Something to look forward to....NAR Creates Single-Source Database of Properties Across the Nation01/27/2010 By: Brittany DunnStarting this summer, Realtors will have access to an online real estate library/archive with data on every property in the United States.Dubbed the Realtors Property Resource (RPR), this powerful new tool is a project by the National Association of Realtors (NAR). RPR was created to help Realtors better serve their clients, providing unmatched access to tax and assessment data; property data; neighborhood, school, and demographic information; and maps, trends, and reports,NAR said. In addition, RPR will include public record information, details of prior transactions, multiple listing service (MLS) data, and zoning information.“RPR is welcoming news for our Realtor members who are always tech savvy and on the cutting edge of business innovation,” said Karl Lee, president of the Santa Clara County Association of Realtors.Lee said this visionary project will provide NAR members with in-depth, trusted information on local properties and make it easier for them to help clients analyze their buying and selling decisions, including specialized property types, such as vacation homes. The advanced user profile and social networking component of RPR will help create online referral communities and inspire members to experiment with new business models, he explained.According to NAR, RPR will be exclusive to Realtors and member of participating MLSs, and beta testing will begin in March of this year. On July 1, 2010, Realtor logins will begin to be activated across the country, and a phased roll-out will occur in the months following.
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Real estate companies that managed survive the recession will become highly productive, more efficient, with stronger teams operating and increased transparency for the good of the industry.This is according to Stan Ross, chairman of the University of Southern California Lusk Center for Real Estate.According to Mr. Ross, there is a good chance that by the end of this year we are going to see some solid real estate companies that will be setting example on how to be profitable, creative, ethical and honest at the same time.In other words, as painful as it is, the recession is going to weed out the weak, the lazy and the dishonest. Will some companies are going to go under that are none of the above? Of course. On the other hand, we cannot expect the recession to be fair; it is an economic process, not a fair trial with jury.However, the majority of the strongest will get stronger and there are plenty of lessons for all of us to learn.The strongest companies learned to rely more on technology and less on human capital. Personally our company witnessed unprecedented use of eFaxes, VoIP phones and social networking.There is a clearly visible trend to do more outsourcing, as less and less real estate companies are able to have everything under their roof. Even if it could be perceived as counterintuitive, hiring help in most cases is cheaper, not more expensive, especially when professional firms are cutting their fees.Think of such areas as accounting, legal and marketing services. Having an in-house full-time or even part-time accountant will cost you tens of thousands dollars a year. Hiring a help only when you need is going to save you tens of thousands, because you pay only for the project that has a clear time-frame. Simple Google search will reveal an astonishing amount of qualified accountants and marketers that are willing to work around your schedule or remotely.According to Mr. Ross, developers, homebuilders, property managers, investors and lenders should reorganize, restructure and flatten their organizations and take a hands-on approach to decision-making.Mr. Ross says it’s also the time to increase liquidity, which could be done by selling assets to create a cash cushion. “Market your unsold inventory more aggressively. Centralize your accounts payable to strictly manage your cash outflows. Understand your receivables,” he says.He also suggests to more tightly control costs, now is a good time to “re-bid everything.”
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Mixed Messages in the Data According to the S&P/Case-Shiller Home Price IndicesData through November 2009, released today by Standard & Poor's for its S&P/Case-Shiller(1) Home Price Indices, the leading measure of U.S. home prices, show that the annual rates of decline of the 10-City and 20-City Composites continue to improve, in spite of price declines being measured across many markets during November. This marks approximately 10 months of improved readings in the annual statistics, beginning in early 2009, and is the third consecutive month these statistics have registered single digit declines, after 20 consecutive months of double digit declines.The annual returns of the 10-City and 20-City Composite Home Price Indices, declining 4.5% and 5.3%, respectively, in November compared to the same month last year. All 20 metro areas and both Composites showed an improvement in the annual rates of decline with November's readings compared to October."While we continue to see broad improvement in home prices as measured by the annual rate, the latest data show a far more mixed picture when you look at other details," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "Only five of the markets saw price increases in November versus October. What is more interesting is that four of the markets – Charlotte, Las Vegas, Seattle and Tampa – posted new low index levels as measured by the past four years. In other words, any gains they might have seen in recent months have been erased and November is now considered their current trough value. On the flip side, there are still some markets that continue to improve month-over-month. Los Angeles, Phoenix, San Diego and San Francisco have seen prices increase for at least six consecutive months. Looking at the annual figures, four markets – Dallas, Denver, San Diego and San Francisco – have finally entered positive territory, something we really haven't seen in at least two years in most markets."To add more mixed signals, we are in a seasonally weak period for home prices, so the seasonally-adjusted data are generally more positive, with 14 of the markets and both composites showing improved prices in November. On balance, while these data do show that home prices are far more stable than they were a year ago, there is no clear sign of a sustained, broad-based recovery."The index levels for the 10-City and 20-City Composite Indices. As of November 2009, average home prices across the United States are at similar levels to where they were in late 2003. From the peak in the second quarter of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. The peak-to-date figures through November 2009 are -30.0% and -29.2%, respectively.San Francisco has reported eight consecutive months of positive returns, San Diego has reported seven and Los Angeles and Phoenix are close behind with six. The two Composites were both down 0.2% over the month, and only five of the MSAs reported positive monthly returns for November. Looking at the annual statistics, Chicago is no longer reporting double-digit declines. Dallas, Denver, San Diego and San Francisco are in positive territory with their annual figures at +1.4%, +0.5%, +0.4% and +1.0%, respectively.Charlotte, Las Vegas, Seattle and Tampa all reached new low levels in November. For Las Vegas, in particular, prices have declined for 39 consecutive months, with a peak-to-trough reading of -55.6%. It is now just 4% above its January 2000 level. This compares to its peak in August 2006, when the average home price was 135% above that same level.The table below summarizes the results for October 2009. