How Long to Wait to Buy After Foreclosure or Other Negative Event

According to The State of the Nation's Housing 2015 report published by Harvard University, "Up to 1 million households who lost their homes to foreclosure have already restored their credit standing, making them again eligible for FHA and other mortgages, and 1.5 million more could do so shortly."

Return buyers are coming back into the market, and will continue to do so, but one of the problems is, many buyers out of the millions who were foreclosed upon between 2008 and 2014 are not aware of the guidelines under which they may repurchase. Plus, many buyers are under the impression that all purchases for owner occupied mortgages require a 20% down purchase.  This is not a mandatory requirement but depends on which kind of loan being applied for, and how long it's been since the negative event was concluded in the past. Briefly, FHA loans allow for a minimum of 3.5% down, VA has similar program, and conventional loans may be 5%-10% down and offer different interest rates and scenarios for the buyer.  Twenty percent down loans are great to have, but many people cannot meet that level, so please understand there are other options.

A lot of buyers who suffered a financial hardship in the past are genuinely surprised when they realize that the FHA or VA loan allows them to purchase again after just 1-3 years, depending on circumstances. Let’s take a look at the 2016 mortgage waiting periods:

AFTER FORECLOSURE:
Conventional loan:  Close of escrow, meaning new loan date, must be 7 years from foreclosure date.  And, under a new rule, if you included the foreclosure in a bankruptcy, you can qualify after 4 years instead of 7 years. Contact your lender for more details on how to qualify under this new rule.

FHA  It is 3 years before you can repurchase again using FHA financing. Contact your lender to find out how you may quality after just one year (this means meeting "special circumstances" which fewer borrowers will be able to meet).

VA.  It is only 2 years before you can repurchase again using VA financing.

AFTER A SHORT SALE:

Conventional.  It is 4 years before you can repurchase again using Conventional financing.
New Rule: There was a new change implemented recently (see below), whereby if you included the short sale in a bankruptcy 13, you can qualify after 2 years instead of 4 years.

FHA. It is 3 years before a buyer can repurchase again using FHA financing. But there are 2 less commonly used ways to help you qualify in less than 3 years if you can meet them under suffering an "economic event" as defined by FHA.  Contact your lender for more information on this, but be aware that showing loss of income and other events must be documented and approved in the loan.

VA. It is only 2 years you can repurchase again using VA financing.

AFTER BANKRUPTCY:
Here are the current 2016 waiting periods when you can purchase or refinance again after a Bankruptcy and want to obtain either Conventional, FHA or VA financing.

Conventional. For a chapter 7 Bankruptcy it is 4 years and 2 years for a chapter 13 bankruptcy, before you can repurchase again using Conventional financing.

FHA. For a chapter 7 Bankruptcy it is 2 years and 1 year for a chapter 13, before you can repurchase again using FHA financing. Or, see above for how you can qualify again after just 1 year if you experienced an economic event.

VA. For a chapter 7 Bankruptcy it is 2 years, and 1 year for a chapter 13 bankruptcy, before you can repurchase again using VA financing.

Another option if you want an alternative to these guidelines, is a portfolio lender (a loan that is not  re-sold on the market after close of escrow), which may be an option, but there may be higher loan rates.

To find out your eligibility, I can help you with finding resources to doublecheck on dates, so please contact me, or, contact a lender if you know one who is well-versed in these guidelines, to find out your eligibility for a mortgage.

New Fannie Mae and Freddie Mac Loan Modification Guidelines for July 1, 2013

If you're still an "underwater" homeowner of a single family residence, a condominium, a second

Did you buy when the market was high?

home, or an investment property with a mortgage owned or guaranteed by Fannie Mae or Freddie Mac, you might be eligible for sweeping new changes as of July 1, 2013, known as the "Streamlined Modification Initiative."

Past programs for helping borrowers modify their loans met with less success than hoped for, and Fannie Mae/Freddie Mac are now offering eligible borrowers the opportunity for less documentation and document collection which also removes administrative issues for the lender.  Under this new program, borrowers are not required to document their hardship or financial situations.

This program ends August 1, 2015, so it's basically in effect for 2 years.

What are the borrower eligibility requirements?

• The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
• Homeowners must be 90 days to 24 months delinquent.
• There must be a first-lien mortgage that is at least 12 months old with a loan-to-value ratio equal to or greater than 80 percent.
• Loans that have been modified at least two times previously are not eligible.
• The borrower must participate in a trial payment plan period of 3 months.

