Posts Tagged ‘pre-foreclosures’

Successful Short Sales: Giving the Lender What They Want

Successful Short Sales: Giving the Lender What They Want

Short sales are enjoying a much-needed resurgence as lenders become more motivated to move short sale transactions through the pipeline more quickly. So, if you’ve soured on short sale business, now is the time to rethink your position as the lending landscape begins to change.

Your approach to successful short sales must be focused in two areas: making sure the seller is truly a short sale candidate  and making sure you foster the right relationship with the lender.

A little secret nobody realizes is that many lenders are desperately looking for a competent real estate partner in the short sale arena. I walked into my local bank, for example, and discovered that they were getting barraged with calls from clients inquiring about a short sale on their property. While a lot of us think that banks are against short sales, the reality is, they just don’t have the time to handle the volume.

This is where huge opportunity lies for real estate professionals. Take the time to build a relationship with your local lenders, understand exactly what they need in order to process a short sale, and then be the conduit throughout the entire process. In other words, work with your clients to give lenders what they want. This will eliminate notorious delays and save you, your client and the lender precious time.

Following is the lender package that I require all short sale clients to complete. When it comes to short sales, the devil is truly in the details.

Required Items: Before the Sales Contract
1. Cover letter
2. Table of contents (this lets the lender know right away that everything they need is included)
3. Third-party authorization
4. Seller’s tax returns from the previous two years
5. Seller’s bank statements from the previous two months (six months is even better)
6. Most recent paystubs
7. Seller’s hardship letter
8. Bank worksheets (financial situation)
a. Current
b. Projected in next three months
c. Projected in next six months
9. Listing agreement

Required Items: After the Sales Contract
10. Necessary short sale addendums
11. History of listing – market report
12. Sales activity report
13. Local community economic report
14. CMA/absorption rate
15. Sales contract
16. HUD-1
17. Buyer’s pre-approval letters
18. Earnest money verification
19. Damage report with photos
20. Carry cost estimate
21. Agent personal letter

By providing banks with the right information, you are helping them push through the glut of short sale requests. Make sure you become their partner in this effort.

Short sales aren’t as complicated as you may think. Let me help walk you through the process.

Joel Thompson RE/MAXAlliance

joelathompson@hotmail.com 303-877-0060

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Foreclosures: Hardest hit zip codes

Foreclosures: Hardest hit zip codes

The mortgage industry has often been blamed for its role helping homeowners get lines or credit and bigger mortgages during the housing boom. The industry saw little downside, unloading the risk that the loans would go bad on to the financial markets.

With Schneiderman, who has been working on his own investigations into big banks, Obama is signaling he’s ready to go after financial crimes. And left-leaning progressive groups cheered the news.

“Schneiderman has shown himself to be a courageous hero in his defense of the struggling underwater homeowners in his state and across the country,” according to a statement released by a coalition of left-leaning advocates such as MoveOn and New Bottom Line.

The news came as a surprise to the financial industry, which had been predicting Obama would tout a proposed settlement under discussion among federal regulators, state attorneys general and the largest bank mortgage servicers under investigation for improperly foreclosing on homeowners.

“We believe the industry is worried that this new task force will go after the banks for the origination of many of the mortgages that have defaulted or are now underwater,” said Jaret Seiberg, a senior policy analyst for the Washington Research Group.

The state attorneys general, the Justice Department and the Department of Housing and Urban Development have been in talks for nearly a year with big bank servicers that stand accused of using robo-signers to service home loans. The five largest mortgage servicers involved in the talks are:Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM).

According to people familiar with the talks, a draft settlement would result in those banks paying $20 billion to $25 billion toward housing relief. About 1 million underwater homeowners would be eligible for an average $20,000 off the principal owed.

In return, state attorneys general would not be able to file future lawsuits against the bank mortgage servicers that agree to the deal. The amount of relief available for homeowners depends on how many state attorneys general agree to the deal.

Obama didn’t mention the talks in his State of the Union speech. A White House official said Wednesday that the new task force would not prevent progress that has been made on that deal.

– CNNMoney’s Les Christie and CNN’s Terry Frieden contributed to this report.