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 22 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com(1) Case-Shiller® and Case-Shiller Indexes® are registered trademarks of Fiserv, Inc.Since its launch in early 2006, the S&P/Case-Shiller Home Price Indices have published, and the markets have followed and reported on, the non-seasonally adjusted data set used in the headline indices. For analytical purposes, Standard & Poor's does publish a seasonally adjusted data set covered in the headline indices, as well as for the 17 of 20 markets with tiered price indices and the five condo markets that are tracked. A summary of the monthly changes using the seasonally adjusted (SA) and non-seasonally adjusted (NSA) data can be found in the table below.A summary of the monthly changes using the seasonally adjusted (SA) and non-seasonally adjusted (NSA) data can be found in the table below.The S&P/Case-Shiller Home Price Indices are published on the last Tuesday of each month at 9:00 am ET. They are constructed to accurately track the price path of typical single-family homes located in each metropolitan area provided. Each index combines matched price pairs for thousands of individual houses from the available universe of arms-length sales data. The S&P/Case-Shiller National U.S. Home Price Index tracks the value of single-family housing within the United States. The index is a composite of single-family home price indices for the nine U.S. Census divisions and is calculated quarterly. The S&P/Case-Shiller Composite of 10 Home Price Index is a value-weighted average of the 10 original metro area indices. The S&P/Case-Shiller Composite of 20 Home Price Index is a value-weighted average of the 20 metro area indices. The indices have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the subject market.These indices are generated and published under agreements between Standard & Poor's and Fiserv, Inc.The S&P/Case-Shiller Home Price Indices are produced by Fiserv, Inc. In addition to the S&P/Case-Shiller Home Price Indices, Fiserv also offers home price index sets covering thousands of zip codes, counties, metro areas, and state markets. The indices, published by Standard & Poor's, represent just a small subset of the broader data available through Fiserv
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Posted by Sandra Page on January 26, 2010 at 10:14am
I have had my Real Estate license since 1994, started doing bpo's and working with REO's since 1996. In 2004 I was asked to help manage an Reo Dept. our Real Estate Company had decided to start.Did that for 3 years and then decided to go back out into the REO world to list and sell again. I have not been sorry although I will admit when I was on the management side I got an hourly wage,benifits, and a bonus for every reo the agents that worked for us sold. Wait a minute, what's wrong with me??? I must have been smoking something funny when I decided to step out. :-) No actually the real reason was I got tired of some (not all) agents expecting everything handed to them with us doing most of the work. They didn't want to do the evictions, cash for keys, occupancy checks,etc.They thought we should do that. They just wanted to list and sell. I was still working 14 hours a day with the paper work,etc. Yes the last few months have been difficult,starting last Sept. , with the reo slow down in our area but I'm happy where I'm at and feel my business will pick up again. I know what the asset managers need and I'm good at it. I try to make their job and life alittle easier. I've been in their shoes , they don't have an easy job and many sleepless nights.
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There are soooooo many platforms for brokers and agents to use out there. Until recently, I was so confused about which one to use. I needed something to help me run my business and stay organized. Low and behold, eBrokerhouse came along. As if these guys were inside my office and heard me. Well they actually did hear me because they listened when I made suggestions. I am a Broker and I have agents. There are times when you just want to track everything in one place. Not a little in Quickbooks, a little on a spread sheet, a lot in a paper notebook, a lot more in my head, etc. (You unorganized folks know what I mean)LOL. I love eBrokerhouse because of what this application has done to my business and my life. What has it done for you lately?
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Posted by Allan S Glass on January 26, 2010 at 7:19am
Popular opinion and personal viewpoints are mutually exclusive ideas. There are times when the two overlap but a true personal perspective is driven by real life, personal circumstances and is not always at the behest of popular or even rational thought.Popular opinion relates to generalities. As a framework, what moral guidelines should we follow as a society to establish order and maintain peaceful coexistence? Personal views tell us if, in the heat of the moment, with the additional emotional burden of personal experience added to the situation, our answer would be the same?The issue of Strategic Defaults creates such a moral dilemma. Most agree that it is morally reprehensible to blatantly disregard commitments or contracts. Regardless of whether it's a nickel on the playground or a million dollars in the boardroom our social contract is that both parties are bonded by trust and an expectation that each will follow through on their pledge. To that end most would generally agree that Strategic Defaults are wrong.But what if it were you? What if you came to realize similar behavior was acceptable from someone other than you? What if your choice directly impacted the comfort and well being of your children? What if walking away from an upside down mortgage was socially acceptable? How would you decide what to do?Calculated Risk - Why Banks LendLet's first consider why banks lend at all. Business. They want to make money. Simply put they have identified a need in the market (capital) and have devised a way to benefit (profit) by delivering their product (money) to the marketplace. They provide a fundamental service to our capitalistic system and without it we would fail.If you were to buy any type of real estate other than your primary residence you would notice that your lender would require a larger down payment and likely charge you a higher interest rate. The reason for relaxed standards when buying your primary residence is two-fold. First, the federal government has decided that widespread homeownership is a social benefit to society. Second, the banks understand that shelter is a basic need. Thus if things go bad, you are less likely to walk away from your home than any other real estate asset.Throughout most times in recent history, banks would not lend to everyone. Interest rates were related to the banks cost of funds, and a borrowers credit worthiness. However in the past decade lenders threw caution to wind. Loans were given to borrowers without requiring proof or documentation supporting the stated income on their loan applications and haphazard policies were in place to insure the banks were lending against collateral that could support the loan. Unadulterated appreciation is the elixir that makes every loan look safe, every investor look like a genius, and allows every homeowner to feel safe in their decision to pay just a little bit more than they could afford.In moderation these cycles of growth do no harm and are always followed by periods contraction allowing market fundamentals to catch up with values. However unabated for too long, we find ourselves unable to absorb losses without devastating impacts across the economy. Someone is always left holding the bag. From the banking perspective, good banks absorb bad banks, certain lending practices come to an end, losses are taken and passed along to shareholders or the taxpayers, and the whole cycle of calculated risk is started again.Taking the Loss - When it's Time to Walk AwayIn the business world knowing when to cut your losses is not just an admirable trait, it is critical for survival. From the smallest start up to the largest conglomerate the idea of not throwing good money after bad is commonly followed and the primary determinant of success or failure.In his article, "The Way We Live Now, Walk Away From Your Mortgage" New York Times columnist, Roger Lowenstein cited several good examples of this practice. From private equity firms deciding it's a better financial decision to close the factory than keep it running, hedge fund managers leaving to start fresh with new funds and new investors after their existing investments turn sour, Sam Zell allowing the Tribune Company to file for bankruptcy, to banks themselves deciding to complete strategic defaults when their own real estate investments go bad.In another recent article for Bloomberg News, Dan Levy quotes Morgan Stanley spokeswoman Alyson Barnes describing an "orderly transfer" of five San Francisco office buildings the bank purchased at the height of the market; they paid $6.7 billion in 2007. Ms. Barnes goes on to explain "This isn't a default or foreclosure situation," rather she suggests "We are going to give them the properties to get out of the loan obligation." Doesn't that sound just like