Short sales and foreclosures have become the face of real estate. Property buyers are seeking deals and distressed homeowners are either walking away from their homes or trying to emerge from their situation as unscathed as possible.
The best way to avoid foreclosure is to pursue alternatives like a short sale or a loan modification. Don’t run from the obligation, but instead confront it head on with an experienced Realtor and your lender to determine the best approach.
Besides the obvious impact to the homeowner of losing the home itself, a post-foreclosure credit score will take a hit of at least 200 points and the homeowner’s credit history will reflect the foreclosure for seven years.
But the ripple effects continue. Both the neighborhood of the foreclosed home and the surrounding community are adversely impacted. Along with the equity, the value of those area homes declines and the likelihood of theft and vandalism increases.
Obviously there is lot at stake. A targeted approach with your lender, a licensed Realtor, and possibly a legal resource will potentially help your situation, maintain the integrity of your neighborhood, and eventually restore some balance to this market.
Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).
Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.
Here are a few reasons why:
On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.
Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.
There is only one way to avoid being affected by all of these costly changes that lie ahead – submit all FHA mortgage applications by the last week of March.
If I can answer any questions you may have about how these changes could impact you, call me at 727-488-9747. We always enjoy helping our clients!
Search for all the Foreclosure properties in Tampa Bay.
Short sales are getting the most press these days as the antidote for foreclosure, but they do have a limited window of opportunity and entail very specific steps.
First of all, short sale eligibility requires proof of hardship; and hardship is determined by a set of defined circumstances that change the homeowner’s ability to remain current with their mortgage payments. The following situations would signify short sale candidacy:
- The failure of your business
- The loss of your job
- Divorce
- Death of your spouse
- A natural disaster
- Insurmountable medical costs
- Illness
Your Realtor will help you organize and present all the appropriate short sale paperwork to the lender, but time is a factor in accomplishing a successful short sale.
The process needs to be initiated in the pre-foreclosure phase which begins with the first mortgage payment default. The foreclosure timeline in your state starts the clock against how long you have to list the home, find the buyer, and get the sale approved by the lender.
Consult an experienced short sale realtor to assess your situation and hopefully get you out from under.
New rules from the U.S. Treasury could figure prominently in Central Florida’s housing market, where about one in every five existing-home purchases involves a short sale.
Key Points of the New Rules: Emerges between now and April; Only banks that owe the federal government TARP bailout funds must comply; New federal guidelines give lenders a 10-day limit in which to respond to sale offers; The Treasury rules, in addition to imposing a 10-day deadline for bank decisions, call for sellers to receive $1,500 moving allowances — and for the sellers to not have to repay any of the debt.
We are working closely with Bank of America in an effort to expedite any short sale they own or service.
I just explored this great opportunity if you are having a hardship and you live in your primary residence. If your 1st mortgage is backed by Fannie Mae or Freddi Mac, the FED has approved the HAMP program that will allow you to reduce your Principle & Interest to a more reasonable payment. In some cases it can reduce your payment $300-$350 in an average mortgage payment of $1500. This will allow you to save that money and pay down other bills that you may have so you can save your credit. A quick phone call and we can determine if you qualify for this type of option. Dave 727-488-9747
When making an offer on a short sale, your Realtor should establish a starting point and an ending point on a contract. You should never have a open ended contract EVER! If you only want to wait a certain amount of time or are not sure you want to commit to a longer timeframe, make your contract good for 60-90 days and so you can get out of it at any point for any reason. You can always extend the contract if you want! There can only be one purchaser of any property. A short sale is alway contingent on 3rd party approval…..the bank decides.
One or the other? If you go into Foreclosure you will most likely receive a Deficiency Judgement agains you. You don’t want this!!! Or maybe you do, I don’t know you! You should probably speak to an attorney on this matter. Banks have a 5yr. Statute of Limitations as to whether or not they send you a deficiency with in this timeframe. We have found that 20-30% of the lenders will release the deficiency at the time of the approval due to our “personal relationships” with lenders and they will state on the credit report “Paid in full as agreed”. Taking a Promissory Note from the bank at a reduced amount at 0% for 10yrs at $200/mo. is better for your credit than taking a deficiency at any point with in the next 5 years…..But you MUST pay that Note! If you are behind on your mortgage, get professional help. Your financial future depends on it!
If you are going into foreclosure and you live in your primary residence, don’t ever move out of the property! If “someone from the bank” calls you and states that there is a sale date scheduled for “next week” or the “end of the month”, speak to an attorney prior to doing anything. Chances are that these are scare tactics used and we don’t really know why. If you think about it…..if you are living in the property and are taking care of it to some degree, the Property/Asset condition is being sustained and will hold its value better than a property that is vacant, vandalized and deteriorating.
Always keep in mind that a Short Sale Attempt DOES NOT STOP THE FORECLOSURE PROCESS. The foreclosure process is handled by the attorneys hired by the bank and has a definitive starting point called the Lis Pendens and a definitive ending point with a Bank Auction at the Courthouse steps. 90% of all properties that end up at auction go back to the bank because the bank is bidding on thier own property and they are trying to collect as much as they can on this bad asset. It is important to know how much time is left in the Foreclosure process when attempting a short sale. We have saved people with in the hour of going to auction due to finding a buyer willing to make a reasonable offer. You never, ever want to go into foreclosure! So, One hand doesn’t know what the other is doing in most cases with the banks and thier attorneys. The attorneys are just doing thier job and will if they don’t hear from the bank regarding the status of selling the property. More to come on this subject!
Bank Owned purchases are very similar to Commercial property purchases in which you have a certain amount of time to do your inspections and you may back out of the contract with in that timeframe. Usually, 10-15 days at most. Short Sales are a little different…..there are two schools of thought. One states that you do no inspections and pay no money until you have an approval from the bank. No skin in the game concept. The other school believes that you do the inspections up front prior to the bank approval and then do a re-inspect upon approval. This concept allows for a buyer to see if there are any hidden issues with the house prior to waiting a possible 60-90-120 days for an approval. Also, if there are any issues with the property, they are now documented and they can be presented to the bank along with the offer to substantiate a discount from market value. All in all it is the commitment that one places on what they do as to what they get!
