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Sacramento Short Sales Will Definately Improve in 2010
December 31st, 2009 Categories: Default News, Sacramento Home Buyers, Sacramento RE Stats, Sacramento Real Estate, Sacramento Real Estate Trends, Shortsales
Sacramento Foreclosure Solution Expert Report
Short Sale Help Is On The Way! BofA Implements The REOTrans Equator Short Sale Process Module.
Sacramento Short Sales are here to stay… and with more and more defaults and homeowners in foreclosure, short sales will become even more and more rampant in Sacramento.
Bandk of Amerioca Short Sale System
Short Sale Help
The problems with most Sacramento short sale transactions are the extremely slow communication, processing, negotiating and approval of short sale files.Even though their are several banks that have been really good to work with; Wachovia has been good for a long time, Chase is becoming a breeze; Wells Fargo is getting things lined up, and now even Freddie Mac and Fannie Mae are pledging to help the Short Sale Process to become smoother.
Click here for Sacramento short sale help.
The “writing is on the wall” for 2010 to become the year that servicers, banks, institutions and secondary investors all get their act together to help make the short sale process more mainstream, less painful, confusing and stressful for buyers!
Over the last few years; often times, after Sacramento buyers have written offers on two, three, even four or more short sales without success, they just quit looking at short sales altogether and look for an REO or equity sale…
We will Surely look back at 2010 as the year the game changed… as more and more banks implement systems to make the Short Sale Processmore streamlined, easier to manage and even transparent; more like traditional real estate transactions! Sacramento’s real estate market will see a huge change as Bank of America gets its act together and starts closing short sales faster and more consistently
Click here for Sacramento short sale help.
The new Equator Short Sale Processing Module (formerly known as REOtrans) has been launched as the industry’s first short sale processingonline portal. The amount of people I talk to here in the Sacramento area just amazes me; its like one of every three or four people I visit with about their mortgage have a BorA or Countrywide BofA
Although Equator has declined to name the lender, the new Internet based platform, as recently reported by the San Francisco Chronicle, will be used by Bank of America. A representative from BofA recently told the Chronicle that they were using the Equator platform to manage the short sale process. Great news, as Bank America is hands down the WORST bank to deal with on short sale files right now!
The Short Sale platform will allow everyone involved in the transaction to work together, in real time with access to all documents, processing requests etc. and will be a huge asset in helping to shorten the time frames of short-sale approvals.
As reported in DSNews:
“This is the first time that short sales have been handled through an electronic platform,” said Equator CEOChris Saitta. “With our new system, everyone works together in real time, dramatically improving communication and approval timeliness for our client, its borrowers, vendors, and real estate agents.”
Just think– The short sale process becoming more like traditional real estate!
Click here for Sacramento short sale help.
If you are a buyer or a homeowner with questions about your options, Contact me today for Sacramento Short Sale Help!
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Folsom Short Sales Will Become Even More Popular in Some Neighborhoods
December 29th, 2009 Categories: Default News, Loan Modification, National Real Estate Trends
Folsom Short Sales will definately be more popular in some Neighborhoods. Folsom homes that were built and sold in 2005 and 2006 will probably be where you are going to see the most short sales in Folsom.
You see, new home builders used negative am, Adjustable rate Mortgages and Pick-a-pay programs to get the most money possible for their homes. These artificially low payments allowed buyers who could normally not afford these larger homes buy them.
Now, amidst a huge market value decline and the worst economy in decades, those loans are coming unlocked.
Most of these homeowners will qualify for some type of loan modification program, may at least get the adjustable rate changed to a fixed. Some will have to extend the mortgage out to 40 or 45 years, because most secondary investors who own the note are not interested in any kind of principle reduction.
Many will go into the new HAMP program, a ninety day trial modification where after a successful trial period the homeowner applies for a long term modification. The short sale will be the best solution for those who do not qualify or choose not to do a modification.
The administration is urging participating servicers to follow through with short sales as an alternative to foreclosure for those homeowners that don’t qualify for a reworked mortgage under the Home Affordable Modification Program (HAMP).