a strategic default?This bank practice of cutting losses and maximizing returns is not limited to commercial investments. This past Friday I had to personally inform one of my clients that the bank felt it was in their financial interest to foreclose rather than allow a short sale on their personal residence. I presented Litton Loan Servicing with an all cash offer, which would have allowed for a full payoff of the first trust deed on which they were foreclosing. I requested an extension so my client could negotiate with the lender on the 2nd and 3rd trust deeds. I explained that the seller was willing to sign a promissory note with the second to avoid the foreclosure and further clarified the non-contingent; all cash offer would fully satisfy the debt owed to Litton Loan Servicing.Their response: It's in our financial best interest to foreclose on this property. Tell your investor to go to the court steps and buy it there.Artificial Support - The Consequences of a BailoutIn a recent policy white paper published by Luigi Zingales, along with colleagues Paola Sapienza, and Luigi Guiso, the trio asserted their belief that a public policy aimed at helping people in arrears with their mortgages could have devastating effects on the incentives to strategically default of people who can afford to pay their mortgage if it is perceived to bail out people unjustly and thus undermine the moral commitment to pay.They point to moral norms in society, which prevent people from defaulting in most circumstances but caution that "the effectiveness of moral rules, in turn, may be affected by economic policies that may undermine a sense of fairness."The Kellog School paper by Mr. Zingales, et. al was followed by another white paper from University of Arizona professor Brent T. White, suggesting that many homeowners continue to make payments even when they are significantly underwater, not because it's in their financial best interest, rather because of social impacts like fear, shame and exaggerated anxiety over the perceived consequences of foreclosure. Mr. White goes on to suggest that government policies and other "social control agents" encourage homeowners to stay in potentially bad financial situations. He states, "Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility" (see my two examples above).So how can we seek to work through the estimated $4 Trillion in excess housing debt encumbering residential property across the nation? Clearly, the burden cannot be placed solely on the shoulders of the borrowers without risking a backlash when it's no longer socially taboo to default on your mortgage. Equally, allowing the banking system to collapse by forcing the full load upon them would have far reaching consequences from which it could be difficult to recover.Band aid approaches and government programs that do not address the root of the problem simply prolong the pain and unequally distribute the relief by placing income limits on participation and targeting only those who have already defaulted on their obligations.Clearly, we will not see a full housing recovery until the majority of excess debt is removed from the system. Loan modifications, short sales, deeds in lieu, and foreclosure are the four most common ways to deal with the problem. The most devastating and costly impact on everyone results from a foreclosure. Short sales are a viable alternative for some but still force owners to leave their homes. Further, banks continue to treat the process as a temporary menace remaining understaffed and inconsistent in their policies and procedures; deed in lieu even more so.Loan modifications simply don't work without including a principal reduction, so far an elusive task for both the government and banks. Even Barney Frank who has long pushed for "cram down" legislation forcing banks to write down principal balances with the help of bankruptcy court judges realizes this is an unrealistic possibility. Yet, the New York Fed, in a December staff report No. 417, recognized that loan modifications that reduce loan balances are far less likely to re-default.Nick Timiraos at the Wall Street Journal highlighted this point in a piece he wrote last week. In his article he refers to the fed study noting, "modifications that write down loan balances can double the reduction in re-default rates achieved by payment reductions alone."If we are to keep people in their homes and/or avoid mass foreclosures, we must make short sales more efficient and reduce principal loan balances as part of the loan modification process.The Fallout - Less Credit, Tighter StandardsAll of this will clearly come at a cost to the American borrower and taxpayer. Business concerns burned once typically learn from mistakes and seek to avoid such pitfalls in the future. If borrowers who can still make their mortgage payments "strategically default" because it's in their financial best interest, we can all be assured that qualifying for loans will be more difficult in the future and costs will be far greater.In light of our current circumstance, I don't see too many no-documentation, negative amortization, 100 percent loan to value loans in our immediate future. Ultimately fewer Americans will be able to achieve the dream of owning their own home and will remain renters. Additionally, fewer lenders will be around to provide loans for the masses.Another possibility is that fewer borrowers will attempt to fit a square peg into a round whole. What I mean by that is, if a borrower's income cannot support buying in a market they desire, perhaps they will consider seeking a purchase in an area that fits their budget rather than "fibbing" on their loan application and getting in over their heads to stay local. Perhaps house values won't rise beyond reason and without support from the sound economic principles. Finally, perhaps banks will become more financially sound and make more prudent decisions, reducing their risks and ultimately providing good loan products to capable borrowers. That doesn't sound too bad.We all learned on the school playground that we should honor our promises. Currently, most people still see strategic defaults as morally reprehensible, but I wonder for how long? It seems not too long ago short sales were a foreign and unacceptable concept. Regardless, as some of our banking leaders suggest, sometimes an orderly transfer is warranted to get out of a loan obligation and sometimes it's simply in our financial best interests to let a home go to foreclosure.Allan S. Glass is a real estate broker in Los Angeles, California specializing in REO and Short Sale transactions. Allan is also a featured blogger on Realtor.com. The ASG Real Group has over $1 billion and 17+ years of transaction experience.
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Hello Everyone!Sorry for the provocative title!This TPFA is really messing with my brain.For those unfamiliar, TPFA stands for the Tenant Protection and Foreclosure Act. It is a fairly new federal law, passed by congress, and here is what it says, in a nutshell.A foreclosing institution has to honor an existing lease so long as the following are true:1. The lease agreement was entered into before the sale (or is it before the notice???)2. The lease rate must be a market rate3. The lease must be arms length (no leasing to your mom)The laws regarding foreclosure, rentals, evictions, hold-overs and the like have been well established over time, mostly state by state, and even city by city. The TPFA seems to be just a monkey wrench into the system.I have a situation where the prior owner gave power of attorney to someone, who rented the place, with a purchase option, to a second party. The second party is refusing cash for keys, and obviously refusing to move out, and are hanging their hat on the TPFA. The first party is hanging on because there is a margin between their option price, and the price they have optioned with the second party. Whew!!!The person with power of attorney is an agent, and they are just hanging on for dear commission (and I think doing a dis-service to the tenant).Anyone have experience with this type of situation?Thanks!Chris Butterfieldwww.SLREO.com801-440-8800
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1. Unemployment: Until people have the income to afford their mortgages, we will not see a recovery in the housing market. I believe a direct correlation exist between unemployment and mortgage defaults, the higher unemployment gets the more defaults we will see. This ultimately leads to more inventory and of course, lower home prices.