Loan servicers, i.e, Bank of America, Wells Fargo, Chase, or whomever handles your loan payments, will be required to send a Streamlined Modification Solicitation Offer to borrowers who are at least 90 days delinquent and meet the initiative’s eligibility requirements.  The HAMP program (Home Affordable Modification Program) is still available to borrowers, and may offer more favorable payment options to the borrower, however it also requires borrowers to meet certain guidelines and submit full documentation. 

If you are considering selling, and are not yet 90 days delinquent on your loan, you should carefully consider your plan of action.  The proposed monthly payment may or may not be satisfactory to you under this Streamline program, and as a seller, you would ideally have a very clear picture in your mind as to the direction you are going to take.  Borrowers should be aware that "strategic defaulters" will be screened for in advance, so if someone is purposely defaulting in order to obtain this program, Fannie Mae and Freddie Mac will be on the lookout for that.

Interestingly, some property owners are not aware of current selling prices in their local market, so obtaining a good market valuation on your property should be a first priority. If your property is a candidate for a non-short sale transaction, you could move on. If on the other hand, you would rather stay put and not sell if you obtained a better mortgage payment, you should find that out as soon as possible to avoid being an unmotivated seller at this time.

For more details about this program, or to find out if you have a Fannie or Freddie mortgage, please contact me via e-mail or phone, I will welcome the opportunity to help you. I serve the Long Beach, Lakewood, Cerritos, Cypress, Seal Beach, Los Alamitos, and San Pedro areas, including adjacent cities such as Huntington Beach.

Update to HAFA Short Sale Program in 2013

The "Home Affordable Foreclosure Alternative" (HAFA) program is a program for distressed homeowners to sell their homes and avoid foreclosure.

This program applies only to participating lenders who agreed to participate in the government's "Home Affordable Modification Program" (HAMP). There are currently about 100 participating lenders, including Chase, Wells Fargo, Bank of America. On February 1, certain rules were changed for these lenders (who are not Freddie Mac, Fannie Mae, or FHA/VA lenders, which are excluded from this post), which simplified some of the steps.

One change now in effect is that the property is no longer required to be owner-occupied, in fact, it may be vacant or tenant-occupied, to be eligible for a HAFA short sale, and the tenant/borrower/non-borrower occupant may qualify for the $3,000 in relocation assistance. Payment to subordinate mortgage lienholders (do you have a 2nd mortgage?) has been increased to a maximum of $8500.

Borrowers are no longer required to successfully complete an initial trial loan period or be eligible for a HAMP loan modification in order to be eligible, and the borrower may apply directly for the HAFA program.

The hardship must be verified by the borrower's lender, with no convictions relating to mortgage fraud or real estate transaction within the past 10 years. A hardship means the borrower must show, among other things, they no longer have sufficient assets to make the mortgage payment (these are  not supposed to include retirement funds).

The current program cutoff date is December 31, 2013 for submission of request for a short sale, or request for approval of an executed sales contract, with conclusion of the transaction by September 30, 2014.

There are specific procedures and forms the borrower must cooperative with during the approval process, which includes about 12 steps including all borrower document submission and lender deadlines. Additional information may be requested depending on the particular loan investor on the borrower's loan.

For a more complete fact sheet on a HAFA short sale, please contact me and I will be happy to e-mail the information, plus links to informational sites.

What is a HAFA short sale?

Short sales have not gone away by any means.  Although the number of actual short sales for residential properties has decreased greatly just since the beginning of 2012 in the south Los Angeles County/north Orange County region, the number of homeowners estimated to be in an "underwater" value position is about 25%-30% of the market. A search in today's MLS in the City of Long Beach, out of 492 active residential listings, about 71 are listed under short sale conditions, or about 14% of the active market.  Interestingly, the number of short sales in October 2012 compared to October 2011 has actually increased by 28% overall in the same general region, with short sales being about 6% of the combined market in all the local cities of this local region.

There are, however, reasons for a decline in short sales, one of which is there is still a great number of owners who go into foreclosure without ever attempting to list their home first; next, some do list their home but are unsuccessful in selling before the bank takes it over.  Nationally, more than 7 out of 10 homeowners go into foreclosure without visible intervention.

Currently, there are over 100 lenders participating in the HAFA (the government-subsidized Home Affordable Foreclosure Alternative), including Citimortgage, Bank of America, Wells Fargo, and many servicers.

For a homeowner to participate in this program, there must be certain requirements met--your home must be listed with a local real estate agent, and the necessary documents must be submitted before December 31, 2013, and close by the following September of 2014.  First, it must be a loan other than one by Fannie Mae or Freddie Mac, or insured by FHA, or the VA.  It must be a first trust deed originated before Jan. 1, 2009, and the loan amount for a house or a condo (1 unit) must be under $729,750. The borrower must comply with the specific timelines in this program. The borrower may have more than one property approved for sale under this program, but cannot have purchased a property in the last 12 months..  Last but not least, the borrower must be in a hardship situation.

