Obama, court plans could help Florida homeowners facing foreclosure

Posted on October 26, 2011 by Admin

October 24, 2011|By William E. Gibson and Donna Gehrke-White, Sun Sentinel

Tens of thousands of struggling South Florida homeowners could benefit from proposals unveiled by White House and state court officials.

President Barack Obama on Monday said “we can’t wait” for Congress to act and issued orders to make it easier for underwater homeowners to refinance. .

About 48 percent of homeowners with mortgages in Broward County are underwater, according to the research firm CoreLogic. In Palm Beach County42 percent owe more than their homes are worth. Most of these homeowners haven’t been able to take advantage of record-low mortgage rates, CoreLogic reports.

Obama will revamp the Home Affordable Refinance Program by eliminating some appraisals and underwriting requirements.More than 890,000 homeowners nationwide have already refinanced under the HARP program, which is available to borrowers with loans backed by Fannie Mae and Freddie Mac that were taken out before May 31, 2009.

Meanwhile, a panel led by Judge William Palmer of the Second District Court of Appeal is recommending the Florida Supreme Court overhaul a required mediation process for homeowners in foreclosure to ease the state’s housing crisis. The panel thinks the program, which has not led to many mediation settlements, is keeping Florida from rebounding from the foreclosure crisis.

South Florida accounts for more than a third of the state’s backlog of 462,339 foreclosure cases.

Here are answers to some questions about the two proposals:

Q: Who would be affected by the Obama refinancing plan?

A: Potentially millions of underwater homeowners nationwide could benefit, federal officials say. That includes hundreds of thousands of Florida homeowners, estimates Rob Nunziata, president of FBC Mortgage, a brokerage based in Orlando.

Until now, homeowners who were more than 25 percent underwater could not use the HARP program, excluding many families in Florida and other boom-to-bust states where housing values have plummeted.

“We have too many Americans who have done all the right things – who have paid their bills, they are current on their mortgages – yet they are still stuck with 6- or 7-percent mortgages because home prices in their neighborhoods have made them ineligible for refinancing,” said Shaun Donovan, secretary of Housing and Urban Development.

Q: What are the restrictions?

A: Homeowners must be current in their mortgage payments. Only homeowners with mortgages created before June 2009 that are owned or backed by government-controlled Fannie Mae and Freddie Mac would be eligible.

Mortgage amounts must be more than 80 percent of the current market value of homes. Officials are talking about dropping that limitation.

It does not help the 3.5 million Americans who are seriously delinquent in their loans or in the process of defaulting.

Q: How would this reduce the cost of refinancing?

A: It would eliminate risk-based fees and reduce “closing costs” when settling on a revised loan. That includes reducing the cost of title insurance and fees for processing liens.

Appraisals – which evaluate the value of homes – would be automated in most cases, eliminating or reducing the need for appraisal fees.

The Treasury Department also is contacting officials in hardest-hit states such as Florida to explore ways to further reduce closing costs.

Under the revamped program, Fannie and Freddie would reduce the fees they have charged to enable borrowers to better afford the new loans.

Among the fees that may be reduced or eliminated are those for loan level price adjustments. In future, borrowers may not be penalized for less-than-perfect credit scores, for example.

Fees also will be waived for some underwater borrowers who refinance into 20-year or other, shorter-term loans. By doing so, it could help homeowners get above water faster.

Q: When does it take effect?

A: New guidelines to implement the program will be sent to lenders on Nov. 15. The refinancing program was to end in June but will now be extended to the end of 2013.

Q: Why are they doing this now?

A: Obama administration officials had hoped that HARP would help as many as 4 million Americans, but as of August only about 900,000 had taken advantage.

Officials also said on Monday they could not count on Congress – riven by party differences – to agree on housing aid, so they took action within existing law to try to reduce costs and other barriers. “Where Congress won’t act, this president will,” said White House communications director Dan Pfeiffer.

