U.S. ‘Underwater’ Homeowners Increase to 28.6%, Zillow Reports

Nov. 8 (Bloomberg) — The number of U.S. homeowners who owe more than their properties are worth climbed in the third quarter as lenders repossessed fewer houses, Zillow Inc. said.

The share of borrowers with negative equity rose to 28.6 percent, up from 26.8 percent in the second quarter and 23.2 percent a year earlier, the real estate data provider said today. Last quarter’s portion was the biggest since Seattle- based Zillow began tracking the measure in the first quarter of 2009, when 22.3 percent of households were underwater.

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Bank of America offers up to $20,000 to entice short sales

By Mark Puente, Times Staff Writer
In Print: Saturday, October 8, 2011

Bank of America is offering up to $20,000 to select Florida homeowners willing to agree to a short sale instead of entering foreclosure.

To sweeten the deal further, the nation’s largest lender will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. It can save homeowners thousands of dollars.

Not every Bank of America customer in Florida will be eligible for the program, which pays a minimum cash incentive of $5,000. It’s targeted toward home­owners who cannot afford their mortgages.

To quality, the short sales must be submitted for bank approval by Nov. 30 and must close by Aug. 31. Sales already under contract are not eligible; neither are properties outside of Florida.

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Obama challenged by RE/MAX broker

Short Sale My Home?: A Homeowners Guide to a Short Sale by Lou Lollio

Book Description
A Homeowners guide and help to answer questions about the Short Sale process. Author Lou Lollio and Tim & Julie Harris

About the Lou Lollio
Lou Lollio is a Real Estate Broker who has been selling Foreclosures for over 20 years and Short Sales for over 10 years. His name has been in the Wall Street Journal, Los Angeles Times Hot properties section, and featured on the front page of American Lifestyle Magazine. His real life experience has helped him to maneuver through the mine fields of purchasing distressed properties for many Americans and those from abroad. He has trained on how to purchase distressed properties and held continuing workshops to help people buy distressed properties both Foreclosures and Short Sales. He has a SFR Short Sale and Foreclosure Specialist certification and designation from the National Association of REALTORS. Tim and Julie Harris have been leaders since day one of their careers. After selling more than 100 homes in their very first year and every year there after. They gained great acclaim when the National Association or Realtors named them Agents of the Year in 1997. They were consistently rated on the Knars lists of top 500 Agents in the US. The youngest and fastest to achieve the Remax Platinum award.

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Are backup offers worth the gamble on short sales?

There is no simple answer to the question of whether or not you should make a backup offer on a short sale. Many factors are involved and you really need to consider them all before you make a decision. Are you looking for an investment property or do you plan to live in the property yourself? How long are you willing to wait to close on the short sale property?

As a general rule you should avoid short sales entirely if you’re in a hurry to buy a home. There is nothing “short” about a short sale, with most taking between 3 to 6 months from contract to closing. And some can take even longer. If you’re not willing to wait a minimum of 120 days you should not waste your time, the seller’s time or the bank’s time. Yes, often short sales get done in less than 90 days, but more often than not you need to expect a more lengthy wait.

If you’re considering placing a BACKUP offer on a short sale all of the relevant factors get amplified. To start with most short sale listings never sell. Most end up going into foreclosure with the owner being forced out of the home. At this point the home will go back on the market as an REO or bank-owned listing. But truthfully it will usually take 4 or more months after the seller is forced out of the house before you will see the home back on the market as a foreclosure property. And then when it goes back on the market the bank will want the house to be exposed to the market for a month or more before they will accept offers. So if you’ve got your eye on a short sale and are hoping to snatch it up after the sellers are kicked out and it becomes a foreclosure listing you will have a long wait. Read more

What do I need to do to sell my Florida home?

If you’re interested in selling your Tampa Bay, Florida home in 2011 you’re going to need to learn how to look at your situation as objectively as possible. By “objectively” I mean “Uninfluenced by emotions or personal prejudices.”

Easier said than done? Tell me about it.