Now, HAFA will not apply to all borrowers because about 60% of California's mortgages were issued under Fannie Mae, which is excluded from HAFA.  (But Fannie Mae and Freddie Mac also have hardship program, please contact me for information.)  The bank or servicer may not attempt to collect any additional sums (i.e., cash or note) from the borrower after the property is approved for a HAFA sale, and the bank may not complete a foreclosure sale if the borrower complies with the HAFA sale terms.

There's about 9 steps to complete (including close of escrow) to go through a successful HAFA short sale.  What are the pluses? You may have some financial incentives to move under this program, and you may also be able to obtain a release of your second lien. 

Are you being scammed?  See this video here for the 5 basic trouble signs you want to watch out for.

The same banks have their own "cooperative" short sale programs which are similar to the HAFA program; currently Bank of America in particular is doing an outreach to certain borrowers.
For more specific information see Making Home Affordable and a HUD telephone number to call for housing counseling. 

This is a sale which requires the assistance of a real estate professional.  Please contact me for more specific information which can be e-mailed to you about this program.  Please remember you may have other options (do you think you still have equity in your property? that actually happens), and there are other short sale programs being offered right now, some of which offer a great deal of cash incentive to the borrower, so please call me about the HAFA or any other short sale program. Don't let your house go into foreclosure if you can possibly help it.

Julia Huntsman, 562-896-2609

Borrowers are always advised to seek advice from their tax and/or legal professionals.

Eliminating Your Second Lien -- Do Some Checking First

Under a new program by offered by Bank of America for home mortgage second liens, about 150,000 of its borrowers are being contacted to apply for full forgiveness.  Based on the total dollar amount forgiven so far for the number of borrowers, the average is about $69,000. 

If you're currently in a short sale, this could potentially cause a delay, or worse, if you're already on track for closing on the first and time is running as you approach your closing date.  The release time required for completion of the second loan is running about 90 days, so accepting that release will result in a delay of your short sale, or even worse, a loss of that transaction if the investor/servicer on the first will no extend time to close.

Make sure you're really going to get freedom from a difficult mortgage burden.  Say you're not in a short sale, and you receive the offer from Bank of America or one of the other major banks, make sure you get a proper estimate of your home's value from a professional.   If your first loan balance is about $465,000, and your second balance is still around $45,000-$50,000 because you got an 80/10/10 loan (you had 10% down payment, and got a 10% second mortgage) getting your second loan released won't do you any good right now because it will not put you into an equity position--I forgot to mention, you just found out that at best your house is currently worth $450,000 from your neighborhood REALTOR who has checked all the sales within the last 4-6 months in your neighborhood.  If releasing that lien puts you into an equity position, and you're not under a short sale timeline that cannot be extended, then the second lien forgiveness program could be for you.  But make sure you read the entire letter, because if your first is currently in default and on a foreclosure track, getting the second forgiven will not prevent the first's foreclosure. That will still require separate action to stop the foreclosure (there can be different banks and/or different investors on each loan).  Bank of America also makes is very clear that they are choosing who gets invited to this event, you as the borrower cannot pursue it without being invited. (It's not personal, it's just that there are many conditions affecting second mortgage liens.) The fact is, Bank of America took over Countrywide's loans, and Countrywide did a lot of "piggyback" loans, which are probably some of the seconds that are part of this offer. 

It's also wise to review beforehand any possible impact to your credit score (debt cancellation may actually impact your score), reporting to the IRS, and any bankruptcy issues you may have.

If you need an estimate of value on your Long Beach, Cerritos, Lakewood, Seal Beach home, or somewhere near these cities, please contact me.  If you would like more information about a short sale and you're in Long Beach, Cerritos, Lakewood, or in Los Angeles County or Orange County, please contact me.

Julia Huntsman.REALTOR®, CDPE, e-PRO®, SFR, Broker

and don't forget to "like" us at www.facebook.com/longbeachhomesandcondos

The Mortgage Debt Relief Act Is Hanging in the Balance For Long Beach Area Owners

In 2007, the Mortgage Debt Relief Act was passed in an attempt to help the millions of homeowners who, due to the housing crisis and economic crash, suddenly found themselves in danger of losing their home to foreclosure.