Q: What does the special committee recommend to the state Supreme Court?

A: The panel says the mandate for a statewide mediation foreclosure program should be eliminated. Instead, the chief justices in Florida’s 19 judicial circuits should be allowed to modify the proceedings to better suit their areas’ needs.

The idea is to make the mediation go faster with more loan modifications approved during the meetings between homeowners and lenders. Homeowners should be made aware of the documents needed, such as paycheck stubs and bank account statements, before they attend a mediation meeting. The committee also recommended that the Florida Supreme Court set up a new group to come up with ways to reduce mediation fees to make it more affordable to struggling homeowners.

Q: When will the Florida Supreme Court decide on the recommendations?

A: “Too soon to tell at this point,” Supreme Court spokesman Craig Waters said Monday. “The report was just circulated to the justices on Friday.”

Q: Where is more information available on the mediation program?

A: For the courts program, Broward’s mediation officers can be reached at 866-222-6541. The Palm Beach Bar Association is handling that county’s mediation and can be called at 561-598-6259.

The website hud.gov, also provides lists of free government-approved counselors who can help struggling homeowners avoid foreclosure.

Q. Where is more information available about Obama’s new plan?

The Obama administration has not yet set up a website about the new program but you can find some information at the Federal Housing Finance Agency’s website, dgehrke@tribune.com“>http://www.fhfa.gov/

dgehrke@tribune.com or 954-356-4205

http://articles.sun-sentinel.com/2011-10-24/business/fl-foreclosure-backlog-underwater-20111024_1_underwater-homeowners-mortgage-payments-freddie-mac/3

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Short Sale Assistance Programs

Posted on October 15, 2011 by Admin

The Obama administration’s is encouraging short sales with the new Short Sale assistance program (where mortgage servicing companies are paid $1,000 to handle successful short sales and mortgage holders get $1,500 for signing over their property).

You’ve  got more compelling reasons than ever to do a short sale rather than just throwing up their hands and “letting things go”.

There are many benefits of doing  a short sale versus foreclosure.

Government mortgage giant Fannie Mae has just announced earlier this year (2011) some changes to  make it easier for those who have done a short sale to qualify for a new mortgage.

In 2008, the waiting period was reduced from five years to four. But effective July 1, 2010, this waiting period has been reduced to only 2 years.

On top of this Chase is offering some homeowners up to $30,000 to do a short sale and Bank of America is offering up to $20,000 in Florida only for a short time.

Chase short sales:   website: https://www.chase.com/chf/mortgage/hrm_otheralt

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Bank of America offers $20,000 to do a short-sale

Posted on October 8, 2011 by Admin

Following the example of Chase Bank, Bank of America, the nation’s largest mortgage servicer, is offering Florida homeowners up to $20,000 to short sale their homes in an effort to get them off their books.

This offer from Bank of America was sent out via email to select Florida Realtors earlier this week outlining basic details of the plan.

There are some strict conditions, however, regarding eligibility and investor participation.  The  short sales must be submitted for approval to Bank of America before Nov. 30 to qualify. The homes must have no offers on them already and the closing must occur before Aug. 31, 2012.

A short sale is when a bank agrees to accept a lower sales price on a home than what the borrower owes on the loan.

Realtors said the Bank of America plan, which has a minimum payout amount of $5,000, is a genuine incentive to struggling homeowners who to encourage the homeowner to act instead of doing nothing.

Given that the current average time to foreclosure in Florida is  676 days — nearly two years — it is in everybody’s best interests to get these homes sold, not just Bank of America. The national average foreclosure timeline is 318 days.

The Palm Beach Post interviewed a number of real estate agents and received different opinions about Bank of America’s offer. “I think this is a positive sign that the bank is being creative to try and help homeowners and get things moving,” said Paul Baltrun.

Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance, called Bank of America’s short sale payout a “bribe.”

