Differentiating Short Sales vs Foreclosure

Short Sale Vs. Foreclosure

Review the following comparisons between short sales and foreclosures for a better understanding of why short sales are a better option for most homeowners. While a short sale is a complicated process, the outcomes of your patience and diligence are worth it in the end!  And when using an experienced real estate agent, it can drastically simplify the process. 

What are the implications to my credit score?
Following a successful short sale your mortgage will be reported on your credit score as either paid in full or negotiated, lowering your score as little as 50 points and potentially only affecting you for 12 to 18 months. After a foreclosure, however, your credit score can lower as much as 300 and usually at a minimum of 250 points and affects your score for over three years, and it will be reported on your credit history as a foreclosure judgement.

What are the implications to my credit history?
A short sale is usually reported as paid in full and is not reported on your credit history. A foreclosure will remain on your credit history for 10 years or more and will remain as public record.

Who decides if my home should undergo a foreclosure or a short sale?
In both short sales and foreclosure, the decision is made by your mortgage lender. The most important aspects to getting a lender to agree to a short sale, and saving you the more damaging credit implications of a foreclosure, is to prove that you have no other way to pay the mortgage and that the amount received from a short sale is the fair price of the market. Lenders who believe they can receive more by taking possession of the home in a foreclosure and selling it themselves will not agree to a short sale.

How long will I have to wait to buy another home?
After a foreclosure, you may end up waiting another 24 to 72 months before a mortgage lender will offer you an interest rate that is acceptable. Most mortgage lenders report that for homeowners who have undergone a previous short sale they may get a reasonable interest rate in less than two years. Fannie Mae guidelines allow a short seller to apply for a new loan immediately if payments were kept current and had no 60-day late payments on their record.

What will be the effects on my future loans?
For most mortgage lenders you will not be asked to declare or be questioned regarding a short sale on any standard loan application (1003). In regards to foreclosure, you will be asked on any future standard loan application (1003) if you have had a property foreclosed in the last seven years, therefore affecting your rate. Fannie Mae backed mortgages will be available to you following a short sale after two years. Fannie Mae backed mortgages will not be available to you for at least five years if you have lost your home due to a foreclosure.

Does it affect my employment opportunites?
A short sale does not appear on a credit report and will not challenge your current employment status. In comparison, if you have a foreclosure on your credit report, some employers consider it a reason for termination or reassignment since many run credit checks on employees for certain positions. A foreclosure can be extremely harmful to your chance of being selected for a new job if your credit report is taken into consideration.

If you are looking to purchase a condo, read this!

If you are looking to purchase a condo, and you are obtaining a loan, you may want to check these sites. When researching condo developments, you should check these lists, to see if the development accepts the loan you would be qualifying for or wanting to use. For example, if the condo is on the conventional list, but not the FHA list, you would be looking to put 25%-30% down, and you can only obtain FHA financing. And if the condo development is not on any of the lists, you can only purchase with cash. 


CONVENTIONAL: https://www.efanniemae.com/sf/refmaterials/approvedprojects/

(25%-30% down required)

VA: http://condopudbuilder.vba.va.gov/2.2/frames.html

(0% down required)

FHA: https://entp.hud.gov/idapp/html/condlook.cfm

(3.50% down required)

Another way to take advantage of the $8000 Tax Credit

Alright all you 1st time homebuyers!!  Time for another way to take advantage of this incredible $8000 tax credit!!  Florida had done away with down payment assistance programs such as Ameridream, but there has now been $30.1 million set aside to re-create new down payment assistance programs.  Beginning in July, those of you who would qualify for the 1st time homebuyers tax credit, (1st timers, or if you have not owned a primary residence for the last 3 years), may apply for this $8000, (all of it or some of it, I believe), and then repay the program when you get your tax credit.  The $30 million is basically set up as a loan, the state loans you the money, then you pay them back.  If you live in the house as your primary residence for 3 years, you also do not have to pay it back.  

This stimulus package, included with the lowest rates of below 5% in most cases is incredible, and we've seen sales & interest in purchasing pick up dramatically.  

