Short Sales Sacramento

Get all your questions answered. Starting the month of March, Angel Lynn will be hosting homeowner awareness classes in Sacramento.  Learn about how to avoid Foreclosure, what is Short Sale and how you can modify your loan.   Classes will be held at 1913 Capitol Ave. Suite C, Sacramento. Come get your questions answered about what is going on in the market.  What to expect and how to protect your family.  Please call our office to reserve your seat.  916 443-1445.

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Wednesday Nights 6pm

1913 Capitol Avenue, Suite C

Sacramento, CA 95811

The Home Affordable Foreclosure Alternatives Program providesfinancial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.

Guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders.

The incentives, first announced in May, expand on the government’s Home Affordable Modification Program, known as HAMP, that has seen limited success in lowering payments for distressed homeowners. The Treasury earlier on Monday stepped up pressure on mortgage companies to make permanent the 650,000 trial modifications they have started.

“While HAMP program guidelines are intended to reach a broad range of at-risk borrowers, it is expected that servicers will encounter situations where they are unable to approve” or offer a modification, the Treasury said in its announcement.

Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses.

Short sales are favored by real estate agents and community groups over foreclosure because they can preserve the borrower’s credit rating and leave the property in better condition than when a homeowner is evicted. While primary lenders typically realize steep losses, their recovery is typically far better than under foreclosure.

But short sales have been frustrating for borrowers and real estate agents, often hung up by negotiations with multiple lien holders and mortgage insurance companies. Real estate agents have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.

Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.

It also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.

In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.

Second lien holders in recent months have begun demanding more money from the first lender, seller, buyer or agent in exchange for releasing their claim, agents have said. Because primary lenders would face larger losses in a foreclosure, some subordinate lenders have felt empowered, the agents said.

The largest second-lien holders are Bank of America Corp, Wells Fargo & Co, JPMorgan Chase & Co andCitigroup Inc.

Second lien holders may proceed with a short sale outside of the Treasury program, if they felt the cap was too low, a Treasury official said in October.

“If there was a short sale program that didn’t recognize the second lien holder position, it could have pretty damaging consequences for the industry,” Sanjiv Das, chief executive officer of CitiMortgage, said in an interview last week.

Okay well lets hope this all starts to go into effect asap.

Short Sale Help

To read the full story, please click here:
http://www.latimes.com/classified/realestate/news/la-fi-lew20-2009sep20,0,1828223.story
Chicago Tribune
Short sales spread across real estate market, leaving frustration in their wake
As more homeowners find themselves underwater — owing more on their mortgage than their home is currently worth — and unable to make the monthly mortgage payments, many are turning to short sales,which allow a homeowner to sell their home for less than owed on the mortgage. Short sales can be a win win situation for all parties, because they enable home buyers to purchase properties in desirable neighborhoods and at favorable prices.
KEEP THIS IN MIND
• Theoretically, short sales should be a win-win for the bank and the homeowner. Although the bank does not receive the full amount owed on the mortgage, it also does not incur the costs of foreclosure and/or eviction, if necessary. Many homeowners also prefer short sales because it is less damaging to their credit scores than a foreclosure. However, many real estate experts say that the majority of banks are reluctant to approve short sales, and often let properties go into
foreclosure, even when there are reasonable offers on the property. In addition to considering the price, most lenders also take into consideration whether the homeowner can demonstrate financialhardship. If the homeowner is capable of making payments, many lenders will try to work out a loan modification, rather than a short sale.
• Unlike foreclosed properties, which may be run-down and vacant for many months, short-sell properties are likely to be better maintained, as most owners may still live in the home.
• Short sales often are more time intensive than traditional transactions and often require additional paperwork. Due to the large number of offers on short sales, many take as long as a few months to receive approval. If information or required forms are missing or incomplete, the bank may set the offer aside, which could delay the process and cause the property to go into foreclosure. To expedite the process, sellers should work closely with their REALTOR® to provide all of the necessary paperwork.
• Working with a REALTOR® who has experience with short sales can help both sellers and home buyers during the transaction. A seasoned REALTOR® will be able to serve as the mediator between the seller and the lender, and lead to a successful transaction.
• It is important to remember that in a short sale, although the seller may be anxious about selling the property and willing to accept any offer, it is ultimately up to the lender to determine if, and at what price, the property can be sold. Home buyers should work closely with their REALTOR® to submit realistic offers.