The act has helped many California distressed homeowners find solutions to avoid foreclosure and opened up options to them that were previously unavailable.  This Act removed the tax responsibility on forgiven mortgage debt and allowed short sale sellers and owners of foreclosed homes to recover more quickly from selling their principal residence as a distressed property.  

 

Although there is less coverage in the media about homeowners who owe more than their home is worth, those owners make up about 22% of the nation's homeowners.

The Mortgage Debt Relief Act, however, was only intended to be a temporary solution and is now set to expire at the end of 2012.  This law has already been extended twice.  There is a bill in Congress that would extend it again, but it is unclear if it will pass. For distressed homeowners, this means that time is limited to take advantage of this program.

Time is running out. But there is still a chance to change your financial direction and avoid foreclosure.  Call today to find out the current process for listing and selling your property as a short sale--the banks have streamlined their process greatly compared to the past, and limited inventory has made buyers more willing to wait for the short sale process.

Just one more thing: please don't think that if this law is not extended, that a short sale is not possible because that is not true.  What it means is that the tax forgiveness period will be over, which will impact both short sales and foreclosed properties.  Please remember that with a short sale, with the vast majority of properties, there is less of a loss for the bank to accept than when it is not sold and goes straight into foreclosure. Either way, the homeowner will be responsible for this difference between the bank's loss and the mortgage amount, if the MDRA is not extended.

 

Contact me, Julia Huntsman, CDPE, at 562-896-2609 and see more short sale information at www.juliahuntsman.com - Help for Homeowners.

What California Homesellers Sometimes Overlook: 10 Things, Part I

Regardless of when and where the homeseller could be selling in California, or whether there's a shortage of inventory or not, the transactional issues and facts are still tied to the contract between buyer and seller.

Here's a handy list for the Top Ten Legal Mistakes, with some added commentary by me.

What are the other contractual terms?
Sellers quite naturally want to sell at the highest possible market price, and have very good reasons for doing so. But selling price is not the only term in the contract-- for example, what if the buyer has a contingency to sell their own property, or what does it mean if the buyer is willing to remove their appraisal contingency but not their funding contingency? What if you agree to the liquidated damages clause? In a short sale, do you understand all the terms of the short sale addendum? And what do you need to consider with an all-cash buyer vs. a financed buyer?

What may happen with multiple offer situations?
In multiple offer situations, many buyers could be submitting offers but the seller is not obligated to any one buyer. The seller may respond to all buyers or choose one (but without discrimination). But what if additional offers are submitted in a regular sale after a signed contract exists with buyer no. 1? And what if you're a short sale seller, and a higher offer comes in after the first offer was submitted to the bank? (Hint: the short sale addendum states property may continue to be marketed after contract with the 1st buyer, and other offers may be presented to the bank.) Or, what if the buyer is submitting multiple offers on multiple properties, should they tell you that, or not, in their offer?  (Hint: Yes, they should disclose.) 

These are issues the seller should take time to review carefully and ask questions, preferably before a contract is signed--it saves on remorse later.

Every Day There is Another Story That Housing is Recovering, and Then It's Not: Read More

What is the real story on short sale numbers and borrower delinquencies? The story seems to vary on a daily basis.

But according to the Mortgage Bankers Association, which keeps track of these statistics, the delinquency/foreclosure rate was still 11.33% as of the end of the 1st quarter of 2012.  That's the lowest since 2008, but is still a lot of homeowners on a national basis.

The Potection of the Mortgage Debt Relief Act Coming to End

With some recent news about positive signs in the real estate market, some owners may be taking the pressure off themselves.  However, the national statistics seem to indicate that about 30% of properties nationwide are in negative equity.

The federal Mortgage Debt Relief Act was passed at the end 2007 to allow homeowners debt relief on their principal residences if foreclosed on or sold in a short sale. California later passed a bill also helping homeowners in this situation.  Currently, it is set to expire at the end of 2012, meaning that if the deadline is not extended by Congress, owners after that date will be responsible for debt after a foreclosure or a short sale. Previous to this Act, the amount forgiven in a short sale, or walked away from in a foreclosure, was treated as "phantom income" to the owner, and taxed.  California's Debt Forgiveness Relief Act also expires as of January 1, 2013.

So, after December 31, 2012, if a property is approved by the bank in a short sale and sold for

Which is Better, A Longer or Shorter Turnaround Time For the Distressed Owner? Or, Buying. After a Short. Sale

Do you picture yourself here someday? or someplace like this?

I can't guarantee anything, but the likelihood that your life will turn better faster might be greater if you consider how quickly you (or someone you know) can shorten the time it takes to obtain a loan in the future.