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Joel Thompson 303-877-0060 joelathompson@hotmail.com

Top 5 States with the Most Home Foreclosures

Top 5 States with the Most Home Foreclosures
 
The foreclosure processaverages 140 days nationwide, an analysis by the website 24/7 Wall St. shows. But in states with the highest foreclosure rates, homes remain in foreclosure much longer—220 days on average. What accounts for the difference? Court and judicial involvement, the 24/7 Wall St. report suggests.Nine of the top 11 states with the most homes in foreclosure require a court or judge to oversee the process, according to 24/7. Also called foreclosure by judicial sale, it’s a formal legal action that can take months and usually involves a short trial.

By comparison, nonjudicial foreclosures—or foreclosures by power of sale—do not involve the court and are resolved more quickly.

Some states allow for both judicial and nonjudicial foreclosures, so you may want to check with a local foreclosure attorney to discuss which option is best for you.

The effects of a longer foreclosure period can be seen in the top five states with the most homes in foreclosure. According to 24/7 Wall St., those states are:

5. New York, with 4.6 percent of homes in foreclosure. The average foreclosure processing period is 445 days—the longest in the nation.
4. Nevada, where 5.3 percent of homes are in foreclosure. The average processing period is 116 days.
3. Illinois, with a 5.4 percent home-foreclosure rate. The processing period averages 300 days.
2. New Jersey, at 6.4 percent. The average processing period is 270 days.
1. Florida, at 11.9 percent. The processing period here averages 135 days.

In Florida’s case, several other factors are also causing the state’s high home-foreclosure rate, 24/7 reports. Those include falling home prices (down 49 percent since 2006), high unemployment (9.9 percent), and the highest mortgage-delinquency rate in the nation (17.4 percent).

For more information, visit www.findlaw.com.

By Andrew Chow, JD

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Joel Thompson, RE/MAX Alliance, 303.877.0060 joelathompson@hotmail.com

What is a Short Sale?

What is a Short Sale?

 

What is a Short Sale?
A short sale or short payoff is generally defined as a sale in which a lender allows the property securing a mortgage or deed of trust to be sold
for less then the existing loan balance, due to factors such as the borrower’s financial circumstances, the property’s physical condition, or
local real estate market conditions. A short sale is really a form of pre-foreclosure sale that occurs when the mortgagee agrees to accept less than the loan amount to avoid foreclosure. A negotiated short sale may result in a discounted purchase price for the buyer. The buyer then finances the acquisition much the same as in any conventional real estate acquisition.
Complexity of Short Sales
Short sales are extremely complex transactions, even for the experienced Realtor. Part of the reason is that they are time-consuming.
Lenders are inundated with requests for short sales and therefore expect all paperwork to be complete and accurate before even considering a short sale. Lenders may also request that the paperwork be resubmitted multiple times, and just getting the file itself to the lender can
sometimes present a challenge. Additionally, there is no regulation or industry standard for short sales, meaning every lender may have different requirements and expectations. Even a Realtor who is familiar with the requirements of one lender may not know the ins and outs of another lender’s requirements. Furthermore, lenders’ policies and processes can change often and even vary by investor.