To read the full story, please click here:
http://www.chicagotribune.com/classified/realestate/chi-sun-short-sales-0920sep20,0,5529436.story

In Other News…
San Francisco Chronicle
U.S. home prices rise 0.3 percent in July
U.S. home prices rose slightly in July from a month earlier, according to a government index, further
evidence the housing market is stabilizing.
To read the full story, please click here:
www.sfgate.com

Many home buyers are advised to steer clear of short sales due to the headaches involved. Certainly many of these transactions can be a real nightmare. But each should be assessed on based on the number of lien holders involved, how many offers (if any) have been submitted to the lien holder(s) and how long offers have been in process with the lien holder(s).

Instead, many homeowners are watching potential buyers walk away as months pass while they deal with lenders’ lengthy delays, lost documents and unreturned calls, according to the National Association of Realtors (NAR). Not all the snafus are lenders’ fault; inexperienced real estate agents who fail to turn in complete paperwork also are causing holdups, as are severely underpricedhomes.

The problems have become such a kink in the market’s recovery that banks and the federal government are launching new efforts this month to simplify and speed up the short-sale process.

Just 23% of short-sale offers that homeowners receive from potential buyers actually close, according to a February study of 1,300 real estate agents by Campbell Communications. More than 90% of agents cited a slow response from the lender as the reason short sales were lost.

FIND MORE STORIES IN: Barack Obama | Bank of America | Wells Fargo | RE/Max
“The delays are quite extensive and a real problem. It’s a serious issue,” says Mark Zandi of Moody’s Economy.com. “You’re seeing a lot of short sales go bust, and it’s contributing to the crisis because it’s one of the reasons foreclosures continue to mount.”

Jorge DeMattos, 45, just completed the short sale on his home in Pembroke Pines, Fla. — a process he and his real estate agent, Edward Goldfarb, say took 17 months and eight separate offers.

DeMattos began pursuing a short sale after he was laid off two years ago and his income plunged from $46,000 to $26,000 a year.

Chase Bank, his mortgage servicer, rejected the first offer, which was $14,000 over what was then fair market value, according to Goldfarb.

On the next seven offers, the bank took months to respond. Each prospective buyer got tired of waiting and canceled the contract. The eighth offer, accepted in May, was $24,000 less than the first one that Chase rejected in February 2008, Goldfarb says.

“Chase made it very difficult. I had to stop paying the mortgage. It was so frustrating,” says DeMattos, who now lives with his sister in Kissimmee, Fla. “We would put the paperwork in, and they would never give a definite answer. Buyers waited for months.”

DeMattos says he owed $355,000 on his mortgage. The short-sale price was $225,000.

Christine Holevas, a Chase spokeswoman, says earlier offers on the home weren’t accepted because they were significantly below the appraised value and the homeowner didn’t send in updated financial information.

No longer uncommon

Short sales once were extremely rare. But now, with unemployment climbing and home values down, more homeowners are pursuing short sales when they can’t afford their mortgage. About 11% of all sales transactions in June are such short sales, according to the NAR.

Some delays stem from agents who fail to prepare buyers and sellers for the length of time it takes to get a short sale approved or who supply incomplete information to banks.

But many short sales are faltering, largely because some lenders may lack the internal staffing, expertise and systems to process such sales in a timely fashion. And short sales can be complex, especially if they involve home-equity lines of credit or other second liens held by different lenders, who also must agree to take less than the amount they’re owed from a home’s sale.

Several lenders acknowledge that banks have been part of the problem, in part because most have done so few short sales in the past that they’ve faced a steep learning curve.

“About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them,” says David Sunlin, vice president in charge of short sales at Bank of America.

Uncompleted short sales that go to foreclosure are costlier for lenders and homeowners. For lenders, a short sale may save as much as 30% of the expense incurred by going to foreclosure.

For homeowners, a foreclosure wreaks longer-lasting damage to their credit records. A homeowner who has gone through a short sale typically can get a new home loan in one to three years, according to the NAR. A foreclosure usually means it takes seven.

Borrowers are expected to pay their mortgage during the short-sale process, but not all can afford to. That leads to abandoned properties that may sit vacant and deteriorate for months. In other cases, homeowners unable to make their payments may stay put and pay nothing, in some cases for up to a year, until the lenders’ review-and-approval process plays out.

