Posted: 03 Aug 2010 12:47 PM PDT CDPE website…

We experienced a serge in home sales in the months of April due to the first time home buyer tax credit. The reality ofwhat the true housing market starts from here on out. There are not any more incentives to buy a home in Shoreview or anywhere else…just the same old benefits of home ownership. Homes even after the tax credit still continue to sell and believe it or not, there are buyers waiting to buy. It doesn’t look as bleak as some may say, homes are still selling. It just takes more time, effort, and patience to sell these days.

The housing market as you may notice, is going on the upswing. There is a steady rise in the average price home sold, and the numbers and statistics compare to last year is on a steady rise. Before you know it, we will once again be talking about how great the housing market it and forget all about the burst.

It didn’t take an official statement from Freddie Mac’s CEO to convince CDPEs — the agents helping distressed homeowners on a daily basis — that short sales have increased dramatically across the country. However, the number was still impressive and makes a big statement on a movement within the real estate industry to provide real solutions to homeowners facing foreclosure. Here’s what Housing Wire reported:

Freddie Mac CEO Ed Haldeman said the company has seen the number of its short sales increase 600% from 2008 as lenders look to dampen the impact of foreclosures hitting the marketplace.

In a statement put out this week, Haldeman said Freddie Mac is doing everything it can to prevent more foreclosures, and that short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed.

That number could increase as the Home Affordable Foreclosure Alternatives (HAFA) program takes hold. The Treasury Department launched it in April to provide cash incentives to servicers for conducting short sales and deeds-in-lieu of foreclosure.

Great to hear, don’t you think?

We feel this is yet another testament to the incredible work by CDPEs being done on behalf of homeowners who need the most assistance. Short sales look to continue their leadership in the marketplace, and we look forward to releasing more information to our members on Freddie Mac and Fannie Mae’s HAFA programs on August 1, 2010.

Article courtsey of CDPE

Strategic defaults are anything but strategic for distressed homeowners today. The Distressed Property Institute and CEO Alex Charfen, author of the CDPE, have stood against this practice from the very beginning. Now Fannie Mae has intensified penalties for those who “strategically default” on their mortgages, stating:

“… defaulting borrowers who walk away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the day of foreclosure.”

This is yet another reason that homeowners should seek other alternatives to foreclosure, including short sales, and why agents need to have all the information to counsel distressed homeowners properly.

Article courtesy of www.cdpe.com

The HAFA program takes effect on April 5th, 2010. The program is for struggling home owners to make it easier for them to sell their homes as a short sale, rather than falling into foreclosure. The HAFA program:

• Property must be their principal residence and bought before January 1st, 2009.
• Current Unpaid mortgage balance is less than $729,750
• Homeowner must have a genuine hardship-must be documented by Tax Returns, bank statements, W2s etc.
• Mortgage is delinquent or default is reasonabley foreseeable
• Lender waives rights to deficiency judgement
• Subordinate Lien Holder Payoff – capped at $3000
• Lender to provide $1500 to borrower for relocation costs
• It is a requirement that home be listed with a licensed real estate agent
• Lender pays real estate commission as per Listing agreement including owner’s closing costs-No costs to the home owner

The HAFA program was design to streamline the short sale process to create a smoother transaction. Now, people are starting to notice that there seems to be a problem with short sales and foreclosures and am finally doing something about it. So far the program is moving us in the right direction.

On November 6, 2009, President Obama signed a bill into law that immediately extended the popular tax credit program offering up to $8,000 for qualified first-time homebuyers (FTHBs) into the first half of 2010.

The bill also instantly expanded the program, offering up to $6,500 in tax credits for qualified repeat home buyers, swinging open the door for even more qualified homebuyers to take advantage of this valuable opportunity at a time when mortgage rates are still near historical lows.

First-Time Buyers: For FTHBs (defined as someone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title), the basic rules remain the same, with one important exception – higher income limits are now in place, increasing the pool of potential buyers eligible for the tax credit of up to 10% of the purchase price or up to $8,000. This is money that does not have to be repaid as long you stay in your new home for at least 36 months.

