If you have been sitting on your home waiting to Short Sale it, now would be a good time to consider making your move. Real Estate analysts are saying that indicators look good. Also, if you are looking to get a deal on buying a Short Sale, you may want to listen up too.
- For Sellers – some lenders such as Bank of America and Chase have now expedited short sale programs to where they pre-qualify their sellers and their homes at agreed-upon prices. This has greatly cut down on the time it takes to push all of the paperwork required for a Short Sale through. Also, these big banks are selectively choosing some of the more troubled properties for extra owner incentives. Banks may pay you as much as $45,000 to sell your distressed home.
- You must start soon – if you want to get your tax break. Lenders are also wiping out any extra debt left after the Short Sale is completed. For example, if you owe $200,000 on your home and you sell it for $150,000, then it would stand that the bank would still be able to come after you for the additional $50,000. What they are doing now is forgiving that debt, and that debt is typically subject to income tax. BUT, it will not be subject to be taxed under a special provision that expires at the end of this year. So, try your best to close your Short Sale this year – it can easily take 3 or 4 months to close once you have a buyer.
- Before a lender will approve a Short Sale, the Seller must make the case that financial hardship is keeping him from paying off his loan. In trying to expedite Short Sales, banks are now broadening their definition of what situations qualify as hardships – a job change or impending retirement could be considered as a hardship.
- For Buyers – you should be realistic in your expectations for a bargain. There’s more competition now that bankers and investors have caught on to what good deals these Short Sales are – usually better than foreclosures because more often they are owner-occupied and well cared for, as opposed to foreclosures which may have been stripped of appliances and other things. Expect to pay market price for a Short Sale – avg. price is $175,000, which is still 20% below avg. price of non-distressed properties.
- Try for long locks on your mortgage rates, Buyers, because it may take a long time to find a property you want to purchase – and you want to take advantage of today’s record-low interest rates. Even 60 day locks may not be enough to get you through to closing of a Short Sale. If you’re buying a house that has been pre-approved via one of the banks’ expediting programs, closing time can be cut down to as little as 10 days.
If you are thinking of a Short Sale of your home . . . or looking to Buy a Short Sale, choose a realtor who is knowledgeable and experienced in Short Sales specifically. Call Kim Kelly, an agent with HK Lane Real Estate at 760-285-3578 for a free consultation. She Lists, Works and Closes her Short Sales !!!
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Short Sale Joy!
Several Short Sale updates came down last week from our friends at Bank of America. I always read these with trepidation, but eternal hope. I think the thought is good..but the reality of implementation is never what the original thought was! Just too many loans with Bank of America and not enough personnel. But here we go anyway…
Update #1: Bank of America 2nd Liens: Enhanced lien deficiency Guidelines
- Short Sale must be initiated by June 1, 2012
- Second lien must be attached to a first lien mortgage owned by Bank of America
This waiver enhancement is based on the Department of Justice settlement and went into effect 6/1/2012.
Update #2: HAFA short sale update
HAFA Short Sale help has been extended to 12/31/2012, but also applies to current HAFA contracts. If you write a contract on 12/31/13, it has to close by 9/30/2014 for it to qualify for the HAFA program.
- The $3,000 relocation fee is only paid to the Primary resident.
- Vacant properties not elegible.
- Non-borrowers can now qualify if occupying the property (tenants, parents, relatives)
So there you have it..the continuing attempt to help the Short Sale process. If you need any more information, please give me a call at 760-285-3578 for a FREE consultation.
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Did you hear? Short Sale law expires after Christmas!
Here in California, we are protected on our Purchase Money Loans for 1-4 residential units whether the anti-deficiency law expires or not. We have been for years..A borrower who defaults on his home relinquishes his home. But..that old refinance or HELOC (home equity line of credit) is protected from pursuit only through 12/31/2012. What?
When you do a Short Sale or if you lose your home to Foreclosure, you as the borrower are protected through the end of the year from your Lenders pursuing you for the deficiency..the difference between what the property sold for and what you owed on your note (s).