Under the terms of the new program, once a servicer determines a homeowner does not qualify for a modification, the servicer has a 30-day window in which the borrower must be considered for the HAFA program. Each participating servicer is required to develop a written policy, consistent with investor guidelines, that describes the basis on which the servicer will offer the HAFA program to borrowers
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The Rise of The Sacramento Short Sale
December 22nd, 2009 Categories: Default News, Loan Modification, Real Estate News, Sacramento Real Estate Trends, Shortsales
Sacramento Foreclosure Solutions Expert Report
Sacramento Short Sales now 21.5% of Market
Well First of all, Let’s just quickly define short sales:
A real estate short sale is a sale of property in which the sale proceeds fall short of the balance owed on the property’s loan or loans.
Sacramento’s Real Estate Market has recently been a perfect storm for short sales.
There have always been short-sales. Since the beginning of real estate. Market prices go up and market prices go down, and when a homeowner has to sell when they are upside-down… well, you get the picture.
Homeowners can have many reasons to sell their home in a Short Sale; any time there is a reduction in market value along with the need for relocation, sickness, job loss, death or divorce, there is no other way besides just letting the bank take it back. So Short Sales are the best solution to keep a homeowner out of foreclosure when it is clear they cannot keep the home…
But in this economy, Sacramento shortsales most often occur when a homeowner just cannot pay the loan payment on their property. With Sacramento unemployment at 12.3% and a 41 month long drop in median home prices that has taken over 55% off the 2005 highs in Sacramento County. Sacramento Short Sales are now over 20% of the market!
Short sales in Sacramento have become a popular pre-foreclosure option to keep homeowners out of foreclousure, when loan modifications just don’t provide a solution to foreclosure.
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9 Must Know Tips on buying Sacramento Short Sales or Sacramento Foreclosure
December 20th, 2009 Categories: Default News, Pre Foreclosures, Sacramento Foreclosures, Shortsales
Weekly Sacramento Short Sale Foreclosure Report
Many Sacramento home buyers want to hit the jackpot and buy that Sacramento REO foreclosed home, or a Sacramento Short Sale, many of which are often under-priced by the bank or seller. When asset managers (working for banks to unload their foreclosed homes) or a distressed homeowner price REOs or short sales under the market, multiple offers are usually the response . This means as a buyer vying for a Sacramento Home, you could be up against stiff competition for that bank-owned home, short sale or foreclosure.
Especially now that the Sacramento Real Estate Market is short of inventory and it’s hard to find a home that interests you, it’s not unusual for some REO (bank owned homes) or Sacramento short sale homes in to receive 15 or 20 offers or more. Sometimes the bank or homeowner will only respond to two or three offers by asking the selected buyers’ agents to resubmit for their buyer what is called their “Highest and Best” offer. Sometimes the bank or homeowner simply accepts the best offer at inception. Sacramento foreclosures that enter the market as bank owned or REO, or short sales and are priced under the market or below comparable sales are usually gone in days.
If you’re wondering how you can make your offer shine above all the rest and be the winning offer, For either Short Sales or Bank Owned Foreclosures here are a few tips to help you select the right price and terms:
1) Learn the Property History
If it is an REO: ask your buyer’s agent to find out the bank’s purchase price on the Trustee’s Deed or Sheriff’s Deed. Generally, it is noted on the document itself, which you can get from the tax rolls or a title company. Compare that price to the price the bank is asking.
Look at the amount of loans that were once secured to the property. Somewhere between the original mortgage balance(s) and the foreclosure sale price is the amount the bank will accept, if the home is under-priced.
If it is a Short-sale, have your Buyer’s agent ask the listing agent what the mortgages are- how many banks, which banks and what the balances of those loans are. It is important to see how much is currently mortgaged on the home. This information can also be deemed from tax records, is usually pretty easy to figure: If the home was purchased in 2004 for $400,000 and mortgaged for $320,000, there is probably still well over $300,000 owed.
2) Study the Situation
If it is a Bank Owned Sacramento Foreclosure: How long has the bank owned the property? How long was it been in the “pre-list” stage? Were the past owners evicted? Was it vacant when the bank took over? Are their outstanding utility bills and HOA liens or Code Enforcement fines that may need to be dealt with at the eleventh hour of escrow? Ask your buyers agent to contact the listing agent if possible, many Sacramento REO listing agents are notorious about being “untouchable” or hard to contact- be persistent. Most Sacramento bank-owned agents have staff that will answer your questions. Know about the property before you write an offer.