Many people have friends and family members struggling with their situation, and all too often, they think foreclosure and/or bankruptcy are their best avenues--when they haven't really gotten all the information they could yet.  If you know someone like this, please share these guidelines with them because they can make a big difference for them in the future for the next several years:

• FHA loan -- After a foreclosure, pre-foreclosure, short sale, or a deed-in-lieu, a homebuyer may obtain an FHA loan 3 years after the date of the event. The FICO score requirement today is about 620-640. (There may be exceptions to this time period, if you can prove the default was beyond your control.)
• VA loan--After a bankruptcy, foreclosure, deed-in-lieu or short sale, a homebuyer may be able to obtain a VA loan 2 years later, with re-established credit.
• FHA loan & Bankruptcy--After a Chapter 7 bankruptcy, a buyer may be able to obtain an FHA loan 2 years later, with re-established credit. Chapter 13 requires 1 year of payout and court approval for a mortgage.
• Conventional loan -- After a pre-foreclosure sale/short sale or deed in lieu, a conventional loan requires 2 years from the completion date to get a 20% down loan, 4 years from completion to get a 10% down loan, and 7 years to obtain maximum financing loans. 
• Conventional loan and foreclosure--It takes 7 years to obtain a conventional loan, and re-established credit.
• Conventional loan & Bankruptcy--Chapter 7 requires 4 years, and re-established credit; Chapter 13 requires 2 years with a discharged BK, and 4 years with a dismissed BK. There can be no 30-day lates in previous 12 months.

Finally, a foreclosure stays on the credit report for 10 years, for all employers, insurance companies and others investigating your credit worthiness to see, regardless of how you've moved on.  A short sale's impact on your credit rating may be considerably less severe over a shorter period of time due to type of entry made, short sale negotation with the bank and depending on the policy of the servicer/investor.

Not all short sale situations succeed, unfortunately, and there are many reasons for this. However, banks would still prefer to do a short sale than a foreclosure: they don't want REO inventory, and they almost always recoup more money doing a short sale.

The banks come out ahead, and so do you, if you can do a short sale.  Doesn't it make sense to choose the option that would allow you to become a homeowner faster in the future, as well as the option that would have less impact on your long-term credit? And then someday you could be back here again--sooner.

Bank of America's Short Sales Programs are Expanding and Improving

Bank of America attended a webinar today with Bob Hora and the CDPE Distressed Property Institute revealing all about new processes in place: The Bank of America will be sending out a package, The Home Transition Guide, to the homeowner explaining owner's options, including a short sale.

2010--90,000 short sales completed by the Bank.
2011--over 100,000 short sales so far.

Their goal is to have a leaner short sale process in the future where the entire process is shorter by several weeks.
More people are hired to do short sales at the Bank, today there are over 3,000 staff members, including those at their call centers. A single point of contact at the Short Sale Department throughout the short sale will be established after the homeowner's initial contact with the Bank of America. Homeowners who go into customer assistance
SLAs (service level agreements) will agree to responses with certain periods of time, and Bank has established a Closing Center in Arizona to handle short sale closings.

The bank has over 500 investors and many MI (mortgage insurance) companies to work with, and get approval from.  Depending on their relationship with these investors, the timeline may be faster or shorter, and it's important that the homeowner understand these relationship.  The short sale specialist can explain who is delegated investor or non-delegated.

If a borrower is having a hard time getting a loan modification, they should turn to an Realtor quickly:  A short sale file needs to be opened with an accepted offer from a buyer at the bank at least 45 days prior to the foreclosure sale date. So if you the borrower has a Notice of Default on your property now, your time is even more limited to market and find a buyer in time.

The Bank also is reviewing every transaction for arms length transactions--the short sale market place is not the venue for questionable "flips" or "deals" during the short sale process, and the Bank ( as well as other legal entities) are on the lookout for practices that do not conform to regular procedures.

The Bank prefers a short sale over a deed-in-lieu, and the bank doesn't consider the DIL the best transaction for the Bank or the investor.
For assistance with a home valuation if you're considering a short sale transaction, either call me or contact me through my website, where I have much information at "Help for Homeowners" at http://www.juliahuntsman.com/.

It’s time to take another look at short sales

As recently as a few months ago, if you would have told a real estate agent who specialized in short sales that they’d be raving about a lender’s stellar service and rapid approval times—not to mention significant cash incentives for financially strapped homeowners for pursuing a short sale—you’d have gotten some strange looks.

That’s all changed. And it’s changed faster and to a greater extent than most real estate professionals ever could have imagined.

