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Will a Short Sale Save Your Credit?

Source: RISMedia

Popularity: 1% [?]

U.S. Housing Values Continued to Show Stabilization in November 2009

U.S. home values in November 2009 showed continued stabilization when compared to previous months, with the Zillow Home Value Index (ZHVI) down slightly (-0.1%) from October, and down 5% from levels a year ago. The ZHVI was $190,000 at the end in November, down 21% from its peak value of $239,500 in June 2006.

But, as always, conditions vary by market. This table shows trends in twenty-five selected metro markets. Of these markets, twelve had negative monthly changes in home values in November versus only nine with negative monthly changes in October, an indication that some of the markets that have exhibited positive appreciation in recent months are seeing renewed depreciation, as we expected.

The three cities with flat or positive performance in October that turned slightly negative again in November were San Diego (down 0.1% in November after six consecutive months of gains), Seattle (down 0.1% after four consecutive months of gains) and Washington D.C. (down 0.1%). Other metros with several months of gains turned in much weaker appreciation in November and are very likely to show renewed depreciation in the coming months. These include Baltimore, Boston, Cleveland, Denver and Los Angeles.

Nationally, the percentage of homes foreclosed in the month (out of all homes) regained its former peak of 0.1% in November indicating that foreclosure activity is picking up again. Foreclosure re-sales as a percentage of all transactions remained steady at 20% but would have likely risen higher had it not been for robust sales activity fueled by the anticipated expiration of the first-time home buyer tax credit (which was expanded and extended to the end of April).

This figure shows the month-over-month and year-over-year changes in home values for the past nine years. The annualized appreciation rate continues to moderate but we think its unlikely monthly appreciation is going to break into positive territory near-term. Instead, we expect monthly appreciation to get more negative in the coming months as foreclosures continue, inventory levels stay high, and mortgage rates increase.

For more information, visit www.Zillow.com.

Read more: http://rismedia.com/2010-01-17/u-s-housing-values-continued-to-show-stabilization-in-november-2009/#ixzz0czYAbLBr

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Americans More Unhappy With Feds’ Housing Fixes

Trillions spent on propping up banks, buying mortgages, tax credits and new programs designed to lower payments and prevent foreclosures. And yet a new survey from Move Inc., the parent of Realtor.com, says Americans are growing increasingly dissatisfied with how Washington is handling the housing mess.

The October 2009 survey found that the federal government’s approval rating by consumers on housing issues has slipped since March 2009. By a six-percent margin, Americans said they don’t think the government is doing enough to stabilize the housing market (48.2% compared to 42.2% five months ago). According to the survey, consumers still want low interest rates (31.4%) and action by the government to help homeowners prevent foreclosures (28.5%), the same two top priorities expressed by survey respondents in March.

The survey found that public participation in the programs to prevent foreclosures is much lower than anticipated. In March 2009, several days after the details of the Making Home Affordable program were announced; Move’s survey found that 17.6 percent of those interviewed said they intended to participate in the Administration’s program. Now only 8.8 percent said they actually did participate.
The number of consumers interested in investing in real estate has doubled since March. One out of eight (12.1%) homebuyers today plan to purchase a home as an investment property, compared to 5.6 percent seven months ago.

Fear of foreclosure is fading. In March 52.5 percent of all survey respondents said they were concerned that they or someone they know may face foreclosure in the next 6 to 12 months. That number dipped slightly to 45.1 percent in October.

The survey of 1,000 people was conducted the third week of October.

Source: BusinessWeek

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What to Do Short of Foreclosure

For a homeowner who needs to sell but has a mortgage balance higher than the property value, one option is something called a “short sale.”

And don’t let the name fool you. This type of sale is complicated and can drag on for months.

So what exactly is a short sale? Here are some questions and answers.

Question: What is a short sale?

Answer: A short sale happens when a lender allows a borrower to sell his or her home for less than what’s owed on the mortgage. The lender usually forgives the difference and considers the debt repaid.

Q: How often do short sales occur?

A: Short sales now make up about one in every 10 home sales, according to the National Association of Realtors. That’s a lot more than you usually see when the housing market isn’t distressed – in fact, the association doesn’t have historical records on short sales before the current downturn because they were such an insignificant segment of the sales market.

Falling home prices have eroded home equity at a rapid place, making short sales more commonplace. About 16 million homeowners owe more than their homes are worth and would have to seek a short sale if they were forced to sell their homes now.

Q: What’s in it for the lenders?

A: Lenders minimize their losses. If the borrower defaults and the bank has to foreclose, there are extra costs to auction the property and maintain it while it’s vacant. Foreclosed homes also typically sell for much less than short sales.

Q: What are the drawbacks for the borrower?

A: While not as bad as a foreclosure, a short sale will still blemish a borrower’s credit report. A short sale would knock an “A” borrower down to a “B” borrower, while the same borrower would fall to “D+” after a foreclosure, said Ritch Workman, co-owner of Workman Mortgage in Melbourne, Fla.

