Real Estate Information Archive

“Distressed properties can have great appeal,” says Wendy Forsythe, executive vice president at Atlantic Pacific Real Estate. “Discounted prices and historically low interest rates make these homes affordable to many families who might otherwise not be able to buy a property. But buyers also need to be selective because not every distressed property is a bargain.” 

Typical discounts on foreclosures are at about 19% on average. That number gets brought up and buyers have a tendency to become blinded to other relevant details that are top priorities in real estate. Here is a convenient list to keep in mind if you are looking to save the big on the distressed property sales:

Know any prior claims on the property. “If a distressed home has been financed with two or more loans then the sales process can be far more complex,” according to an article for RISMedia written by Atlantic Pacific Real Estate.

Get Financing. How does a buyer hope to purchase the property? By preparing financing in advance, buyers are able to move more efficiently when a distressed property does come on the market.

Judge the Condition. Getting a deal my result in getting in over your head. Getting a thorough home inspection prior to committing financially to anything!

Foresee Delays In Advance. Ask your realtor to talk you through any potential delays.

Source: “Buying a Distressed Home: What You Need to Know,” RISMedia (July 15, 2012)

To curb the rate of foreclosures, BofA is offering $25,000-30,000 of assistance in relocation fees if they are willing to complete the short sale instead of foreclosure. Why? Banks are seeing short sales as a money saving avenue than if a homeowner falls into foreclosure. The difference between the two processes is simple; short sales tend to give the bank ownership of the home more efficiently leaving the condition of the property optimal for a speedy turn around on the selling end with low fees. In addition, data reveals that short sales bring in more money than foreclosures in the long run.

With that information at hand, banks have started to put forth special offers for homeowners struggling to enter into either short sales or foreclosures. BofA ran a pilot program in Florida and JPMorgan Chase piloted a similar program with the same incentive.

"This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," says Bob Hora, a Bank of America executive.

Source: “Bank of America Offering up to $30,000 for Short Sales,” CNNMoney (May 15, 2012) andBank of America

Read More

BofA Starts Writing Off Borrowers' Mortgage Debt

Abandoned, Deteriorating Homes … Just Let Them Burn?

The short sale trend is still surging. In fact, short sales are passingforeclosures in frequency because banks see it as a better route when compared to foreclosures. In addition, mortgage servicers are increasing the pace of approving short sales in order to move away from the stereotypes short sales have acquired of moving too slowly through the process.

The rate of short sales increased33% this last year and "[We] believe 2012 could be a record year for short sales," says Daren Blomquist, vice president at RealtyTrac. So cross your fingers that the process will be sped up and this year will continue to bring positive news to the market.

Source: “Short Sales Expected to Surge This Year,” CNNMoney (April 19, 2012) and “Short Sales Start to Outpace Foreclosures,” REALTOR® Magazine Daily News (April 19, 2012)

In 2011, the government cut the foreclosure inventory by half. “From the end of 2010 to 2011, Freddie Mac, Fannie Mae, and the Department of Housing and Urban Development saw a 49 percent reduction in the number of REO properties it owns. The three government enterprises held about 150,700 properties as of Dec. 31, 2011, compared to 296,000 at the end of 2010.”

Who Decreased By How Much?

HUD: Reduced foreclosures by 32,000, a 47% decrease.

FANNIE MAE: Decreased by 118,000, 27% of its total inventory.

FREDDIE MAC: Dropped 16% of REO inventory, 60,500 compared to 72,000 in the prior year.

Read More

NAR: REO Rental Programs Largely Unnecessary

Determining the Speed of Foreclosures

Source: “Government-held REO Halved During Robo-Signing Freeze,” HousingWire (March 9, 2012)

Banks are changing their attitude on the infamous distressed sales by being more willing to agree to sale at a lower cost than ahome owner’s mortgage balance. This will ultimately avoid the property from shifting to the status of foreclosure for then the property becomes more costly for the lender.  The trend banks are taking to do more short sales is likely to “show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans," said RealtyTrac CEO Brandon Moore.

To Read More Click Here

To Ask Questions, Click Here

More banks are offering home owners incentives to sell their houses in a short sale to prevent a costly foreclosure to the bank. In fact, some banks are offering struggling home owners as much as $35,000 to do a short sale, according to an article at CNNMoney.

Many home owners have been surprised at banks’ recent willingness to approve short sales.

"Initially, the home owners are skeptical," says Elizabeth Weintraub, a real estate professional in Sacramento, Calif. "The bank may have already turned down their request for a modification. Then, one day, they call and say, 'Let us give you some cash.'"

For banks, the incentives have proven to be a smarter move than letting a property fall into foreclosure.

"The first choice is a modification, but if that's impossible then a short sale is a faster, more efficient solution," Tom Kelly, a spokesman for Chase Mortgage, said. 

With a foreclosure, home owners stop making their mortgage payments and usually property taxes as well. They also often put off maintenance issues, which can cause the home to lose value even more. Foreclosed homes sold, on average, for 22 percent less than homes not in foreclosure in December, according to National Association of REALTORS®’ data. For comparison, discounts for short sales were about 14 percent.

"I've seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again," says John Hayton, a short sale specialist in Orlando, Fla.

Source: “Banks Pay Delinquent Borrowers $35,000 to Sell Their Homes,” CNNMoney (Feb. 10, 2012)

One-Year Cap of Foreclosures Deficiencies

The House of Representatives introduced a new bill on Tuesday that seeks to limit and standardize the timeline in which a mortgage company can go after a home owner following a foreclosure for a deficiency judgment.

Dubbed the Fairness in Foreclosure Act of 2011 (H.R. 3566) wants to place a one-year cap on deficiency judgment (with the exception of states that already have shorter time limits in place). In addition, the bill proposes that mortgage lenders will not be allowed to go after “low-income” borrowers for a deficiency judgment.

"A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to home owners after they have gone through the arduous foreclosure process," Rep. Edolphus “Ed” Towns, D-N.Y., who introduced the bill, said in a release. "Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely."

Source: “House Bill Proposes 1-Year Limit on Foreclosure Deficiencies,” HousingWire (Dec. 7, 2011) and “Rep. Town Introduces the Fairness in Foreclosure Act,” Congressman Ed Towns (Dec. 6, 2011)

BofA's Short Sales Outnumber Its Foreclosures

Bank of America seems to be favoring short sales over foreclosures, at least according to new housing data released this week. The banking giant completed more short sale transactions than foreclosure sales every month for the last year and a half, HousingWire reports. Bank of America completed more than 95,000 short sales in 2010--more than double compared to the year prior.

BofA as well as other banks say the Home Affordable Foreclosure Alternatives program, introduced in April 2010, has helped make it easier to collect documents and reduce the time it takes to close on a short sale transaction. For example, Citigroup says it has dropped its average closing time from 120 days (from when the property was listed to when it closes) to 83 day currently.

"It's a lot easier to qualify now for HAFA than it was in 2010. All I need is a hardship affidavit and one water bill. We're trying to make it as easy as possible," David Sunlin, Bank of America’s real estate management executive, told HousingWire.

Source: “BofA Completes More Short Sales Than REO for Last 18 Months,” HousingWire (June 14, 2011)