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

2010 is Here

2010 is HERE………… Is it 20-10 or 2,010?

Coming into 2010, there are many people trying to decipher all the data that is being reported regarding the housing industry. Due to the information highway, we have and use and some times abuse, data is being thrown at us at a high rate. The main goal is to try to bring clarity to a market that has been clouded with confusion for the last Three to four years.

We must not allow the truth to overshadow the facts. What do I mean by that? Let me give you an example. The housing market is better than it was, that is a fact.
But the truth is that home prices in many areas (NOT ALL) are still falling and will continue to fall for a period of time.
Many people except when they hear that the market is doing better that implies we are back to 2005-2007. News Flash….. That is not the case and will not be the case for many years. Prices in many markets are being adjusted. For example, a wise Realtor/Manager told me about equity and people saying that they lost value of their home. That is a misconception, they got their equity early (Prepaid).

Prices must still be adjusted in order for buyers to be able to afford the home. Proof of that is that the government is still subsidizing home purchases by artificially keeping interest rates low and offering tax credits to both first-time and move-up buyers. The good news is that those programs are creating a market for people looking to sell their home now. The bad news is that they will not last forever. The question that begs to be answered is what happens when interest rates rise (the government program that has kept them low ends on March 30) and the tax credit expires (April 30)? It is my belief that, when these inducements fade, so will demand. What will happen in June is the real question, what will banks and the governments do to keep this market moving.

Pricing has always been about supply and demand. The current housing market is no different.

If you are considering selling your house, put it on the market NOW to take advantage of the increased demand before the aforementioned government incentives that created it disappear. And please don’t wait for the distressed properties to come to market.

Edwin Gerace

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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.

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