The largest U.S. mortgage-financing company, Fannie Mae, is offering an unusual incentive to any qualified buyer wishing to purchase one of their foreclosed properties -- as much as a 3.5 percent in closing-costs assistance or an equivalent amount in appliances.
The offer is good through May 1, said officials at the D.C.-based company. Terry Edwards, Executive Vice President of Credit Portfolio Management, described it as a win-win situation.
In a time when the housing market is flooded with foreclosed properties, company officials hoped the incentive, along with the federal home tax credit, would get more buyers looking. The federal program currently offers new home buyers a home tax credit of up to 8000 dollars and existing homeowners may claim a credit of up to 6500 dollars when they purchase a new residence.
The federal home tax credit is only available on houses purchased by April 30, 2010 and closed by June 30, 2010. Many analysts believe that with mortgage rates predicted to rise, now is the time for qualified buyers to act and take advantage of the federal government incentive.
Currently Fannie Mae has a stock of foreclosures that increase during a three-year housing slump when home prices crashed. Edwards said the incentive is designed to foster sales in a still-weak housing market.
He said attracting qualified buyers and reducing the inventory of foreclosures are essential to "stabilizing neighborhoods and helping the market recover."
Eligible properties are listed on HomePath Web site, which would not only include detailed information about a property for sale, but also information about the community and nearby schools. The company also has properties that are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, which offers home buyers an opportunity to purchase with as little as a 3 percent down payment.
Fannie Mae sold 89,691 foreclosed homes in the third quarter, up from 39,864 in the previous period, according the company's recent quarterly filing. Fannie Mae had 72,275 such homes, called real-estate-owned properties, as of Sept. 30.
Tuesday, February 23, 2010
Thursday, February 18, 2010
Buying a Short Sale? Here Are The Questions You Need To Ask.
The "Short" in short sale is NOT in reference to the time it will take to complete the transaction. Potential short sale buyers... you need to know and accept this. While good real estate agents on both sides of the short sale transaction can and will make a difference, a short sale, by it's nature, will take longer than a traditional sale. When buying a short sale you, and your agent, are to some degree at the mercy of the seller and their real estate agent (Not to mention the lender(s)). Let me explain what I mean by this. If the seller's agent is not doing their job correctly you will have to deal with the consequences. At best the transaction time may be lengthened or the bank's counter-offers may be more extreme. At worst, the sale may collapse altogether. It is a lot of work for the selling agent to address a short sale correctly. Fortunately there are some questions you, the buyer, and your agent can, and should, be asking that will determine if the selling agent "knows their stuff" and is willing to put in the work to make the sale happen:
1) Is there more than one lender involved?
If there is a second mortgage (or perhaps even a 3rd mortgage!) the transaction will be more complicated and likely take longer. Second mortgages have been known to "spoil" a short sale transaction by requiring a short payoff much higher than your offer will allow. Multiple mortgage short sale transactions are not impossible. They will likely require more time and suffering though. Be prepared.
2) Has a short sale packet been submitted to the bank?
Once your offer has been made and accepted by the seller you should know the exact date that a COMPLETE short sale package was submitted to the lender(s) and the exact date that the selling agent has verified receipt of the package(s). A long delay between acceptance of your offer by the seller and submission of the short sale package(s) may indicate that either the seller or the seller's agent are not motivated or not experienced with short sale transactions.
3) Has a lender "negotiator" been assigned to the short sale file?
Short sales are eventually assigned to a lender negotiator. This is an important step in the progress of a short sale. You and your agent should request in advance to be notified by the seller's agent when this has transpired. If it takes longer than 60 days to obtain assignment to a negotiator it could indicate that the sellers agent is not proficient with short sales. You and your agent should determine what the sellers agent is doing at this point to escalate the case. This is a general rule of thumb. Every short sale is different. A long duration until assignment could indicate that either the seller is uncooperative or that their agent is not proficient at moving the process along.
4) Has the BPO been completed?
Generally the lender will have at least one BPO (Broker's Price Opinion) done to ascertain the current market value of the property. When the BPO is ordered is a matter of policy that varies from lender to lender and negotiator to negotiator. It is always a good sign though as it indicates that progress is being made on the short sale within the lenders structure. The seller's agent should be actively pressing for this step until it is completed.
5) Has the price or net proceeds amount been bank approved?
Essentially this is the approval of the short payoff by the lender(s). Often the lender will make a counter-offer rather than accept the transaction as submitted. Your alternative at this point is to accept the counter (meaning "pay more") or stand pat and let the seller's agent negotiate further with the lender. This is over-simplification as the lenders will often apply a "line-item" mentality to a short sale transaction and seek to control the specifics of a short sale settlement (amount they will pay for realtor commissions, title insurance, payoff to jr. liens, etc.).
