Are Short Sales A Good Bargain?

In this economy, where many homeowners are desperate to sell their homes, short sales can be a great bargain for the well-informed homebuyer.



"A short sale," according to Greater Minneapolis/St. Paul realtor and real estate blogger Tom Sommers,"is when the seller is saying to the bank, "we can't afford to stay here due to financial hardship. Can you let us sell it for less than we owe?" That's what creates the short."

The bank often agrees to the short sale because it guarantees, even at a loss, a larger percentage of money back. Also, the bank doesn't have to go through the expense of the foreclosure process and doesn't have to kick anyone out of their home.

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With Short-Sale Offer Refused, Foreclosure May End Up The Best Option

The only way to save the most money (and know for sure you’re getting a good deal) is for at least two of these to be true. The best scenario is when you’re lowering the interest rate, lowering the monthly payment and shortening the term of the loan.
 

While renewing for a 30-year term might make sense for some people, you’re not maximizing the amount of money you can save.

If you have already paid down eight years of the loan, you’ll actually lose money in almost every scenario if you stretch the loan term back to 30 years. For example, if you have 22 years left on your loan, shortening the loan term to 20 or 15 years (preferably 15) means you save years of payments on the mortgage. That translates into thousands of dollars.

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Why Short Sales Take So Long

Most folks these days know what a short sale is, but here’s a quick review: A short sale is when a home is bought for less than what the seller owes the bank.

The lender being “shorted," or getting paid less than they are owed, has to agree with the terms of the new buyer and the purchase price being offered.

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House Votes To Kill FHA Short Refis

In a largely symbolic move given the Obama administration's veto warnings, the House of Representatives has voted to kill the Federal Housing Administration's short refinancing program.

HR 830, The FHA Refinance Program Termination Act, was approved by the House in a 256-171 vote, with 18 Democrats joining 238 Republicans in favor of ending the program.

Critics say the program -- which allows underwater borrowers who are current on their loans to refinance into an FHA-insured mortgage if their lender agrees to write off at least 10 percent of their principal -- has gotten off to a slow start. Taxpayers may be on the hook for up to $8 billion to reimburse lenders for a share of their potential losses on the loans, critics say.

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Realtors Seek Reforms On ‘Short Sales'

With fewer than three of every five short sales successfully closing in California, desert Realtors have joined their peers statewide to ask regulators, elected officials, business organizations, lenders and others to initiate reforms.

Homeowners with proven hardships can negotiate “short sales,” essentially agreements that enable them to sell their homes for less than the balances owed in order to avoid foreclosure.



Those who own homes and are “upside down” in their mortgages, as well as mortgage lenders, may want to take advantage of the federal Home Affordable Foreclosure Alternative program, or HAFA, California Desert Association of Realtors officials said.

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Writing a Hardship Letter: Questions that Sellers Should Consider

I review short sale packages for a living. It’s what I do. One part of the package that is interesting to me is the hardship letter.

In order to participate in a short sale, a borrower must have some sort of hardship. The bank actually requests a copy of a hardship letter.

The reason that the hardship letter is interesting to me is because it’s a tell—like in poker. It shows exactly where the seller is at with regard to their mortgage, their home, and even their emotional state. Some hardship letters are longer than my kids’ book reports, and others do not share enough information.

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There's Life After Bailing On A Mortgage

The typical questions about ethics and blame were not what three Huffington Post writers had in mind last year when they asked readers, "Are you considering walking away? Have you already walked away from an underwater mortgage?"

Nearly one in four American mortgages is worth more than the home it's tied to. That's about 10.8 million mortgages. Borrowers of 58 of those mortgages responded to the reporters. In the ensuing year, 10 homeowners lost touch with The Huffington Post but 48 stayed in contact and reported on their experiences. Today, just eight are still in their homes.

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You’d Better Pay Attention to the Short Sale Settlement Statement

In the past, the average real estate agent didn’t spend too much time scrutinizing the estimated closing statements. Usually, that task would be left to escrow officers, title officers or lawyers. With short sales being the new normal, scrutiny of these statements in the early stages of a short sale transaction is vital.

Why? Well . . . the banks request the settlement statement as part of the short sale package. The short sale lien holders want to see their bottom line. How much money are they going to net? How many cents on the dollar will they be forgiving?

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How To Do Short Sales: The Benefits For Everyone Involved

Learning how to do short sales in the current changing marketplace is really challenging to keep up with, it’s an essential thing to do nowadays. If you’re able to disconnect and discover how to do short sales properly from individuals who can verify for you that they know what they’re speaking about then you’re going to be able to wrap your brain around the concept much easier.

You need to know the best way to be successful in this particular market to really make it and virtually all Real Estate Agents haven’t been educated the proper way. Most Realtors still don’t understand how to do them and in addition they say that they would rather not learn because of how hard they heard they are. Crazy huh? So… Precisely how to complete them the correct way without having to be scammed by fake authorities and worthless real estate “experts” who’re asking for you for precisely the same outdated re-written information.

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30% Of Mortgages Are Underwater

Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon.

Home prices dropped 2.6% nationwide during the last three months of 2010, pushing more borrowers underwater, according to a quarterly real estate market survey from Zillow.com.