But you’re going to need to do it nonetheless, so perhaps now is the time to start practicing. A good place to start is by walking out of your home and then back in the front door, pretending you’re an actual home buyer seeing the “property” for the first time. You’ve never been in the house before so look around at what you think a buyer would look at if they were seeing your home for the first time.

Is it clean and organized? Are there unfinished repair or maintenance projects obvious? How does the home smell? Is it light or are all the windows covered making the place feel more like a cave than an inviting home?

These are the physical steps to attempting to see your home objectively – as buyers might see your home. You might also ask some friends to do the walk-through with you and to be honest about what they think a buyer might think. Read more

Where is the Shadow Inventory?

WASHINGTON – Sept. 20, 2010 – For the last year, the real estate industry has been talking about shadow inventory and the coming flood of distressed properties. Where are they?

Here’s what’s happening, according to a recent paper by Alan Mallach, a senior fellow the Brookings Institution:

• Some delinquencies have been resolved through loan modifications or people working out the problems on their own.

• Banks are getting better at managing short sales.

• Investors are aggressively buying up properties, sometimes in bulk, directly from the banks or at courthouse auctions so they don’t hit the market.

The likeliest outcome, Mallach predicts, is a steady flow of foreclosures over a long timeframe that will prevent another crash in home prices – but it will probably lead to low or no appreciation in home prices for a while.

Source: The Wall Street Journal, Nick Timiaros (09/16/2010)

Bill could speed up short sales

WASHINGTON – Sept. 17, 2010 – Homeowners underwater on their mortgage may find relief through a bill strongly supported by the National Association of Realtors®. The bill, if passed by Congress and signed by President Obama, would force lenders to respond to a short sale request within 45 days.

The legislation, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010,” was filed yesterday in Congress by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.).

“The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth,” says NAR President Vicki Cox Golder. “While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times. As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners … as well as the nation’s economy.”

The number of potential short sale properties is rising across the country. According to NAR data, in the second quarter of 2010, four states have a significant share of properties with short-sale potential: Florida has 27 percent, Nevada 32 percent, California 28 percent, and Arizona 24 percent.

“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said. “Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives.”

Golder says she commends Reps. Andrews and Rooney for their efforts on the bill and urges Congress to pass the bill quickly.

How long can you breathe underwater?

Inman News

Top 10 states with highest share of negative equity mortgages

1. Nevada (68 percent of 592,000 mortgages)
2. Arizona (50 percent of 1.3 million mortgages)
3. Florida (46 percent of 4.5 million mortgages)
4. Michigan (38 percent of 1.4 million mortgages)
5. California (33 percent of 6.9 million mortgages)
6. Georgia (28 percent of 1.6 million mortgages)
7. Idaho (24 percent of 243,000 mortgages)
8. Virginia (23 percent of 1.2 million mortgages)
9. Maryland (22 percent of 1.4 million mortgages)
10. Utah (20 percent of 470,000 mortgages)

What documents are needed in a short sale?

What is a short sale?

A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan.

Unfortunately, there is nothing “short” about short sales so be prepared for a lengthy process far more complicated and frustrating than a traditional sale. But in the end a short sale can save your credit from the long-lasting blemish of a foreclosure.

What documentation will I need to provide to my Realtor and lender?

Authorization Letter
An authorization letter giving your lender permission to speak with your Realtor about your loan(s).

2 most recent months of bank statements
You can use your online bank statements. Just print out the last 2 months.

2 most recent months of paycheck stubs
Be sure to use the 2 most recent paychecks or you’ll delay the process.

Last 2 years W-2s
Employers provide this to employees and to the IRS every year.

Last 2 years tax returns
If you missed filing write a note to the lender explaining this fact.

A hardship letter
A letter describing your financial troubles and inability to handle the mortgage payment.

There are many additional forms and documents that your lender may require, but just about every lender requires these above items. It makes sense to start locating these documents immediately when you believe you’re going to be attempting a short sale.

Your Realtor will need to provide an executed sales contract (both buyer and seller have signed), a comparative market analysis justifying the contract price, a signed listing agreement and a HUD-1 settlement statement.