2. Tightening Credit Standards: The harder it gets for people to obtain the necessary credit to purchase a home the slower it will take to reduce the inventory we have. Make no mistake, I don’t believe in loosening credit standards for the sake of it but, it’s a fact that if people can’t get credit, inventory won’t reduce quickly and therefore slowing if not halting a housing recovery.
3. Artificial Government Inventory Control: In other words, arbitrary influence by the Government to keep unworthy homeowners in their homes at all cost. Make no mistake, this is housing inventory control in the most negative way. I have GSE Investor loan reinstatements after foreclosure on my desk right now where Fannie / Freddie is offering to reinstate a homeowners loan where they will consider unemployment benefits as income……..seriously!
4. Energy Prices: Did you realize that you are paying .86 cents more for gas this week than you were this same week last year? Most likely you haven’t noticed because we have all been pre-occupied with the nations job losses, underwear bombers, Massachusetts election, and Washington bleeding red ink. You may not have actively noticed it but, if energy prices continue to rise people will have less discretionary spending and that pulls buyers out of the market and couple this with Great Depression level unemployment and we end up with more housing inventory.
5. Risk of Hyperinflation: As the US currency continues to looses value against it’s competitors we find ourselves having no other choice but to increase inflation. If the Government continues to spend / make money with less and less value people refuse to hold onto the Dollar and start to move their assets into other currencies or metals and therefore an uncontrollable rise of inflation begins.
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Existing-Home Sales Down but Prices RiseAfter a rising surge from September through November, existing-home sales fell as expected in December after first-time buyers rushed to complete sales before the original November deadline for the tax credit. However, prices rose from December 2008 and annual sales improved in 2009, according to the National Association of Realtors®.Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 16.7 percent to a seasonally adjusted annual rate1 of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005.Lawrence Yun, NAR chief economist, said there were no surprises in the data. “It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit,” he said. “We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year.”An NAR practitioner survey2 shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.The national median existing-home price3 for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008. “The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Yun said. It was the first year-over-year gain in median price since August 2007.NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said market conditions are challenging in some areas. “There’s a shortage of lower priced homes for sale in much of the country, resulting in multiple bids in some areas,” she said.“Raw unsold inventory has been trending down. As the market heats up again this spring, buyers may need to be prepared to move quickly on a particular home – the best advice is to begin working with a Realtor® now to be able to use the tax credit and benefit from the increased buying power in the current market,” Golder said.Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply4 at the current sales pace, up from a 6.5-month supply in November. Raw unsold inventory is 11.1 percent below a year ago, is at the lowest level since March 2006, and is 28.2 percent below the record of 4.58 million in July 2008.Distressed homes, which accounted for 32 percent of sales last month, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area. For all of 2009, the median price was $173,500, down 12.4 percent from $198,100 in 2008; distressed homes accounted for 36 percent of total sales last year.According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.93 percent in December from 4.88 percent in November; the rate was 5.29 percent in December 2008.Single-family home sales fell 16.8 percent to a seasonally adjusted annual rate of 4.79 million in December from a pace of 5.76 million in November, but are 12.7 percent above the 4.25 million level in December 2008. For all of 2009, single-family sales rose 5.0 percent to 4,566,000.The median existing single-family home price was $177,500 in December, which is 1.4 percent above a year ago. For all last year, the single-family median was $173,200, down 11.9 percent from 2008.Existing condominium and co-op sales fell 15.4 percent to a seasonally adjusted annual rate of 660,000 in December from 780,000 in November, but are 34.7 percent higher than the 490,000-unit pace a year ago. For all of 2009, condo sales rose 4.8 percent to 590,000 units.The median existing condo price5 was $183,700 in December, up 1.0 percent from December 2008. For all of last year, the median condo price was $176,100, which is 16.1 percent below 2008.Regionally, existing-home sales in the Northeast dropped 19.5 percent to an annual level of 910,000 in December but are 21.3 percent above a year ago. The median price in the Northeast was $241,700, up 3.2 percent from December 2008.Existing-home sales in the Midwest fell 25.8 percent in December to a level of 1.15 million but are 8.5 percent higher than December 2008. The median price in the Midwest was $143,200, which is 1.8 percent above a year ago.In the South, existing-home sales dropped 16.3 percent to an annual pace of 2.01 million in December but are 15.5 percent above December 2008. The median price in the South was $152,000, down 1.0 percent from a year ago.Existing-home sales in the West declined 4.8 percent to an annual rate of 1.38 million in December but are 15.0 percent higher than a year ago. The median price in the West was $236,000, up 2.7 percent from December 2008.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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State Regulators Announce Launch of "NMLS Consumer Access"The Nationwide Mortgage Licensing System & Registry (NMLS)—a mortgage licensing system operated by state financial regulators, including Georgia—is launching “NMLS Consumer Access.” NMLS Consumer Access is a fully searchable website that allows the public to view information concerning state-licensed mortgage companies, branches, and individuals currently licensed through NMLS.The goal of NMLS Consumer Access is to provide homebuyers and the general public with greater information regarding state licensed companies and professionals in the mortgage industry. NMLS Consumer Access will benefit consumers by providing consumers a single location to access standardized information regarding their mortgage provider, regardless of the state in which they operate.“The launch of NMLS Consumer Access shows, once again, the commitment of state financial supervisors to protect consumers,” said Georgia Department of Banking and Finance Commissioner Rob Braswell. “States have long been regarded as leaders in the consumer protection arena. NMLS Consumer Access provides an innovative method for consumers to research prospective mortgage companies or providers.”State regulators, through the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, launched NMLS in January 2008. To date, 45 states and territories—including Georgia—license mortgage companies, branches and individuals through the system. All 54 states and territories are expected to be on NMLS by the end of 2010.“During development of NMLS,” Commissioner Braswell continued, “one of the goals put forth by state regulators was to provide a central source of information that promotes transparency throughout the states. I see NMLS Consumer Access as a critical tool to protecting the consumers in Georgia.”In addition, Title V of the Housing and Economic Recovery Act of 2008, the SAFE Act, mandates that NMLS provide consumers with easily accessible information, offered at no charge, regarding the employment history of state licensed and federally registered mortgage loan originators.“NMLS is successfully combining the objectives of state regulators with the mandates of the SAFE Act by launching NMLS Consumer Access,” Commissioner Braswell concluded.