Large numbers of uncompleted short sales are especially troublesome, because other efforts to stem foreclosures have been less effective than expected. The Obama administration’s housing rescue plan, which includes getting banks to rework home loans into more affordable mortgages, has made such slow progress that representatives from 25 major mortgage servicers were called to Washington, D.C., last month to discuss improving the efforts.

Short sales are moving into the national spotlight now as:

•Mortgage servicers ramp up their programs. Bank of America has begun trying to slash the turnaround time on short sales from up to 90 days after a buyer submits an application to just a week. In a typical short sale, a buyer makes an offer, then the bank conducts appraisals to determine the price it will accept. Setting that price can take so long that would-be buyers may walk away. To try to avoid such delays, Bank of America has begun doing appraisals and determining a minimum price it will accept before a home goes up for sale.

Meanwhile, Wells Fargo has created a real estate agent education guide that explains the process, has increased staffing and has set up procedures to handle short-sale requests and explain the process to homeowners. The bank says it has cut its average turnaround time from offer to approval from up to 90 days to about 30.

•The U.S. government is getting more involved. The Treasury Department soon will detail a plan to streamline short sales by providing standardized documentation and cash incentives to lenders and a moving allowance to homeowners.

Treasury has said that servicers have opted to pursue foreclosures instead of short sales because of the complexity and time required to complete the discounted home sales.

Borrowers who complete a short sale will be eligible for $1,500 to help with relocation expenses. Second-lien holders will get up to $1,000 to relinquish their claims in such transactions.

Eligible homeowners can be accepted through Dec. 31, 2012, but the short-sale program is for those unable to get mortgage modifications from their banks.

“We realized we couldn’t reach everyone with a modification. For us, that wasn’t the end of the story,” says Michael Barr, Treasury assistant secretary for financial institutions. “The alternative is to significantly speed up short sales.”

No authoritative figures on short sales’ completion times are available, but some research indicates the problem is worsening.

A survey in March 2008 by Campbell Communications found that the average time for a mortgage servicer to respond to an offer to buy a short-sale property was 4.5 weeks. Campbell’s follow-up survey in February found that the average response time had doubled to nine weeks.

A third survey in June found the response time was 9.5 weeks. The surveys were sponsored by Inside Mortgage Finance, an industry publication.

“The foot-dragging means it’s taking six weeks to six months,” says Lawrence Yun, chief economist with the NAR. “There are big delays. The review process is taking way too long.”

‘We had a learning curve’

Lenders say the approval process takes time because there are so many parties involved. Some bank officials say they’ve been learning as they go.

“We had a learning curve,” says David Knight, senior vice president for Default Retention Operations, Wells Fargo Home Mortgage. “Any stakeholder has a right to disapprove the sale. Realtors out there were used to regular sales. Now, all of a sudden, the servicer and Realtor have had to learn a lot.”

Some real estate groups also are trying to improve the process. Re/Max International Chairman David Liniger says his company is aggressively working to train agents on handling short sales and other so-called distressed properties. Instead of eight weeks to close a short sale, trained agents can get them done in two to four weeks, he says.

Within the real estate industry, hopes are rising that short sales will become a shorter process.

“It’s horrible the amount of time it’s taking to do these sales,” says Valerie Torelli, who owns Torelli Realty in Costa Mesa, Calif. “It happens all the time that short sales fail and then go to foreclosure. A seller doesn’t make payments for a year and then just walks away. It’s unbelievable.”

I must agree these Short Sales can be extremely frustrating. I think the most important thing is seller have to be educated about the wait times. Here in my office we are successful at getting our Short Sales closed but it can take months before it happens. I had a deal with Countrywide finally close this month that I took the listing on a year ago. I had another close with Indymac that took two weeks. You just never know who your negotiator will be and at the end of the day they have the control.
ANGEL LYNN

Sold price per square foot remained around the $120 mark where it was in June giving evidence to the argument that the market may have bottomed out after all. Currently average sold price per square foot is at $120.93. Average sales price has fallen 14% year over year from a high of $228,312 to rest at $196,323. Median sales price is currently at $175,000.