If it is a Sacramento Short Sale, find out about Recourse on the Second Mortgage, if there is one. Were all loans “purchase money loans?” Make sure your buyer’s agent knows what this is and what the ramifications could be. Be sure you are working with an agent who is a hort Sale Specialist and a Short Sale Listing Agent. When most Sacramento Short sales will be multiple offer competitive situations, you only want to write offers on short-sales that have a decent chance of being successful.
3) Study Comparable Sales
Here in our market, Sacramento shortsales and Sacramento bank owned foreclosures make up to 85% of the market in the last six months or more… so that means that every home in a radius search of the Bank Owned Property you are interested in may also be bank owned or short sales. In many cases, the list price has little bearing on the value of the home. The market value will always prevail- If you are up against competing offers, many times other buyers will offer more than list price, they will do their homework to see what they belie market price to be and coffer that price.
- Look at the last three months of comparable sales, a mini CMA, for that neighborhood to determine how much this REO or short sale is worth. Try to use only those homes that most closely match regarding square footage, number of bedrooms, baths, amenities and condition.
- Look at the pending sales. Ask your agent to call the listing agents of those pending sales to try to find out the accepted offer price. Sometimes a Sacramento Short Sale Listing Agent will share that information and some will not.
- Look at the active listings. Those are most likely the listings other buyers will use to formulate a price because they are the only homes those buyers actually tour.
4) Review Listing Agent’s REO and Short Sales Solds History
Most Sacramento REO agents work for one or two banks. Some listing agents are exclusive listing agents for REOs, and they do not list any other type of property. Some agents will do Elusively Short Sales, some will do a combination. Since most Sacramento REO and Sacramento Short Sale agent will deal in volume, they typically apply the same pricing principles to all their foreclosure listings.
- Ask your buyer’s agent to look up the listing agent in MLS.
- Run a search using that listing agent’s name to find the last three to six months of that agent’s listings.
- Pull the history of those listings to determine the list-price to sales-price ratio. If most of those listings are selling for, say, 5% over list price, then you may need to offer 6% over list price, and vice versa.
5) Ask Listing Agent About Number of Offers
If there are no offers on the Sacramento Foreclosure REO or Sacramento short sale home, you can probably offer less than list price and get your offer accepted. However, if there are more than two offers, you will most likely need to offer above the asking price.
If there are multiple offers, bear in mind that some of those offers might be all cash. Banks like all cash offers. Short sale sellers don’t really care and the bank that is being shorted sees no benefit in a cash offer- it’s going to get cash at the close of escrow whether the buyer gets a loan or not, and a homeowner is probably going to counter for a longer escrow time, so a cash offer is really no benefit.
If you are obtaining financing for a bank owned, then you may need to increase the price on your offer to be considered.
5) Submit Preapproval Letter
You do not want a prequal letter. You want a preapproval letter. Get preapproved from a lender in advance. both Bank owned transactions and short sale transactions require the buyer to be fully approved.
Moreover, if it is a bank owned, get pre approved by the lender who owns the property. Do not expect to use this lender for your loan, but submit the prepproval letter from this lender, along with the letter from your own lender. Banks don’t trust other lender pre approvals but trust their own departments.
6) Don’t Ask for Repairs / Inspections up from
Make a squeaky clean offer…
On an REO or Bank Owned, sometimes banks will pay for repairs, but usually will not agree to do so at the offer stage. Besides, remember, you are probably in multiple offer competition here in the Sacramento bank owned foreclosure market. If there are problems found during a home inspection, renegotiate after your offer has been accepted.
On a Short Sale it is very hard to negotiate repairs any time after the initial offer has been approved by the bank- if you absolutely love the house you may want to have your inspections done outside of the contract offer, getting your offer accepted and then approved by the bank is the most critical and hardest part of the process. You may want to do your own inspections just for your information, but don’t ask the bank to pay for anything other than a pest report, if that (remember you may be in competition for the best offer). It will cost some up front money but will keep the deal clean.
7) Shorten the Inspection Period
If other buyers ask for 17 days, for example, to conduct inspections, and you ask for 10, you will be deemed the more serious buyer.
Offer to Split Fees
On REO’s some banks will not pay transfer taxes, for example. If the you as a buyer offer to split those fees, the bank will feel more amenable to accepting the offer. Same thing for escrow and title fees– remember, this is just business .