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New Consumer Protection Bill Would Reinstate Practices that Led to Housing Bubble: Appraisal Management Group- H.R. 1728 MAY UNDERMINE APPRAISER INDEPENDENCE AND HURT HOMEBUYERS -The Title/Appraisal Vendor Management Association (TAVMA) today announced its opposition to federal and state legislation that would dismantle new federal safeguards designed to protect appraiser independence and provide unbiased appraisals to homebuyers and lenders.Proposed legislation (H.R.1728) on the federal level and numerous initiatives on the state level would once again permit discredited business practices that were key factors behind the real estate bubble and crash. Specifically, they would allow mortgage brokers to select handpicked appraisers and communicate with them regarding property values. In May 2009, Fannie Mae and Freddie Mac banned this practice and the Federal Housing Administration (FHA) is expected to enact a similar rule next month.H.R. 1728 would in effect repeal that new Home Value Code of Conduct (HVCC), initiated by Fannie Mae and Freddie Mac to prevent appraiser pressure and inflated appraisals, even though both agencies are on record as saying that the new code has improved appraisal quality.TAVMA warned that the new bill, if passed, would reinstate business practices that have lead to appraiser pressure. Specifically, it noted:· Commission-based professionals like mortgage brokers and others, who get compensated only when a real estate deal is completed, would again be in a position to unduly influence transactions.· Without firewalls, appraisers would be subject to pressure, both overt and implied, to hit the price" and appraise a property at the value the mortgage broker or other commissioned salesperson needed to close the deal or lose future business.· There is an inherent conflict of interest when appraisers are selected by referral sources that have a financial stake in the outcome of the appraisal."Unbiased home valuations protect consumers and encourage lenders to provide home financing," explained said Jeff Schurman, Executive Director of TAVMA. "Turning back-the-clock, and letting parties who are compensated based on closed deals order and interact with appraisers will inevitably lead to pressure and inflated appraisals. This was clearly one of the major factors that inflated the unsustainable real estate bubble that has just burst and tanked our economy. If Congress wants to help consumers, and not just a small group of interested parties, it will make sure that it retains safeguards to protect appraiser independence, before it discards new rules that are already doing this job."Background on this issueSince the S&L Crisis of the late 1980s, various federal agencies have attempted to mandate a firewall between appraisers and mortgage brokers. But these efforts, for the most part, were unsuccessful until HVCC went into effect and said, among other things, lenders couldn't sell loans to Fannie Mae or Freddie Mac, unless they prohibited mortgage brokers and commissioned loan officers from selecting and influencing appraisers.Since implementation last year, both of these government sponsored entities and their parent, the Federal Housing Finance Administration (FHFA) have stated that the quality of appraisals has improved significantly, since appraisal management companies have replaced mortgage brokers as the primary source of appraisal orders. These entities have also rebutted the charges made by brokers and realtors in the press that AMCs and the new code are deflating home values.Last summer, FHFA issued the following statement: "Contrary to some suggestions, the Code does not lead to lower appraisals for property. The Code insulates appraisers from pressures that led to higher or lower appraisals and should now lead to more accurate valuations. This is in everyone's interest. Declining home prices began long before the deployment of the Code and relate to many other factors."This has not stopped opponents from waging a campaign against HVCC and AMCs in the media and the Internet. Among their most frequent claims: AMCs hire out of market appraisers; AMC appraisers travel too far and or use the wrong "comps"; HVCC is depressing real estate prices.The facts are:· AMCs use licensed and certified local appraisers. In fact, 60% of all independent residential appraisers work with AMCs.· The average AMC appraiser travels 13 miles or less to their assignment, and are chosen based on local real estate expertise.· AMCs offer clear methods to challenge an appraisal based on incorrect or incomplete comps being used.· AMC appraisers are licensed and bound by professional standards that prohibit them from taking assignments if they are unfamiliar with the locality or type of property.· AMCs monitor their appraisers for performance and professionalism."For more than 20 years, various federal bodies have struggled with ways to prevent appraiser pressure, " said Schurman. "Finally an effective mechanism has been put in place to prevent this practice, and in less than six months, pressure from the same groups that created the real estate crisis are on the verge of overturning it. Is our collective memory really that short?"
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Posted by Megan Zavieh on January 25, 2010 at 10:16am
I have been working hard in the background, trying to get our REO practice really going. I thought I'd take a moment to introduce myself to the community, and let you know what we've been up to.My father and I are a team -- always have been, and now we are in business too. We are the Mission Valley Real Estate Company, located in Northern California. We are both lawyers and real estate brokers. My dad moved from law to real estate and then back to a mix of the two many years ago. I went to New York as a lawyer, worked in the big firms, and then came back to California a couple of years ago to focus on real estate (with a legal bent, of course, because you just can't help it!).We had some success in the REO market last year. We had some great contacts at Downey Savings and sold several of their properties here. When US Bank took over Downey, though, we found that most of the work was gone. The asset managers we knew were all laid off, and US Bank was such a small player in our area that there were very few properties left to be sold.I have spent the last several months trying to get into other venues. We do BPOs through Equator, and I'm registered with many other asset companies that yield no work. We absolutely have the chops to do this -- we have handled trash outs, repairs, cash for keys, and the marketing of several homes. Our teamwork is a huge asset because we each pick up when the other can't complete something immediately, so our timeliness is awesome. It's just frustrating to keep trying, keep trying, keep trying and get so little!We will continue to persevere, though. Our website is constantly under revision, we have an active blog and Twitter page, and we just keep at it. I hope that I can learn from the others here on REO Pro and move ahead!
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I am still exploring the idea of a role REOPRO can play in the foreclosure crisis. I published a blob with my thoughts, but I have not received any reactions to that publication. I accept my approach is aggressive and far reaching, but so is the problem and solutions will require the same degree of effort and determination, but can be worth it. I really think a clearing house approach has some merit and could be a great role for REOPRO. I would welcome feedback from members of the Advisory Board especially Jesus (Jesse) Gonzalez, even if you think my idea has no merit.