Now 27% of homeowners with mortgages owe more than their homes are worth. That's up from 23.2% a quarter earlier.

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Realtor, Home Seller Baffled When Bank Rejects Its Own Offer

Stacy Baker fought for two years to sell her father’s house and to keep it from being auctioned off, but lost the fight even after her real estate agent said an offer was made to the bank that met its own conditions.

Baker’s father was 61 when he succumbed to complications from a heart transplant, and she said her father probably realized “it was the wrong decision after he bought it.”

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Buying Tips for Short Sales

With new records being set in foreclosure rates, sellers are turning to short sales more and more. How does a short sale work? The seller has to make arrangements with their mortgage lender to accept a sale for the property for an amount that is less than what is owed. This agreement typically ends up with the lender waiving the rest of the loan. This is a better option than going through a foreclosure. The result of this is that the buyer gets a good discount on the property, and the lender avoids the difficulty of having to sell the property again. Due to the exorbitant amount of losses suffered by mortgage lenders during the financial crises of 2007-2010, they are now much more willing to accept short sales than they have been in the past.

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Is It Possible That Short Sales Just Got Easier?

I just got a hold of these news from the closing attorney I use for my properties. If you are interested in doing a short sale or investing in real estate through short sales, you will want to verify the following information and see if it can help you:

Changes to HAFA make more homeowners eligible for streamlined short sales.

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What Do I Put In A Short Sale Hardship Letter?

What in short sale and letter and why do I need to write one?
Please mail your real estate agent has explained the process of short sale to you and has told you that you need to write a short sale hardship letter. If you are reading this is most likely because they did not thoroughly explained that to you. The hardship letter is the statement from you to your lender as to why you no longer can make your mortgage payment and why they should accept a short sale on your home.

What should you never do when writing a hardship letter?
Your short sale hardship letter is not the place to complain about your lender! As you sit down to write your letter resist the urge to complain to your lender about how unfair they are and how bad your loan is. They simply do not care! You need to focus on staying factual and nonemotional as you write your hardship letter. Keep in mind that the person reading your hardship letter does not really care about your situation but has the power to approve or disapprove the sale of your home. Starting off by telling them how stupid they are, and how unfair the bank is been to them is not likely to help you.

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Write A Letter To Get Your Short Sale Approved

You can no longer afford your mortgage payment and you’ve decided to try to get out from under your house. The easiest thing would be to just let the bank go through its process and foreclose on your house. But you don’t want a foreclosure on your credit report. A short sale is a good alternative. You’ll market your home and agree on a price with a buyer, subject to your lender agreeing to take less than the loan balance as payment in full. But it’s not that simple. There’s one more thing. The bank will only approve a short sale if they believe that it’s their best option. They’d really rather that you keep making payments as originally agreed. In order to convince them that their only other choice is foreclosure, you need to write a convincing hardship letter.

Lenders know which kinds of things make loans default. If you claim to have a financial hardship, they will want to know specifically what the problem is. And they’ll want to verify it. Here are some of the more common financial hardships that tell lenders that a loan is not going to succeed.

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The Biggest Celebrity Real Estate Losers of 2010

Pummeled by the steep devaluation of their real estate investments, Shelter Pop finds the biggest celebrity real estate losers of 2010:

• Actor Nicolas Cage tops the charts at No. 1: The notorious property collector has built his own real estate coffin with an estimated loss of more than $10 million, and more than a dozen homes around the world selling for much less than he paid. One of the homes includes his legendary and primary residence in Bel-Air formerly owned by Dean Martin and Tom Jones that was seized. He currently has a home still on the market on REALTOR.com®.
• Actress Scarlett Johansson is also in the running with her recent failed marriage to Ryan Reynolds, and a $3 million loss on a very A-list property (pictured here), which was valued at $7 million this past June.

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Submitting A Short Sale Package

So…..You’ve evaluated a potential short sale and decided that it meets your investment criteria. You have the information you need from a listing Realtor to submit the short sale package to the lender. Now you need to gather information from the homeowner.

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Housing Recovery Stalls

A new bout of declining home prices is threatening to hamper the U.S. recovery, just as consumers and the overall economy have been showing signs of healing.

Home prices across 20 major metropolitan areas fell 1.3% in October from September, the third straight month-over-month drop, according to the S&P/Case-Shiller home-price index released Tuesday. Many economists expect the declines to continue into at least next spring, erasing most of the gains made since prices bottomed out in early 2009. 

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Foreclosures.com Founder Faces Auction of Fair Oaks House

Alexis McGee, founder of Foreclosures.com, made a national reputation by helping investors find and buy distressed properties whose owners were struggling to stave off foreclosure.

Now those investors might have an unlikely prize in a large new Craftsman-style home in Fair Oaks that's scheduled for sale on the courthouse steps early next month.

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Short Sales Becoming More Attractive To Servicers As Foreclosure Expenses Rise

Offering a 10 percent recovery advantage compared to foreclosures, short-sales are becoming a popular solution for servicers faced with projected steeper loss severities on mortgage-backed securities  in 2011. Short-sales are especially attractive as the unprecedented lag between the last payment and a foreclosure is expected to grow. See the following article from HousingWire for more on this.

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