The extent of the damage also depends on the borrower’s credit history before the short sale. A borrower with good credit won’t get hit as hard, while a borrower with tarnished credit will feel more pain.

Normally, a borrower would have to pay taxes on the forgiven part of the balance, though the George W. Bush administration granted homeowners a reprieve that applies to debt forgiven through 2012.

Q: Why is the process so complicated and why does it take so long?

A: Short sales are plagued with snags on both sides. Desperate sellers or inexperienced real estate agents often send in the wrong paperwork, only to get it kicked back. It’s an easy mistake to make because each lender requires different documents.

For their part, lenders don’t have enough staff to handle the flood of short sale applications. It can take months before a lender will get back to a seller about an offer from a potential buyer. Some deals take more than year to finish.

And approvals from third parties – such as private mortgage insurers, Fannie Mae or Freddie Mac, and lenders who hold a second mortgage on the house – also can slow a short sale.

In May, the Obama administration promised to standardize documents and offer incentives to mortgage servicers, borrowers and second mortgage holders to encourage timely short sales. The Treasury Department has yet to release specific guidelines to lenders, which will take months to implement.

Q: What should I do if I’m interested in a short sale?

A: Most lenders will approve a short sale only if the borrower is behind on his or her mortgage, but some are now considering nondelinquent borrowers because they don’t want them to walk away from their mortgages, said Pava Leyrer, president of Heritage National Mortgage in Michigan.

Ask a trusted mortgage or real estate professional to recommend a real estate agent, attorney or company to help with the short sale.

Source: The Washington Times

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Overcoming Fear of Foreclosure Critcal for Many People to Keep Their Homes

Foreclosure numbers continue to rise and many homeowners are at an increased risk of losing their home. While foreclosure can be prevented, many homeowners remain confused or afraid to confront their mortgage problems and take action to help save their home. “Fear often prevents many consumers from seeking help,” said Michelle Jones, senior vice president of counseling for Consumer Credit Counseling Service (CCCS) of Greater Atlanta, Inc. “Overcoming these fears can mean the difference between staying in your home and losing it.”

CCCS counselors address some of the common fears homeowners have about seeking help:

Fear: Homeowners are afraid to let the mortgage company know they are having a problem because they think it will speed up the foreclosure process.

Contacting your lender is an important first step if you want to save your home from foreclosure. It provides you with an opportunity to explain why you have fallen behind on your payments and what steps you are taking to get back on track. Lenders have a financial interest in keeping you in your home and may be willing to alter the terms of your loan or devise a repayment plan.

Fear: Homeowners believe that if their mortgage company has already turned them down for a loan modification, there is no point in contacting a counseling agency.

Many homeowners are turned down for a loan modification because the information they provide to their lender indicates that their expenses exceed their income or that they have not provided accurate documentation and information about their loan. In other cases, the lender may have made a processing error or the investor who owns the loan will not modify loans in accordance with the Making Home Affordable program.

A housing counselor may be able to suggest alternatives that better suit your current financial situation or help you make adjustments that make you a better candidate for a loan modification with your lender.

Fear: Homeowners fear being judged by others for seeking help.

These are challenging financial times. While it may feel like you are the only one struggling, the reality is that many of your friends and neighbors are also finding it difficult to stay afloat. By seeking help, you will not only increase your chances of avoiding foreclosure, you may also serve as an inspiration to others.

Fear: Homeowners think it is better to use all of their financial resources before seeking help.

Many homeowners try to ride out the financial storm, using their savings and depleting their retirement accounts before seeking help. By the time they do seek help, they are in an even more desperate financial situation and they have spent the resources that may have given them more options in dealing with their mortgage crisis.

Fear: Homeowners facing foreclosure fear that their situation is hopeless.

For homeowners facing foreclosure, the feelings of hopelessness and despair can be overwhelming. While for some, seeking help may mean saving their home, it is inevitable that some homeowners will end up in foreclosure. A certified housing counselor can help homeowners work through the foreclosure and build a new path for long term financial success.

Fear: Companies claiming they can save your home charge large, up-front fees.

You can receive counseling from a reputable, nonprofit housing counseling agency at no charge. While there are unscrupulous businesses looking to take advantage of homeowners, there are also many HUD-approved housing counseling agencies that offer help for struggling consumers.

For more information, visit www.cccsinc.org.

Source: RISMedia

Popularity: 1% [?]

4 Things Every Seller Needs to Know

Special thanks to Carra Riley, CRS, for the following article.  No matter your market, these points are fitting!  Follow Carra on Facebook and Twitter for more great info!

All four of the following variables go together to create the “perfect sale.” Each aspect must be taken into consideration if you want a property to sell.

1.  Price fixes everything! Don’t let anyone tell you different.  When the buyer perceives there is a value because of the price, they will buy the home.

The other three variables always can effect the price.