On short sales, the most important thing to remember is that it is all about net to the bank- how much money are they going to net from your offer- do whatever has to be done to get your offer accepted by the seller and then approved by the bank.
Many banks negotiate discount fees for title insurance. If the bank will pay for the owner’s policy, the ALTA policy might cost a bit more. But it’s still a good idea to let the bank choose title if you want your offer accepted.
9) Consider the Appraisal Consequences
If you offer over list price on a Sacramento Foreclosure Bank Owned or Sacramento Short Sale, bear in mind that the appraisal will need to substantiate that price, if you are going to obtain financing for your foreclosure purchase. If you find yourself dealing with a low appraisal, you have options; so don’t despair. Remember, the new appraised value will be disclosed to the next buyer and. Most times the bank (either as the seller or the montage lender/investor of a short sale) will agree to sell at the appraised value.
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Folsom Foreclosure, Granite Bay Foreclosure and Eldorado Hills Foreclosure advice.
December 19th, 2009 Categories: Default News, Pre Foreclosures, Shortsales
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Sacramento Short Sales will begin to be the norm…
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1.7 Million Additional Bank Owned Homes and Homes Facing Imminent Foreclosure
December 18th, 2009 Categories: Default News, Mortgage and Loans, National Real Estate Trends, Pre Foreclosures
First American Puts ‘Shadow Inventory’ at 1.7 Million
From DSNewsThere were 1.7 million REOs and homes facing imminent foreclosure that had not yet hit the market at the end of the third quarter, according to data released Thursday by First American CoreLogic.
The company says that at the current sales pace, it would take 3.3 months to get rid of this looming “shadow inventory.” By comparison, First American CoreLogic says shadow inventory a year ago was 1.1 million, representing a 2.4 month backlog.
Shadow inventory is not included in official measures of unsold inventory. According to First American CoreLogic’s
analysis, the visible supply of unsold inventory – accounting for new and existing homes that are currently on the market – was 3.8 million units in at the end of September, down from 4.7 million a year earlier. The visible months’ supply fell to 7.8 months in September 2009, down from 10.1 months a year earlier.
Together, total inventory of unseen and marketed properties comes to 5.5 million units as of September 2009, an 11.1 months’ supply of homes. That figure is down from a total inventory of 5.7 million a year ago, which equates to a 12.7 months backlog.
First American CoreLogic says this indicates that while the visible months’ supply has decreased and is beginning to approach more normal levels, adding in the pending supply reveals there is still quite a bit of inventory that will impact the housing market for the next few years.
Just how big of an impact the shadow inventory makes will depend on whether it hits the market in large fell swoops or makes its way out of the darkness in steady, manageable streams. According to a new report from Radar Logic, the looming distressed property supply will enter the housing market at a controlled rate that can be absorbed by existing demand without drastically reducing prices
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Sacramento Area Foreclosure News
December 11th, 2009 Categories: Default News, Mortgage and Loans, Sacramento Economy, Sacramento Foreclosures, Sacramento Real Estate
The Foreclosure market here in Sacramento is currently drying up… very few homes coming on the market as REO or bank-owned, fewer foreclosure filings, Multiple offers for the homes that are priced right, and an overall sense of “wait and see” seems to be on most potential buyers’ minds right now.
The banks have been rescheduling foreclosure sales or Trustee Sales at the county courthouse for so long, that now the foreclosure departments just haven’t been scheduling them in the first place– kinda makes sense, if all your going to do is reschedule it and put it off anyway; why spend the time and money on scheduling it in the first place?
If the number of buyers at the foreclosure sale (trustee sale) is any indication– there must be many investors who believe the prices are not going much lower, or who think there may be some up-tick in the market sometime soon: the number of buyers has tripled or quadrupled in the last several months and continues to grow, according to friends who attend the sales down at 720 9th St. downtown Sacramento (address for the Sacramento County Municipal and Superior Courts). they say tat over 90% of foreclosure sales are postponed still, or re-scheduled, usually for only 30 days at a time…
In other Sacramento area real estate news: According to OBSNews
An amendment co-authored by Sacramento Congresswoman Doris Matsui (D–California) has been based by the House of Representatives and was added to the Wall Street Reform and Consumer Protection Act (H.R. 4173) yesterday. The act requires mortgage servicers or lenders who are participating in the Making Home Affordable Program (HAMP) to publicly report their progress in helping responsible homeowners stay in their homes. The amendment was introduced by Congresswoman Matsui with Rep. Betty Sutton (D–Ohio) and Rep. Kathy Castor (D–Florida), and debated on the House floor. Passage of H.R. 4173 is expected today.
