Palm Springs Valley – Legislators in California are urging the Federal Housing Finance Agency to allow mortgage principal write-downs to help homeowners who are “underwater.”
This approved resolution was introduced by Assemblywoman Nancy Skinner, D-Berkeley to urge Freddie Mac and Fannie Mae to immediately offer principal reductions to homeowners who owe more than their homes are worth.
The reason for this push comes after the acting director of the Federal Housing Finance Agency said he would not allow Freddie Mac and Fannie Mae to lower the amount some underwater homeowners owe on their mortgages – even in the face of new new financial incentives from the Obama administration.
The reason given for not offering write-downs is because the FHFA said its analysis determined that principal reductions would be too expensive for taxpayers and would not necessarily improve the ability of many homeowners to avoid foreclosure.
Real estate professionals, lenders and economists in the Palm Springs Valley are of the belief that such a principal reduction could help the housing market to recover. However, it also raises some key questions — mainly, how would the write-downs be accomplished?
One local realtor thinks we should try to do anything we can to help homeowners stay in their homes – it’s one of the things to deter strategic defaults. And some local economists and financial experts question whether urging principal write-downs is the right approach.
A local Palm Springs Valley economist says that the intention is obvious – and it’s a good one, but he questions what the consequences would be and thinks write-downs are a big mistake. His feeling is that it makes more sense to let the market work itself out. And sometimes, such measures simply raise hopes and delay inevitable short sales or foreclosures. Also, it’s not right to offer mortgage relief for some underwater homeowners and not for others.
This economist stated that some banks already are voluntarily reducing principal for underwater borrowers, though they’re not talking about it. Banks are looking at the option of a foreclosure or short sale, where they’re going to lose money anyway versus a homeowner who is making payments to reduce their principal and continues to live in his or her home.
A local Valley loan officer has said he knows of underwater homeowners who have had their principals reduced voluntarily by lenders, and it generally works this way . . . the lender modifies the loans by saying, ‘If you pay on time every month for the next three years, we’ll reduce the principal X number of dollars.”
Another point that has been brought up is the raising of moral issues – whereas, some people got into something they shouldn’t have, but writing down their debt rewards mistakes or irresponsibility . . . and how do you determine who deserves it and who doesn’t?
It will be interesting to watch this dialogue as it continues – justifiable points on either side.
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PGA West Short Sale; CLOSED!
Short Sale Specialist CLOSES another one! Short Sales aren’t easy, take patience and persistence on both the Buyers and the Sellers parts, but I get them done! List to Close on this beautiful semi-custom home at the Norman Estates in PGA West..approx. 95 days. Two notes.
First lienholder: B of A Approx. value of 1.4 mil
Second lienholder: Chase HELOC (Home equity line) Approx. value of $250,000.
Negotiated Sales Price: $925,000 and $8,500 went to pay off the second. Both lienholders released their right to sue for deficiencies and seller paid ZERO!
If you are underwater on your mortgage, or just want a FREE consultation, give me a call at 760-285-3578. Information is power!
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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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My Bermuda Dunes CC listing for a single-family HAFA Short Sale was Approved !!! This sizable home of 2,555sf at 42185 Caballeros Drive has 4 bedroom/3 bath and sits on an estate size lot of 10,454sf.
This home in Bermuda Dunes CC was Listed on 5/16 for $240,000… went into Back-up on 6/5…and was approved on 7/19… for $240,000! There was only one note with Bank of America and that was for approximately $284,000. That’s a Total of only 64 Days from List to Approval !!!
Not only was the accepted Sales price the same as the List price at $240,000, but the Seller will also receive a $3,000 HAFA Relocation Fee! The HAFA program is reserved for primary residences, but if you have moved out and can show you’ve lived in the home within the past 12 months, you may qualify. There are other restrictions, but a terrific program and a huge help to borrowers who have lost so much on their homes.
Only 64 Days from List to Approval? That’s why it’s important to work with a Listing Agent who knows Short Sales and has a proven track record of CLOSING their Short Sales. I List, Work and Negotiate my own Short Sales – I do not use a 3rd party to Negotiate for me. If your Agent is not working their own files then maybe they just have too many files..or even worse, don’t understand the short sale process?
Thinking about Short Selling your Home? Please give me a call for your free consultation. There is NO COST to you, for me to negotiate your Short Sale from list to close. Kim Kelly, Short Sale Specialist with HK Lane Real Estate in La Quinta.
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La Quinta Cove – Yes, another Short Sale submitted, just one note with Chase!
