Short Sales Information from Edwin Gerace

SHORT SALE INFORMATION THAT YOU CAN USE..............

1. Starting April 5, some distressed homeowners possibly could qualify for $1,500 in relocation expenses.
2. short sale is the event when you must sell your property for a lower amount than what is owed on the outstanding mortgage balance. While putting your home up for a short sale is generally not something you want to do, in certain circumstance it is unavoidable and can actually be a sort of win-win situation for both the mortgage lender and homeowner. By selling your home as a short sale you will be able to limit the damage done to your credit score and also limit the losses on the lenders behalf as well.
3. The banks are then able to dictate the whole process of selling the homes by controlling, terms & conditions, and limiting the buyer's options to independent financing, title work, etc. These "Third Party or Bank Short Sales" utilize unscrupulous marketing practices to manipulate the market, techniques that are expressly forbidden by a realtor's "Code of Ethics". With the vast percentages of homes that are bank owned on the same market as those sold by private parties, the whole process is affected at the further expense to Americans, in reduced property values, impossible loan restrictions and a bulging inventory.
4. MDA DataQuick reported yesterday that the county’s median price in February rose $17,000 from the previous month to $322,000, its level for most of the second half of 2009. On a year-over-year basis, the median was up 13 percent, the best increase in five years
5. Washington, DC - On April 5, 2010, the Obama Administration and the U.S. Treasury Department will offically activate the HAFA (Home Affordable Foreclosure Alternatives) program, which gives struggling homeowners incentives to take advantage of two alternative options to foreclosure. A helpful web site, http://www.whatishafa.org/, has already been launched to explain the program. Through the program, homeowners are encouraged to do a short sale - in which the borrower and the mortgage servicer agree to sell the home for less than the value of the loan. They can also do a deed-in-lieu of foreclosure, in which the homeowner voluntarily gives the deed of the property to the servicer. Incentives include being fully released from future liability for the first mortgage debt, and $1,500 for borrower relocation assistance. There are also incentives for investors and lenders.

The key to Short Sales is to do one 2 things for a sucessfull

MANAGE EXPECTATIONS OF BUYERS AND SELLERS.

DOCUMENT AND COMMUNICATE WITH ALL PARTIES.

For imformation about the homes for short sale in your community contact Edwin Gerace at mail@609SOLD.com or Call 803-609-7653

For a Certified Short Sale Mediator Expert to guide you as a buyer or seller contact Edwin Gerace at mail@609SOLD.com or Call 803-609-7653

Short Sales don't relieve Deficiency Judgement

You lost your house – but you still have to pay?

As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right?

Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes.
It can even happen to people who got their bank to approve them selling their home for less than it is worth. Some banks issue 1099 for the difference and make home owners pay taxes on the short amount as well

Sad Examples are that
Mr. Jones does a Short Sale, His bank 2-4 years latter sends a letter demanding 1- Payment of short sale amount or them to claim Bankrupcy. This is the dark cloud that looms over the future Short Sales

Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there's a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale

Releasing title does not necessarily end the debt. It's complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan

Snap Shot look at Short Sales

There is some great issues with banks and learning the systems of "Short Sales" but over the last year. The banks have not been willing to work with the consumers. The banks are not willing to be timely with the getting information to the new buyers. The banks are not willing to work with in a timely manor with the sellers.

Studies have shown that it costs the bank more money if a property was foreclosed upon than if they accepted a 'short sale'. For homeowners, a 'short sale' makes much more sense for several reasons:
1- There is a much higher chance that the deficiency judgment could be negotiated in a short sale versus a foreclosure.
2- A short sale would have less of a negative impact on the homeowner's credit rating.
3- The homeowner would have at least some control over the timing of their relocation to new living arrangements.
4- A 'short sale' would allow the homeowner to leave with dignity.
5- It does not leave a house vacant for a year or more and bring other bank owned homes value down due to condition of subject property.
6- And Finally it just makes sense ( Banks don’t get it)

In the past, the banks used to process the loan (take the application, put together the file, etc.), lend you the money, and service the loan (send the bills, make collection calls, follow-up, etc.).

