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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Delinquent Mortgage Rate and those in Foreclosure

Posted on June 23, 2011 by Admin

Hollywood, FL June 23, 2011

You want to know how many people are not paying their mortgages at the moment?

In April, LPS reported that there were 6,388,000 mortgages going unpaid. This is a decline in delinquent mortgages!

This calculates out at 7.96 percent of mortgages . It  includes loans that are at least 30 days past due but not yet in foreclosure.

This is 18.3 percent lower than it was in May last year.

Of the 6,350,000 past due home mortgages in the nation, LPS says 2,164,000 were in the process of foreclosure.

The remaining 4,187,000 were 30 or more days past due but the lender had not yet initiated foreclosures. Of these, 1,921,000 were 90-plus days delinquent.

According to LPS’ analysis, the states with highest percentage of non-current loans – which combines foreclosures and delinquencies – include: Florida, Nevada, Mississippi, New Jersey, and Illinois.

Some are finding solutions, some are waiting it out till the end and others are doing a short sale and getting on with their lives.

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Banks Take Back More Homes in Palm Beach County

Posted on June 17, 2011 by Admin

1,113 homes were repossessed by lenders in Palm Beach County in May.  This was 56% higher than April and 38% higher than the same time last year.

A key reason for this increase was that judges are reluctant to cancel foreclosure sales as there is such a backlog of foreclosure cases, according to a report in the Sun-Sentinel.

In Broward County, lenders repossessed 733 homes during the same period.

So what are the trends in foreclosure filings?  Palm Beach County’s foreclosure filings increased 15% month over month; Broward County’s foreclosure filings fell 10% and statewide foreclosure filings fell 2%.

It appears that banks are still working through thousands of foreclosure cases from last year which were subject to ‘robo-signing’.  The banks appear to be wanting to ensure that all paperwork is correct before proceeding with their foreclosure cases.  The robo-signing crisis has contributed to a delay in clearing foreclosure properties.

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Changes to the HAFA Short Sale Program

Posted on March 2, 2011 by Admin

Home owners are attracted to the  HAFA program for doing a short sale of their homes, when they find themselves in deep water. They don’t always succeed because HAFA has certain restrictions and limitation. Realizing its lack of success, a few changes have been made to the program.  Still, unless they have a real estate agent who has mastered the art of short sales, they may have trouble successfully completing the short sale.

Most people have to take recourse to short sales because of the crashing of the housing market, especially in places like Hollywood in south Florida A positive development is that lenders are now much more organized and agreeable to a short sale to avoid foreclosure.

Short sales could see an increase of over 50% this year. This is the prediction made in an article published on the website www.HousingWire.com.   Short sale programs are becoming more and more common because the home owners, without an income due to unemployment and share value dipping face foreclosure on their mortgages. Mortgage servicers are accepting short sales as a solution for the problem.

Short sales are not the preferred form of settling the matter for home owners. They prefer that the terms of the mortgage be modified to make it possible for them to avoid foreclosure and keep their home by reducing the mortgage payments. Short sales become unavoidable when modifications are not approved and there are other problems with the mortgage. The percentage of homeowners who get a successful loan modification is relatively small – around 25%.  Short sales are in fact less costly for both servicer and the home owner.

The new modifications to the HAFA program of short sales have come with very helpful features. One of them, to help short sales, is the removal of certain restrictions which required a certain minimum level of income. Positive results have come about in the process of because of the amendment. It is great relief to home owners who are already reeling under the bad effects of unemployment, reduction in share value etc. Facing a foreclosure on their mortgaged property is an additional strain on them, both financially and mentally. Short sales are now much easier. The HAFA amendment gave the option of short sales to the home owner to avoid foreclosure.  Banks are also now suggesting short sales as an option to home owners.

The current wave of foreclosures is expected to continue through 2014. But, the modification to HAFA and the banks also taking more positive stand short sales will become more common in the near future. Home owners realize that short sales option is much better a foreclosure and have to resign them to the situation.

Although the HAFA program is much improved, there are still some significant drawbacks and you need to look at HAFA guidelines carefully.  It may be more advantageous to do a regular short sale.  The most important factor in doing a short sale is to use a real estate agent who has successfully closed many short sales and who uses an in house negotiator.

The short sale process.



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Only 1 in 4 Got Mortgage Relief from HAMP Loan Modifications

Posted on March 1, 2011 by Admin

 Republicans Now Want to Kill HAMP Program That Made Only a Small Dent

By ALAN ZIBEL And LOUISE RADNOFSKY

Just one in four of the 2.7 million homeowners who sought to participate in the Obama administration’s signature mortgage assistance (HAMP loan modification) program have succeeded in getting their monthly payments reduced.