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In reading many blog posts here and elsewhere on the web, I am astounded that many people who want to break into REO wish to skip an important step. Being persistent.In this world where we have the world at our finger tips, the internet gives us access to all sorts of information at the push of a button. If we want food fast, we go to a fast food place. We are not used to waiting and have not learned the lost art of patience.If you were getting a degree in REO, you would have to go to college classes, spend your time, spend your money, complete your homework and be successful on the tests. In this wonderful REO business, we are blessed with the ability to enter this business for little money, little time, but lots of effort.If I told you that the secret was followup, would you do it? Networking, follow up, follow up, follow up and networking.....completing BPO's are part of your homework and testing. If you do not do this part well, how can you expect to complete the larger picture of marketing and selling an REO asset?I am relatively new to this REO business. I followed a short sale lead to the asset manager. I begged the short sale person to tell me who the asset manager was and then I called and emailed that asset manager for 6 months until one Friday, at 5 pm, I called and she picked up the phone! She told me that I was the most persistant person and to click on a link to sign up and when she had an asset in my area, she would give it to me. I followed up with her for another 2 months before I finally got that miraculous email....I had an asset! It was in an area that is known to be a heavy drug area and I thought that she gave me the worst asset to test me. Although I was petrified, I went to do the occupancy check. Of course, the property was occupied and about 3 weeks later it got pulled for improper foreclosure. I thanked the asset manager for giving me a chance and reminded her that I was ready, willing and able to help her in the future. The second asset was a reassignment, 2 hours away from my office, one way. I went immediately to the property to take pictures and the agent that previously had it had taken all of the keys from the lockbox. I went back the next day and took my pictures, completed my bpo and submitted eveything. I then received a phone call that the previous contract that had been cancelled was back and that the asset was being given back to the original agent. If something happened to the contract again, I would receive the asset back again.At this point, the asset manager felt bad that 2 properties had been given to me and pulled, she started passing my name around in her sphere and I received several properties that I got to keep and I sold on my own!The key is patience and persistance, continue to do your bpo's, continue to try to establish a relationship. All it takes is one asset manager to give you a chance. Remember, would you like to list and sell assets or would you like to act like you would like to list and sell assets? Do the work that is necessary! I am giving you a key, use it to unlock your future!
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Posted by Allan S Glass on January 24, 2010 at 10:00am
In the most simple of terms a real estate agent serves a fiduciary responsibility to the client. This legal and ethical relationship of confidence and trust bonds the client to the agent in reliance of protection and aid during the transactional process. For the real estate broker and agent, the fiduciary responsibility is a clearly defined relationship requiring specialized knowledge, dutiful care, and pragmatic repose.Traditionally, the mechanics of a real estate transaction allow for a seller to financially gain by selling their asset to the highest bidder. In these cases the broker/agents role includes advising on how to best position the property for sale, qualifying the potential buyers, negotiating for the highest price, and maneuvering through the logistics of escrow. But what happens when profit is removed from the equation?What is a Realtor’s® fiduciary responsibility in a short sale?First and foremost, a real estate professional should understand how the term is defined. According to the 2004 edition of California Real Estate Practice by Lowell Anderson, Daniel S. Otto, and William H. Pivar, a fiduciary duty is one of good faith and trust. “The agent must be loyal to his or her principal, placing the principals interest above those of the agent. An agent’s actions, therefore, cannot be inconsistent with the principals interests. The agent cannot act in a self-serving manner to the detriment of his or her principal.”According to the National Association of Realtors a fiduciary responsibility is like an OLD CAR. the acronym used to account for the six duties outlined by NAR. These responsibilities include:1. Obedience - the duty to promptly obey and follow all legal instructions of the principal2. Loyalty - the duty to act in the best interest of the client, putting their interests above others, including your own3. Disclosure - the duty to disclose all relevant facts affecting decisions of the principal during the transaction4. Confidentiality - the duty to safeguard a principals secrets, unless doing so violates disclosure laws5. Accounting - the duty to account for all funds and proceeds entrusted to you by the principal6. Reasonable Care and Diligence - the duty to use all of your real estate skills in pursuit of the principals affairs, including the responsibility of knowing when you are beyond your scope of knowledgeTwo TransactionsShort sales actually involve two separate transactions that occur simultaneously. The first is a real estate transaction, where the defaulted seller enlists a Realtor® to find a ready, willing, and able buyer to purchase real property. Most agents are very qualified to handle this part of the equation as it falls squarely within the scope of expertise shared by all. Like most other non-short sale transactions the agents and brokers are paid for this work by way of a real estate commission earned upon the successful completion of a sale.The second transaction in the short sale process is a financial transaction. This occurs between the principal and the one or more lien-holders with financial claim against the real estate in question, over and above the net purchase price offered by a buyer in the first transaction mentioned above. Unfortunately many Realtors® attempting to handle this transaction do not have the technical expertise nor the experience to dutifully represent the principal in this matter. This transaction has legal ramifications, tax consequences, and can carry significant financial impacts. Additionally, unless an agent imposes a negotiation fee, paid by the lender on the HUD-1, they do not get paid for the work on this second transaction.Understanding Who is the ClientIn a world of REO’s it’s sometimes lost on the listing broker that his or her client is not the bank during a short sale. Quite the contrary. If you were to ask a loss mitigation representative at your local bank how they view a defaulted seller requesting a short payoff you might be surprised to find that the relationship is considered adversarial. Anything and everything collected by the banks representatives can and will be used against the defaulted seller when negotiating a settlement.Effective customer representatives, asset managers, and loss mitigation specialists while sometimes warm and pleasant are building the banks case against your client with each and every financial document you share. You are not working together to find a solution. They are looking for ever last possible dime they can extract from your client before writing off the balance as a loss. Agents would be well advised to understand the dynamics of this relationship and exercise the utmost care with their approach in negotiating debts.What Constitutes the Best Offer?As I mentioned above, a defaulted seller walks away from a completed short sale with the same amount of money in their pocket regardless of the purchase price. Zero, zilch, nada. The short lender in the transaction will, as condition of their approval, specifically address this point and strictly prohibit the defaulted seller from any form of financial gain. As is the case in most distressed sales, the best deal is often not the highest priced offer, rather it is the offer that presents the greatest “surety of closing” to both the distressed seller and bank accepting the loss. My point here is not