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.

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.

Homebuyer Tax Credit Extended

Atlanta home buyers, you may yet get that homebuyer tax credit. Late today, the Senate passed a bill to extend the $8,000 homebuyer tax credit until September 30th. It now goes to President Obama, who is expected to sign the bill. The bill was overwhelmingly approved by the House on Tuesday. The deadline had been June 30th to close on the property.

Before you get too excited, the bill doesn’t help anyone currently shopping for a home. Buyers must have signed a contract by April 30th to qualify for the tax break. At issue is when the deal must be finalized.

Repeat home buyers also have until September 30th to close on new homes and receive a tax credit of up to $6,500.

Congress has been trying to pass the extension for the last month, but it got caught up in the usual Washington politics. The extension is estimated to raise the deficit by $9 million.

An estimated 200,000 people have missed out on the tax credit because they wouldn’t have been able to close by the end of business Wednesday. Many are trying to take advantage of short sales, which are complicated deals to complete. We specialize in Atlanta short sales and foreclosures and fortunately all of our clients who were under contract by April 30th were able to close without need of the tax credit extension. Our short sale team are experts in navigating the Atlanta short sale minefield and helping our clients find some great homes at significant discounts.

Contact us for all of your Atlanta short sale and distressed property needs. We are local market experts and continue to find great deals for our clients.

You may be in the market and wanting to take advantage of the $8,000 first-time homebuyer tax credit or the $6,500 repeat homebuyer tax credit and have heard the horror stories about short sales and how long they can take to complete.

With the tax credit deadline looming at the end of the month, it’s a natural reaction to think that you should exclude short sales from your options.

But, don’t jump to conclusions.

Keep in mind that there are numerous short sale homes currently available that have been approved by the lender(s), but where the initial buyer had walked away for some reason. The ability to step in to an approved short sale at the last minute eliminates the wait.

So don’t eliminate short sales for this reason, just make sure your Atlanta Realtor specializes in short sales and does a little more due diligence to determine the status of the short sale. Our team has identified lots of good opportunities with approved short sales just waiting on new buyers over the last couple days.

 The other reason why you shouldn’t exclude short sales is simply that many short sales are simply better financial deals. You may not get $8,000 in your pocket, but you may be able to buy your new home at a substantial discount that will be worth much more than $8,000.

We maintain a list of the best Atlanta short sales, so be sure to contact us if you’re interested in buying a new home and looking for a great opportunity.

We also have an on-staff CPA to answer all your questions about the tax credit and help you understand whether you qualify for the $8,000 first-time homebuyer tax credit or the $6,500 repeat homebuyer tax credit. Sometimes it’s surprising to find home buyers that don’t realize that they can take advantage of the tax credit.

Contact us today to schedule your complimentary homebuyer consultation.

Foreclosures are continuing to be a pressing issue around the country as well as in Atlanta Georgia. A homeowner who has stopped making their mortgage payments is at risk of their home being foreclosed. There are options for Atlanta homeowners, but often a short sale is teh only viable option.

It’s always stressful enough when you are having financial difficulties, but the unknowns of how one does a short sale does not need to add stress to your life. It’s always important to hire a short sale Realtor who is knowledgeable of the process and has successfully negotiated short sales..

Realtors who are experts in short sales can advise you on the proper steps when dealing with the mortgage lienholders. Avoid hiring anyone who has little experience in short selling or who hasn’t been successful in closing a similar deal in the past. Ask the agents about how many deals they have successfully closed in the past.

Always get the help of a Realtor who has the knowledge and experience in short sales. Seeking out a Certified Distressed Property Expert helps to ensure the Realtor has attained critical training related to short sales and foreclosures. The Realtor should be able to explain how things will go from the beginning to the end and keep you informed throughout the whole process.

We speak with many homeowners that are in a similar situation such as yourself. When trying to avoid foreclosure, procrastination is not an answer. It’s important that you contact us immediately so we can assess your situation and provide you with options based upon our initial assessment. Rest assured, all consultations are held in the highest confidence. We understand that this is a stressful time and we want to ensure that your needs will be addressed in a confident and professional manner.

About the Author:

Aaron Hofmann is a Certified Distressed Property Expert with Keller Williams Realty in Atlanta. Mr. Hofmann is not only Realtor, but also a CPA, and is expert in dealing with the financial industry and assisting distressed Atlanta homeowners avoid foreclosure.

Georgia is third in the nation, with 13.5 percent of mortgages one or more payment past due as of December 31st, according to the Mortgage Bankers Association’s National Delinquency Survey. Florida and Nevada came in at #1 and #2.