Palm Harbor, FL Short Sale and Bank-Owned Statistics

My clients regularly ask for my professional opinion on the Tampa Bay area real estate market. Are things turning around or will prices continue to decline? Should I sell my house or attempt to find a tenant?

This week I was asked about the overall real estate market in Palm Harbor, Florida, and specifically, what percentage of homes for sale are short sales or bank-owned. So I set about to get some data for this client that I’ll now share right here for anyone interested in Palm Harbor real estate. Keep in mind that these numbers represent a snapshot in time and may not apply if you’re reading this post at a much later date.

As a general rule there is an inverse relationship between list price and percentage of short sales and bank-owned properties. As list price increase the percentage of listings that are short sales or bank-owned decreases. I’ve known this inverse relationship exists, just by virtue of being a full-time Tampa Bay Florida Realtor, but today was my first day running the numbers.

Palm Harbor, Florida Short Sale and Bank-Owned Statistics

I ran a series of MLS searches in Palm Harbor in $100,000 increments. Afterall, I’m trying to demonstrate that as price increases there are fewer and fewer financially distressed properties on the market.

	$0 – $100k	$101 – $200k	$201 – $300k	$301 – $400k
Total	12  (100%)	154  (100%)	125  (100%)	78  (100%)
Short Sales	6  (50%)	41  (27%)	19  (15.2%)	7  (8.9%)
Bank-Owned	3 (25%)	7 (4.5%)	2  (1.6%)	0  (0%)
Regular	3  (25%)	99  (64.3%)	104  (83.2%)	71  (91%)

I’ve called listings that are not short sales and not owned by banks “regular.” In real estate we often term these as “traditional sales.” The point being as price increases the percentage of homes that are financially distressed decreases. In the table above only about 25% of the Palm Harbor Florida listings priced below $100,000 are NOT in financial distress.

I actually ran the numbers for the next 4 $100,000 price increments and the trend continues to the point where there are virtually no financially distressed Palm Harbor listings at the higher end.

	$401 – $500k	$501 – $600k	$601 – $700k	$701 – $800k
Total	46 (100%)	19 (100%)	18 (100%)	4 (100%)
Short Sales	3 (6.5%)	1 (5.3%)	2 (11%)	0 (0%)
Bank-Owned	1 (2.2%)	0 (0%)	0 (0%)	0 (0%)
Regular	42 (91.3%)	18 (94.7%)	16 (88.9%)	4 (100%)

 

I hope brief study helps my Palm Harbor buyers and sellers understand the current ratio of traditional listings to distressed property listings. As is obvious I have refrained from commenting on why these numbers might be important to buyers and sellers of real estate. That will be a different post.

* These numbers only pertain to single-family houses and not condos, townhomes, villas, or land for sale.
* I rounded my numbers off and might not have always done so perfectly.
* The numbers don’t always add up to 100% because there are a few other seldom used categories in MLS, such as “pre-foreclosure” and “in foreclosure.”

Will the $8,000 tax credit be extended?

According to my sources the $8,000 tax credit will NOT be extended. There simply is not enough money available to extend this first-time home buyer tax credit. So it is now or never folks. If you’d like to benefit from this tax credit you need to be under contract in the next few weeks and closed by June 30, 2010. This means short sales aren’t going to work. Concentrate on traditional sales and bank-owned or you will miss the tax credit. Anyone that tells you that you can go under contract and close on a short sale by June 30, 2010 is either under the influence of something exotic or completely inexperienced with short sales.

Tampa Bay Realtor – Short Sale Specialist

Are you considering buying or selling real estate in the Tampa Bay area? More than likely your home is going to be worth less than you owe if you bought in the past four years. This poses a challenge to both buyer and seller as the transaction is much more complicated and lengthy than a sale where the seller is walking away from the closing with money.