On a side note, you will also want to know if the bank "previously approved" another offer prior to yours. This may provide you with insight as to where your offer stands in relations to what they are willing to settle for. If your offer is well below the "previously approved" short payoff you may want to reconsider buying the property or raising your offer.
While a short sale provides buyers with an opportunity to purchase a home below market value, buyers must be prepared to endure the negative aspects of a short sale transaction. Make sure the seller is committed to the sale and is cooperative in providing documentation. Discern whether the selling agent has the right combination of experience, skill and effort to make the transaction work. Ask the questions I have mentioned as you move through the process! You will be glad you did.
1) Is there more than one lender involved?
If there is a second mortgage (or perhaps even a 3rd mortgage!) the transaction will be more complicated and likely take longer. Second mortgages have been known to "spoil" a short sale transaction by requiring a short payoff much higher than your offer will allow. Multiple mortgage short sale transactions are not impossible. They will likely require more time and suffering though. Be prepared.
2) Has a short sale packet been submitted to the bank?
Once your offer has been made and accepted by the seller you should know the exact date that a COMPLETE short sale package was submitted to the lender(s) and the exact date that the selling agent has verified receipt of the package(s). A long delay between acceptance of your offer by the seller and submission of the short sale package(s) may indicate that either the seller or the seller's agent are not motivated or not experienced with short sale transactions.
3) Has a lender "negotiator" been assigned to the short sale file?
Short sales are eventually assigned to a lender negotiator. This is an important step in the progress of a short sale. You and your agent should request in advance to be notified by the seller's agent when this has transpired. If it takes longer than 60 days to obtain assignment to a negotiator it could indicate that the sellers agent is not proficient with short sales. You and your agent should determine what the sellers agent is doing at this point to escalate the case. This is a general rule of thumb. Every short sale is different. A long duration until assignment could indicate that either the seller is uncooperative or that their agent is not proficient at moving the process along.
4) Has the BPO been completed?
Generally the lender will have at least one BPO (Broker's Price Opinion) done to ascertain the current market value of the property. When the BPO is ordered is a matter of policy that varies from lender to lender and negotiator to negotiator. It is always a good sign though as it indicates that progress is being made on the short sale within the lenders structure. The seller's agent should be actively pressing for this step until it is completed.
5) Has the price or net proceeds amount been bank approved?
Essentially this is the approval of the short payoff by the lender(s). Often the lender will make a counter-offer rather than accept the transaction as submitted. Your alternative at this point is to accept the counter (meaning "pay more") or stand pat and let the seller's agent negotiate further with the lender. This is over-simplification as the lenders will often apply a "line-item" mentality to a short sale transaction and seek to control the specifics of a short sale settlement (amount they will pay for realtor commissions, title insurance, payoff to jr. liens, etc.).
On a side note, you will also want to know if the bank "previously approved" another offer prior to yours. This may provide you with insight as to where your offer stands in relations to what they are willing to settle for. If your offer is well below the "previously approved" short payoff you may want to reconsider buying the property or raising your offer.
While a short sale provides buyers with an opportunity to purchase a home below market value, buyers must be prepared to endure the negative aspects of a short sale transaction. Make sure the seller is committed to the sale and is cooperative in providing documentation. Discern whether the selling agent has the right combination of experience, skill and effort to make the transaction work. Ask the questions I have mentioned as you move through the process! You will be glad you did.
Thursday, February 11, 2010
Citigroup allowing Distressed Homeowners to stay in their homes for 6 months.
WASHINGTON – Citigroup Inc. plans to let homeowners on the verge of foreclosure stay in their homes for six months — if they turn over the deed to their property.
Citi said Thursday it is launching the pilot program, dubbed "Foreclosure Alternatives," this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. Citi may expand the program nationwide.
In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi's program, like other "deed in lieu of foreclosure" efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower's credit score.
The policy is an attempt to deal with what lenders see as a growing phenomenon: borrowers who choose to default on their mortgages. Close to one in every three U.S. homeowners owe more on their mortgages than their homes are worth, according to Moody's Economy.com.
Many housing analysts say these borrowers — particularly those who owe at least 20 percent more than their home's current value — are choosing to walk away because they see little chance that home prices will come back.
Also, many states have lengthened the time it takes to complete a foreclosure, making the process more time-consuming and expensive for the lending industry.
"Why should we all go through the foreclosure process and evict people?" said Sanjiv Das, Citi's top mortgage executive. Avoiding foreclosure, Das said, is "less painful for our borrowers as well as for us."
Borrowers in Citi's program will still need to pay their utility bills. But Citi will pay at least $1,000 in relocation costs and will consider helping out with other expenses. Citi also plans to provide relocation counseling.
The program is intended to help borrowers who don't qualify for a mortgage modification or a short sale — one in which the lender agrees to sell a home for less than the total mortgage amount.