The rest failed to qualify for the (HAMP loan modification) program or were disqualified after they were initially accepted into the program, according to an analysis by the Wall Street Journal of data on applicants to the program newly released by the Treasury Department.

In all, about 680,000 homeowners who applied for the Home Affordable Modification Program, or HAMP, had received permanent modifications of their loans and were making timely payments or were still in the trial phase as of December.

Almost 6.7 million U.S. homes were lost to foreclosure, short sales or turned back to lenders between 2000 and 2010, according to Moody’s Analytics. Another 3.6 million could meet the same fate through 2013.

The White House launched the HAMP program in 2009 as a broad attempt to reverse the rising number of home foreclosures by reducing families’ mortgage payments, typically by lowering the interest rate and extending the term of a loan. But the administration’s strict eligibility criteria resulted in far lower participation than expected.

 This translated into a smaller cost to taxpayers. Two years ago, the Obama administration said as much as $75 billion would be needed for HAMP. About $1 billion has been spent so far.

The (HAMP loan modification) program has faced sharp criticism. Neil Barofsky, the departing special inspector general overseeing the program, has faulted the administration for launching it with inadequate analysis and only partially developed guidelines. This led to delays and confusion, and the program “continues to fall short of any meaningful standard of success,” he said a report released in January.

House Republicans have called the (HAMP loan modification) program a waste of money and are considering a bill this week to end the program. “In an era of record-breaking deficits, it’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners,” Rep. Spencer Bachus (R., Ala.) said last week.

Treasury spokeswoman Andrea Risotto said the (HAMP loan modification) program helped establish standards across the loan servicing industry and prompted the industry to make more private modifications. The Republican legislation “would close the door to struggling homeowners seeking relief in the face of the worst housing crisis in generations,” she said.

The (HAMP loan modification) program offers payments to more than 100 mortgage servicers if they successfully complete loan modifications. It has tighter qualification criteria for admission than loan modification programs offered by individual banks or other lenders. Homeowners who are accepted into the program have to get through a trial period of at least three months before their modifications are made permanent.

Almost half of the applicants to the (HAMP loan modification) program, or about 1.3 million homeowners, were declared ineligible from the start.

Applicants were most often rejected because they didn’t submit the necessary paperwork, or it was lost by their mortgage company. Nearly 266,000 applicants to the HAMP loan modificationprogram were denied for this reason. Another 255,000 were ineligible because they were considered to have affordable mortgages, defined as less than 31% of pretax income. Borrowers also were turned down because they had loans for more than $730,000 or were not considered in danger of defaulting soon.

Another 770,000 homeowners started the (HAMP loan modification) program but were later disqualified, most for the same paperwork and eligibility problems as the applicants turned away at the outset. Only a small number were rejected for failing to make trial payments.

Homeowners in southern states had the hardest time getting into the (HAMP loan modification) program and staying there. In the four-state region of Arkansas, Louisiana, Oklahoma and Texas, about 83% of applying homeowners failed to complete the loan-modification process. That proportion was 80% in the four-state region of Alabama, Kentucky, Mississippi and Tennessee.

Homeowners had the least trouble getting into the (HAMP loan modification) program in New England, where the rejection rate was 72%, and in western states, including Alaska, California, Hawaii, Oregon and Washington.

From The Wall Street Journal  www.wsj.com Feb 28 2011

 Curious about the Short sale process ?

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Wells Fargo to Ramp Up Loan Modifications

Posted on February 1, 2011 by Admin

Loan Modifications seem to have been a bit of a lottery for homeowners facing foreclosure. Wells Fargo is, somewhat suprisingly, offering mediation sessions across the country for 150,000 of its borrowers who have missed payments or been trying to get a modification.  Perhaps they realise finally,  that this is the best way to stop the bleeding!

Of course, in some states, such as Florida, mediation is encouraged or even mandatory at some stage before the banks can foreclose on  a homeowner.

Fannie Mae is also pushing banks to meet with borrowers who are behind to negotiate a loan modification before they file the foreclosure at the courthouse.  To see if your mortgage is owned by Fannie Mae or Freddie Mac, click here.

Of course, loan modifications have had a very mixed result – see previous post.  Treasury has just reported that the government’s HAMP program has provided help to 521,630 homeowners since it began in 2009.   Banks have separately negotiated another two million permanent modifications.  Yet, there are still millions of others who have failed to get their loans modified and have lost their homes to foreclosure.

