Tag Archive | "Foreclosures"

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Short sales don’t have to be Horror Stories

Posted on 15 September 2010 by Aaron Hofmann

A couple years ago, very few people had heard of short sales. Now everyone seems to have hear a horror story about the process, whether a seller or a buyer. A short sale transaction can take months to be approved and closed. While short sale approvals can be completed in a short timeframe, the reality is that short sales usually take three to four times as long as a regular sale to finally get to the closing.

Our number one tip for both buyers and sellers is to be patient and flexible. Each transaction has its unique attributes.

For conventional loan short sales, it can take anywhere from 30 days to 6 months for lender approval. Click here for more information on FHA short sales.

Buyers

For buyers, the first step is to make sure you’re working with an Atlanta Realtor that specializes in foreclosures and short sales. A lot of advice always points to making sure that the listing agent is an expert, but if the Realtor representing you as a buyer’s agent is very knowledgeable in distressed properties, you will become frustrated very quickly.

Identifying the right property and understanding expectations up front is important. Your Realtor will be able to assess whether the property is priced where it’s more likely for the bank to accept or whether the price is completely out of line. We’ve seen a growing trend where listing agents will reduce the price of a property the last few weeks before foreclosure in an attempt to get an offer, but this is merely a “teaser” price. They’re trying to stall the foreclosure and buy their clients some time, but along the way they’re misleading buyers.

So it’s very important for your Realtor to investigate a home that you’re interested in making an offer on to determine the likelihood of a bank approving the short sale. They will need to interview the listing agent to ensure they have the adequate training, experience and proper documentation to see the short sale through to a successful completion.

Once you have a contract with a seller, it will be contingent upon the bank approving it. They’ll review all the hardship documents to ensure everything is complete. The next step will be to assess the current value of the home. They’ll either order a broker’s price opinion (BPO) from a real estate broker or an appraisal from a certified appraiser. They’ll compare the offer price to the outstanding loan balance and to the current value attained from the BPO or appraisal. The unfortunate thing for buyers is there isn’t much communication from the bank during this process so buyers are left waiting and wondering. If you go into it with the right expectations, this won’t be an issue.

Once the bank has approved the short sale, they’ll generally require it to be closed in 30 days. This is where flexibility is key.

Sellers

If you’re a seller, you also must be patient and flexible and do your homework upfront. Most critical for you is to ensure you’ve compiled all the required documents and have them updated when you’re ready to submit a buyer’s contract on your home. Many short sales get delayed due to incomplete files or outdated information.

Lenders take their time while responding, but when they do, they usually give a 72 hour timeframe to respond or provide the missing documentation. If the documentation is not provided within the specified timeframe, it usually ends up in a closed file. Another common situation that is happening very often is borrowers being served with foreclosure paperwork from either the lender or Homeowner’s Association while the short sale is being processed.

If this happens, you need to communicate this to your listing agent as soon as possible. Foreclosures and short sales are parallel processes and one does not cancel the other. Sometimes a short sale might delay a final sale date, but it will definitely not stop the lender from starting the foreclosure proceedings.

Once you have a contract and have submitted all hardship documents, you are in the same boat with the buyer. You wait. Be patient and flexible. Once the bank has come back with an approval, you’ll need to review to ensure you are satisfied with the terms of the short sale approval.

While short sales can be frustrating for buyers and sellers, it doesn’t have to be. Our team specializes in short sales and foreclosures, so we see the issues on a daily basis, know how to react and counsel you on these items and assist you in either avoiding foreclosure if a seller or finding a great deal if you’re a buyer. We are Certified Distressed Property Experts, trained specifically to deal with Atlanta short sales and foreclosures.

You can contact your Atlanta Short Sale Realtor for more information or to schedule an appointment.

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How is the purchase process different between a short sale and foreclosure?

Posted on 02 September 2010 by Aaron Hofmann

We get a lot of questions about short sales and foreclosures from Atlanta home buyers these days. Here’s one of the most common.

Q: How is the purchase process different between a short sale and foreclosure?

