Short Sale

Top Real Estate Headlines for Week Ending: October 8th

The weekend is finally here. Before you run off to the Chicago Marathon let’s pause for a moment to review what the top real estate and mortgage headlines were this week according to the National Association of Realtors.

• Another Gain for Pending Home Sales
  Pending Home Sales Index rose for the 2nd consecutive month, thanks to low rates and affordable prices.
• Regulators to Banks: Review Foreclosures
  The Office of the Comptroller of the Currency has told seven big banks to review their procedures in light of problems at other banks.
• 3 Tips for Negotiating Short Sales
  Kathy Mehringer, who educates real estate agents on short sales, offers her 3 best tips for working with lenders on these complex transactions.
• Mortgages Hit Lowest Levels Since 1950s
  The last time borrowers could get rates this low, every tv was black and white and Americans liked Ike.
• Foreclosure Reviews Could Lead to Costly Delays
  If documentation is found to be incomplete, legal challenges could arise.
• 4 Ways to Ramp Up Your Marketing
  Get ideas on how you can enhance your marketing to expand your reach to buyers and sellers.
• Fed Chair: Government May Buy More Debt
  Federal Reserve Chair Ben Bernanke suggested that the Fed is likely to buy more debt, which could further drive down rates on mortgages, corporate financing and other loans.
• Most- and Least-Promising Metros for Investors
  See which U.S. metropolitan areas were ranked as the best and worst places for real estate investment.
• How to Reach the Millennials
  The millennial generation is a growing segment of buyers in today’s market. But they have different views about home ownership, and they also communicate differently than previous generations. Are you talking their talk?
• Good Neighbor Award Finalist Jim Arnhold
  Virginia practitioner harnesses land for charity, giving disabled children a chance to thrive through horseback riding.
• HUD Has Loans for Out-of-Work Borrowers
  The U.S. Department of Housing and Urban Development will offer $50,000 loans to unemployed borrowers who are at least three months behind on their payments, but have a reasonable likelihood of being able to resume payments within two years.
• Helmsley Mansion Sells at Deep Discount
  The Greenwich, Conn., estate of the late hotel magnates Leona and Harry Helmsley sold for $35 million after being listed in 2008 for $125 million.

These were the top real estate and mortgage headlines for the week ending October 8, 2010.

Want to know how these national real estate headlines could impact you right here locally in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our collective years of real estate experience in Northwest Indiana guide you to an informed and successful real estate transaction today.

Short Sale

Complexities of Short Sale Transactions by Samantha Taylor

Short sale is often the best choice for the distressed homeowners (the mortgage borrowers) to avoid foreclosure on the property. It is a process by which the lender agrees to accept less than the outstanding mortgage balance. Apart from benefiting the homeowners, a short sale is advantageous for the lenders, too. A foreclosure is often time-consuming and expensive for a lender. However, there are often complexities and difficulties associated with a short sale. 

One of the major complications of a short sale is its long waiting time. Often banks take several months to respond to a short sale offer. Moreover, a short sale involves dealing with several parties because of which the process may take about 2-6 months to get completed, as compared to about only a month in case of a normal sale.

The situation worsens more when the homeowner has to deal with more then one lender. It happens when there are two or more liens on the property. The success of a short sale also gets reduced in such situations. This is because the second and other lien holders must agree for a short sale to happen. All the lien holders need to agree on accepting an amount less than the balance owed.

The lenders become more hesitant to agree on a short sale especially when it is a non-recourse mortgage loan. In case of such home loans, the lenders cannot go after the homeowner to recover the deficit amount. In case of a recourse mortgage loan, the lender usually can file a lawsuit and if the court issues a judgment order, the mortgage borrower has no other alternative than to pay back the deficit amount or else he/she has to face legal issues.

Moreover, the real estate agents need to follow various guidelines that are incorporated by the mortgage companies and the investors on the mortgage notes. The operating rules vary from one mortgage company to the other. This makes the process even more complex and difficult. It may happen that several investors situated at different parts of the world own a specific mortgage note. In such a circumstance, multiple negotiations are required so as to come to a conclusion regarding a loan payoff amount.

However, the homeowners can opt for a short sale under the HAFA (Home Affordable Foreclosure Alternatives) program. It helps minimize certain complexities as well as the homeowners can avoid foreclosure on the property that has damaging effects on their credit record. The program is beneficial for the lenders and investors as they receive financial incentives to participate. However, not many lenders allow the homeowners to opt for HAFA. This is because the lenders have to calculate the minimum net proceeds (eligible for HAFA) before allowing the homeowners to take help of the HAFA program.

Short Sale

What’s a Short Sale and Why This Option?

A “Short Sale” is when a home seller sells his home for a lesser amount than what is owed on his mortgage, and the mortgage lender agrees to accept the lesser amount in lieu of a full payoff.

By way of example, a Short Sale may be appropriate for a home seller in Crown Point, Chesterton, Munster, Saint John, Schererville or Valparaiso whose mortgage balance is $250,000 but whose home wouldn’t sell for more than $220,000.  Rather than pay the $30,000 difference to the lender at the time of sale, the seller enters into an agreement with the lender by which all sale proceeds are paid to the bank and the deficient balance is forgiven.

Short Sales are a preferable alternative to foreclosure but the process still harms both parties. For one, the seller is penalized with a derogatory tradeline on credit for not fulfilling a mortgage obligation. And, two, the lender is forced to take a loss on a mortgage loan.  Versus an executed foreclosure, however, Short Sale damages are relatively limited on both sides.

For this reason, Short Sales are sometimes considered “the economical alternative” to default in Northwest Indiana.

The process of getting a Short Sale approved varies from lender-to-lender and can be time-intensive. Home sellers in Highland, Portage and Valparaiso should not go at it alone — speaking with a real estate agent about the proper protocol is usually the best place to start.  And sellers should be aware of how a Short Sale on their credit can impact future borrowing.

Current Fannie Mae guidelines prevent short-selling homeowners from obtaining new mortgage financing for a period of 2 years.

Contact Benchmark Mortgage in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!