Critics of HAMP are calling to end the program, calling it a “colossal failure”  according to a report today in The Wall Street Journal.   Government assistance programs have generally failed.

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The Hard Truth About Loan Modifications

Posted on January 20, 2011 by Admin

1.4 million trial loan modifications have been granted under the government’s HAMP program since March 2009.  Considering that there are currently over 7 million homeowners who are more than 30 days late and not in foreclosure, that’s a lot of homeowners who don’t qualify.  The worst news about the HAMP loan modifications, however, is what has been happening to those who have been approved for trial modifications.

Thousands, like Jill Anthony in Texas, have had their homes auctioned off because their trial modification was cancelled after the bank allegedly lost the paperwork.

Others end up in foreclosure because of the arrears that accumulated during the trial loan modification. According to congressional testimony, “One incomplete payment or one accounting mistake can land you on one unstoppable conveyor belt to eviction.” This includes penalties and even late fees as well as back payments.

Applying for a loan modification is thus a very treacherous process and its success is not guaranteed. Many homeowners believe that they are protected by having an attorney represent them.  This may give them more time in the home but there is no reason to believe that it will make any difference in getting a loan modification approved.  Very few are approved, and then many of these ‘approvals’ come undone.

Furthermore, what if you are one of the lucky few to get a permanent loan modification?  Is that a great result?  Maybe, if you’re not very upside down.  You get your payments reduced to 31 percent of your total household income but if you are seriously underwater you need to do the math on what it will cost you to keep that mortgage, compared to bailing now in a short sale and starting over.

Most people will end up with a larger mortgage due to accrued interest and other charges that get tacked onto the balance.  Some homeowners also get stuck with a balloon payment that is due if the house is ever sold.

There is a major problem even for those lucky enough to get a permanent loan modification. The mortgage balance in many cases will still be higher than the home is worth. Secondly, even with lowered payments, homeowners are still carrying a very high debt ratio, leaving little money to live on. What happens if a major expense arises like replacing a roof or a motor vehicle?  The result ?

Some project a permanent modification re-default rate of over 50%!

These homeowners will be unable to sell their house until prices recover enough to cover the balance and closing costs. That could be as long as ten years.  Their only other option to sell their house will be a short sale but for this they will have to prove financial hardship.  As hard as it is to give up your home, for many homeowners it would be far better to do a short sale now and make a fresh start.  Getting positioned to buy again in a couple of years while house prices are low could save hundreds of thousands of dollars.

HAFA short sales

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A Typical Mortgage Foreclosure Process and Timeline in Florida

Posted on January 16, 2011 by Admin
The foreclosure process can happen in less than 180 days or it could drag out for two years (or longer).   Some people want to get “free” time in their house; others want to minimize the damage to their credit and get on with their life. 
Timeline: AFTER 90 DAYS      
If you stop making your monthly mortgage payments, this is the time to act.  
Stop the foreclosure, call your mortgage company or contact a local  counseling agency or the foreclosure process will continue.  
Timeline:

120 DAYS

      
Your bank sends you a “Notice of Default”. The phone calls begin. Your bank wants to know why you are behind and wants you to make a payment to avoid foreclosure proceedings.  
   
Your lender can file a mortgage foreclosure lawsuit against you. Once filed, you have 21 days to respond once filed. NOTE: At this point, the banks will no longer accept the late amount. They require the debt paid in full due to the accelerant clause in your mortgage.  This is whenthe foreclosure process really starts.The Loss Mitigation Department of the bank may offer you a Loan Modification, a “Deed-in-Lieu” or a “Short Sale”.  This is a separate department and will have no effect on slowing or stopping foreclosure proceedings unless you get a written agreement from the bank AND the bank’s attorneys are informed.  There are many cases when people thought they had a loan modification but had the house foreclosed and sold off at auction!  
   
Once you receive the Court Summons of the mortgage foreclosure lawsuit, you have 21 days to answer. It is very important for you to answer this summons as it will give you more time to work on avoiding the foreclosure. NOTE: READ the summons that came with the lawsuit. It will tell you what you are required to do. For legal advice, you will need to consult an attorney. If you do not have an attorney, you can obtain a referral through the Florida Bar Lawyer Referral Service at 800.342.8011  
   
Timeline: If a lawyer files defenses against the foreclosure, you can expect the foreclosure process to be delayed, however, the interest and penalties continue to increase.If you ignored the summons, eventually the lender will win a judgment against you and will ask the court to set an auction date for your property. This auction is called a Sheriff’s Sale. If you responded, you will be allotted additional time, depending on your response, to fight the foreclosure.  This is the end stage of the foreclosure process.  
   