Factors the Lender May Consider
What makes a lender decide whether to take a discount on a mortgage? What formula do they use to decide how much to take? These
are tricky questions. Each of these transactions must be evaluated on a case-by-case basis, and there are a number of variables involved in each one. A borrower is often in default or will be soon when the lender decides to take a discount. There may be instances where there is no
default; this usually means that the borrower is upside down on the mortgage and what is owed exceeds the value of the house. There are a number of factors that a lender may consider when deciding whether to discount a loan and by how much, including the borrower’s overall financial condition and circumstances, the property’s “as is” value, and the cost to market and re-sell the property. Also, two short sales at the same bank may actually be held by different investors, so the percentages and “formulas” for approval may vary even with the same bank. A short sale is usually the lender’s last resort before foreclosure. Overall, the goal is to show the lender that a short sale is the quickest and best way to mitigate their loss. Some lenders will only approve a short sale when foreclosure is not economically feasible because the
borrower is insolvent and one or more of the following may have occurred:
• The property was purchased or refinanced at the top of a seller’s market at an over-inflated price, and a substantial drop in value has occurred.
• The property was financed as an interest-only adjustable rate loan and the borrower has no capacity to refinance at a lower interest rate.
• The property was refinanced at more than 100% of its value.
• The property is located in an area where property values have dropped due to local economic conditions, or the home’s value has decreased to an amount below the loan balance due.
• The property’s “as is” condition has deteriorated to a point where it is not feasible for the lender to put it in a marketable resale condition.
• The proposed purchase price is more than the lender would be able to sell property for after foreclosure.
• Any sales commission proposed in a contract is less than what the lender may typically have to allocate after the foreclosure process is
complete to market and sell the property. The lender will also do a market analysis of the property. The Broker’s Price Opinion (BPO) may be the single most influential component the lender considers when deciding how much they are willing to accept as a reasonable short sale offer. The lender hires a real estate agent, broker, or appraiser to assess the property and give their professional opinion of its value to the lender.
Documentation
Most lenders ask the borrower to document their hardship prior to approval of the sale. The lender will request at least the following information or consideration of a short sale:
• a personal hardship letter that defines what the hardship is and proof of the hardship claim, if available;
• a Third Party Disclosure for authorization to speak to the Realtor or other representative about the loan status;
• a completed financial worksheet of net income and monthly expenses;
• copies of the last two years’ Federal Income Tax returns with all schedules;
• copies of last two months’ payroll stubs, or profit-and-loss statement if self employed;
• copies of last two months’ bank statements for all accounts;
• a copy of the sales contract signed by both the seller and the buyer; and
• estimated closing costs showing a detailed breakdown of all projected costs including Realtor commissions for listing and selling agents.
Once the lender has the above information, it could take three to twelve months to negotiate and close a short sale, depending on the lender.
It really is a “numbers game,” with the lender in control. Not every homeowner facing foreclosure is a good short sale candidate. A giant step to getting a lender to consider your short sale proposal is to have as much information ready as possible to expedite the process, and to
work with short sale specialist, like Joel Thompson at RE/MAX Alliance

If you’re considering selling your home contact me to discuss your options. JoelAthompson@hotmail.com Search Boulder short sales

** Denver Business Journal, “20% of Colorado Mortgage’s Upside-
Down,” February 24, 2010.
** DSNews, “Short sales See Big Jump in Activity,”
February 22, 2010.
Disclaimer: This publication is designed to provide accurate
and authoritative information in regard to the subject matter
covered. It is distributed with the understanding that the
publisher is not engaged in rendering legal, accounting,
or other professional service. If legal or accounting advice
or other expert assistance is required, the services of a
competent professional should be sought.
© Copyright, 2010, by Land Title Guarantee Company

Foreclosure Homes Account for 24 Percent of All U.S. Residential Sales

Foreclosure Homes Account for 24 Percent of All U.S. Residential Sales
 

RISMEDIA, Friday, March 02, 2012— RealtyTrac® , a leading online marketplace for foreclosure properties, recently released its Q4 and Year-End 2011 U.S. Foreclosure Sales Report™, which shows that sales of homes that were in some stage of foreclosure or bank owned accounted for 24 percent of all U.S. residential sales during the fourth quarter—up from 20 percent of all sales in the previous quarter, but down from 26 percent of all sales in the fourth quarter of 2010.Third parties purchased a total of 204,080 residential properties in some stage of pre-foreclosure (NOD, LIS, NTS, NFS) or bank-owned (REO) during the fourth quarter, down 8 percent from a revised third quarter total and down 2 percent from the fourth quarter of 2010. That brought total foreclosure-related sales in 2011 to 907,138, down 2 percent from 2010 and accounting for 23 percent of all sales during the year.The average sales price of homes in foreclosure or bank owned was $164,944 in the fourth quarter, nearly identical to the average foreclosure-related sales price in the previous quarter and down 5 percent from the fourth quarter of 2010. The average price of a foreclosure-related sale was 29 percent below the average price of a non-foreclosure sale during the quarter, down from a 34 percent foreclosure discount in the third quarter and down from a 35 percent foreclosure discount in the fourth quarter of 2010.

“Sales of foreclosures in the fourth quarter continued to be slowed by questions surrounding proper foreclosure paperwork and procedures,” says Brandon Moore, chief executive officer of RealtyTrac. “Even so, foreclosures accounted for nearly one in every four sales during the quarter and for the entire year. We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months.

“We continued to see a shift toward pre-foreclosure sales, or short sales, and away from REO sales in the fourth quarter,” Moore continued. “Nationally, pre-foreclosure sales increased 15 percent from a year ago while REO sales decreased 12 percent. Pre-foreclosure sales outnumbered REO sales in several bellwether markets, including Los Angeles, Miami and Phoenix, where REO sales had outnumbered pre-foreclosure sales a year ago. That trend will likely show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans.”