With a glut of bank-owned properties dragging down the recovery of the real estate market, as well as the national economy, major lenders are more eager than ever before to avoid foreclosure. So they’ve sharpened their focus on short sales. Bank of America, for instance, says they have processed 500,000 loans for short sales this year through their online Equator system. It's not a perfect world--not all short sales close: there are many parameters, including lender and investor efficiency, to getting a short sale closed. California Association of Realtors states 3 out of 5 actually close. But for those sellers willing to do the work, and for buyers willing to qualify and hang in there, there are successful closings.

The biggest lenders in the country have staffed up to ensure rapid processing of short sale applications. They’ve come up with cash incentives, some in the thousands of dollars, at closing for homeowners who pursue a short sale. And they’re proactively reaching out to CDPE agents and putting them in touch with delinquent borrowers.

This is big news and the media has not really caught onto it yet. What’s important for you to know is that whatever you’ve read or heard in the past about long lag times and frustrations with short sales is probably no longer the case.

To find out more,I invite you to contact me and/or to visit my website at http://www.juliahuntsman.com/ to learn more and feel free to contact me any time at if you or anyone you know is struggling with an unmanageable mortgage.

Handling the Stress of an Unaffordable Mortgage Payment

Whenever I research the latest foreclosure and distressed property statistics, the sheer number of Americans facing the stress of losing their homes amazes me. For the month of June per the MLS, 148 single family homes and condos sold as an REO or short sale property in Long Beach, out of a total of 316 sales for the month.

It is my goal to help as many homeowners I can either stay in their homes or relieve the burden of their mortgages. Knowing that there are so many that need my help is a driving force for me to continue doing what I do.

In fact, I just released another report that I’ve made available on my website today. It explains the CDPE designation and lists 10 options that homeowners can take advantage of to relieve the stress that comes with owing their mortgage lenders more money than they can afford to pay.

The report also draws a contrast between short sales and foreclosures. Unfortunately, there’s a growing trend of “strategic defaulters” who think it’s smart to let their home go into foreclosure. As any one who follows this blog knows, there is nothing strategic about foreclosure; it’s one of the most long-lasting, negative financial challenges you can go through. A short sale seller who can legitimately show a hardship will avoid the post-foreclosure consequences.  Just recently signed into law in California was SB 458 which took effect immediately and which "extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans," so that no first mortgages (signed into law earlier) and now no junior liens can be pursued later if the lender agreed to the short sale. This makes it even more worth it to examine the possibility of pursuing a short sale.
I’m excited about acting as a resource for more homeowners who have questions about what they should do. As always, if you know homeowners who may need my help, have them contact me immediately! Together, we can put them back on the path to financial stability.

Good News for Short Sale Sellers and Junior Mortgages (and How Jerry Brown Used to Look)

Finally, short sale sellers in California and the Long Beach/Los Angeles County area have more protection against deficieincy judgments.  Senate Bill 458 was signed into law on July 15th by Gov. Jerry Brown, effective immediately. This was previously turned down by former Governor Schwarzeneggar, but is now made part of the protections of SB 931 which was passed into law as of 1/1/2011.

This means that if you have a second loan on your principal residence and the holder of the junior lien agrees to a short sale, there is no "deficiency judgment to be requested or rendered for senior or junior liens after a short sale of one-to-four residential units", per the California Association of Realtors. Additionally, this law does not appy in situations of fraud or waste (deliberate damage), it applies to residences, and does not apply to corporate owners, LLCs, and a few other exceptions. Previously, the protection was against first mortgages only, but is now extended to the seconds and other junior mortgages.

Missing Mortgage Payments? It's Not Too Late

Wondering what a homeowner should expect when payments are missed? The most important thing to know is that no matter what stage of default a homeowner is in, there is almost always a way to avoid foreclosure. That being said, the quicker a homeowner does something about the situation, the less challenging it will be to resolve.

First, here’s what a distressed homeowner should expect to happen when payments are missed:

30 Days Late: The lender will attempt phone contact or send a notice in the mail.

60 Days Late: The lender will attempt to make contact by phone and follow up with another letter in the mail.

90 Days Late: The lender will send a letter demanding all past due amounts within 30 days and start the foreclosure process.

120 Days or More Late: The lender’s attorneys will take over and the homeowner will be responsible for their fees in addition to missed mortgage payments and the loan amount due.

Not late yet, but about to be?

Homeowners who are not yet late but foresee missing payments should communicate this to their lenders as soon as possible. In the past, many banks wouldn’t work with homeowners unless they were one or more payments behind. In light of the mortgage crisis, most lenders would now rather take a proactive stance and decrease their loan losses. They are more willing than ever to work with homeowners to avoid being late.