“Too many families in my district of Sacramento have faced foreclosure on their homes as a direct result of the economic meltdown,” stated Matsui. “There is another uptick in foreclosures expected that could affect as many as 4.5 million homeowners over the next two years. The Making Home Affordable Program holds the potential to greatly reduce these figures, and my amendment will ensure accountability on the mortgage industry. Transparency will incentivize the mortgage industry to help responsible homeowners stay in their homes.”
Some information courtesy (OBSNews.com)
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Struggling Homeowners: 4% Get Mortgage Help
December 11th, 2009 Categories: Default News, Loan Modification, Real Estate News, Real Estate Trends, Shortsales
This just in from Chris McLaughin:
Treasury officials, in the first comprehensive tally of permanent modifications made, say that loan servicers have converted 31,382 people from trial adjustments to long-term assistance as of Nov. 30, but 30,650 people in trial modifications have been denied. That means that only about 4% of troubled borrowers have received long-term help under the Obama administration’s foreclosure prevention program. A nearly equal number of trial modifications have been denied permanent assistance, the report showed. The reasons include not making monthly payments on time, not submitting all the necessary paperwork and not qualifying for reasons such as insufficient income.
Homeowners claim that banks keep losing paperwork, but banks claim they often don’t get it in the first place. Around 375,000 people should be eligible to receive long-term relief by year’s end, but only one-third of homeowners who have made at least three trial payments have submitted all the needed forms, Treasury officials say, and some 20% have not submitted any paperwork at all. Banks and government agencies have hired outside companies to knock on borrowers’ doors to assist them with completing the paperwork. None of this addresses the real problems, of course: a lot of people are underwater and don’t see the point of making payments, and quite a few know they won’t qualify once their real income comes to light.
Along the same lines is This Article From DSNews:
Treasury released the highly-anticipated progress report on the government’s foreclosure prevention program Thursday afternoon – which for the first time includes details on the number of trial modifications each servicer has converted to permanent status – and as lenders warned earlier this week, the results were disappointing.
Of the more than 728,000 Home Affordable Modification Program (HAMP) trials under way across the country, 375,000 are scheduled to convert to a permanent modification by the end of the year, and only 31,382 have made the transition.
The Treasury Department said in a statement to the press, “According to servicer reports, most borrowers in modifications are meeting their responsibilities to make their payments. Servicers need to do their part to help borrowers complete the process and get to the finish line.”
A number of servicers have told DS News that the problem lies in the paperwork. They say an unsettling number of borrowers just don’t submit the required documentation for conversion once they complete the trial phase, or file incomplete or inaccurate information. Participating servicers say they’re ramping up outreach efforts to ensure homeowners who’ve successfully completed their trial phase get the necessary documents in for permanent assistance.
Molly Sheehan, SVP of housing policy for JPMorgan Chase’s home lending division told a congressional panel earlier this week that the focus of her group’s “immediate attention is finding ways to assist the 51 borrowers out of 100 that are missing some or all of the documentation.”
But on the other end of the process, homeowners and their advocates say it’s the servicers and their staff that cause the delays, and in some cases, even lose the paperwork.
Julia Gordon, senior policy counsel for the Center for Responsible Lending, testified to lawmakers Tuesday that servicers still lack the capacity to effectively administer a program of HAMP’s size and scope. It’s been nine months since HAMP began, and Gordon said, “Homeowners still have terrible trouble reaching their servicers, and when they do, they often encounter staff who are ignorant of the HAMP program, they sit through attempts to steer them into other products, and they are unable to get any firm decisions made in a timely manner.”
Timra Valentyne, a loan officer with United Homestead tells DSNews.com that she’s encountered similar problems helping homeowners work with their servicers on HAMP modifications. On numerous occasions, Valentyne said, the borrowers’ documentation gets lost in the shuffle or never gets tagged for the appropriate account.