“You can call it a relocation fee, but it’s basically a bribe to make sure the borrower leaves the house in good condition and in an orderly fashion,” Cecala said. “It makes good business sense considering you may have to put $20,000 into a foreclosed home to fix it up.”

Homeowners, especially ones who feel cheated by the bank, have been known to steal appliances and other fixtures, or damage the home.

A spokesman for Bank of America said the program is being tested in Florida, and if successful, could be expanded to other states.

Wells Fargo and J.P. Morgan Chase have similar short-sale programs, sometimes called “cash for keys.”

Wells Fargo spokesman Jason Menke said his company offers up to $20,000 on eligible short sales that are left in “broom swept” condition. Although the program is not advertised, deals are mostly made on homes in states with lengthy foreclosure timelines, he said.

Bank of America’s plan excludes Ginnie Mae, Federal Housing Administration and VA loans.

Similar to the federal Home Affordable Foreclosure Alternatives program, or HAFA, which offers $3,000 in relocation assistance, the Bank of America program may also waive a homeowner’s deficiency judgment at closing.

A deficiency judgment in a short sale is basically the difference between what the house sells for and what is still owed on the loan.

HAFA, which began in April 2010, has seen limited success with just 15,531 short sales completed nationwide through August.

But Realtors said cash for keys programs can work.

Exclusions from the Bank of America program:

  • Ginnie Mae, FHA, VA and USDA loans are ineligible for participation
  • Lot loans are ineligible for participation
  • Properties outside the state of Florida are ineligible for participation
  • Short sales initiated with an offer are not currently eligible for the enhanced relocation assistance

Frequently Asked Questions:

Q: How can I find out if my client/homeowner qualifies for Bank of America’s relocation assistance?

A: Call a Bank of America short sale specialist at 1.877.459.2852.
Monday – Friday 8 a.m. – 10 p.m.; Saturday 9 a.m. – 5:30 p.m. Eastern

Q: Do I have to do anything differently when initiating or completing a Bank of America short sale?

A: No. As long as the homeowner’s short sale is initiated between September 26 and November 30, 2011, and the property closes by August 31, 2012, they will be eligible.

Q: Will Bank of America’s relocation assistance funds be reported on the HUD-1?

A: Yes, they will be documented on the HUD-1, and a 1099-MISC will be issued.

Q: Can Bank of America’s relocation assistance funds be used to pay off existing liens?

A: Yes, if the investor approves it.

Q: Is the relocation assistance added to any other incentives, such as the HAFA or Bank of America proprietary program incentives?

A: No. A homeowner will receive the $5,000 to $20,000 in place of the typical incentive paid out by these programs. The relocation assistance is essentially an enhancement to the standard payout offered on these programs.

Q: Is Bank of America’s enhanced relocation assistance available for other programs?

A: Currently, Bank of America’s enhanced relocation assistance is only available to short sale programs initiated without an offer. However, as we gauge the success we may extend this incentive to other programs.

Questions?

Homeowners and agents may call 1.877.459.2852 to speak to a Bank of America short sale specialist about this exciting relocation assistance offering.

Visit the Agent Resource Center at bankofamerica.com/realestateagent for additional short sale education, news and resources to help you complete short sales at Bank of America.

* The relocation assistance payment from Bank of America is calculated based on the unpaid principal balance of the homeowner’s loan and the type of short sale that the homeowner completes, but will not be less than $5,000 or more than $20,000.

For help preparing and submitting a short sale to Bank of America, go to www.BelroseProperties.com

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Priced Well, Will It Sell?

Posted on September 26, 2011 by Admin

Tracking the local real estate market is practically a hobby for Yetta Levitt of central Florida. And she has always bought and sold houses by owner, saving thousands in commissions.

But even the formidable talents of Levitt were challenged by the merciless Florida real estate market when she decided it was time to sell her family’s large waterfront house and downsize to a smaller house nearby.