If you are visiting my website at http://www.juliahuntsman.com/distressed-property-resources-short-sales.html and you or someone you care about may miss mortgage payments in the near future, please contact me. I can help navigate the process and put you back on a path to financial stability. Contact me today and alleviate the stress that comes with unaffordable mortgage payments. Find out what your options are.

Credit Impacts on a Short Sale? You Make the Call

I try to help people with this question: short sale or foreclosure, which is the better option? For most people, my reaction is, “Short sale, of course!” This has been mostly because I was always under the impression that a short sale, although still a ding on your credit, was easier on the score than a foreclosure.



But for some time, other sources have been saying, and according to a recent blog post by FICO Banking Analytics, that there is no real difference in the effect a short sale or a foreclosure has on your credit score. Supposedly, both the impact in points and the time to fully recover is about the same for both events.


But all this time I believed that the short sale was superior to foreclosure, largely because of its less adverse effects on credit. So I was forced to do further research into which was the better option. In doing so I learned about benefits of a short sale I wasn’t even aware of, and found that the FICO blog was not true all the time for everyone.


The fact is, each borrower’s credit situation is different, and the way that a creditor reports a short sale to bureaus is different. The reality is that hundreds of thousands of distressed homeowners who have chosen a short sale have experienced a lesser impact on their credit than those who have chosen foreclosure. One of the differences, for example, is how long the borrower had been delinquent on payments prior to the short sale, along with other credit factors.


And, another very big mitigating factor is that in a short sale, a distressed homeowner may be able to obtain another mortgage sooner than someone who has a foreclosure on his or her record. Did you know that more and more employers pull credit before hiring a potential employee, and a foreclosure might keep you from getting a job. Some employers pull credit reports on existing employees, and a foreclosure may not bode well for job advancement in certain industries.
To see a special report, go to www.juliahuntsman.com/briefcase/29690_526201142402PM32754.pdf  which can be downloaded.

These benefits stacked against the negatives of foreclosure, including the embarrassment of public announcement and literally being kicked out of your home, make, in my opinion, short sale the reigning champion.



Now you make the call!

What Do You Do After Finding Out About the Notice of Default?

What if you have a Notice of Default recorded on your property? What then?
This is what happens when your bank or loan servicer no longer is receiving your mortgage payments, and they initiate legal action as stated in your loan documents, and according to California state law.

Once you start down this path, it can be a tough course to change unless you have the financial resources to pay the bank past due payments, plus interest and penalties.

Non payment can occur because your income has been reduced, you lost your job, your payment is going to increase above your means, and last, but not least, you wanted to get a loan modification and you were advised to stop making your payments.
The last reason is a common one, but it can lead the borrower down the wrong path. By the time he/she is behind 2-3 months in payments, it may turn out the homeowner does not qualify for the loan modification program. We hope you didn't pay anyone fees up front, because that's illegal now. PLEASE do not pay anyone an upfront fee for a loan modification, and get a second opinion at least before you stop making payments.
Your credit score will drop and the effect will continue as long as payments are not made, because every month the bank is reporting another 30-day late payment.
You have about 111 days from the recordation date until the time of the foreclosure sale. If your loan was made between Jan. 1, 2003 and Dec. 31. 2007, there is an additional 30 days for the lender to contact the borrower.  The Notice of Sale is usually recorded 20 days before the end of that period.
What can you do? 1) Pay your loan and make it current. 2) Put it on the market to sell it, either as a "regular" sale or a short sale depending on your loan-to-value plus costs of sale. 3) Rent it out, if you think market rent will cover the monthly costs, or your income will be able to make up the difference. 4) Try giving it back to the bank if there's only a first mortgage--if there's a 2nd with a different lender a deed-in-lieu will probably not work.

If you have considered all your options and you can't keep the property and your funds don't cover the deficient amount, please investigate a short sale. In most cases you will be able to obtain a future mortgage sooner than if you have a foreclosure--or a deed-in-lieu--on your credit report. More banks and servicers have become more efficient and able to deal with the volume of short sales in the market, and more buyers are willing to wait out the time period involved. Depending on the lender and the program, some short sales are being approved and closed within 90 days and less.  But remember, you have just a certain amount of time to obtain a buyer and get short sale approval, and then close escrow. Banks may extend the sale date one or more times, but usually they want an accepted offer in hand by a qualified buyer. So it's back to the loan modification point-in-time: think twice about not making your payment unless you know what's on the road ahead.