If you owe more than you can sell your home for you will need to consider a short sale, and to do a short sale you need an experienced and knowledgeable Realtor with a proven track record for selling short sales in the Tampa Bay market. Please consider calling me today at 727-804-5319 and I’ll help get your home sold. With close to a 100% success rate with Florida short sales I have the knowledge and experience to navigate the complexities of loss mitigation and short sale negotiation.

Only 1 in 8 short sales ever close

Fannie Mae recently released statistics showing the difficult nature of a Short Sale transaction and how that relates to Foreclosure statistics.

In 2008, Fannie Mae found that for every one short sale that closed, eight homes went into foreclosure. This speaks to the difficult nature of the Short Sale process and the backward nature of how lenders handle them.

Charles Rutenberg is rated #1

If you’ve been paying attention as you drive around Tampa Bay neighborhoods you’ve undoubtedly noticed an abundance of Charles Rutenberg Realty signs dotting the yards. There are good reasons for why we’re dominating the real estate market, but this blog post isn’t about the why of our success. It’s simply to note that we are successful and significantly more so than every other real estate brokerage in town.

Charles Rutenberg has 3x as many listings as the 2nd place real estate company. With 1997 total listings we have more listings than the next 4 brokerages combined. We control an impressive 19.46% of the market for active listings.

But active listings are only one indicator of success. Even more important than what we have for sale is what we actually have under contract. According to the Kenst Report, the industry ratings guide for the Tampa Bay area, Charles Rutenberg Realty is outperforming all other real estate brokerages. Our share of the market is just under 25% at 24.83%. Our nearest competitor comes in at 10.43%.

And even more important than active listings and listings under contract are listings we’ve actually sold. So let’s take a look at those numbers now. From January of 2009 through the end of September 2009 Charles Rutenberg Realty sold more than 2x as many listings as the 2nd place real estate brokerage. And to show this isn’t some sort of fluke we can look at the same statistics for 2008 and see a similar level of dominance.

Why share these statistics with Tampa Bay area home buyers and sellers? The time will come when just about everyone will need to buy or sell real estate. And at this point a decision needs to be made. Will you hire the best or one of the rest? Yes, that rhymed. I couldn’t help it. I feel like a cheerleader right now, but trust me, you don’t want to see me in a cheerleader uniform.

Why do lenders agree to Short Sales?

This is one of those questions many people are asking me these days. There are so many homeowners in Tampa Bay, Florida that are behind on their payments and exploring their options that I thought I’d write a bit about why short sales make sense for lenders. I can assure you they aren’t accepting less than you owe because they want to do you a favor!

Lenders are willing to accept a Short Sale for the following reasons:

• To avoid the cost of foreclosure — Lenders lose, on average, $50,000 per foreclosed home
• To avoid adding additional real estate to their inventory; afterall, they are in the business of lending money, not purchasing homes
• Perhaps the Seller has a true hardship and is a likely candidate for filing bankruptcy

So even though a short sale might be in your lenders best interest it is often a challenge to get them to realize this fact. This is why you need a knowledgeable Realtor skilled in navigating complex real estate transactions like Short Sales. Please don’t hesitate to call me if you have questions or need help. Also, you’re free to post comments right here and I’ll respond quickly.

Home short sale flips nixed

By SHANNON BEHNKEN
sbehnken@tampatrib.com
Published: June 12, 2009

TAMPA – It may be a bit tougher now for investors to flip short sales for big profits.

Attorneys’ Title Insurance Fund notified its 6,000 member lawyers this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales. A short sale occurs when a mortgage holder agrees to allow a home to sell for less than the mortgage balance so that foreclosure can be avoided.

The Orlando-based fund is a major underwriter for lawyers who write title insurance in Florida. In a letter to lawyers, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work.

The letter says they involve investors entering option deals with homeowners for “the exclusive right to purchase their property for a period of time.”

The investor negotiates a short sale with the mortgage holder by convincing it that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.

The problem is that “the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property,” the letter states.

The fund’s decision could have a major effect on short sale flips because many investors use lawyers to close deals when traditional title companies won’t.

The option contract method has been gaining steam as a way to work off inventory in a bad real estate market.