Stay tuned, there is also a bill being passed to increase the homestead exemption for 1st time home buyers from the 2 $25,000 exemptions to a total of a $100,000 exemption, which will lower 1st time homebuyers taxes!!  More details on that to come as information comes available!

 Perhaps the shiniest: $30.1 million for down payment assistance programs. Beginning July 1, those who qualify for the federal first-time homebuyers tax credit will be able to apply for down payment assistance in advance of closing, and then repay the amount borrowed when they get their tax refund. 

Update on Military Homeowner Assistance Program

Hi all, just wanted to update you some more on this program.. the details have not rolled out just yet, but I'm committed to calling the Army Corps of Engineers, (who is the contact person), to see when they will have it all outlined.  We do know that its 1st come 1st serve, (after disabled & widowed families 1st), and they are currently accepting applications.  The applications are a little long, and included in the paperwork is required to have a copy of your listing agreement with your REALTOR.  They want to see that you are attempting to market the property, not just sell it for $1 to your best friend!!   Currently they have approximately 1200 applications in, and that $ will go quickly!  

If you are not sure if you qualify for this money, please feel free to call me, or you can call the number direct.. 800-861-8144

Good luck!  

Loan Modifications

Its not an easy subject.. but lets face facts.. the economy has changed.  Some have been more affected than others.  Some have had personal life changes, as well as financial economic changes, and due to the rise & adjustment of the real estate market, some families are having to decide whether or not they can keep their home.  

The good news is Obama has set aside $75 billion to assist with families in this situation.  This plan was developed to help these struggling families with a permanent, (or temporary, depending on the hardship), restructuring of their mortgage loan, which would help foreclosure rates & help homeowners be able to stay in their home.  This was also set up to help slow the decline in home values.  The majority of the foreclosures out there are because people were put into mortgages that they could not afford, add to that the recent layoffs, on top of the other unfortunate life circumstances.   http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm  Please reference this website for frequently asked questions.  

There are companies who specialize in loan modifications.  Now, some people may disagree with me, but I wasn't sure how this "specialist" can do something you or I can't.  If you qualify for this modification, then your bank will approve you.  Granted, each person's situation is going to be different than the next, but how can a 3rd party that costs a few thousand dollars get you such a good "deal" when there are non-profits who do it for free.   Also, if it costs a few thousand dollars, aren't you more in the hole than you were in the beginning? http://www.hopenow.com is a great reference site that you can use, for free!  HOPE NOW is an alliance between mortgage companies, investors, counselors, and other mortgage participants that will maximize outreach efforts to homeowners in distress.  

I've been party to a few loan modifications, and the results were very reasonable.  One home owner was able to negotiate a 3.25% interest rate for 3 years, (old rate was 6.25%), and there was a 3 month lapse where no payments were required.  I've also discussed with a past customer that they were able to negotiate a 5% FHA loan, which is down from their original 7%, and this is on a 30 year fixed.  Typically, and from what I've seen & heard, most of the mods are interest rate reductions.  The property has to be your primary residence.  I've heard of some principal reductions, but they are in the range of 10-15% of the principal balance, and in some areas in Jacksonville, depending on the property, this may not help enough.

Also, loan modifications may not be for everyone.  If you have questions, I welcome your phone calls.  Also, if you feel a loan mod is not right for you, and you want to explore your options of a short sale, I'd be more than happy to help you out with that as well :)

Military Homeowner Assistance Program

They serve our country.  The get sent all over the world to protect our way of life.  They get moved around every 2-3 years.  I'm sure you know who I'm talking about!!  This post is for our military friends, family, coworkers, neighbors, army, navy, air force, marines, and even coast guard!  This program is set up as part of the stimulus package which will help military families who are up for transfer and who are affected financially due to the decline in the residential real estate market.  There is, of course, criteria that must be met.  The home must have been purchased as a primary residence before July 1, 2006.  The program gets a little bit more involved than I want to on here, and I'll list the basics to avoid confusion.  If you think you may qualify, please reference http://hap.usace.army.mil/homepage.html.  The basic program is that you have purchased a home prior to July 1, 2006, and are being relocated more than 50 miles from your current base.  This doesn't work for those guys transferring from Mayport to NAS, sorry!!  The program will cover the difference of the sale price from what is owed.  Lets say for example, you purchased your home for $300,000 in May 2006.  You are being transfered from Jacksonville, FL to San Diego, CA.  And lets say your home is now worth $240,000.  The program is set up to pay the difference in what is owed and what the sale price is.  This program will also cover your closing costs- title insurance, survey, REALTOR COMMISSION, etc.  