It will cost you nothing to weigh your options, a fact that more people should remember in spite of it being such a difficult thing to think about while you're in it. In fact, a lot of people let their properties go into foreclosure without having tried to sell it. Please don't do that without consulting with a real estate professional who's had experiernce with distressed properties.

Please contact me for a printed format on your foreclosure timeline, and for more information about the your options, and the difference between short sales and foreclosure. You may also go my distressed property page and also here for more information on foreclosure timelines and prevention.

How Many Short Sale Listings in Belmont Heights, the Shore and Naples Areas?







3923 E Vista

 Currently, including actives and those taking backup offers, there are 20 single family properties in short sale status in the 90803 zip code. They range in price from $449,000 for 3923 E. Vista St. to $2,350,000 for 5649 E. Corso Di Napoli.

3923 E Vista is a two-bedroom 1923 bungalow style home in Belmont Heights, east of Redondo Ave, with a detached garage.
The Treasure Island home on Corso Di Napoli is a bay front home with open water view, and includes two 48' boat docks.
It is listed as a two-story house, with 3 bedrooms and 3 baths, and a 2-car garage.



5649 E Corso Di Napoli

 There are 12 more active short sale listings in this area, including 2703 E 2nd St, listed at $740,000 in Bluff Park Historic District. This property is a 1909 craftsman style house on a corner lot, and is waiting for an offer! This is a great price in a neighborhood where recent sales have closed over $1,000,000.

Since December 1, 2010, 3 short sale (single family) properties have closed in this zip code; 3 properties closed as bank-owned sales; and 25 were listed as "standard sales", out of a total of 33 sold in all categories in the same time period.

Short Sales are Working Better in 2011

Lenders are primed for short sales in 2011 because short sales are a terrific option for homeowners struggling with unaffordable mortgage payments. In fact, lenders’ losses due to foreclosure are projected to increase at record rates in 2011, giving them more reason to pursue short sales. Lenders are projected to incur losses as severe as 85 percent in foreclosure! Meaning, after deducting the expense of the foreclosure process on a $100,000 loan, they may only get back $15,000!

It’s common sense that lenders will be looking toward the short sale solution. Even though they are accepting less than is owed on the property, they lose far less than in a foreclosure sale.

In fact, right now in the Long Beach market, short sale transactions for condos and lofts increased by more than 200 units from 2009 to 2010.  Short sale transactions for single family houses grew from approximately 762 home in 2009 to 875 homes in 2010, or about 27% of all sold, cancelled or expired single family listings in the MLS.

Thus far in 2011, there are 593 single family homes in short sale status as active, in escrow, or otherwise on the market, out of a total of 1280 or 46%; and 380 condos and loft units are in the same categories of short sale, out of a total of 738, or 51%.

It may be a surprise to many that lenders actually want to work out a solution that benefits all parties. Oftentimes, the lender is seen as the villain in the situation. I’ve found that the lenders want to avoid foreclosure just as much as homeowners. The free, downloadable report at "Distressed Property" called "On the Edge of Losing Your Home" on this website at Long Beach Condos and Homes talks more about working with your lender, and details all the foreclosure alternatives available to you.

Download the report and call me today; I can help you develop a plan to work with your lender and avoid foreclosure.

Take These Steps Towards a Successful Short Sale

Lenders and the federal government, prompted by the sheer volume of loan modification and short sale requests, have overhauled their systems and programs, making the foreclosure avoidance process much easier than in the past. If you haven't considered this option before, maybe now is the time to find out more.

If you are considering short selling your home to avoid the financial and emotional fallout of foreclosure, you should be aware of the five steps you should take to increase your chances of a successful transaction.

First, do you qualify?

You must:

1. Have a verifiable hardship, like unemployment, medical bills, or relocation

2. Must have a monthly income shortfall

3. Be insolvent (you have no cash or assets that can be sold to pay down the mortgage), or headed towards insolvency



If you meet these qualifications, follow these five steps to a successful short sale:

1. Contact me so we can identify your servicer, fill out a short sale packet for the lender, and assemble all the required information needed to list your home for sale

2. Gather financial information (i.e., bank statements, pay stubs) from at least the last three months

3. Keep your house in showcase condition for showings, and make as many repairs as necessary and that you can afford

4. Expect the lender, junior lien holders, and private insurance companies to request more paperwork, and try to gather requested information quickly to ensure transaction efficiency

5. Set realistic expectations and work with me, the lender, and the buyer to the satisfaction and benefit of all parties involved


For more information about how the short sale process works, or about any other foreclosure alternatives you may qualify for, call me today. I can help you alleviate the burden that the threat of foreclosure brings, and we can develop a strategy to help you breathe a little easier.