Home sales, prices separate
Home sales in McHenry County have been on the rise, climbing 19 percent in the first seven months from the same time a year ago. The median home price, though, has continued to fall as home sales increased.

Read more on Business Journal of McHenry County

‘Flopper’ Fraud Hits Short Sales, Spurring Federal Investigations
“Flopping” is what law enforcement is calling the latest real estate scam. The FBI, Freddie Mac and state real estate departments are all probing flopping. Think of it as flipping without a fix-up, but with a fraud.

Read more on Investor’s Business Daily, Inc. via Yahoo! Finance

Double trouble: Foreclosure process doesn’t stop during short sales
Seller OK? Check.

Read more on Reno Gazette-Journal

Foreclosures are the biggest thing in the market right now, but short sales are completed in the preforeclosure phase. There are many short sales occurring all over the United States right now. Donald Trump mentioned recently that this is the best time to make money in Real Estate. Short sales, REO, probates, bankruptcies, foreclosures, notice of defaults, distressed sellers, abandoned properties are all great ways to make money in this market.

If someone forecloses there homes or short sales there home, will they or can they be responsible for the negative equity or the negative loss the banks took on the home? What if there was a second mortgage, will they be responsible for the extra dollars or does the bank lose out completely and have no recourse to collect money as the asset was reposessed?

When considering a short sale, be aware of how it affects your credit and your ability to acquire another mortgage down the road. If you intend to buy again, a short sale may mean that you have to wait a shorter time and get a better interest rate than if you go through foreclosure.

A short sale will affect your credit negatively, but the long-term effects are not nearly as bad as having a credit report stamped with “Foreclosure”. Having that on your credit report is like having a huge pimple on your face. Lenders just can’t help but notice that it’s there. A short sale at least shows that you were proactive about your mortgage.

The way that FICO determines the effect of any change to your credit, positive or negative is based on a number of different data. There’s your payment history, your debt load, the amount of time that you’ve had a credit history, any new credit you’ve obtained and the type of credit you use. Of course, your payment history reigns supreme here, followed closely by how much you owe. No single factor determines your credit score.

If you short sell your home, your FICO score may take a dip comparable to foreclosure – possibly up to 300 points. Any “not paid as agreed” accounts are considered the same to FICO. This can stay on your record for 7 years, impairing your ability to get considered for a decent loan.

The main advantage of a short sale is the amount of time that it will take another lender to consider you for a loan. You will be able to buy another home for a workable interest rate a lot more quickly with a short sale than a foreclosure. The average is within 2 years as opposed to 3-5 years.

If you view this event as an opportunity to rebuild your credit in the interim between the short sale and purchasing another home, it’s possible to improve your credit in under 2 years. Over time, the negative impact on your score lessens. Keep on top of your debt and expenses and you may find that you are a homeowner again a lot quicker with a short sale.

When considering a short sale, be aware of how it affects your credit and your ability to acquire another mortgage down the road. If you intend to buy again, a short sale may mean that you have to wait a shorter time and get a better interest rate than if you go through foreclosure.

A short sale will affect your credit negatively, but the long-term effects are not nearly as bad as having a credit report stamped with “Foreclosure”. Having that on your credit report is like having a huge pimple on your face. Lenders just can’t help but notice that it’s there. A short sale at least shows that you were proactive about your mortgage.

The way that FICO determines the effect of any change to your credit, positive or negative is based on a number of different data. There’s your payment history, your debt load, the amount of time that you’ve had a credit history, any new credit you’ve obtained and the type of credit you use. Of course, your payment history reigns supreme here, followed closely by how much you owe. No single factor determines your credit score.

If you short sell your home, your FICO score may take a dip comparable to foreclosure – possibly up to 300 points. Any “not paid as agreed” accounts are considered the same to FICO. This can stay on your record for 7 years, impairing your ability to get considered for a decent loan.