Critics say mortgage holders are misled and don’t realize they could be selling for more. Some real estate agents and buyers complain that the option contracts lock some buyers out of the market. That’s because some types of loans forbid flips.

Some lawyers have raised concerns that sellers may have to pay the difference later.

But proponents say investors can make money and homeowners can avoid foreclosure. They say mortgage holders would lose even more money if they foreclosed on the home.

Examples of hardships for a hardship letter

One of the items your lender will ask for during the short sale process is a hardship letter. A hardship letter is a written explanation as to why you fell behind in your mortgage payments. So swallow your pride and face the reality that you’re going to have to explain yourself before your lender says, “Oh, don’t worry about those 15 delinquent mortgage payments. And we’re comfy with you selling your home for $150,000 less than what you owe.” Consider it like having to bring a doctors note to school after missing a few days. The purpose of this article is to help you write a good doctors note.

Your goal is to stop the foreclosure process so start brainstorming for all the reasons why you are in your current financial crisis. And the bank expects you to be in a bit of a crisis too before they’ll consider accepting a short sale. If you’re current on your mortgage payments and have a fat bank account don’t expect your bank to forgive your debt. That wouldn’t make any sense now would it?

Here are some valid reasons for experiencing financial hardship:

• Illness and/or medical bills
• Loss of job
• Reduced income
• Failed Business
• Job relocation
• Death of spouse or co-borrower
• Incarceration
• Divorce or marital separation
• Military duty
• Damage to property (hurricane, flooding, fire)
• Adjustable Rate Mortgage (ARM) reset shock

The last example of an ARM reset is becoming increasingly common so don’t be shy about adding this reason to your hardship letter. If you were paying $750 per month for the past few years and suddenly your mortgage rate adjusts to a $1200 payment you could very well experience a strain on your finances leading to a hardship. The difference between your old payment and new payment is the equivalent to a new car payment.

Cumberland Trace – Largo, FL Real Estate

Looking for a townhome in Cumberland Trace of Largo?

There are some incredible deals available in Cumberland Trace townhomes. Prices have dropped significantly over the past few years due to adverse market conditions. While this is bad news for Cumberland Trace homeowners it’s an incredible opportunity for buyers.

As of April 22, 2009 there are 4 units currently for sale. All have 1272 square feet and identical floor plans. The list prices are as follows:

• $99,900
• $117,000
• $119,000
• $134,900

The 3 lowest priced listings are all short sales while the $134,900 is a fair market sale.  The crazy thing is these units were over $120,000 brand new back in 2004 so clearly they have lost all equity gained over those years. In fact most have lost all equity and are now selling at a loss for the homeowners. Again, good news for buyers and not so good news for sellers. Read more

Short sale doc stamp problems causing angst at closing time

TALLAHASSEE, Fla. – Sept. 3, 2008 – Should documentary stamp taxes levied against a short sale be based on the sale amount or on the sale amount plus money forgiven by the original lender? It’s a simple question without a simple answer, and it impacts closings in Florida.

The problem is fairly new, and arose with the large number of short sales. Florida law does not clearly state whether the doc stamp taxes owed on a deed should be based on the sale price paid by the purchaser, or on the sale price plus any existing debt forgiven by the bank. Consequently, local governments make their own decisions and charge different amounts.

The Florida Association of Realtors (FAR) contacted the Florida Department of Revenue (DOR), the Attorney General’s office and the governor’s office when the problem became clear. As the dispute intensifies, it could shut down some closings and impact an already soft real estate market.

“Meetings with officials have continued,” says FAR Public Policy Representative Trey Price. “Last week, FAR had a two-hour meeting with eight DOR personnel, including both the head of the agency and the general counsel.”

Some local government officials and others within the real estate community mistakenly think the issue has already been decided, based on a widely circulated one-page letter on DOR letterhead that claims doc stamps are due on the higher amount.

But a top DOR official says, “No official position has yet been issued by the department.”