Citi's policy is similar to one announced in November by Fannie Mae, the government-controlled mortgage finance company. Fannie is allowing homeowners to hand back the deed to their properties, then rent them back at market rates.
Citi said Thursday it is launching the pilot program, dubbed "Foreclosure Alternatives," this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. Citi may expand the program nationwide.
In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi's program, like other "deed in lieu of foreclosure" efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower's credit score.
The policy is an attempt to deal with what lenders see as a growing phenomenon: borrowers who choose to default on their mortgages. Close to one in every three U.S. homeowners owe more on their mortgages than their homes are worth, according to Moody's Economy.com.
Many housing analysts say these borrowers — particularly those who owe at least 20 percent more than their home's current value — are choosing to walk away because they see little chance that home prices will come back.
Also, many states have lengthened the time it takes to complete a foreclosure, making the process more time-consuming and expensive for the lending industry.
"Why should we all go through the foreclosure process and evict people?" said Sanjiv Das, Citi's top mortgage executive. Avoiding foreclosure, Das said, is "less painful for our borrowers as well as for us."
Borrowers in Citi's program will still need to pay their utility bills. But Citi will pay at least $1,000 in relocation costs and will consider helping out with other expenses. Citi also plans to provide relocation counseling.
The program is intended to help borrowers who don't qualify for a mortgage modification or a short sale — one in which the lender agrees to sell a home for less than the total mortgage amount.
Citi's policy is similar to one announced in November by Fannie Mae, the government-controlled mortgage finance company. Fannie is allowing homeowners to hand back the deed to their properties, then rent them back at market rates.
Thursday, February 4, 2010
Short Sale Expert in Murrieta
While 2009 was considered bad for the real estate market, 2010 is predicted to see a worsening of the mortgage trend. A 2 to 3 year resetting of adjustable rate mortgages is forecast which might even run through 2012. It is rumored that loan administrators of certain lending institutions have been instructed to defer foreclosure process till the end of the first year. Some analysts believe we are sitting in the eye of a mortgage hurricane which will become deadly again when we hit the opposite wall some time later this year. They add that foreclosed properties will hit the markets again over the next two years. No one will hazard a guess as to when real estate prices will touch bottom, but the depths haven’t been plumbed yet. Unprecedented foreclosures are expected to spawn a plethora of displaced homeowners — the largest in history — descending on the rental market.
Although Mortgage rates and the “Indexes” they are tied to remain very low, the issue with the current group of loans is that the majority of them have Interest Only payments now, but when they adjust, switch to Principle and Interest payments. The increase in the monthly payments on these loans is likely to result in many more defaults, then foreclosures.
Stacy Frazier-Brock is a Murrieta realtor whose specialty is avoiding foreclosures with short sales. In doing this the distressed borrower’s credit rating is preserved. Stacy Frazier-Brock has established a long-standing rapport with loan administrators in lending institutions through which he is able to successfully negotiate short sales. More often than not this is a preferred option that benefits both lender and borrower. To know more about her and her modus operandi, please click on http://www.shortsalemegastars.com/.
Although Mortgage rates and the “Indexes” they are tied to remain very low, the issue with the current group of loans is that the majority of them have Interest Only payments now, but when they adjust, switch to Principle and Interest payments. The increase in the monthly payments on these loans is likely to result in many more defaults, then foreclosures.
Stacy Frazier-Brock is a Murrieta realtor whose specialty is avoiding foreclosures with short sales. In doing this the distressed borrower’s credit rating is preserved. Stacy Frazier-Brock has established a long-standing rapport with loan administrators in lending institutions through which he is able to successfully negotiate short sales. More often than not this is a preferred option that benefits both lender and borrower. To know more about her and her modus operandi, please click on http://www.shortsalemegastars.com/.
Monday, February 1, 2010
Military Personnel Receive Federal Help on Short Sales
Members of the military who find themselves in a short-sale situation now have a new tool via the Homeowners Assistance Program (HAP) through the Department of Defense (DoD).
Congress expanded HAP when they passed the American Recovery and Reinvestment Act of 2009; and now nearly every military personnel involved in a short sale can get financial help through HAP if they find themselves upside down when they must sell because of a mandatory permanent transfer.
The HAP website (http://hap.usace.army.mil) contains several brochures for military personnel and for real estate professionals to help understand the expanded guidelines for those using the program.
Authorized under Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966, HAP is a law that is managed by the U.S. Army Corps of Engineers "to assist eligible homeowners who face financial loss when selling their primary residence homes in areas where real estate values have declined because of a base closure or realignment announcement." The American Recovery and Reinvestment Act expands the legislation temporarily for DoD employees caught up in the mortgage crisis. Those who can apply for assistance include:
service members and DOD employees who are wounded, injured or become ill when deployed;
surviving spouses of service members or DOD employees killed or died of wounds while deployed;
service members and civilian employees assigned to BRAC 05 organizations; and
service members required to permanently relocate during the home mortgage crisis.