She cited a particular case with Chase, in which the homeowner had successfully made his restructured payments through five months of a HAMP trial, but was denied a permanent modification because he cashed in a certificate of deposit (CD) to help cover the new payments and the bank ruled his hardship was only temporary. When Valentyne followed up with Chase, the bank representative told her the homeowner was never on the HAMP plan, although the homeowner had a rejection letter stating that he’d been denied for the “Making Home Affordable” modification program – a clear discrepancy in records and paperwork.
Gordon advocates requiring HAMP-participating lenders who are producing insufficient results to use specialty servicers working for the government to handle certain accounts. These companies specialize in intensive, “high-touch” approaches to working with homeowners in trouble, she says, and are much more effective at reaching borrowers than a mainstream servicer.
One specialty servicer says it’s exactly this type of high-touch method that has led to its HAMP success. Ocwen Financial has converted an industry-leading 74 percent of its trial mortgage modifications to permanent status. The Treasury’s latest HAMP report shows that Ocwen accounts for a disproportionately high 13.5 percent of all permanent modifications completed to date even though it services only 2 percent of the estimated HAMP-eligible loans.
Ocwen says its partnerships with homeowner advocacy groups have been indispensible in helping the company keep borrowers active in the process. Ocwen collaborates with a range of independent housing advocacy and grassroots organizations to reach out to homeowners and to help them gather the required documents for a modification.
Based on the December HAMP report GMAC Mortgage is having the most success with permanent modifications in terms of sheer numbers. GMAC has successfully made the conversion for 7,111 homeowners. The company has extended trials to 39 percent of its eligible borrowers.
Bank of America had the worst showing of all the largest lenders. It has finalized a mere 98 permanent modifications, and has extended trial offers to only 15 percent of its more than a million eligible homeowners.
The administration recently announced a new push to compel servicers to complete more permanent modifications, threatening to impose fines, withhold cash incentives, and publicly name those companies that fail to perform up to par
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Luxury Short Sale Homes Are on the Horizon!
December 4th, 2009 Categories: Default News, Loan Modification, Mortgage and Loans, National Real Estate Trends, Real Estate News, Shortsales
…The Coming ARM Storm
First it was the sub-prime market and now experts agree, adjustable rate mortgages combined with rising unemployment and falling property values could create another economic storm capable of ravaging the weak economic recovery. Here’s a quick breakdown of the ARM Storm-Tracker for those savvy short sale investors to beginning their planning:
Resetting Rates: Current interest rates are at or near historic lows with 30 year fixed mortgages below 5 percent while ARM’s are likely to readjust and drive the cost of monthly mortgage payments to double their former payments. Unfortunately, many current ARM holders do not qualify for refinancing due to changes in employment status, high loan to value ratios and increased debt to income percentages.
Evaporating Equity: Not only did millions of Americans take out Adjustable rate mortgages but they built additions and over-improved their homes based upon loans. As home values fell, so did the equity reserves required to refinance their ARM mortgages. Whether it was a first mortgage with minimal down payment or a second (and even third) mortgage, lower property values have all but erased excess equity from a large number of buyers.
Cheaper to Walk: Many homeowners are finding it less expensive to simply walk away from rapidly rising mortgage, rent for awhile then repurchase. According to industry experts, a significant number of homeowners are capable of making the mortgage payment but simply don’t desire to do so given the cost of purchasing the same home after foreclosure. Current homeowners are eligible for FHA loans in as few as three years after default – creating an inverse incentive to continuing paying on a property worth tens (or even hundreds) of thousands dollars less than the existing mortgage.
Renting an Increased Option: Throughout the nation lenders are getting creative in order to reduce the inflow of defaulting properties on their portfolio; one of the more popular options among existing homeowners is the ability to rent your current property for a specified period of time.
ReFi with an ARM? It’s true, the FHA has a 3.87 five year adjustable rate mortgage option designed to help keep payments affordable. Unfortunately, it may simply delay the pain until interest rates continue to rise later. However, with a 2 percent cap on each adjustment/rate increase, it could conceivably buy time for those in unusual short term situations such as temporary illness, job loss of other large expenses. It also has the benefit of “buying time” for the banks and lenders who are in no hurry to acquire even more properties given the current backlog of non-performing properties in their portfolio.
What is a savvy short sale investor to do? Get ready for the coming wave of ARM properties to hit the market. Be sure your credit is in place and position yourself to solve problems for both homeowners and lenders in need of a new start.
See you at the top!
Another article courtesy Chris McLaughlin
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