Pre-foreclosure sales increase 15 percent from year ago
Third parties purchased a total of 88,303 pre-foreclosure homes—in default or scheduled for auction—during the fourth quarter, a decrease of 5 percent from the previous quarter but up 15 percent from the fourth quarter of 2010. Pre-foreclosure sales accounted for 10 percent of all sales during the fourth quarter and 9 percent of all sales for all of 2011.

Pre-foreclosure sales increased more than 20 percent on a year-over-year basis in several states, including Michigan (103 percent), Georgia (59 percent), Arizona (48 percent), Washington (36 percent), Nevada (29 percent), Oregon (27 percent), Illinois (26 percent), Ohio (25 percent), California (23 percent) and Texas (22 percent).

Pre-foreclosures, which are often sold via short sale, sold for an average of $184,221 in the fourth quarter, down 3 percent from the previous quarter and down 11 percent from the fourth quarter of 2010. The average sales price of a pre-foreclosure home in the fourth quarter was 21 percent below the average sales price of a non-foreclosure home, similar to the discount of 22 percent on pre-foreclosure purchases for the entire year.

Pre-foreclosure homes that sold in the fourth quarter took an average of 308 days to sell after starting the foreclosure process, down from an average of 318 days in the third quarter but still up from an average of 237 days in the fourth quarter of 2010.

REO sales decrease 12 percent from year ago
Third parties purchased a total of 115,777 bank-owned (REO) homes in the fourth quarter, down 10 percent from the previous quarter and down 12 percent from the fourth quarter of 2010. REO sales accounted for 13 percent of all sales during the fourth quarter and 14 percent of all sales for all of 2011.

Despite the nationwide decrease, REO sales increased 20 percent or more on a year-over-year basis in several states, including Minnesota (65 percent), Wisconsin (23 percent), Washington (21 percent) and Illinois (20 percent).

REOs sold for an average of $149,686 in the fourth quarter, up 2 percent from the previous quarter but down 2 percent from the fourth quarter of 2010. The average sales price of a bank-owned home in the fourth quarter was 36 percent below the average sales price of a non-foreclosure home, while the discount on bank-owned homes for the entire year was 40 percent.

REOs that sold in the fourth quarter took an average of 175 days to sell after completing the foreclosure process, down from 193 days in the third quarter but still up from 171 days in the fourth quarter of 2010.

Nevada, California, Georgia post highest percentage of foreclosure sales
Foreclosure sales accounted for 56 percent of all residential sales in Nevada in the fourth quarter, the highest percentage of any state. Third parties purchased a total of 52,086 homes in foreclosure or bank-owned in Nevada during all of 2011, representing 54 percent of all sales and up 17 percent from 2010.

California foreclosure-related sales accounted for 43 percent of the state’s total residential property sales in the fourth quarter, the second highest percentage among the states. Third parties purchased a total of 246,780 homes in foreclosure or bank-owned in California during all of 2011, the most of any state and up 2 percent from 2010.

Foreclosure sales accounted for 39 percent of all residential sales in Georgia in the fourth quarter, the third highest percentage of any state. Third parties purchased a total of 44,631 homes in foreclosure or bank-owned in Georgia during all of 2011, representing 36 percent of all sales and up 18 percent from 2010.

Other states where foreclosure-related sales accounted for 20 percent or more of all sales in the fourth quarter were Arizona (38 percent), Michigan (33 percent), Colorado (26 percent), Illinois (26 percent), Minnesota (23 percent), Washington (21 percent), and Florida (20 percent).

Top metros to buy bank-owned
Among metro areas with at least 500 REO sales during the fourth quarter and where REO sales increased at least 5 percent from a year ago, the following posted the biggest discounts on sales of bank-owned properties.

Top metros to buy pre-foreclosure (short sales)
Among metro areas with at least 500 pre-foreclosure (short) sales during the fourth quarter and where pre-foreclosure sales increased at least 5 percent from a year ago, the following posted the biggest discounts on sales of pre-foreclosure properties. A few metro areas (Chicago, Atlanta and Seattle) are on both lists, demonstrating that buyers are finding substantial discounts on both short sales and bank-owned homes in these markets.

For more information, visit www.realtytrac.com.

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