Levitt was one of four winners in ForSaleByOwner.com’s “Is Your House Priced Right?” contest, which invited homeowners around the country to submit short essays explaining what they thought their houses were worth, and why. The prize package included an appraisal to find out once and for all what the house is worth.

Levitt’s meticulous process started in September 2009 with a formal appraisal. Verdict: $698,000. She put the house on the market at that price. After all, the rise in local foreclosures would not affect a house bordering water and overlooking a nature preserve, with a pool and other amenities beloved by outdoorsy Floridians?

Homeowners often underestimate the impact of foreclosures. But especially in markets dominated by foreclosures, such as Florida, all property values are affected.

That’s what Levitt discovered. The house did not sell. In March 2010, Levitt dropped the price 20% to $558,000. “Initially I was reluctant to admit that foreclosures and short sales should factor in. Then reality dawned and I realized, you can’t avoid using distressed sales as comps,” she says. “I’ve always bought and sold by owner, over 25 years, my own homes and for my mom. In all that time I would have been highly offended by a 20% discount. But, it is what it is.”

Even that splash of cold reality didn’t move the house. What did it take? Tune in later this week, or cut to the chase.

http://blog.forsalebyowner.com/2011/09/priced-well-will-it-sell.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+forsalebyowner-blog+%28ForSaleByOwner.com%3A+Blog%29

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New federal refinance plan shuts out homes too far underwater, may help few in Florida

Posted on September 11, 2011 by Admin


By Kimberly Miller

Palm Beach Post Staff Writer

Updated: 10:58 a.m. Saturday, Sept. 10, 2011

Posted: 9:28 p.m. Friday, Sept. 9, 2011

Recognizing the shortcomings in his once-heralded refinance program for struggling homeowners, President Obama asked Thursday for a revamp of the 2009 plan that has helped fewer than 840,000 borrowers nationwide.

The Home Affordable Refinance Program, or HARP, was created to encourage more homeowners to take advantage of record-low interest rates by allowing borrowers to refinance even if they owe up to 25 percent more on their loan than their home is worth.

Interest rates have continued to drop since the plan’s debut, with Thursday’s average rate for a 30-year fixed mortgage falling to a record 4.12 percent.

But millions of homeowners, especially in hard-hit states such as Florida where values have plummeted since real estate’s salad days, have been blocked from taking advantage of the federal plan.

The snag is that many borrowers are more deeply underwater than what is allowed in the program, which is available to homeowners whose loans are owned or guaranteed by Fannie Mae and Freddie Mac.

“The program, as it stands today, hasn’t done a whole lot for anybody,” Andy Seepersad, chairman of the government affairs committee of the Florida Association of Mortgage Professionals, said of HARP. “From the mortgage side of things, I’m not holding my breath until I see the details of a new plan.”

In South Florida, 46 percent of single-family homes with mortgages were underwater in the second quarter of this year. Nearly 57 percent of Treasure Coast home loans were underwater during the same time period, according to real estate analysis firm Zillow.

Another HARP requirement is that borrowers must be current on their mortgage and have no payments later than 30 days in the past year. More restrictive loan guidelines, such as higher credit scores and proof-of-income requirements, are also shutting out some homeowners from refinancing.

About 750,000 homeowners had refinanced through HARP at the end of the first quarter of this year, with 50,000 owing between 5 percent and 25 percent more on their loan than their home is worth. But that compares to an estimated 5 million underwater loans owned nationwide by Fannie and Freddie, according to a report released this month by the Congressional Budget Office.

The most recent HARP data raises the number of homeowners helped to 838,400 nationwide.

“Any time you can save someone money, that’s great,” said Bobby Bashwiner, a principal with Group One Mortgage in Jupiter. “But it doesn’t matter if they reduce it to zero if you don’t have a job.”

Obama gave no details in his speech Thursday about what tweaks could be made to HARP, but said a refinance at today’s rates can put “more than $2,000 a year in a family’s pocket.”