A: To give you a little background, in short sale you have multiple parties involved in the transaction. It’s not just a buyer and a seller. On the seller side, you’ll also have one or two lenders, as well as a third party investor and a mortgage insurance company. With so many fingers in the pot, short sales can take several months to complete. Banks are working to improve their systems and personnel, but don’t expect a traditional 30-day close. The majority of short sales don’t even involve the lender until they’ve received a contract from a buyer, which is submitted to the lender(s) along with a hardship package. The lender(s) then need to go through their due diligence process before ever making a decision. Generally, we counsel buyers to expect a minimum of 2-3 months before hearing a decision. Sometimes it’s quicker and sometimes it’s slower.

Conversely, the process for purchasing a foreclosure, also known as an REO (real estate owned) property it pretty quick. Typically, we’ll receive a response with just a couple business days. With a bank-owned property, there’s just the bank and the buyer involved, so it makes sense that decisions don’t get hung up for a long period of time. In addition, with a foreclosure, the bank has already done their pricing analysis prior to putting it on the market, so once they have an offer, they’re ready to make a decision.

In both cases, there are great opportunities available for the savvy Atlanta home buyer and patience and flexibility are key to ensuring you’ve found the right property and can wait for the decision.

We specializing in counseling buyers on the advantages and disadvantages of buying short sales and foreclosures. Contact us today to see how we can help navigate you through the short sale and foreclosure home buying process and find you a great home at a great price.

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One in Seven Homeowners is Past Due on their Mortgage or in Foreclosure

Posted on 30 August 2010 by Aaron Hofmann

According to the State Foreclosure Prevention Working Group’s latest report on home loan delinquencies, we have seen an improvement in loan modifications not becoming delinquent within the following six months. Loans modified in 2009 are 40 to 50 percent (40% – 50%) less likely to be seriously delinquent six months after modification than loans modified at the same time in 2008. In addition, recent modifications that significantly reduce the principal balance of the loan have a lower rate of redefault compared to loan modifications overall.

Finally, while loan modifications have consistently increased over time, the numbers of foreclosures continue to outpace loan modifications. Nearly three years into the foreclosure crisis, the report finds that more than 60% of homeowners with serious delinquent loans are still not involved in any loss mitigation activity. With the significant overhang of seriously delinquent loans, they anticipate hundreds of thousands of foreclosures will occur later this year absent additional improvements in foreclosure prevention efforts.

According to the Mortgage Bankers Association’s latest report on home loan delinquencies, one in seven homeowners is past due on their mortgage or in foreclosure.  The report shows that mortgage delinquencies rose during the second quarter, and overall, one in seven borrowers is delinquent or in foreclosure. That’s up from one in eight a year ago and one in 11 two years ago. Although there was a dip in the share of homes in foreclosure, the report shows that the foreclosure epidemic continues, with millions of homes still at risk.

If you are at risk of foreclosure, contact us today to see what your options are because procrastination is certainly not one of them. Loan modifications are a possibility to keep you in your home and if you don’t qualify for a loan modification, we can talk to you about the benefits of a short sale rather than losing your home to foreclosure and the destructive impact foreclosures have on your life.

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Freddie Mac foresees large wave of foreclosures

Posted on 25 February 2010 by Aaron Hofmann

Freddie Mac, one of the two big mortgage finance companies taken over by the government, announced earnings today. It reported a net loss of $6.5 billion, which is great compared to a net loss of $23.9 billion in the same quarter a year ago, but a loss is a loss. So we’re talking semantics when a $6.5 billion loss is an improvement.

For the full year, Freddie Mac posted a $21.6 billion loss, less than half the $50.1 billion in lost in 2008.

Freddie Mac (NYSE: FRE) says it ended the quarter with a net worth of $4.5 billion and, as a result, did not require additional funding from the Treasury Department. It was the third straight quarter Freddie Mac did not need to tap the Treasury Department’s lifeline.

