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Four Short Sale Myths

by Allyson Hoffman

The economy is still in recovery here in the Chicago North Shore and across the nation. This has unfortunately has made foreclosures and short sales common place in today's real estate market. Eventhough it's very common to see short sales and foreclosures on the market, much of the information regarding these types of homes is outdated or simply untrue!

Here are some of the top misconceptions of short sales:

Short sales can take up to a year to close. This is simply not true. It can take 7-10 days for the lender to acknowledge receipt of the complete short sale package, which consists of personal seller documents and related real estate items, including the buyer's short sale offer. Once a negotiator is assigned it can take an additional 30 to 45 days for a BPO or appraisal. After this has been completed usually another 2 to 3 weeks for management / investor review and short sale approval.

If you purchase a short sale, you will end up paying too much.  Some listing agents may set a short sale below market value, this is a tactic used to attract multiple offers. Remember that a listed price on a short sale is fabricated, because you won't know how much a bank will accept until the offer is submitted. However, most banks will consider a price at a minimum of 90% of market value.

Lenders of a short sale won’t accept a discounted payoff. Many sellers are often surprised to learn that in markets where prices have fallen over a 5-year-period, a home might be worth 50% or less of its original value when the seller bought it. Lenders know about these declining markets and will do their own research about value and typically come to the same conclusion. The value of the home is not based on the amount of the mortgage; it's based on recent comparable sales.

Short Sale Sellers Must Be in Default Before the Bank Will Approve a Short Sale. The lender will approve a short sale based on the seller's hardship and the value of the home. Many sellers may struggle to make the monthly mortgage payment, but have not fallen behind in their payments. It is true that sellers in default receive immediate attention, but a seller can also pay a mortgage payment on time each and every month and still qualify for a short sale.

Do you have questions about a short sale? Contact me today to see if this type of purchase is a good fit for you and your family!

Image courtesy of Rheog/pixabay.com

 

 

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Have You Considered a Foreclosure?

by Allyson Hoffman

In this Chicago North Shore market, foreclosures are fairly readily available. They typically represent a good deal for the buyer, and if you are ready to purchase a home, you may want to consider this option.

According to a market study, 2012 could be a record year for home foreclosures. So, how do you go about buying a foreclosure home in 2012? What are the steps involved? First, you need to understand the different stages in the foreclosure process. The process varies from one state to another (based on state laws), but the basic stages are the same

1. Pre-foreclosure: Take for example a homeowner that falls behind on his mortgage payments. Maybe he lost some of his income, or perhaps his mortgage payment increased in size due to an ARM loan adjusting. Two or three months after falling behind on the payments, they receive a notice of legal action from the lender. This is the pre-foreclosure stage, where the homeowner has defaulted but the lender has not yet foreclosed on the property. When the lender files a legal record of the homeowner’s default, it becomes public information. During this stage, they might try to get back on track. They can do this through reinstatement, or one of several other foreclosure-avoidance options. They can even sell the home through a short sale, with the lender’s permission. This is one way to buy a foreclosure in 2011 (or a pre-foreclosure, to be exact). If none of these options work out, the bank will eventually foreclose on the home.

2. Auction: This is often the next stage in the foreclosure process, after the bank forecloses on the home. At this point, the homeowner has been evicted from the property. Next, the bank wants to sell the home as quickly as possible, since it’s a “non-performing asset.” An auction is one way to go about it. Bidders who have cash in hand can bid on the home. Generally, their bids must be above a certain starting point. If the property is sold through auction, that’s the end of it. If it’s not sold at auction, the home goes back on the market as a bank-owned house. Sometimes the auction process is skipped entirely.

3. Bank-owned home: When a foreclosure home comes back on the market for sale, it’s usually referred to as a bank-owned home. You can find these homes listed on the two websites mentioned above. The home might have been through an auction prior to reaching this stage, or the bank / lender might have skipped the auction. Either way, you can be fairly certain that the homeowner who defaulted is now out of the picture entirely. From a buying standpoint, most experts agree that this is the safest stage of the process. You might not get the kind of deal you would get during an auction. But you can probably rest assured that the home is “free and clear” of any liens or other legal claims.

If you do your research and have a good real estate agent by your side, buying a foreclosed home can be a great option for you! Of course, it's not for everyone, and there is no shortage of more traditional sales as well. Contact me today to find out which is best for you and your family!