The initiative will need final approval from Edward DeMarco, acting head of the Federal Housing Finance Agency, which oversees the two mortgage companies. On Friday, he said, officials were “carefully reviewing the mechanics” of the program to “identify possible enhancements that would reduce barriers for borrowers already otherwise eligible to refinance using HARP.”

According to an analysis by mortgage market consultants Alan Boyce and Columbia Business School economists Glenn Hubbard and Christopher Mayer, if three-quarters of all borrowers with interest rates higher than 4.5 percent refinanced, it would leave consumers $70 billion richer.

The mortgage industry calculates the negative equity in a home, or how underwater it is, by figuring a “loan-to-value ratio.” To determine that, take the amount owed on the loan and divide it by the value of the home. For example, a loan with a principal balance of $300,000 on a home worth $240,000 would have a loan-to-value ratio of 125 percent.

“People beyond the 125 percent have zero options right now – none,” said Skip McDonough of Family Mortgage in Jupiter.

The Associated Press contributed to this story.

Figuring loan-to-value ratio

To calculate a home’s negative equity, take the amount owed on the loan and divide it by the value of the home.

For example, a loan with an unpaid principal balance of $300,000 on a home worth $240,000 would have a loan-to-value ratio of 125 percent. In other words, the owner owes 25 percent more on the loan than the home is worth.

For more information on the Home Affordable Refinance Program, go to www.makinghomeaffordable.gov

http://www.palmbeachpost.com/money/foreclosures/new-federal-refinance-plan-shuts-out-homes-too-1833574.html

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FHA Short Sales

Posted on September 2, 2011 by Admin

FHA Short Sales

If you have a HUD (the U.S. Housing and Urban Development) loan, they now have a program to help you do a short sale and enable you to  move from their home with a program called Pre-Foreclosure Sale (PFS Program). This program allows borrowers who have fallen short on their payments and are now in pre-foreclosure sell their homes short of what they owe.

The way  FHA Short Sales work is if you meet certain criteria set forth by HUD…HUD will perform a new appraisal of your home and accept roughly 88% of the current homes value satisfying he old mortgage note.

Key Benefits of an FHA Short Sale

1.   Borrowers/Sellers will receive cash incentive of up to $1,000

2.  The Mortgagee (your lender) or HUD will not pursue the borrower for a deficiency judgment

3.  HUD allows up to 1% of the buyer’s mortgage amount for closing costs to be included in
the “Seller’s Costs” on the HUD-1 for all transactions that involve a new FHA-insured
mortgage.

4.  Mortgagee/ lender must respond within 5 working days from receipt of the executed contract

To be eligible for an FHA Short Sale

  • Must have a marketable title, title search must be performed and all liens should be cleared/discharged prior to closing
  • Borrower can be current at time of submission but must be delinquent by at least 30 days prior to the closing
  • Borrowers/Sellers must professionally & actively market property for up to 3 months which will delay any foreclosure proceedings.
  • Property values are determined by an FHA certified appraiser, using a “as-is” Fair Market Value (FMV)
  • Mortgagor/Sellers must maintain property in “ready to show” condition
  • The property must be owner-occupied, no “walk-a ways” or investment properties. Exceptions: when it is verifiable that the need to vacate was related to the cause of default (job loss, transfer, divorce, death), and the subject property was not purchased as rental investment, or used as a rental for more than 18months.
  • The Mortgagor must be 31 days or more delinquent at the time of the Pre-foreclosure Sale closing.
  • The Mortgagor must provide documentation substantiating a reduction in income or an increase in living expense, and documentation that verifies the Mortgagors need to vacate the property (if applicable).

If you think you may be eligible for an FHA short sale, contact someone right away who is experienced in doing FHA short sales.

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How to rescue the housing market: Foreclosures!

Posted on September 1, 2011 by Admin

NEW YORK (CNNMoney) — If the Obama administration really wants to save the housing market, it should speed up the foreclosure process — not prolong the inevitable, experts say.