But all may not be well in Smallville. Freddie Mac CEO Charles Haldeman Jr. pointed out the risk of a potential large wave of foreclosures on the horizon.

The likelilhood of a rise in foreclosures is a very real issue and as loan modifications continue to have almost no impact, the only likely solution will be more short sales. If you find yourself in need of assistance, our team of Certified Distressed Property Experts are here to assist you. Be sure to contact us for assistance. This is a very real problem and we’re here to help.

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Foreclosure Filings Down, Expected to Surge

Posted on 12 February 2010 by Aaron Hofmann

Forecasts are coming in, that despite mortgage foreclosure filings in the country dropping in January, projecting  a surge in foreclosures due to the ongoing impact from unemployment rates and uncertainty over the economy.

One in every 409 U.S. housing units received a foreclosure filing in January, Irvine, California-based RealtyTrac said in its January 2010 U.S. Foreclosure Market Report.

Foreclosures are definitely the biggest threat U.S. housing market recovery.

Many lawmakers, advocacy groups and housing experts say the government’s Home Affordable Modification Program, or HAMP, has fallen short because of its failure to adequately address negative equity, or “underwater” mortgages.

Negative equity has been one of the biggest banes of many homeowners, making many unqualified for home loan refinancing and preventing some from selling their homes. Borrowers in negative equity are more prone to defaults and foreclosures.

Slowing the foreclosure rate is a key step in the recovery of the real estate market and the overall economy. The foreclosure crisis forced the federal government and several states to come up with plans to prevent or delay the process to help delinquent borrowers.

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Foreclosure Pressure Building

Posted on 27 January 2010 by Aaron Hofmann

With continued high unemployment and depressed home prices, expect to see foreclosures continue to rise in 2010. A record 3 million U.S. homes are projected to be repossessed by lenders this year.

In 2009, there were 2.8 million foreclosures according to RealtyTrac and 4.5 million foreclosure filings ares projected for this year. There were 3.96 million filings in 2009.

Many are projecting this year to be the peak in the foreclosure wave. Despite efforts by lenders and pressure by the government, initiatives to keep people in their homes has failed.

As reported previoulsy, lenders have permanently modified such a small number of home mortgages, that the total is less than 1% of the 4 million loans targeted under the Obama administration’s foreclosure prevention plan through November, the U.S. Treasury Department said last month.

Fewer than half of the 3.2 million homeowners estimated as eligible for mortgage relief by the Treasury actually qualify, according to Herb Allison, assistant secretary for financial stability.

Besides pressuring lenders to do more loan modifications or accept short sales, the government has also attempted to stimulate the housing market with the extension of the $8,000 tax credit and the expansion for repeat home buyers worth a $6,500 tax credit.

This tax credit is due to expire on April 30th, which is about the same time that it in anticipated that the Fed will run out of funds to continue their purchase of mortgage bonds (which has held mortgage rates at very attractive, historically low levels). This is likely to add additional pressure to the market.

Georgia had the seventh-highest rate in the US at 2.68 percent of households receiving a foreclosure filing, which equated to 106,110 filings.

If you’re delinquent on your mortgage payments, contact us today to discuss alternatives to foreclosure. We are a team of Certified Distressed Property Experts and are trained to assist you with your needs.

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Strong September Home Sales Expected

Posted on 22 October 2009 by Carl Martens

With homebuyers rushing to complete their home purchase before the first time home buyer tax credit expires, a report Friday is expected to show strong September sales.

Home resales are expected to show an almost 5 percent increase to a seasonally adjusted annual rate of 5.35 million, up from 5.1 million in August, according to economists polled by Thomson Reuters. If the report meets forecasts it would be the best month for home sales in more than two years.

The National Association of Realtors’ report is scheduled for 10 a.m. EDT.

First time homebuyers and investors both are taking advantage of the low mortgage rates, short sales, foreclosures, and overall discounted homes.  The buyers are also eligible to take advantage of the tax credit of 10 percent of the sales price, up to $8,000 so long as the sale closes by November 30, 2009.