This home is so Cute, listed at $143,000, and is located at 52255 Avenida Obregon.
Built in 1993, this home has 3 bedrooms and two baths and has 1414 sf on a 4792 sf lot. You enter into its Enclosed Front Courtyard – and this home is charming, clean as a whistle and well designed and thought out. It boasts a separated Family Room and very large Kitchen with an Eating Area.
The Master Bedroom in this home is on opposite side of house from the two Guest Rooms and Bathroom, giving it a great flow. There are ceiling fans throughout, and home is beautifully maintained and very welcoming.
There is a finished double Garage with a Laundry Area within. The backyard is lush and green with ideal Western mountain views. The backyard even has a Storage Shed.
Deals like this one are still to be had in the Cove . . . if you are interested in buying or selling a home, contact Kim Kelly with HK Lane Real Estate in La Quinta. She Lists, Negotiates and SELLS her Short Sales !!!
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Yet another Short Sale submitted, this one in Indio . . . with only one note with Wells Fargo. This beautifully maintained single level condo at Indian Palms Country Club in Indio boasts frontage on the fairway, a front porch with an inviting double entry door and is an End Unit, making the entry and front door private.
This 3 bedroom/2 bath home has a vaulted ceiling, giving the condo a light and spacious feel. The kitchen is upgraded with granite slab counters, stainless steel appliances and a double sink. Ceiling Fans exist throughout and there are no popcorn ceilings. The dining area is separate and off the kitchen.
Two porches complete this lovely home, along with lots of storage and an interior laundry area. It has a single enclosed garage plus a single covered carport.
Location is everything, and this Indian Palms condo at 49020 Eisenhower Dr. in Indio is close to the restaurant and community pools. Built in 1981 and 1368sf in size, the list price is $110,000
Such a lovely living opportunity in a gated golf community where amenities are plenty and the the living is easy, all at an affordable cost. Monthly HOAs are only $285.
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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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FNMAE short sale changes
I got a call on Thursday last week from a guy that claimed he was my contact for a FNMAE short sale at Atlas Mountain in Desert Hot Springs. What??? I get calls all the time from short sale negotiation companies claiming they can “help me close my deals.” I don’t need their help. I close 100% of my short sales. I did call the servicer, GMAC, and they confirmed he was for real.
Here’s the deal….(not sure if it’s ALL FNMAE backed notes, or just GMAC)
If the investor on your note is FNMAE, the negotiation company, Kazork, skips the Servicer completely, GMAC in this case, and negotiates my offer directly with the Investor (FNMAE). Sounds great, right? I hope so. I have already submitted offer + supporting docs to GMAC, so it’s a redo, but oh well.
I list the property at Kazork.com. Agents submit offers at their assigned list price or above, and they are negotiated within 30 days. The catch? I’m guessing their list price will be too high..same as with B of A COOP program.
Why the change? The guy tells me there has been extreme fraud on the part of Short Sale List Agents. They are submitting low offers, getting them sold, then turning them again on the other end! What??? I attach prices on my Short Sales that are typically 10% or so below Fair market value. They get accepted..often takes awhile, but there you go.
Anyway….could be good. Keep you posted.
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In La Quinta and across the state of California, Bank of America has announced that for a limited time, they are offering enhanced relocation assistance payments to qualified California homeowners who initiate a short sale without an offer. Those who qualify could be eligible to receive anywhere from $2,500 – $30,000 in relocation assistance and owe no more on their mortgage with the short sale of their property.
Many distressed homeowners are not aware of options available to them for avoiding foreclosure. It’s best to be proactive and call your lender before missing a payment. Then the embarassment and credit problems brought on by foreclosing on your home can be avoided. To not call your lender to discuss your options will only hurt your case.
Providing this enhanced Relocation Assistance Payment to distressed homeowners helps them with relocation costs and can also be used to help pay escrow items, such as past due HOA fees (a fee the banks will not pay for in a short sale situation). Banks are now more willing than ever to work with their borrowers to come up with a solution that works for all parties involved.
Remember that the Listing Agent in a Short Sale is your key to success, both for the Short Sale seller as well as the new Short Sale buyer. If you need help with your underwater mortgage, or simply doing your investigative work, give me a call at 760-285-3578. I am
experienced and short sale certified and consultations are FREE! I would be Happy to talk to you.
I am not a tax professional nor an attorney. I am posting this because he IS, and gives a very clear, concise understanding of the tax non-implications of a Short Sale for both Primary and Investment properties. Check it out!
http://www.youtube.com/embed/6901YZhzqII
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