I have found that with the protection in place, borrowers have been more willing to do a Short Sale. This is a good thing! Borrowers that short sale vs. those that foreclose, keep their HOA dues up (most of them), keep utilities on, and most often stay in the home until it closes. The home isn’t vacant and therefore squatters don’t move in and the neighborhood isn’t hit as hard.
If the deficiency protection is allowed to expire, I believe we will see the numbers of “strategic Defaults” increase once again..why not? Doesn’t make sense to keep pouring money into a black hole, and even less sense to short sale it if the Lenders are coming after you anyway. At least, they retain the right to.
Keep the anti-deficiency law in place. It’s helping. Short Sales are better than foreclosures for neighborhoods. That helps more than anything else.
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Just one more file number to Bank of America..
My saga with the never ending Short Sale in Laguna Niguel, CA. continues. For the property history see my previous post. A couple interesting developments in this ongoing battle..the Investors for this one purchase money loan are..drum roll here…Bank of America! Well..that puts an interesting twist on things, doesn’t it?
Bank of America is the Servicer..they collect the mortgage payment every month, but on this particular note, they decided not to sell it off to a group of hedge funders or to Fannie or Freddie, but rather to keep it in their portfolio of “high-performing Loans”…or whatever they label that particular folder.
Normally, when I have only one loan on a primary residence and it’s a portfolio loan, I jump up and down because I’m about 99% sure I can get it closed relatively quick. This one should have been a slam dunk because the Sellers get me their docs immediately, and the hardship is a separation from spouse with reduced income, making it necessary to let the home go. Not so fast. If you have been following the news, you know that the Banksters just got a 26 billion dollar settlement agreement completed with the Federal Government. I don’t know all the details..I do know that the principal reductions that they are to take on some of their notes ONLY pertain to portfolio loans..not Fannie or Freddie. Hmmm..coincidence here? I suspect there is some extra money to be made at taxpayer expense, having to do with offering to reduce principals on portfolio notes..and that is what this one is!
So..yesterday I get a call from the Bank of America media contact person. She has read my blog and seems sincere when she says she is going to look into it. “I can’t promise you anything, but I will get back to you.” I’m still waiting..
Meantime..my esteemed negotiator, Camele, calls. She obviously knows nothing of the uproar surrounding this deal, which is curious since I communicate with her a couple times a week via Bank of America’s online short sale system, Equator. Nevertheless..Camele calls and says something like,
“My Investors want this deal to work, so let’s see what we can do.”
“Camele…your Investors are one and the same..Bank of America, and they absolutely do NOT want to sell this house! If they did, they would accept this offer of $865,000 because I have their approval letter, and so do you by the way, from my last Buyer, Buyer #3. Remember them? They were approved to close on this house March 16, 2012 for the Bank of America approved price of $865,000!”
Silence.
“Well, my Investors have to see less negative numbers, so perhaps you would reduce your commission?” says Camele.
“Camele..I have spent almost one year on this short sale. I have done my job exceptionally well I would say, by bringing them not 1, not 2, but FOUR qualified Buyers..my commission is off the table.”
Next she suggests getting the Buyers to throw in some money. Not an option in California first off, and secondly, their Lender has already said they will not appraise this property at a dime over $865,000. Shock and awe here because Buyer #3 Lender appraised the home at $825,000!.
“I want a copy of that appraisal, Camele, and I also suggest that no matter the number on it, your highly qualified Investors fire him (or her)!”
What don’t they understand here???? Your Investors gave me a number of $865,000 as FMV. I bring yet another buyer to the table at that number and you raise the number to $1,050,000. Isn’t it interesting that the new Appraised Value matches my original List Price which I picked out of the air based on the note value of approx. $1,085,000.
There is something very fishy going on with Bank of America’s Short Sales. They do not want to sell this home..period! Never mind what you read in the papers. Let’s see if I get anywhere today…I’m not holding my breath.
Oh by the way..the Buyers’ Agent told me yesterday that the Buyers will not go $1 over $865,000. So..if you see it re-listed at $1,050,000, just wait..it WILL come down. To think this home could have been closed six months ago..now THAT’S good business Bank of America!
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