Four years into the housing crisis, the real estate market is still teetering on the edge. The Obama administration has tried one program after another to stem the tide of foreclosures with limited success. And it is continuing to look for ways “to ease the burden on struggling homeowners,” though no new initiative is imminent, the White House said this week.

But some housing experts argue that the administration should go in a different direction than it has in the past. Instead, they say it’s time to focus on pushing many of those delinquent borrowers through the foreclosure process and putting foreclosed properties back into use.

While some of the 2.2 million loans in foreclosure can still be saved, many are too far gone, they say. Some 37% have not made a payment in more than two years, while another 34% have not made a payment in 12 to 23 months, according to Lender Processing Services.

“Loans enter into foreclosure, but never come out,” said Thomas Lawler, founder of Lawler Economic & Housing Consulting. “If this keeps going on, you have a continual overhang that never goes away.”

Delaying foreclosure increases the percentage of homeowners who’ll likely never catch up, Lawler said. In 2009, only 6% of delinquent borrowers were more than two years behind. And it means vacant properties still in limbo could fall even further into disrepair, hurting the value of the surrounding housing market.

Lawler is not the first to warn about the consequences of slowing the foreclosure process. Since the housing crisis began, several experts cautioned that foreclosure prevention efforts may only prolong the pain.

Accelerating foreclosures is tricky, however, especially since it is largely the purview of the states. But the administration could work with state officials to speed the process, especially on vacant homes, he said.

The push would come at a time when many mortgage servicers have slowed foreclosure efforts as they resolve shoddy paperwork practices. Foreclosure filings in July dropped to their lowest level since November 2007, due to processing delays and foreclosure prevention measures, according to RealtyTrac.

Getting rid of the glut

Another key to helping the housing market is facilitating the resale of homes that have already been foreclosed upon, experts said. This glut of vacant properties will continue to weigh on home values until they are sold.

“They can’t be a glacier hanging over the market with everyone waiting for it to fall,” said Jim Gaines, research economist at The Real Estate Center at Texas A&M University. “Those properties have to clear the market.”

A first step could be to sell off the foreclosed properties owned by Fannie Mae, Freddie Mac and the Federal Housing Administration. Collectively, they own 248,000 homes, about 31% of the foreclosure inventory.

The administration and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, are already looking for ways to unload these foreclosed homes. Earlier this month, they put out a request for ideas, including possible bulk sales of inventory. Also, they are interested in turning many of these properties into affordable rentals, which are sorely lacking in many communities. Experts interviewed agree this would be a good move for the market.

To entice investors to purchase these homes, as well as other foreclosed properties owned by banks, the administration could advocate for changes to the tax code, Gaines said. For instance, more favorable capital gains or depreciation rules could attract buyers.

The case against foreclosure

Of course, not everyone agrees that pushing people through the foreclosure process is the best solution to the housing crisis.

David Min, associate director for financial markets policy at the Center for American Progress, argues that there are many homeowners who can be saved if their payments can be adjusted to affordable levels or if some of their principal is forgiven. This particularly applies to those who are only a few months behind.

Foreclosure is very costly for servicers, homeowners and neighborhoods, he said.

“There are a lot of other options that make more sense” than foreclosure, Min said. “It’s just so destructive to value. We should be pulling every lever we can.”

Mediation, for instance, could help some homeowners avoid foreclosure, he said. Some 23 states and the District of Columbia currently have programs that require mortgage servicers to sit down with borrowers and discuss the homeowners’ options, though many began only in the last year. More than 70% of mediations end in a settlement, often restructuring the mortgage to a sustainable level, according to the center.

Helping those still current with their payments can also give the housing market — and the economy — a lift, albeit a somewhat marginal one, experts said.

For instance, the administration could revamp its refinancing program aimed at allowing underwater homeowners to take advantage of today’s lower interest rates. Improvements could include reducing some of the upfront costs and underwriting requirements.

Lowering borrowers’ monthly payments would give people more money to spend. And, for those on the edge, it could make it more likely that they will stay in their homes.