There are also some inherent rules as well.  The sale price must be within 10% of the actual value.  They won't accept your cousin buying the property for $1, and cover the differential for you!!  All the details are not in writing yet, so its not determined how they will determine market value, but your Realtor, (or me of course!), can show you how to best determine market value and price your home accordingly.  It is not determined if they will use our price opinion, or if they will hire a third party realtor or an appraiser to justify this value, but due diligence up from will ensure that you are within the limits.  

The Department of Defense estimates that this information will be made public around the July 2009 timeframe, but they are currently accepting applications.  If you think you qualify, please call me, review the website- and get your application in!  The money will be divided to those facing foreclosure, as well as wounded & widowed first, but after that it will be first come first serve.  

This is a temporary expansion of the old Homeowner Assistance Program, so it will not be around forever.  There has been $550 million appropriated for qualifying personnel.  

2 lots for sale in AB

For those of you familiar with the beach.. we know Atlantic Beach kind of like its own little city, with its own personality, old charm, laid back people!!  I have a great opportunity for someone to build in there.. have a double lot owned by 1 family, either to build one house or build two.  About a block and a half to the 10th street beach access and 8 blocks from town center!  Check it out!!

www.882ocean.com

$8000 tax credit for buying a home

FIRST-TIME HOME BUYERS, PAY ATTENTION!

Wanted to keep this short & sweet- If you buy a home in 2009, and close on or before December 1, 2009, you may qualify for an $8,000 tax credit.

Visit www.FederalHousingTaxCredit.com, for detailed information about the tax credit.  Best deal available to 1st time home buyers in a long time!  The $8000 is actually yours to keep if you live in the property as a primary residence for 5 years!

The tax credit is available to all first-time home buyers, or persons who have not owned a primary residence for the last 3 years.  Frustratingly, I have a great friend who will miss this deadline by 13 days :(

But you can't wait too long to become a home owner. Qualified buyers must buy the home on or after January 1, 2009 and before December 1, 2009 to receive the tax credit. 

If you have already filed your taxes for 2008, but you purchased after January 1, 2009, then you can amend your taxes, or you can claim this money on your 2009 taxes.  

To learn more about the $8,000 tax credit, go to www.FederalHousingTaxCredit.com.

Short Sales

Such the buzz word in today's Real Estate market-- and with good reason.  Since they are opportunities in which the seller is selling his house for less than he owes, you are getting the price, in most cases, for less than what they paid, which is unfortunately the way the economy sits now.  (In some cases, the seller over-leveraged themselves with a 2nd mortgage or line of credit, but a lot of cases are due to the decline of property value.)  Some notes on some short sales I'm working with- GMAC seems to have their "act" together.. about a month after submitting the offer, (along with ALL the necessary paperwork), we were assigned a negotiator, and within a week they had ordered the "BPO"- Broker Price Opinion, which helps the lienholder determine approximate value for the neighborhood.  A month- seems like a long time to some, but I'm doing dances with the listing agent!!  Now Bank of America, on the otherhand, kindof makes me want to jump off the Dames Point.  Approximately 80-90 days in FINALLY a negotiator, and after just under a month, he's finally "looking at the file".  I'm sure one day he'll order a BPO, and maybe in 2010, he'll decide to accept or reject the offer.  Please please let the buyers still want the house after waiting probably 6-7 months for an answer!  Had another one- offer to close in about 60 days.  Just wrote another offer for some folks and Chase has the 1st lien.. Fingers crossed & toes crossed, its going to be a LONG few months!!  I've read that there is around 30-40 negotiators per bank, and they review about 20-30 files a day- no wonder they are always so short with us Realtors who call in!  Not an easy process, but if all goes well, price wise- worth the wait!!