Inventory also continues to hover around the 3 month mark. Total inventory is at 3.3 months based on the last year of sales and 3.4 months based on the last six months of sales. Foreclosure inventory is at 0.5 months and 0.6 months respectively.

New Short Sale listing in Rocklin take look at my first video. Still learning how to use the flip!

Call me if you would like to schedule an appointment to view this property.

ONE avenue for escaping foreclosure may be getting a little easier to navigate: the so-called short sale, through which distressed owners sell their homes for less than the mortgage amount and are forgiven the remaining loan balance.

More Mortgage Columns As the credit crisis deepened, short sales became harder to complete. Among other things, people who had second mortgages, including home equity lines of credit, found that the second lien holders often balked, fearing they would be left with nothing, or close to nothing, after the holder of the first mortgage was paid off.

Homeowners in these situations would typically stand by while lenders argued about how to divide the proceeds from a sale, and the impasse would frequently result in a foreclosure.

But mortgage executives say they are now working more cooperatively on short sales, and proposed changes in the industry could increase the number of these transactions.

“Without a doubt, lenders are more willing to work through short sales,” said Andre L. Mitchell, the executive vice president of the Lynx Mortgage Bank in Westbury, N.Y. “In this marketplace if the lenders can negotiate in any way to get rid of a bad loan, they’re going to do it.”

The Treasury Department said last week that it would increase incentives for lenders to work out short sales when borrowers fail to keep pace with their loan payments. The department did not release details about those incentives.

Lenders have been eager for direction from the government, especially when more than one loan is involved. “To be able to systematize the negotiation would be a big plus,” said David Sunlin, Bank of America’s real estate management executive.

In the meantime, Mr. Sunlin said, Bank of America has shifted its own policy to encourage more short sales.

In the past, the bank followed the recommendation of Fannie Mae, the government-sponsored mortgage finance business, and gave second lien holders about 10 percent of the second mortgage balance in a short sale where Bank of America held the first lien. When Bank of America held the second lien, it also required first lien holders to forfeit that amount in a short sale.

Now, when it holds the second lien, Bank of America will accept 5 percent of the net proceeds of the short sale, Mr. Sunlin said. When it is the first lien holder, it will offer the same to holders of the second lien.

Banks encourage short sales because they lose less money on such transactions than they do in foreclosures, where they must sometimes carry the house for months before selling it.

Homeowners who are considering short sales can often make the process smoother by involving the bank early in the process.

For instance, if a home is worth $375,000, but has a first mortgage of $390,000 and a second mortgage of $20,000, the borrower might contact his or her first mortgage holder and raise the possibility of a short sale. If that lender knows it can negotiate successfully with the second lien holder, it can start those negotiations and put the borrower in touch with a real estate agent with experience in short sales.

The borrower would then list the home for its appraised value, and the agent, after conferring with the lender, usually accepts any offer close to that amount. After the house sells, the bank pays the agent’s commission of around 6 percent, and pays the second lien holder a portion of the proceeds. Both lenders then forgive the remaining debt.

The borrower is not off the hook completely, since after the short sale his or her credit score is likely to fall. But even then, the credit score would probably be far better than it would be after a foreclosure.

Mr. Sunlin said that homeowners who are considering short sales do not necessarily need to involve the bank early on. He said they can contact the bank within five days of getting an offer on the house and still expect good results.

That is especially true, he added, if documents are presented showing that the offer is in line with others in the local market, as well as pay stubs and other paperwork demonstrating the borrower’s financial hardship.

Mr. Mitchell of Lynx says short sales are often the best approach, even for homeowners considering a new loan to save the home.

“It’s gotten to the point where people understand that sometimes you have to start over,” he said. “A loan modification might help you in the short term, but sometimes what people need to do is get out completely.”
Published by NY Times

I am so glad that lenders are starting to work smarter! Holding off isn’t going to help anyone in a short sale situation. On the other hand handling Michael Jacksons estate may be a thriller? RIP MJ you are a lengend, and your music will live on forever! My past client and freind will be at the funeral services tomorrow check out John Hooper on CNN.

Angel Lynn

Our buyer just received notice that he has to move out of state. We are looking for a new buyer on this home. This one won’t last long. This is a charming 4 bedroom home! This home is priced to sell at $181,000. Yes approved we can close in 30 days! Call the office for an appointment to view this beautiful home.