Single tax filers who earn up to $125,000 are now eligible for the total credit amount. Those who earn more than this cap (but less than $145,000) can receive a partial credit. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap (but less than $245,000) can receive a partial credit.

Repeat Buyers: The new homebuyer program offers an exciting new opportunity missing from the previous incentives – a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. This gives those who already own a qualifying residence some additional reasons to take advantage of lower home prices and interest rates and finally move up to the home of their dreams.

Important Deadlines: Purchase agreements must be signed by April 30, 2010, and closings must be final by June 30.Get the FactsThere are other important rules and guidelines you must meet to qualify for this great opportunity. So, if you or someone you know has missed out on the first two home buyer tax credit programs in the last two years, don’t wait.

Article Courtesy of Homes and Money Quarterly News

A short sale can save lenders lots of time and money. It is estimated that for each house that goes into foreclosure the bank is spending around $50000+/-. When the lenders decide to sell a property on a short sale, the litigation and foreclosure proceeding are skipped and the cost of holding the property is shorten. When a property falls into foreclosure, the lenders have to find asset managers and real estate brokers to list and sell their properties. In a short sale the lenders do not have to find asset managers and real estate brokers to sell and list their properties. The process is cut down and although it looks like the lenders are losing money up front, they actually will be saving more money by selling a property early before foreclosure.

The most difficult part in a short sale is getting the approval from the lender, because they are usually bombarded by multiple files and don’t have the adequate staff to manage all their files. It will take some time but most lenders will come to terms with an offer and will usually accept the lesser amount owed. In the long run, lenders know that they will benefit more from the short sale.

There are numerous benefits to the sellers, some benefits include:

Won’t affect credit score as much as a foreclosure. When the seller’s only option is to sell a short and not got into foreclosure their credit score is effective as much as a foreclosure. Most seller’s who sell their home as a short sales can regain a good credit standing within 2 years where as a foreclosure your credit can be damage for up to 7 years.

No deficiency judgment. In most cases the banks will not have a deficiency judgment for the seller’s after a sale. The loan is satisfied and recorded as that.

Live in home. As a seller you can still stay in your home until the sale of your home. In a foreclosure the lender will order the sheriff to evict a person out of their home. If a homeowner has missed a payment and believe they have run into a hardship and are unable to work out anything with their lenders, seek a real estate professional trained in managing and selling short sale homes so their homes can be sold in a timely matter before they fall into foreclosure.  

Morally correct. Most individuals want to be able to stay in their home and pay for their mortgage but hard times are upon them so they are unable to make the payments. If they can pay for the bills, they would.

Short sales are not easy transactions and everyone involved with a short sale should have patience and understanding of the process and educate their clients about the process. When there is better understanding of the process, all parties will benefit from the outcome.  

We are seeing more and more short sales these days and it is now a common sight nowadays. I want to educate the public and all those interested, about the process and benefits of a short sale to all parties involved in the transaction.

For those of you not familiar with short sales, I will explain what a short sale is in common everyday terms. A short sale is when a homeowner is selling his/her property for less than what is owed on the mortgage with the approval from the lender to take the lesser amount to satisfy the loan. In most cases the homeowner does not have to pay what is owed. By this time, the homeowner usually has exhausted all their other options in trying keep their home and is force to sell their property as a short sale instead of falling into foreclosure. I will explain and go into further details about the benefits of a short sale compare to a foreclosure later in another blog.

In order for a short sale to occur two things must occur: the home must be under contract (have a purchase agreement) and the lender must accept that discounted payoff amount.

My next few blogs, I will concentrate on everything related to short sales from what a short sale is to its benefits and reason behind it. Short sales are here to stay…at least a while longer. If you have any questions please do let me know and add some comments. Till then, I am going to eat, breath, sleep, and live with everything related to short sales. So check back often to learn everything you need about short sales.