Timeline: After the Judgment is filed  
Your property will be appraised to determine its value for the auction. A formal written notice of date of sale and the appraised value will be published in the Legal News.  This will be on public records for everyone to see. Once you have reached this point, your options are very limited. You must pay off the entire balance + legal fees, or negotiate a short sale. You have until the court confirms the sale to do this.  
   
The auction can be done at any public place. It is no longer required to be done at the court house. A winning bidder will be named, usually the bank.  
   
Your lender will ask the court to confirm the sheriff sale. Once the court determines that the sale was done in a proper manner, the court will order a deed to the new owner.  
   
Timeline: Within 14 days after the Confirmation of Sale, the Sheriff’s Deed is issued to the new owner. The new owner can request the courts a writ of possession to have you removed.  Unless the new owner agrees to give you more time, the Sheriff will may give you 7-14 days to move out of the home. NOTE: Only the sheriff has the right to force you to move out of your home. This will only occur after all of the above have taken place.This is a typical foreclosure process in Florida but may vary in individual cases.Florida foreclosure laws

Foreclosure v short sale

For information on the short sale process, click here.

  
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Foreclosure Help – How To Stop The Foreclosure Process

Posted on December 23, 2010 by Admin

The foreclosure crisis has hit people from all walks of life and south Florida is one area that has been hit the hardest. Maybe you are one of the 12 percent plus who have lost their job, or you have been hit with other unexpected problems that have turned the joy of owning a home into an incredible burden. Maybe you stuck with a mortgage whose payments have just jumped way too much.  The other problem facing about one third of mortgage holders in South Florida is that they are upside down – in other words they now owe more than their home is worth.  Property values here have dropped between 40 to 60 percent.  No matter what the cause of your troubles, ignoring the problem won’t help, it will only make it worse. You must act quickly and get the foreclosure help you need to resolve the issue.

The following are a few examples of how to stop a foreclosure on your home:

1. Look for Other Sources of Income – If you have a temporary loss of income you might want to consider  income created by unemployment or disability insurance and your savings as possible cash-flow resources. You might be able to slash the household budget by trading in expensive items like cars, boats, and motorcycles for cash. Even retirement funds can be used, but beware that many people with access to their retirement funds can be penalized for early withdraw and face increased income taxes.  However, if you are upside down (you owe more than your home is worth) like so many people, this might not be a sensible option.

2. Contact Your Lender – If you are behind in your payments, make sure that you contact your lender.  Most people try and get a loan modification because the government has made a lot of noise about this and given the impression that loan modifications are available to everyone who is behind on their mortgage. It is worth applying for if you are not too upside down.  Realize that 75 percent of people never get approved and you may end up being locked in to your home for longer than you want, and not be able to sell it if you want to move in the next few years.  Also, there have been many problems with banks losing documents, foreclosing on people who are doing loan modifications, even on those whose modifications had been approved!  Be prepared for a lot of work, keep records of every conversation with the bank  and get everything in writing if you plan to go down this road.
4. Foreclosure Defense – Lawyers are promoting their services aggressively to those facing foreclosure. Many have just jumped on the bandwagon to make a quick buck, others have more expertise and experience.  Like any business, you need to check lawyers out carefully.  Be wary of large upfront fees.  Call around for prices and find out about their past successes. Even if you have a case, the most they can usually do is get you more time in your house without paying the bank, but watch out that you are not going to be stuck with a large deficiency judgment at the end of it all.  Typically, judges are not very sympathetic to homeowners who have not paid their mortgages even if the banks have not completed their paperwork properly.

5.  A Deed-in-Lieu of Foreclosure – This is handing the property over to the bank and walking away.  This can give you the benefit of avoiding a deficiency judgment but on your credit is considered the same as a foreclosure.

5. Short Sales – Short Sales are our specialty so of course we are biased, but we think we have good reason to be.  There are so many advantages to short selling your property if it is done properly.  In this option, the lender accepts less than what you owe on the property, enabling you to sell your home and walk away.  Lenders are often willing to accept a short sale because it greatly reduces the expense and time involved in foreclosure proceedings. A short sale does less damage to your credit than a foreclosure.  Contact us for more information at 954-274 -7823 or click here.

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