FAR officially requested a Technical Assistance Advisory (TAA) with DOR, which would provide Realtors a specific document to explain the short sale doc stamp procedure. Bob McKee, deputy executive director of the agency, adds, “We anticipate that official position to be taken very soon in the form of the TAA requested.”

While FAR hopes that an outcome favorable to all parties will occur (an advisory using the lower amount), Price warns that an unfavorable outcome is possible. “FAR is prepared for that outcome as well, including exploring possible ‘amnesty’ avenues the Florida Legislature could enact to protect earlier short sale transactions.”

FAR received notification yesterday that the TAA should be available soon. “Advisories can sometimes take months or even a year before a conclusion is made, so the DOR expediency illustrates their understanding of the importance of this issue,” says Price.

FAR will continue to follow the short sale problem and keep members informed of any updates.

Wells Fargo Loss Mitigation Contact Information

Wells Fargo
(877) 216-8448 or (866) 261-5642 or (800)766-0987 or (800) 678-7986 for payment assistance
Borrower Counseling Services
Monday – Friday 8:00 a.m. – 9:00 p.m., CT
Saturday 9:00 a.m. – 2:00 p.m., CT
Web: https://www.wellsfargo.com/mortgage/account/

Doing short sales with Wells Fargo doesn’t have to be stressful. Of all the banks Wells Fargo is one of the easiest to deal with. Please join the discussion and share your short sale story below. Keep in mind that I am a Tampa Bay Florida Realtor and not a Wells Fargo employee. Don’t post your personal information such as account numbers, names, phone numbers, addresses, etc…

I’ll try to respond as often as possible to questions about the Wells Fargo short sale or Loss Mitigation process. But I cannot answer legal questions or tax questions, especially for all of you people posting that aren’t in Florida. I’m a Florida Realtor and my real estate knowledge is restricted to Florida real estate transactions.

Wachovia Loss Mitigation Contact Information

Here is the current contact information for the Wachovia Loss Mitigation department. Please feel free to leave your comments and questions about the Wachovia Bank short sale process. Keep in mind I am a Florida Realtor and not an employee of Wachovia. I cannot help you with your short sale unless you are located in Florida and are interested in hiring me to list your home. I don’t work as a short sale consultant. This page is here for your benefit and I will try to answer questions as they arise, but don’t post personal information here thinking I will be able to help you negotiate your Wachovia short sale. Call the Wachovia Loss Mitigation contact information below if you need to sell your home short.

Wachovia Corporation
(866) 642-8608
8:00 a.m.-5:30 p.m. Monday-Thursday
8:30 a.m.-4:00 p.m. Friday

US Bank Loss Mitigation Contact Information

The below contact information is for the Loss Mitigation Department for US Bank. I’m not an employee of US Bank and I cannot answer specific questions that only an employee could answer. Please feel free to leave comments or ask questions about the US Bank short sale process, but I’ll only be able to help you as a Realtor and not an attorney or tax accountant.

I have done short sales with US Bank and I would personally rather have my spleen removed with a rusty spoon than go through the process again. Of all the banks I have dealt with these people were abusive, unprofessional, rude and basically heartless. Oh, and irrational comes to mind too. And I have extensive experience negotiating short sales and for some odd reason I usually enjoy the process. Not with US Bank. I have nothing good to say about them and would never advise anyone do business with them.

Below you’ll find the US Bank Loss Mitigation contact information you will need for doing a short sale with US Bank.

U.S. Bank Home Mortgage
(800) 365-7900
8 a.m.-5 p.m. CST, Monday-Friday
www.usbankhomemortgage.com

Fair Market Fantasy for Tampa Bay Florida

You’re probably wondering what the fair market value of your home is in this nightmare real estate market. I suggest you get rid of that idea as it is virtually a meaningless statistic. Fair market sales aren’t very common in the Tampa Bay Florida real estate market right now. But if you’re just dying to know email me at chris@callchristoday.com and I’d be happy to help you with home valuation. I can tell you the fair market value and what I believe is a more realistic listing and sales price.