“It would be helpful to some borrowers with high rates,” Lawler said

From http://money.cnn.com/2011/08/31/real_estate/housing_market_foreclosures/

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Government Owns 248,000 Foreclosures!

Posted on September 1, 2011 by Admin

Lenders and government bodies like Fannie Mae, Freddie Mac and FHA now own 800,000 foreclosed properties!

Who would have thought that so many properties that have been taken back by lenders as foreclosures have yet to be sold!   This is a frightening number of foreclosures and is an indication of the size of the tragedy that has affected so many US homeowners during the past 3 years.

So what is Obama planning to do?  Well, the government really doesn’t know what to do with all these foreclosures and wants your ideas!

The problem is that they can’t sell them off without pushing down the price of real estate even further.

The government has already tried lots of programs to help homeowners who are facing foreclosure, such as loan modifications that people thought were going to save everybody but few qualified for.

Florida has recently released its Hardest Hit Program to help prevent foreclosure.

There’s not a lot the government can do – interest rates are at a 40 year low, but is exploring new ways to help hard hit neighborhoods, unemployed homeowners, and underwater borrowers.  While all this is admirable, much of it just stretches the pain out longer.

www.ShortSaleExpertBroward.com

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Are Short Sales Replacing Foreclosures?

Posted on August 21, 2011 by Admin

Are Short Sales Replacing Foreclosures?

The latest figures show that short sales are on the rise and foreclosures are on the decline. According to data from Moody’s Investors Service, in August 2009, short sales accounted for 8% of bank distressed property sales. As of mid 2011, short sales have jumped to more than 25%. Meanwhile, the time it took for a borrower to go to foreclosure grew from an average 14 months in early 2009 to 24 months in mid 2011.

Why are short sales increasing and foreclosures  declining?

Foreclosure has become a problem for the banks.   Banks began stopping the foreclosure process in October 2010 in order to correct forged documents and mishandled foreclosure paperwork as part of the robo-signing scandal. Since then, new regulations from federal agencies and still ongoing negotiations between the state Attorney Generals have made foreclosing on property more difficult.

It is often cheaper for a bank to short sale a property.  Banks saved an average of 10% when doing a  short sale instead of a foreclosure. They usually get the property off their books much quicker and they have fewer legal costs and don’t have to worry about botched paperwork.

Short sales are often completed in as little as 3 months although sometimes they can get dragged out to 12 months, too.

For borrowers, short sales can be a great alternative to foreclosure. The damage to a borrower’s FICO credit score is far less with a short sale (50 to 200 point drop) compared to a foreclosure (as much as 400 point plunge.) Borrowers can usually buy a new home within a couple of  years after a short sale whereas it can be a 5 to 6 year purchasing moratorium after a foreclosure. Plus, many borrowers are attracted to the possibility of avoiding a deficiency judgment and avoiding having a foreclosure sitting on Public record.  They can also hold their head high knowing that they sold the property.

www.ShortSaleExpertBroward.com

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Cash for Keys Expands to Short Sales

Posted on July 29, 2011 by Admin

Traditionally, cash for keys was a way for the bank to entice homeowners to give their home back to the bank so the bank didn’t have to foreclose. This, unfortunately, would leave homeowners with  severely damaged credit that often said ‘foreclosure’.

Now, in their desperation to get non-performing loans off their books, banks like Chase and GMAC are offering cash for keys to homeowners to do a short sale.  The government has the HAFA short sale program to encourage this but it seems like banks are sometimes offering considerably more than the $3,000 in the HAFA program.

The banks have too much inventory and too many more properties still coming into foreclosure over the next 4 years, so they are looking at other ways of moving the properties, like short sales, instead of  foreclosing.

This new approach to cash for keys is a great opportunity for homeowners who want to get out from under a mountain of debt and not have to worry about a deficiency judgment (as long as the short sale is done properly).

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