With concerns about the housing market still prominent, Congress is considering several proposals to extend the tax credit for first-time buyers. Senators Johnny Isakson, R-Ga., and Christopher Dodd, D-Conn., want to extend it through June 30, and expand it to include all home buyers, at an estimated cost of $16.7 billion.

One potential roadblock, however, emerged this week. There are concerns that some of the 1.5 million applications for the tax credit are fraudulent.

At a hearing before a House subcommittee Thursday, J. Russell George, the Treasury Department’s inspector general for taxes, questioned the legitimacy of some 100,000 claims for the credit, potentially including some illegal immigrants and 580 people under 18. The youngest taxpayers to apply for the credit were 4 years old, his office said.

While the program has widespread support in Congress, there are growing concerns about the costs. The cause, said Sen. Jack Reed, D-R.I., “is a worthy one.” But “I hope we can find ways to pay for it.”

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Georgia Unemployment Rate Higher Than National Average

Posted on 17 September 2009 by Carl Martens

georgia unemployment lineGeorgia’s unemployment remains higher than the national average of 9.7 percent for the 22nd consecutive month.  The state’s current unemployment rate is 10.2 percent.  Last year in August the state’s rate was 6.4 percent.

According to the Georgia Department of Labor, Georgia’s work force has shrunk by 79,039 to 4.74 million people since last December.  The number of unemployed workers has doubled to 481,488 from 244,962.  The number of jobs has declined by 314,100 to 3.87 million.

Health care and private educational services improved, adding a combined 13,400 jobs.

Until the unemployment rate starts to improve we will continue to see a plethora of short sales, foreclosures, and REOs.  With mortgage rates extremely low and homeowner’s and bank’s willing to negotiate now is the time to purchase a home for investment purposes as well as primary residence.  Contact us if you would like to learn more about the available distressed homes on the market.

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What’s the Difference Between a Foreclosure and a Short Sale?

Posted on 04 September 2009 by Carl Martens

What’s a Foreclosure

Foreclosure is the process whereby the lender takes possession of the property.  A foreclosure terminates all rights of the homeowner covered by a mortgage.  Foreclosure is the process in which the estate becomes the absolute property of the lending institution.

When a homeowner fails to make the payments on their mortgage, the lender can begin foreclosure proceedings. This is a very specific legal process with set timelines and outcomes. In a Short Sale situation, the home owner’s name is still on title of the property and they are the official owners who are trying to sell the property. In a foreclosure, the lender takes possession of the house and as a result, the homeowner is no longer a party in the sale.

Foreclosure my pose potential problems such as: Title problems, Superior loan pay offs, IRS liens, tenants or owners still occupying the property, and/or structural problems.

What’s a Short Sale

Short sales occur when the current value of the home is less than the debt owed to the lender.  It occurs when a lender agrees to take less than the full loan payoff from the homeowner. The seller must demonstrate to the lender that they have a financial hardship and are unable to fulfill their mortgage repayment obligation.  In most cases, the owner is in default and is not making their payments for whatever reason.

Short sales, in most circumstances, are the first step to avoid foreclosure. Although the lender(s) will recover less than the total loan amount in a short sale, they may prefer this in lieu of foreclosure. The costs of foreclosing on a property may be more than the bank’s loss by taking a short sale. Also, the property may not sell at auction and then the bank would be forced to take it back as an REO (Real Estate Owned) property, which then they would have to maintain, list and sell themselves.

Something to keep in mind, the lender is under no obligation to grant a homeowner a short sale and in most cases it can be a frustrating process to get approved for one.  A Certified Distressed Property Expert, however is trained to help you with the process.

Banks are overwhelmed with short sale requests and the approval process can take months. Each bank evaluates each individual request on a case by case basis. Many times there is more than one lender involved. Not only do the banks consider the borrower’s personal and financial situation, but they also consider an appraisal of the property, market conditions, the banks financial situation, their current portfolio and in many cases have to consult with an outside investor who purchased the loan at some point. Given all of these varying circumstances, you can imagine why this process takes so long.

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