to contend that price is completely irrelevant; rather i’d suggest when reviewing multiple offers, consider how much staying power the potential buyers possess along with other intangible assets like buying / investing experience, and patience.I’ve seen short sales completed in less than 90 days and I’ve heard of short sales that have taken longer than a year to complete. In most cases, the difficulty in closing a short sale is keeping an interested buyer motivated to close. It is not uncommon for retail buyers to submit offers on several short sale listings hoping at least one in the group will be approved by the lender absorbing the loss. The unfortunate reality is that many families cannot wait for months to make a housing decision. Parents need to accommodate work needs, kids have school schedules, and families, especially in this market, have other options.How to Get the Ball Rolling - Offer TacticsThe short lender has no interest in discussing a short sale transaction unless a qualified offer is in hand. To address this issue, temptation sometimes drives a distressed seller and their agent to submit an offer, any offer, to the bank even if the buyer isn’t real. The use of “straw buyers” is a dangerous practice and walks an agent and their client down a slippery slope. Even if the principal suggests or demands the use of these tactics, the agent has a fiduciary duty to be obedient along the letter of the law. It is the agents responsibility to be aware of both legal and illegal practices and inform the client when such lines are crossed.Only substantiated offers from real buyers should be accepted and/or submitted to the lender with a completed short sale package. If a home is languishing on the market, an agent has a responsibility to investigate and inform the seller what may be causing the problem, why buyers have not written offers, or why agents are avoiding showing their property. If a defaulted seller has waited too long into the foreclosure process to allow for normal marketing time, the agent has a responsibility to price the listing appropriately to allow for maximum interest from the buying community.Putting it All TogetherFiduciary responsibilities require a broker / agent to enact a responsible business plan incorporating a full awareness of the real estate process. Understanding what can be done legally, determining who exactly is the client, discerning the clients objectives, protecting client interests, and diligently advocating on their behalf are primary to the agent / client relationship. Although the agents expertise and experience are relied upon for guidance through the real estate transaction, the agents fiduciary duty is to put the clients interest and desires above their own.Short sales present a unique set of circumstances that likely contradict common practice due to the absence of profit for the principal, and the cumbersome financial transaction that accompanies the real estate sale. Broker / agents taking short sale listings bear the burden of responsibility to their clients to know when they are in over their heads. It’s not enough to simply declare yourself a short sale expert because distressed assets are the only properties selling in your marketplace.Brokers and agents must understand the primary objective of the seller in a short sale is to avoid foreclosure. This objective is met only if and when a bonafide offer from a real buyer is submitted and approved by the lender modifying a debt. If you take a short sale listing, the bank is not your client and is not working in tandem with your principal to accomplish their goal. It is incumbent upon the broker / agent to understand this adversarial relationship, protect the interests of their client, and maintain a modicum of confidentiality on their behalf. A broker / agent who accepts a short sale listing must be willing to put subjective viewpoints aside and present all potential options objectively to the client. Finally, a broker / agent must understand from both the buyer and seller’s perspective the correct legal procedures necessary to complete the sale of property in imminent default.The responsibility is great, but the reward of helping a client avoid foreclosure is even greater. If you educate yourself, understand the process, remain objective, and focus on the client’s goals your fiduciary duty can easily be maintained.Allan S. Glass is a real estate broker in Los Angeles, California specializing in REO and Short Sale transactions. Allan is also a featured blogger on Realtor.com. The ASG Real Group has over $1 billion and 17+ years of transaction experience.Read more…
Posted by Nick Miller on January 24, 2010 at 9:27am
This is the second part of a 3 part series called "The Good, The Bad, and The Unexplainable."The Bad - An REO Agents Worst Nightmare.The South was recently plagued with extremely COLD WEATHER. At night temperatures reached as low as 8 degrees. This may be considered a warm winter to some of our REO brothers and sisters in the North but to us Southerners, it felt like we were in the Arctic Circle.I received a new property around the first of December. The home is perfect for a first time home buyer. Just a few years old and in fairly good condition. Due to this, the seller thought the home would make a good candidate for a rehab. So, as instructed, I got two contractor bids. Also as instructed, I had the home re-keyed and winterized.The bids included some minor repair as well as new carpet, vinyl flooring and pressure washing the exterior. One of the contractors bid was approved by the seller and they promptly began work right after Christmas. I received a call from the Contractor on Sunday, 1/3/10, informing me that the work was done and that I could take completion photos. I went out to the house to take the pictures on Monday, 1/4/10. The work had been completed and looked good. While I was there I noticed that the water had been turned on, which I assumed they did to pressure wash the exterior.When I got back to the office that afternoon I uploaded the pictures and informed my asset manager that the home had been de-winterized and asked if I had authorization to have it re-winterized (of course I was wanting to know if I would be reimbursed because if you do anything without permission, it is very difficult to get your money back). I didn't hear anything back from them until the evening. They were asking that I get bids to have the work done. The next morning, before I had a chance to submit the re-winterization bid for approval, I get a call from the neighbor of the property. You guessed it, water damage. Her words were, "It looks like it is raining in your garage." That's right. A pipe to the hot water heater busted and the hot water heater just happened to be located in the attic. It flooded the house.Needless to say this ruined my day and the rest of the week. Even though I had followed the procedures from the seller in handling their asset, they still felt that I was responsible for the damage. Well, right or wrong, I did what any good, seasoned REO agent should do. I bit the bullet, fixed the problem, and salvaged the relationship with the asset manager. It cost me about $1500 to get the water cleaned up and pipes repaired (which I am not getting reimbursed for). A lessen to those agents wanting to break into REO's, if you are in the business long enough, your going to have something go wrong.I would love to hear some of your stories. It feels good to know that your not the only one having to deal with these types of situations.
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When I first created my brokerage's "REO Team" a couple years ago I often wondered what area we needed to focus on to attract -- and also keep Asset Managers happy.After asking others, reading a lot, and attending conferences, we came up with the motto: "Our job as REO Agents is to make the Asset Manager's job as easy as possible". Keeping this focus proved very beneficial and truly launched our REO Team.As I pondered this today, I thought of a new motto to add to our original one: "Time is of the Essense". Time and again I have had Asset Managers thank me for getting back to them in a timely manner. By timely, they meant returning emails or calls within 3 hours or less. I have always been a fanatic about responding very quickly -- usually within minutes. I assumed other agents operated the same way.What I have learned is that this is not the case. Numerous Asset Managers have told me that is their #1 pet peeve. Something so simple...but often overlooked.
