Jack Lewitz

I am often asked by buyers and agents “How Long will it take to get an answer from the Bank” on a short sale?

This is a difficult question because each bank is different.

Currently, I am going for a new record for the longest Short Sale. On July 7, 2009 it will be 1 year and I still do not have an approval from the bank.

During the past year a lot of things happened like:

August 2008: Olympic Games of the XXIX in Beijing, China, from August 8 to August 24, 2008.

Michael Phelps broke the records for most gold medals in one Olympics and for most career gold medals for an Olympian.

September 2008: Hurricane Hannah does $160 million damage in US.

Oct. 2008: The $700 billion bailout of nation’s battered financial industry is approved by Congress and signed by Bush.

Nov. 4: Obama wins presidency, says “Change has come to America”

December 2008: Appollo 8 celebrated 40 years since its historic flight around the moon.

January 2009: Barack Obama is the 44th President of the United States

February 2009: Slum Dog Millionaires wins the Oscars as “Best Picture”

March 2009 Without more bailout money, GM says it will be broke by March 31

April 2009: Novel H1N1 (referred to as “swine flu” early on) is a new influenza virus causing illness in people. This new virus was first detected in people in the United States in April 2009.

May 2009: Justice Souter decides to retire from the Supreme Court and Judge Sonia Sotomayor is picked by Obama as the Justice to replace Souter on the Court.

June 2009: Michael Jackson Dies and shocks the world.

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As I reviewed the Home Affordable Modification Program (HAMP) in more detail I thought of another analogy to help people understand the concept "Mortgage Forebearance".

As a child my first business enterprise was a "Lemonade Stand" in front of my house.

I stood outside selling lemonade to people as they parked their cars and went to the beach near my house.

My stand look something very similar to the picture you see in this blog.

If you look real close to the picture you will see children standing in line with money and the very last boy in line is standing there without anything.

He appears to be looking for something. Maybe he thinks money will fall from the sky. I don't know about you but I think he plans on asking for a free drink in the form of I.O.U.

Well a " Mortgage Forebearance is also a form of an I.O. U. instead of Lemondade it's your home.

Well back to my analogy. If I were the operator of this lemonade stand and I gave this boy a free glass of lemonade in the form of an I.O.U. what are the chances that I would collect my money after the glass is empty? Not very good. As a entrepreneur I expect those losses.

Now back to the homeowner who has to agree to a "Mortgage Forebearance" Let's say this homeowner agrees to sign this I.O.U. with the bank and wants to sell his home in 5 years and the value of the home is less than the amount he has agreed to pay back to the bank in the form of the I.O.U. what is the banks chance of collecting on this I.O.U.

I think it is pretty much like the boy in the lemonade stand.

I was invited to be a guest speaker at a First Time Home Buyer Seminar and was given a list of topics to discuss.

As I prepared for this seminar, I thought about how I wanted to present material to a group of first time home buyers and what would be the most important thing to say to this group. So here is what I came up with. I wanted to first talk to this group and find out

Truths or Myths

• Owning your home is the American Dream

• Buying a home is one of the most important investments in ones lifetime.

• People who own a home feel better about themselves.

• Owning a home can bring long term security and wealth

• Owning a Home is better than Renting

Basic Questions to Ask Yourself:

• Why do I want to own a home?

• Why is it important to Me and My Family that I own a Home?

• What Does my Dream Home look like?

• What would happen if I do not find my Dream house?

As a Realtor I think buying a home is one of the most important decisions in ones life time. People look back on their life a remember great moments like getting married, having a child and buying their first home.

For those of you ready for the challenge, get ready for an exciting time. I challenge you to think, learn, embrace the experience with all of your senses.

Unable to Afford an Affordable Home what next? The Obama Administration and The National Association of Realtors are soon to announce new procedures and uniform process for Short Sales under its new Foreclosure Alternatives Program.

This program will work with borrowers (Homeowners) who do not qualify or meet the minimum eligibility requirements fro the Home Affordable Modification Program.

Before proceeding with Foreclosure, servicers must determine if a Short Sale is appropriate.

Incentives include a $1,000 for servicers who are successful in completing a Short Sale or Deed-in-lieu of Foreclosure. The Homeowner will also receive a $1,500.00 check as relocation expense and another $1,000 to payoff any junior liens on the property.

There will also be Standardized Documents, including Short Sale Agreement and Offer Acceptance Letters. The goal is to make things simple and help speed the Short Sale Process.

Servicers will independently order Broker Price Opinions (BPO) to determine the market value and minimum Net return to the investor.

The Short Sale Agreement will give a minimum 90 days to market and sell the home and up to 1 year in more difficult markets. If the property does not sell within this time frame then the servicer would agree to a Deed-in-Lieu of foreclosure.

Are the following statements fact or crap:

“A large percentage of Short Sales never Close”

“Short Sales take too long to Close”

“Banks will receive less money after a Foreclosure than with a Short Sale”

It was these three statements that made me do research and search for the truth about Short Sales and Foreclosures.

The following chart examined only closed transaction for the past 12 months in five different communities in five different counties in Illinois.

The Average Sale Price Sold is the average of lowest price and higest price sold during the 12 months.

The Average Market Time is the average time of lowest price and highest price sold during the 12 months.

“Short Sales Do Not Close”- This statement is Crap. In all five communities more Short Sales closed than Foreclosures.

“Short Sales Take Longer to Close”- This statement is Fact. In four out of the five communities it did take longer to close a Short sale than a foreclosure.

“Banks will receive less Money from a Foreclosure than a Short Sale”- This statement is Fact. Four out of five communities surveyed banks did in fact receive less money after the foreclosure.

Woodstock, IL was the only community where a foreclosure commanded a higher sale price than did a Short Sale. There are many reasons why this could happen and would need to be further explored before any conclusion can be made about this community.