The MBA said the drop in the 30-day delinquency rate is “a concrete sign” that the end of the mortgage crisis may be near. That’s important because mortgages that are 30 days late generally serve as a leading indicator of serious delinquencies and foreclosures.

The U.S. Department of the Treasury recently reported while more than 1 million U.S. homeowners have started the process of modifying their home loans under the government’s Home Affordable Modification Program (HAMP), only 116,000 have actually had their mortgages modified as of last month.

In Georgia, there have been 33,059 active trial loan modifications through January. Of them, 4,508 have been permanently modified.

Atlanta is among the top 15 metro areas for HAMP activity, accounting for 3.2 percent of overall HAMP activity. The city had 30,285 active trial loan modifications through January. Of those, 3,692 were permanently modified.

If you or someone you is having financial issues and concerned about foreclosure, contact us for a free report on Avoiding Foreclosure.

Federal and mortgage industry officials are increasingly looking for ways to get distressed borrowers to leave their homes voluntarily, without going through the expensive foreclosure process or a messy eviction.

Citigroup, for instance, plans to announce a pilot program on Thursday that would allow delinquent borrowers who don’t qualify for or decline mortgage relief the opportunity to stay in their homes without making payments for up to six months before turning over the keys, in return for keeping the property in good condition.

Other initiatives have also emerged for borrowers likely to lose their homes. Fannie Mae and Freddie Mac, the mortgage financing companies, developed programs allowing former homeowners to become renters after a foreclosure or other proceedings.

As part of its federal foreclosure prevention program, known as Making Home Affordable, the Treasury Department announced late last year that lenders would be eligible for $1,000 in exchange for allowing borrowers to sell their home in a short sale.

In such deals, the borrower sells the home for less than the outstanding mortgage, and the lender forgives the difference.

Moody’s Economy.com has forecast that the number of short sales and transactions in which borrowers surrender their deed in lieu of foreclosure will increase more than 50 percent, to about 490,000, this year. That is just a fraction of the 1.9 million homeowners Moody’s has forecast will lose their homes to foreclosure this year, up from 1.7 million last year.

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.

The U.S. Department of Housing and Urban Development (HUD) recently released a letter to lenders covering short sales and short payoffs. Mortgagee Letter 09-52 is effective immediately and provides guidance to lenders regarding borrower eligibility when pursuing a new Federal Housing Administration (FHA) mortgage.

In a nutshell, FHA guidance included:

Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement on their principal residence simply to:

• Take advantage of declining market conditions, and
• Purchase, at a reduced price, a similar or superior property within a reasonable distance.

Borrowers are considered eligible for a new FHA-insured mortgage if:

• They were current on their mortgage and other installment debts at the time of the short sale of their previously owned property, and
• The proceeds from the short sale serve as payment in full.

Borrowers in default on their mortgage at the time of the short sale (or pre-foreclosure sale) are not eligible for a new FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Lenders may make exceptions to this rule under certain circumstances, such as a short sale being due to the death of the primary wage earner.

The U.S.Treasury Department issued new guidelines for short sales that should make the process easier, faster and more consumer-friendly. Imagine a world where short sales were short? Somehow whenever I think of the word “imagine” I think of the the song written by John Lennon and his depiction of a world that would never be. The same could be said for a world where short sales are actually short.

If you’ve been a frequent reader of our ShortSalesCentral.com, then you know that a short sale is when the mortgage lender accepts less than what they are owed in lieu of foreclosing on the property. It’s generally considered a win-win. It allows the homeowner to walk away from the property without a foreclosure on their credit and allows the lender not have to go through the cost and hassle of foreclosing, maintaining and marketing the property after the fact. Not to mention having to increase their reserves due to foreclosing on the home.

The new program doesn’t go into effect until April (why wait???), but here are the major points on the new program:

-Mortgage servicers will have 10 days to approve or disapprove a short sale price. This will speed up time and allow the borrower to be released from debt more quickly.

-The borrower will receive $1,500 in relocation credit. This will help move out of the home and into an alternative residence without as much stress or worry about getting into debt again right off the bat.

-Mortgage servicers will receive $1,000, and second lien holders up to $3,000. This encourages them to release the home for a lower price than they may have otherwise.

-Loan servicers will no longer be able to require a reduction in commission for agents or Reators on a short sale. This will make sure agents don’t shy away from short sales for fear of not earning as much.

The new guidelines should allow the process to go faster and make short sales a more viable option. But that is if the lenders agree to play along since the program is voluntary. Time will tell. Contact us if you need assistance with your Atlanta short sale needs. We have a team of Certified Distressed Property Experts ready to go to battle for you.