Over the last eight to ten years, the lending of mortgage money has shifted. First Wall Street and then the federal government became the primary lender in the mortgage sector. But, neither Wall Street nor the government had any interest in processing or servicing the mortgage. Mortgage companies continued to process the loans, but a new industry was created to fill the need for the servicing of these loans. So now, a separate and independent entity is servicing a tremendous portion of existing mortgages.

Just ten years ago, 37.4 percent of all mortgage loans were securitized (thus requiring a servicing company). Today, that number is 79.3 percent. Servicing companies actually collected more fees for a foreclosure than they did for a 'short sale'. Actually, the servicing company would lose money if they did a 'short sale'.

The federal government realizing that modifications were not the answer and banks realizing that the foreclosure process was too expensive, have agreed to change the fee structure to make it more profitable for the servicing companies to lean toward 'short sales'

Now knowing that information the process for short sales over the last 6 months to a year have become easier on everyone with one exception. While the process is easier, the volume has increased to the point that customer service has been thrown out the window and time of the essence is not spoken of.

My advice:
1- If you are in the need of a short sale, contact someone locally to help you through the process ( Loss Mitigation Specialist or an attorney). I can recommend someone to you if you need that assistance.

2- If you are interested in purchasing a Short Sale home, understand the process and understand it takes time and 85% of the time the delays are not the agents, or sellers fault. However, work with an agent that has done these type of transaction before. I can recommend someone to you if you need that assistance.

Short Sales and Real Estate in Lexington SC

Short Sale in real estate is nothing new but is becoming more evident. There are benefits for both, the lender and you. The short sale process is not easy, and can be stress full. Homes are sold for less than the mortgage you owe on it and lender forgives the remaining debt, there are few things to know on how to do a short sale, so it does not become too cumbersome and time-consuming. Banks see the short sale process as a an alternative to foreclosure, and is usually willing to accept a smaller pay-off or a deed-in-lieu of foreclosure to simply minimize its loss rather than go all the way the long and costly road of foreclosure. Short sale home is far more desirable to the general home-buying market than a foreclosed one. The money a bank looses is less than if the lender takes on the short sale is rather small compared to the expense of foreclosing on the property.

Short Sale Process (subject to change from one lender to another)
Contact the Lender
Lenders will not talk to investors, potential buyers or real estate agents unless the borrower instructs to them. You will need to get their approval in writing, contact the lender with that approval, and make the first telephone contact. You must decide if you want the assistance of a 3rd party to help the seller or you want to do it on your own. If you want the assistance of a professional contact Edwin Gerace 803-957-5566

The seller must create a hardship letter is the cover for the short sale package. It is a lot like the cover letter for a job resume. It must be convincing and complete. The lender must get the first impression that it is a short sale or a foreclosure or bankruptcy. This letter must paint the picture of your financial situation and honesty is key. There is a paper trail for all your finances.

Short sales will not work if there is sufficient equity in the home for the lender to sell it and at least break even in a foreclosure. The homeowner must be "upside-down" in their loan. Learn how to determine if this is the case.

Lenders will usually want to validate the seller’s financial situation by looking at bank statements, investment accounts, along with examining pay stubs and other financial records.

The meat of your short sale presentation backs up the statements made in the hardship letter. You prepare a thorough and detailed set of documents and financial data to support the claim that a short sale is a good solution for the lender. This is the time to put all your cards on the table. Sellers must be honest and forth coming with all data.
Contact an agent
When obtaining a short sale listing you must explain to everyone the process of the short sale. Since no one can predict with certainty what any bank will do in any situation, do not tell anyone in the transaction that this will be fast and smooth. Listing documents should state “ This list price is subject to a 3rd Party Bank Short Sale Approval”. However, it is always better to under promise and over deliver throughout the entire process. Otherwise, everyone gets frustrated. You need to either have your agent be in control working with the bank ( You will have to give the bank permission to talk to the realtor) or you will need a 3rd party person to be the contact for you and the bank.