The main advantage of a short sale is the amount of time that it will take another lender to consider you for a loan. You will be able to buy another home for a workable interest rate a lot more quickly with a short sale than a foreclosure. The average is within 2 years as opposed to 3-5 years.

If you view this event as an opportunity to rebuild your credit in the interim between the short sale and purchasing another home, it’s possible to improve your credit in under 2 years. Over time, the negative impact on your score lessens. Keep on top of your debt and expenses and you may find that you are a homeowner again a lot quicker with a short sale.

I have an update on HAFA that you will find helpful. The media is making me crazy. I saw an article last week titled Automated Short Sales on the Way as HAFA Nears. If you follow me on twitter you might have seen me go off on this article. When you watch the video you will understand…

How do find a list of short sales??? Not a site that charges you. You would think the mortgage company would want to advertise it. I don’t want to use a realtor until i find what im looking for

If you are a Real Estate Professional, you are hurting yourself by not pursuing short sale opportunities. If you had a previous client in trouble, would you be able to serve them? Would you just walk away and hope you find another client who isn’t in trouble? If you are looking to stay in Real Estate, you’d better take the time to know how to deal with homeowners in trouble or you will be throwing away good commission dollars and decreasing your customer base you worked so hard earning.

Many analysts have predicted that short sales will only last until 2011, but the fact is it will be much longer. With limited help provided by the government and the economy failing to create enough jobs, more and more people will lose their homes. Look at how long it’s taken to deal with sub-prime defaults, which started in 2005 and still count for a large part of today’s foreclosure inventory in 2010.

Following are the short sale trends as of Dec 2009, heading into 2010, which will explain the challenges short sales in 2010:

Trend #1 – Can’t Pay Me Now, Then Pay Me Later…..Lenders are scrutinizing reasons for hardships and predicting future financial status

In order to prevent short sale approvals for homeowners who may really not be in trouble, lenders have been scrutinizing the reasons provided in a short sale submission. If you broke your leg and you missed a few months of work that caused you to be behind, but your ability to continue earning income when you recover shows to the lender you really don’t have a real enough hardship to approve a short sale.

Trend #2 Junior Lien holders get paid $3000 by the Senior Lien holder regardless of how much debt is owed

In most transactions when there are multiple lien holders and the first mortgage lender forecloses, Junior lien holders understand that they will receive nothing. Junior lien holders know this but also don’t want to give up their hand that easily. Don’t expect Junior lien holders to lay down so easily. In fact, short sale deals have died because the Junior lien holder wanted more than $3000, even when the first and second lenders where the same company!

Trend #3 Junior Lien holders gets borrowers to continue paying on payment plan

Junior lien holders are asking for a promissory note from the borrower if they want them to release the lien from their property and give up their rights to deficiency. The thought is that they will get $3000, and even if the borrower makes a few payments from the promissory note, it is still more money in their pocket. The payment plan is very reasonable with a long payment term with a very low rate.

Trend #4 Commission adjustments

The maximum lenders have been allowing on commissions is 3% for each agent involved. A full 6% commission is supposed to be allowed by FNMA backed loans but lenders may still scrutinize these commissions. In fact, the amount of commissions will most likely be affected if they are not able to recover enough money from a short sale offer. Be aware that if a deal has two separate agents from the same office, the commissions may be reduced.

Trend #5 Strict compliance of title companies for short sale transactions

Every short sale transaction will need title insurance and there has been concern from title companies that a lender will take back an approval if the title company is not able to comply with their closing practices. If any mistakes are made by the title company, they would be paying out money on any future claims.

Trend #6 Homeowners will continue to face foreclosure

This is an obvious trend, but the 24+ billion adjustable mortgages this year will add more inventory to the housing market. Values will continue to decline and lenders will be pressured to allow more short sale approvals to prevent additional inventory hitting the market and reducing the values of their REOs in the market.

Full Article Resourse:  www.whbsolutions.com/blog/

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