Welcome to the world of REO’s and Short Sales

Most of the homes selling in Tampa Bay Florida today are either REO’s or Short Sales. REO stands for “Real Estate Owned,” which, if you ask me, is a rather silly acronym. REO’s are owner by the banks. These are foreclosed homes where the sellers have lost the battle and are now out of their homes. The banks have hired REO listing agents to attempt to sell the properties. If the REO listing agents fail to sell the homes might end up being sold at auction.

Short Sales are homes that are still owned by the sellers, but they are teetering on the edge of foreclosure. If they don’t sell they will be taken back by the bank, but in order to sell the seller must sell at a price lower than what they owe their lender. (I am over-simplifying this process) The lender is getting “shorted” a sum of money so the lender must review the sales agreement and either approve or reject it.

Sellers that are in good financial condition that simply want to sell their homes at the fair market value have a real problem on their hands. They are forced to compete with a large quantity of very low priced bank owned and short sale properties, and usually it is simply impossible to compete and still walk away with some cash at closing. Unless the seller has tremendous equity this is just not the time to sell. I strongly suggest sellers sit back and wait this real estate/economic crisis out. While the market is saturated with REO’s and short sales fair market sales will remain a fantasy in the Tampa Bay Florida market.

Don’t throw in the towel just yet

If you’re about to throw in the towel and just walk away from your home and mortgage you really need to reconsider. There are numerous great options available to you. Ignoring phone calls from your lender isn’t one of them. With a bit of effort and smarts you can solve your financial crisis and not have the nightmare of a foreclosure plaguing your credit report for the next 7+ years.

You might think I’m biased here, but hear me out. If you’re a few months late on your payments now is the time to call a good Realtor. While I happen to know one (me) I am suggesting you call ANY decent Realtor. A knowledgeable Realtor can help you explore the various options available such as a loan modification or a short sale. Don’t assume the banks are out to get you and sitting there at the corporate headquarters giggling about how they can’t wait to kick you out of your home. It just isn’t happening. Your lender does not want your home. They want money from you or from someone else. But there is no wild-eyed banker plotting to boot you from your home.

“But will they boot me?”

In a heart beat. Well, not an actual heart beat. Probably more like 20,000,000 heart beats…but who is counting? In Florida the foreclosure process takes about 5 – 6 months at the minimum. The time for action is the moment you start to slip behind in your payments. You need to be on the phone with your bank, and specifically the Loss Mitigation Department, discussing how you can get out of this predicament. Your bank will work with you if you give them a call.

“But I have called them and they were rude and mean and nasty!”

If this is the case you were probably talking to an idiot. Yes, you heard me right. If your lender doesn’t treat you with respect for making an effort to communicate with them and work towards a resolution then they’re idiots. It costs $20,000 or more for that bank to hire an attorney to initiate the foreclosure process. And then the costs start to really add up as the process moves along at a snails pace.

Most banks will treat you fairly and professionally, but few will offer empathy, sympathy or a shoulder to cry on. They’re dealing with thousands and thousands of other delinquent files and they cannot afford to get emotionally attached to you or your problems. If you call and get someone rude, mean and nasty politely end the call, wait an hour, and then call back. You’ll probably get a completely different person. And if this 2nd person is rude, mean and nasty then it is time to call me. I happen to specialize in dealing with rude, mean and nasty banks.

Short Sales: Bad for Business?

In the October 2008 edition of “Florida Realtor” a Realtor wrote a letter to the editor complaining that short sales are basically bad for business. Home sellers that are not in a short sale or foreclosure situation cannot compete with the extremely low prices offered by short sales and bank owned properties.

While this is true I have the reverse opinion. Short sales and foreclosures are helping thin out a saturated market. Granted, it is going to take quite a while to sell all of these short sale and REO (bank owned) homes, but they DO need to be sold if we’re ever going to get out of this economic crisis. The lower the list price the quicker the sale. The quicker the sale the faster we can clear the market of these under priced homes and start seeing traditional sellers have a chance of selling. Because right now…you and I don’t stand a chance of selling our homes. We have to wait it out and let the short sales clear the market. And it’s going to be a long and painful process so don’t hold your breath. As the current short sales sell new ones will enter the market.