Buyer for House
Once you have a buyer in place with either a contract or offer to purchase, we must manage the expectations of both the buyer and the buyer’s agent. If the purchaser is buying a home to live in, this means they probably love the house and are already thinking of things that they can do to the house to make it their own. On the other hand, the buyer’s agent is motivated by getting the sale closed so that they get a paycheck. Because agents and their buyers are nervous, you will need to manage their expectations. We have made this easier by allowing all of you to track the short sale online. Time is something that you cannot control. Example: Bank of America as of today said any offers they receive they wont get back to you in 21 days. They are the fastest bank.

You may have to go back and forth with the loss mitigation department at the lender to get an acceptance of a short sale. Learn about this negotiation and the importance of a fast close.

The lender will review a settlement statement, which will indicate the proposed selling price, remaining loan balances and itemize all expenses, including real estate commissions and other fees and expenses associated with the closing.

Because of the documentation required, the short sale process can be lengthy. But if done correctly, it can work well for all parties involved. The lender avoids the uncertainty of the foreclosure process, the seller avoids a foreclosure on his or her credit report (along with potential bankruptcy), and the buyer hopefully got a good deal on a property.


Approval from the sellers bank
Once you receive the lender's approval will give the parties a maximum of 30 days to get the deal closed (it is occasionally shorter)

Neither the lender nor the title company can close overnight. The title company must get the HUD-1 for approval 72 hours before the closing. This allows time to submit the file to the lender so that there are no surprises at the closing table.
These are the essential steps to a problem-free short sale. Always remember that accurate paperwork and good communication with the buyer’s agent are the two most important parts of the short sale process as long as you leave the actual facilitations to Short-Sale-Negotiations.

For an agent that has knowledge in the Short Sale process email me mail@609sold.com
For a list of homes that are available that are short sales email me mail@609sold.com
For more information about listing your home as a short sale email me mail@609sold.com

Edwin's Gerace's Real Estate and Economic Solution

I have observed something interesting in the real estate market although extremely complex. The continuing economic mistakes have created unprecedented consequences in an industry that has been known for its stability and predictability. These errors need major corrections for the healing to begin. The correction needed cannot be implemented without critical financial adjustments.

There is an abundant supply of homes in Lexington, Chapin/Ballentine, Forest Acres, Irmo, Lake Murray area, and other parts of Lexington and Richland County. I have several blog posts about
South Carolina market conditions, HUD’s attempt to help Home Buyers, News about Real Estate in South Carolina and other Real Estate in 2009. The questions most frequently asked me are: “Are houses selling? And “What is going to happen to house values?

As an experienced Realtor, my opinion is that corrections are necessary and crucial to recovery. The timely recovery of the real estate market requires corrections but these corrections must be joint efforts of the real estate industry and banks/financial institutions. It has to be a joint effort for recovery to occur in a timely manner.

The following are Edwin Gerace’s five steps for recovery of the real estate market:

1. Keep mortgage rates under 6% with no large swings in the rates. (With large swings in the rates people may be motivated to refinance but that does not stimulate the real estate market,) For todays interest rates email me.

2. It is mandatory for banks to work quickly with Realtors, sellers, buyers and other parties on “short sales”. The current “short sale” process is a perceived as a nightmare. Qualified buyers back off. This does not help the people that need it the most. Policies that are pro buyer and pro moving intentory need to be created and mandated.

3. Halt all foreclosures if home is occupied and mandate the bank to work with local Realtors to create a timely “short sale” opportunity for qualified residential buyers. This keeps owners in their home and not on the streets. This forces banks to work for solutions because when banks foreclose, homeowners are out and the bank “fire sales” the home, market values drop and everyone loses. It is a lose-lose proposition.

4. There needs to be some type of incentive program for Unfinished construction on the market to be completed. This way, banks can sell a finished product. The typical buyer is not interested in buying a ½ finished house. There is slim chance of getting a loan on the ½ finished house. The net effect of doing nothing with these homes is the property values of the surrounding homes fall and the unfinished home condition declines. Another lose-lose situation. With an incentive program for a builder to complete the house, the net effect will be a builder with work, bank sells house, and neighbors don’t lose property value.