The assistance is limited to employees who were reassigned within about a 5-and-a-half year period between 2006 and 2012 and the house being considered must have been the applicant's primary residence. Some of the criteria for eligibility include:
Permanent reassignment requires move of more than 50 miles.
Reassignment ordered between 1 February 2006 and 30 September 2012.
Property purchased (or contract to purchase signed) before 1 July 2006.
Property was the primary residence of the owner
Owner has not previously received these benefit payments.
An online brochure, which can be printed via a PDF file, is available here.
This next paragraph is very important for purchasers of houses where the HAP program is being used.
The execution of this program requires the assignment of the contract to the Department of Defense, via the U.S. Army Corps of Engineers. In essence, the seller conveys the house over to the USACE and then the purchaser buys the house from the USACE all at the same time at the same settlement or escrow table. Your state laws may require a few differences, but this is how it's executed on the ground level.
Many Realtor contracts contain paragraphs that will not allow the assignment of a contract, so military sellers using HAP may need to strike this paragraph to allow the contract to go through without any hiccups.
An "assigned" contract is one where one party in a sales contract can assign their interests over to a third party before settlement. It would say something like: "this contract is between 'Mr. and Mrs. Seller' and 'Mr. and Mrs. Buyer and/or assigns.'"
With this language, it allows Mr. and Mrs. Buyer to slip in Mr. and Mrs. Buyer-2 at some point in the performance of the contract. It's legal, and is usually used via a pre-foreclosure contract where one party is finding houses for sale and selling them to a secondary buyer once they get the terms of the contract in place.
Thus, in the use of the DoD's HAP program, the purchaser needs to understand that at the end of their contract, before they go to settlement, the seller will no longer be Mr. and Mrs. Seller, but the U.S. Army Corps of Engineers.
For details on how the HAP program works, visit here.
Congress expanded HAP when they passed the American Recovery and Reinvestment Act of 2009; and now nearly every military personnel involved in a short sale can get financial help through HAP if they find themselves upside down when they must sell because of a mandatory permanent transfer.
The HAP website (http://hap.usace.army.mil) contains several brochures for military personnel and for real estate professionals to help understand the expanded guidelines for those using the program.
Authorized under Section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966, HAP is a law that is managed by the U.S. Army Corps of Engineers "to assist eligible homeowners who face financial loss when selling their primary residence homes in areas where real estate values have declined because of a base closure or realignment announcement." The American Recovery and Reinvestment Act expands the legislation temporarily for DoD employees caught up in the mortgage crisis. Those who can apply for assistance include:
service members and DOD employees who are wounded, injured or become ill when deployed;
surviving spouses of service members or DOD employees killed or died of wounds while deployed;
service members and civilian employees assigned to BRAC 05 organizations; and
service members required to permanently relocate during the home mortgage crisis.
The assistance is limited to employees who were reassigned within about a 5-and-a-half year period between 2006 and 2012 and the house being considered must have been the applicant's primary residence. Some of the criteria for eligibility include:
Permanent reassignment requires move of more than 50 miles.
Reassignment ordered between 1 February 2006 and 30 September 2012.
Property purchased (or contract to purchase signed) before 1 July 2006.
Property was the primary residence of the owner
Owner has not previously received these benefit payments.
An online brochure, which can be printed via a PDF file, is available here.
This next paragraph is very important for purchasers of houses where the HAP program is being used.
The execution of this program requires the assignment of the contract to the Department of Defense, via the U.S. Army Corps of Engineers. In essence, the seller conveys the house over to the USACE and then the purchaser buys the house from the USACE all at the same time at the same settlement or escrow table. Your state laws may require a few differences, but this is how it's executed on the ground level.
Many Realtor contracts contain paragraphs that will not allow the assignment of a contract, so military sellers using HAP may need to strike this paragraph to allow the contract to go through without any hiccups.
An "assigned" contract is one where one party in a sales contract can assign their interests over to a third party before settlement. It would say something like: "this contract is between 'Mr. and Mrs. Seller' and 'Mr. and Mrs. Buyer and/or assigns.'"
With this language, it allows Mr. and Mrs. Buyer to slip in Mr. and Mrs. Buyer-2 at some point in the performance of the contract. It's legal, and is usually used via a pre-foreclosure contract where one party is finding houses for sale and selling them to a secondary buyer once they get the terms of the contract in place.
Thus, in the use of the DoD's HAP program, the purchaser needs to understand that at the end of their contract, before they go to settlement, the seller will no longer be Mr. and Mrs. Seller, but the U.S. Army Corps of Engineers.
For details on how the HAP program works, visit here.
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