An elementary understanding of economics tells us that price (or the equilibrium point of supply and demand) cannot increase (thus making traditional equity-holding sellers happy) without a decrease in supply. So short sales selling are facilitating a decrease in supply. Short sales are a good thing. We should all celebrate every time a short sale closes in our neighborhoods, because this short sale is moving us one step closer to a normalized market. There IS a light at the end of the tunnel. Hopefully, that light isn’t a train.

Lenders setting short sale prices?

A Realtor sent in a letter to the editor in the October 2008 “Florida Realtor” magazine expressing his opinion that it is wise to allow the bank to set the list price on short sales. Here is the letter:

“If the listing agent determines that the sale of a home won’t satisfy the loan, he or she should contact the bank in first position and notify them that the homeowner wants to market the house for sale, and that the transaction will constitute a short sale. The bank can then do their BPO [broker price opinion] and set the “market price.” Imagine that. In a matter of seven to 10 days, we now have a property on the market, in the MLS, advertised for sale at a price that we know the bank will accept.”

From my experience this just isn’t how the short sale process works. And it definitely isn’t a realistic idea about how to improve it. The first few phone calls to a lender in 1st position are typically to low-level employees in the Loss Mitigation Department. These people aren’t authorized to give the banks bottom line or to order a BPO.

In fact the bank doesn’t want the listing agent to know their bottom line. They actually wish to hide this from them much the same as the seller of the home, in a normal sale, doesn’t want potential buyers knowing their bottom line. The whole concept behind real estate negotiation is to attract a buyer ready, willing and able to pay the highest dollar amount that the current market will bare.

Asking a bank for their bottom line is like walking into a car dealership and asking for their bottom line. No dealer is going to leave money on the table and come right out and tell you what they would accept. Their goal is to sell as high as possible while your goal is to buy as low as possible.

When you bid on an item on eBay why do you think you don’t know the sellers bottom line? Quite simply they are playing their cards close to their chest in hopes of attracting a buyer willing to pay even more than their bottom line. Welcome to America and capitalism.

Loss Mitigation Contact Numbers

* ABN Amro Group: 1-800-783-8900
* Ameriquest: 1-800-211-6926
* Bank of America: (716)-635-2982
* Chase Manhattan: 1-800-446-8939
* CitiFinancial Mortgage: 1-800-422-1498
* CitiMortgage Inc.: (636)-256-5088 or 1-800-695-0384
* Citymortgage: 866-558-3662 or 800-422-1498
* Countrywide: 1-888-453-3102 or 877-744-7691
* Ditech: 1-800-852-0656 or 1-800-449-8582
* EMC Mortgage: 1-888-577-4011
* Fairbanks Capital: 1-888-818-6032
* FHA insured mortgages: (301)-696-5127
* First Franklin Loan Services: 1-800-622-5035
* GMAC: 1-800-850-4622 or (319)-236-4643
* Greentree: 1-877-816-9125
* Homecomings: 1-800-206-2901 or (858)-874-7417
* Homeq: 1-800-414-0969
* Household Finance: 1-800-333-5848
* Household Mortgage: 1-800-395-4489
* Irwin Home Equity: 1-877-577-3643
* Irwin Mortgage: 1-888-444-6446
* Litton Loan Servicing: (713)-960-9676
* National City Mortgage: 1-800-367-9305 x54949
* New Century Mortgage: 1-877-206-9904
* New South Federal Savings Bank: 1-800-504-7110
* OCWEN: 1-800-746-2936
* Saxon Mortgage: 1-800-594-8422
* US BANK: 1-888-780-3997
* Washington Mutual: 1-888-456-5353 or 866-625-3176
* Waterfield Mortgage: 1-800-957-7245
* Wells Fargo: 1-877-216-8448
* Wells Fargo: 1-866-261-5642
* World Savings: 1-800-642-0257
* WaMu: 1-877-926-8937
* HSBC: 1-800-365-6730