5. Banks to have system in place to lend money. The model that worked 2 years ago( lending to anyone with a pulse, no down payment and inflated apprasials) contributed to the current financial crisis. The present model is not the answer either going to the extreme of tightening the credit requirements and requiring large down payments. This knee-jerk reaction has scared off potential buyers and is no help in reviving the real estate market. We might need to find a banking policy model from 8-10 years ago that worked with people that had credit issues to secure a loan that is fair to all parties, banks and consumers.

I Feel the government and the lenders put people in situations that led to the situation that we are in. We need a team approach to get us back on our 2 feet.

These are the views of Edwin Gerace and only Edwin Gerace.

Feel free to comment and post your thoughts and ask Edwin questions by sending email to him

Mortgage Industry

Notes and Comments from Edwin Gerace of Russell & Jeffcoat Realtors and Chris Smith of Wells Fargo Mortgage.
What are some of the largest changes in the Mortgage Industry that effect buyers?
In the past few years, the biggest concern that a prospective home purchaser should consider is the restrictions associated with financing. Just two years ago, a purchaser could expect that they may be able to buy a home with no down payment, with marginal credit, and without documenting her income. Those days are long gone now. Purchasers of home now can expect that lenders now expect a down payment (as little as 3.5%). In addition, credit is more important- a purchaser can expect not to get very favorable financing terms unless her credit is of the highest quality. All aspects of a mortgage loan application will be scrutinized greatly now- documenting all income and assets thoroughly.

Are interest rates going to stay steady over next several months or do you see them to climb?
As to interest rates, in the past seven months, we have seen a big drop in rates, though in the past few weeks, we've seen a bit of a tick upward. Though it's impossible to accurately forecast future interest rates, I expect rates to continue to be below 5.5% for the next few months.

When is a good time to refinance your home?
When it comes to refinancing a home loan, there are innumerable rules of thumb. Some say that refinancing is a good idea if rates are at least 1% below the existing loan rate. Others say this gap needs to be at least 2%. I don't like any of the rules of thumb. Before even considering the rate differences, I would suggest that a homeowner first ask herself, "How long do I expect to own this home?" If a homeowner can tell me exactly how long she will own the home, I can say with a great amount of confidence whether or not refinancing makes sense.

Has the loan approval process over last 90 to 120 days on loans changed?
In the previous year, the homeloan application process has changed fairly dramatically. In most all instances, lenders are now scrutinizing documents at a very high degree. A prospective homebuyer can expect that her lender of choice will be asking many many questions after application, once paystubs, W-2 forms, tax returns, and bank statements are provided to the lender.

Are there any True 100% financing programs out there?
As far as I know, apart from USDA RURAL HOUSING, 100% financing homeloan programs are extinct animals.

What are the top 2-4 factors that effect buyers buying/ credit score numbers?
As to cxredit scores, there are thousands of opinions as to what constitutes a great credit score. For most people who live in a world called "real," it's just about impossible to do all of the things necessary to have a "perfect" credit score. Generally speaking though, as to working on improving credit scores, a consumer should 1) pay her bills on time, and 2) if you aren't using some of your credit cards, those accounts should be closed.

Chris Smith is a loan officer with Wells Fargo Mortgages with over 5 years of experience in the Columbia market. He has helped buyers find the right mortgage that fits thier needs.
Give him a call or email him today if you need any information about getting a mortgage loan. He can help with purchases or refinances in 48 of the 50 states. Kip Murphy , Loan Officer, Wells Fargo Mortgage, Cell : 803-361-4263, (803) 951-0713 Tel, Christopher.M.Smith2@wellsfargo.com, Visit me on the web at www.wfhm.com/christopher-smith

Edwin Gerace is a realtor with Russell and Jeffcoat Realtors with over 10 years of expierence in the Columbia market. He has help buyers,sellers and builders over the years reach thier real estate desires. Feel free to call or email him about real estate. Visit him on othe web at http://www.edwingerace.com/ or visit his blog at http://www.edwingeracesrealestateblog.com/ . Contact him at 803-609-7653 cause with Ed You Win.