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Last week I was talking to a fellow agent from another company who got his real estate license in September of last year. He used to be an investor and always put low offers in all my listings and never got one accepted, he went to one of the large REO brokers in the area and the broker told him to lie in his applications and tell the banks that he had 3+ years of experience in REOs, etc ,etc. He told me that he is doing about 70 BPOs a month and he just got his first REO listing. He never had a real estate transaction as an agent, he keeps calling me for advise because his broker and other REO agents in his office are not helping him.I admire his dedication and enthusiasm, but I am worry that he is too green and might make a costly mistake. I am advising him because he is a nice guy and I might convince him to join my company. But I know some of us have to wait several months or years to receive our first REO listing. I know there are agents in this forum who have never had a REO listing, and have years of experience and have designations, etc.I received this email from Jesse this morning that was like a call to arms, and a great motivation for all of us seeking to increase our business, and I want to share this story with you, I don't agree that it was right to lie in an application, but I think sometimes we need to out and get what we want rather than just sit and wait for the email or phone call.
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The big wave of foreclosures is still to hit Midwest states like Illinois in this year . The best way to avoid foreclosure in particular is to sell your house during a process called a short sale. There are some crucial moments you need to know in order to sail through the process as soon as possible.1. The success of a short sale process is in the package.If you want to sell your house fast, your short sale package must be impeccable. That means you have to submit the correct package from the beginning. Even smallest mistakes, like a missing page, can stall the sales process for months. Banks are overwhelmed by home owners' requests. If a negotiator checks on your file and finds something missing, he or she might come back to your file in a couple of months, even thought you send the missing piece of paperwork in two days.2. Every bank has different requirements when it comes to what must be included in the package. If you are trying to submit it yourself, make sure to find out exactly what your bank needs in order to deem your package complete.3. Incomplete package results in extra delays (on the top of usual delays because of the fault of banks).4. When you call your bank, make sure you are talking to the particular person (negotiator) who is handling your application. Get all your questions answered during one phone session with your negotiator. Otherwise, don't be surprised if the next time you get to speak to him or her is after a month or two.5. Send your package over the fax and also via certified mail. Due to a huge workload, representatives handling applications often forget to enter the data into their system. When asked about it, they usually claim they have not received the package, as they cannot find any records about it in their computers. Have your certified mail stub ready and confront them.6. Contact the bank to inquire about the status of your application at least twice a week. Be prepared to spend up to one hour on hold why trying to speak to a representative every time.7. Consider looking for an experienced agent with proven record in short sale. Success and speed of a short sale process lays in negotiations. If this is not your strongest side, hire somebody who is an expert in the field.
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ADVANTAGES OF SHORT SALESIf your home is under water (you owe more than what it’s currently worth), and/or you are having problems making your mortgage payments, it’s important you carefully consider all options available to you:Loan Modification- Banks are more flexible than ever to reduce mortgage payments by reducing the interest rate and at least some banks will reduce your principal in some cases. In order to qualify, you must prove you have income above and beyond your monthly expenses. Even in situations where the bank offers a Loan Modification and/or principal reduction, if the new payments are still well above the current fair market rents, a Short Sale could be the best solution.While nobody can predict exactly what will happen, most experts believe real estate prices will stay stagnant for 5-7 years and consistent year-to-year appreciation may not resume for another 10-15 years.Foreclosure- This is likely the worst option because of the long term effects it can have on your credit, your employment opportunities, income taxes etc.Short Sale- This option is worth considering for the following reasons:GROW YOUR SAVINGSIn most cases, once a homeowner decides a Short Sale in the best option, the sellers stop making mortgage payments. In most cases the decision is made AFTER the seller is already behind not before. The Short Sale process could take anywhere between 3-12 months or even longer in some isolated cases. I had two that lasted more than a year because the lenders took that long to approve them.SAVE YOUR CREDIT (FICO) SCOREWith a Short Sale only late payments show up on the credit report.Once Short Sale is closed, it is reported as “settled for less than full amount due”. As long as your credit is kept clean in the rest of the accounts, the impact to the FICO Credit score could be as little as 50 points. A foreclosure could impact FICO scores by up to 200 points and stay on record for 7-10 years.PURCHASING A NEW HOMEA person selling their home as a Short Sale can be eligible for a FNMA (Fannie Mae) loan after only 2 years. I have heard of cases where Short Sales sellers can purchase another home immediately as long as they stay current on the mortgage payments on the house they sold as a Short Sale. A foreclosure, on the other hand, can prevent the previous owner from getting a FNMA-backed loan for 7 years.OBTAINING FINANCINGAt this time, there are no questions related to Short Sales on the financing application. On a foreclosure, there is a question related to foreclosure in Section V111 of the Standard 1003 Application.LOAN DEFICIENCY CONSEQUENCESIn a Short Sale, it is possible to negotiate that the seller be released of the deficiency in writing by one or more lenders. In many states, including California, lenders have the right to pursue a deficiency against the homeowner. It is more likely that lenders will seek a deficiency from the sellers on a foreclosure than on a Short Sale.SALES PRICE VS DEFICIENCY JUDGMENTIt is likely that a Short Sale be closer to market value than a foreclosure (REO or Bank-Owned). Therefore, the amount lost by the lenders will be less on a Short Sale than on a foreclosure. In the rare event the lenders seek a deficiency judgment, the amount owed will be less on a Short Sale.INCOME TAX IMPLICATIONSOn a Short Sale, the lender sends the IRS a 1099-C for the amount “written off”.As long as the home was the seller’s primary residence and was not refinanced, the Mortgage Debt Relief Act of 2007 protects homeowners from owing additional income taxes. In cases where the seller did not occupy the home and/or the home was refinanced and money was taken out, insolvency (Chapter 7, 11 or 13) could be considered.EMPLOYMENTA Short Sale is not a public record and is reported separately on a credit report. Prospective employers will only be able to see the late payments and the account has been settled. A foreclosure could pose a bigger obstacle to employment.SECURITY CLEARANCEA Short Sale does not pose any problems for Security Clearances. A foreclosure could be a problem when applying for police officer, military, CIA, FBI etc.Disclaimer- In matters with potential tax and legal implications, it is always recommended that professionals be consulted (CPAs, Tax Advisors, Attorneys).Rudy RomoREO PRO REALTYT: (707) 235-4773F: (707) 526-5790www.RudyRomo.comrsraaron@comcast.net
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