Image courtesy of BasicGov/Flickr.com

 

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Foreclosures: Are They Increasing or Decreasing?

by Allyson Hoffman

There seems to be much confusion about the number of distressed properties which are currently entering the North Shore housing market. This inventory has a tremendous impact on pricing in any particular region. For this reason, we want to bring a little clarity to the situation. Mortgage delinquencies are decreasing and foreclosures are increasing. Still confused? Let us explain.

Delinquencies are decreasing

The great news at this time is that the number of people 90+ days behind on their mortgage payment is falling. As the employment picture slowly brightens and families adjust to their current financial situation, more people are paying their mortgage on time. This has created headlines touting that the foreclosure situation is easing. Those headlines are correct. However…

Foreclosures are again flowing to the market

We must still clear the large inventories of foreclosed properties that exist. We had a small reprieve over the last few months as many distressed properties were caught in a logjam created as banks corrected faulty paperwork. That bottleneck is beginning to clear. This month’s LPS Mortgage Monitor shows exactly this situation in this graph:

 

As further evidence, Campbell/Inside Mortgage Finance just released their HousingPulse Distressed Property Index (DPI). The Index indicated that:

… nearly half of the housing market is now distressed properties. This trend is likely to continue as a backlog of foreclosures and mortgage defaults make their way through the housing pipeline. 

What does this mean?

We will keep hearing what seems to be conflicting reports on the foreclosure situation. Remember that delinquencies and foreclosures are two different measures and can go in different directions. Here is an additional slide from the Mortgage Monitor to help you distinguish the differencies.

Bottom Line

More people are paying their mortgage. Once we clear through the existing distressed property inventory, the market will finally gain momentum.

Article from KCM Blog

 

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More Foreclosure Fallout

by Allyson Hoffman

Recently, another controversy in the mortgage industry has drawn attention. This time it is regarding the falsification of documents and affidavits used in foreclosure proceedings. With the nation’s top lenders freezing foreclosure activity while investigations continue, some of the newest victims are buyers and Realtors of distressed properties. Foreclosures create a significant book of business for home sales in hard hit areas – as much as 30% or more of the sales market.

Home sales this past summer hit the lowest levels in ten years, and in some markets, like Florida and Nevada, the active housing market is full of foreclosures. The uncertainty is also causing chaos for all home sales. Experts tell us that home prices could bump up slightly on the short term, but that a glut of foreclosed properties post-freeze will hurt the general status of the market in the long run.

While some markets are obviously hit harder than others, the moves by some of the nation’s largest lenders – Bank of America, Chase, Ally Financial and GMAC Mortgage is systemic, now affecting proceedings in all 50 states. Fannie Mae has responded by pulling foreclosed homes off the market and many title companies are refusing to issue title policies, making the homes unsellable.

Widespread investigations at either a state or national level will further paralyze a market that already shows few signs of life. Foreclosed home sales at least pump money into the market and generate real estate activity. The foreclosure inventory competes directly with new construction and if both inventories rise or stay unchanged, the construction industry will effectively shut down in some areas.

Mark Zandi, chief economist at Moody's Analytics, noted that today’s latest crisis is likely to have an impact for the next two years. "It'll probably push out the distressed sales into 2011 and 2012," he said. Delays of large foreclosure inventories will slow long term recovery.

Additional market uncertainty will keep more hesitant buyers on the fence as they wait to see what foreclosed homes might be coming back on the block. Prolonged delays in getting foreclosures moving again can also hurt long-term prices and futures as investors will look to other markets.

 

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Fending Off Foreclosure - What Alternative Will Work For You?

by Allyson Hoffman

 

It is no secret that foreclosures have increased drastically this year as a result of the subprime lending disaster and a lot of people are wondering if they will be next. For many homeowners there may be options, if they know what to look for and where to look. 

In the event that you find yourself struggling to make your mortgage payments, and you fear foreclosure may be in your future, the National Foundation for Credit Counseling (NFCC) has suggested a few possible alternatives. These options to fend off foreclosure include:

 

  • Repayment Plan
  • Reinstatement
  • Forbearance
  • Loan Modification

The Federal Trade Commission wants people to know that these alternatives may not work for everyone especially if you are already three or four mortgage payments behind.

For more information regarding the above alternatives visit the NFCC's Homeowners Crisis Resource Center website. They can also assist you in locating a certified housing counselor to explore your options in an effort to fend off foreclosure.

Image courtesy 24oranges.nl/Flickr.com

 

Displaying blog entries 1-5 of 5

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Allyson Hoffman
RE/MAX Villager
1245 Waukegan Road
Glenview IL 60025
847-310-5300
Fax: 847-400-0881

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