There are circumstances where a buyer has lost the ability to qualify for a traditional loan because of a foreclosure or bankruptcy and the buyer needs owner financing.  With Owner carry Terms that particular buyer may be willing to pay more because they have ownership with possibly a small down payment.

Conversely, if the Condition is bad the price will have to be reduced to reflect a value in the home where a buyer will have to come in and do repairs or cosmetic updates.

Location is the toughest variable in the sale to compensate for.  Most people have heard about in Real Estate the terms Location, Location, Location. If the location is bad.. ONLY price will sell the property possibly combined with terms so exciting that a buyer will not be able to pass up the deal.

2. Terms. If the Terms are attractive, sometimes a seller can get more money for the home.  For example: a home with a value of $325,000 listed with owner carry terms of $25,000 down and no bank qualifying might be able to sell at $350,000 because of the terms.

Under any owner carry situation, it is important the seller speak with their accountant and attorney before accepting any contract and agreement to finance. The seller should be completely aware of the liability and consequences in owner financing. This is just an example how price can increase with the rightterms.

3.  Condition is a key factor in selling a home. When the property is in top condition, looking like a show home the seller may get top market value for the property. In times where homes are selling at a slow pace, in order to procure a sale, the home should be the BEST property at the Lowest price to get to the closing table.

Taking a seller on a preview tour of the homes in the area similar to their property can save months of discouragement with a home not selling.  When a seller can see the competition and accepts the fact their home needs to be the Best house at the lowest price to sell, the home will sell and the seller will see what they are up against in comparison.

Carpet or paint allowance does NOT work in selling a home. If the home needs carpet, put it in.  If the home needs painting, get it painted.  Many times this can cost a seller $5,000 to $8,000 to do those upgrades.  Investing, yes, investing is the correct term, for getting the house sold. The money invested will come back in the form or a quick sale at full market value.

A picture is worth a thousand words so think about how the property looks and even take some pictures to see what a buyer is looking at.  Sellers should look at the pictures like they were a buyer and ask, “would I buy this house in this condition for this price?”  Are the kitchen counters cluttered?  Are the closets a mess?  What does the front door look like and the yard when people drive up to the house?

A seller has 8 seconds for a buyer looking at a home to decide if they really like the house and if it will go on the A list.  The buyer starts the decision making process when driving up to the home while looking at the surrounding properties and the entrance to the home.

There are many agents are trained in “staging” a home and there are “staging services” which help a seller to understand what needs to be done to create a “marketable product.” Listen to these people if you want to get the house sold.

The seller needs to separate from the house and see it as an investment or product that needs to be sold. The seller needs to take all the emotions out of the happy memories in the home if they are serious about selling.

4. Location is the only variable which cannot be changed. A bad location, is a bad location so only price and terms are going to help this situation.

It does not matter that the same model home across the street sold for thousands more, because it was ACROSS THE STREET and did not back to the highway.  A seller needs to get a reality check on location and think about when they purchased.  If the seller got a good deal when they bought because it had a bad location then they have to give the new buyer the same good deal to sell.

Sellers should take all the emotion out of the business of selling a home and treat the transaction as an investment decision.

If the goal is to get the home sold then listen to the professionals and let them do their job.

As Donald Trump would say, “It’s only business.”

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Foreclosure Filings Dip From July to August

MIAMI (AP) — The number of U.S. households threatened with losing their homes held steady last month, a sign that lenders’ efforts to help distressed borrowers may be having a gradual impact. But one month does not make a trend.

More than 358,000 foreclosure-related filings were recorded in August, meaning one in 357 U.S. homes received a filing, RealtyTrac Inc. reported Thursday. That number, up 18 percent from a year ago, includes default notices, scheduled auctions and bank repossessions.

Mortgage companies are ramping up efforts to help troubled borrowers modify their loan payments to make them more affordable, data Wednesday showed. And RealtyTrac said bank repossessions dropped 13 percent from July.

The problem is the economy. The unemployment rate continues to rise, despite a new Federal Reserve survey that suggested the recession is over.

More than 138,000 households received a default notice in August. Another 144,113 received a notice scheduling the house for public auction.

“The August report demonstrates that there is still an ample supply of properties filling the foreclosure pipeline,” said James Saccacio, CEO of Irvine, Calif.-based RealtyTrac.

Despite an 8 percent monthly decline in foreclosure activity in August, Nevada had the nation’s highest foreclosure rate for the 32nd-straight month. Nearly 18,000 Nevada properties received a foreclosure filing, down 8 percent from July but an increase of more than half from August last year.

Florida, California, Arizona, Michigan, Idaho, Utah, Colorado, Georgia and Illinois completed the top 10 states for foreclosure filings.

Among cities with at least 200,000 people, Las Vegas had the highest foreclosure rate, followed by the California cities of Stockton, Merced, Riverside-San Bernardino-Ontario, Vallejo-Fairfield and Modesto.

Source: Yahoo! Finance

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