Brian Bean, Dream Big Real Estate & IE Short Sale Pros, SoCal, 951-778-9700

A new Senate bill introduced recently reduces the time it takes to process a short sale and includes fines for banks that don’t adhere to the strict timelines.

The “Prompt Notification of Short Sales Act” would require banks and mortgage servicers to approve, deny or counter a short sale request within 75 days, according to the bill. Servicers also could request one 21-day extension of the response period.

The bill is designed to speed the process and help reduce the stigma associated with short sales, which can be timely and frustrating for homeowners, buyers and inexperienced agents who don’t know how to properly navigate the system.

“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” Sen. Lisa Murkowski, R-Alaska, said in a news release. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”

A short sale is a real estate transaction in which a homeowner sells a property for less than is owed on it and the lender agrees to the discounted payoff. Though major banks have created massive short sale departments to handle the rising tide of such requests, some banks and servicers are less cooperative.

In addition to putting a ticking clock on short sales, the bill would allow a homeowner, buyer or perhaps even a real estate agent to sue the servicer for “equitable relief” and up to $1,000 per violation. The “aggrieved individual,” however, would be required to pursue the penalty in court.

This section of the bill appears to be among the first to address home buyers, who can expend money to inspect a home while waiting for a short sale approval that might not come.

The bill, however, will not impact homeowners with inexperienced agents who market homes at lowball prices or fail to provide a “full package” for the mortgage servicer. These issues continue to be a major reason why half of short sales fail.

Sens. Scott Brown (R-Massachusetts) and Sherrod Brown (D-Ohio) are co-sponsors of Murkowski’s bill. U.S. Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey) In April 2011 introduced a bill to require mortgage servicers to respond to a short sale request within 45 days. That bill never got out of committee.

THE BEST DEALS AROUND

Lawmakers continue to seek ways to help smooth the path for short sales, which are a growing segment of the real estate inventory. In Riverside-San Bernardino counties, more than one-third of all homes on the market are short sales.

And more and more real estate agents are becoming adept at handling short sales.

Last month, a study by online real estate marketer HomeGain showed that 83 percent of short sale purchasers are happy with their decision, topping satisfaction levels of all other types of purchases. Every respondent who was satisfied said price appreciation was the No. 1 reason.

Many prospective home buyers and real estate agents shy away from short sales because of the longer wait times and high fallout rates.

But the fact is, short sales are the best values around for home buyers. Here’s why:

Better Prices: In the hierarchy of pricing for a neighborhood, new homes and standard equity sales trend to the top of the price range. Short sales and REOs sell near the bottom.

Banks are willing to accept a lower price on a short sale because it’s their favorite method to avoid having to foreclose on the property. And foreclosures mean the bank will lose 8 percent to 12 percent more than from a short sale.

Better Condition: Short sales tend to be owner-occupied homes in better condition than vacant bank-owned properties. They are less likely to be vandalized, squatted on or stripped of appliances and fixtures. Homeowners tend to maintain their homes during the short sale process, as well.

Less Competition: Because many buyers and agent avoid short sales, there is less competition among buyers. Many buyers aren’t willing to wait for a short sale, which can add a couple months to the purchase timeline. But for those who are willing to wait, the payoff is handsome.

Want to know if a short sale is the right solution for you? Call us today at 951-778-9700, and we’ll help you evaluate your situation.

We have begun interviewing homeowner candidates who need to do a short sale but don’t want to move.

The HAFA short sale program allows a homeowner to sell the home, rent it back for three years and then buy it back at prices much lower than their current loan values.

According to the the Homes Affordable Foreclosure Alternative program supplemental direction, “Section 7.3 of Chapter IV of the Handbook requires that a short sale be an arm’s length transaction. This Supplemental Directive amends this restriction to allow servicers the discretion to approve sales to non-profit organizations with the stated purpose that the property will be rented or resold to the borrower, so long as all other HAFA program requirements are met.”

How does the program work?

• You must work with a real estate broker who has a relationship with a qualified non-profit organization.
• That non-profit will purchase your home.
• You will then rent it back for a minimum of three years, allowing your credit history and FICO scores to heal so that you can qualify for a mortgage.
• Finally, if everything goes as planned, you can repurchase your home, perhaps at a giant discount.

Think of this program as a slow-motion loan modification with a drastic reduction in your loan amount!

We have partnered with a national non-profit organization to offer this program in California. However, it is important to note that this is an optional program for the banks. Not every homeowner will qualify.

Homeowners who participate in the program are placed with with a qualified HUD counselor, attorney and tax expert to ensure that this program is the right fit for their needs.

If you and your loan qualify for this program, you will have an opportunity to stay in your home. Even if you don’t qualify for the program, a traditional short sale is still better than a foreclosure.

Want to know if you qualify for the Short Sale Buy-Back Program. Call us today at 951-778-9700.

Short sales continued to soar in January, reaching their highest level in California in three years.

The California Association of Realtors reported in its Pending Homes Sales Index that the number of short sales increased from January last year and also from the previous month.

A short sale is a real estate transaction in which a homeowner sells a property for less than is owed on it and the lender agrees to discount the payoff.

Statewide, short sales accounted for 23.8 percent of all homes in escrow, up from 22.2 percent a year earlier, CAR reported. But short sales dominated the pending home sales in Riverside and San Bernardino counties, making up more than two-thirds of the sales.

The CAR index also reported:

• Equi

ty sales dropped in January to 49.9 percent. Standard sales hit 52.7 percent in December 2011 and 46.5 percent in January 2011.

• Distressed properties, including short sales and bank-owned homes, increased to 50.1 percent in January, from 47.3 percent in December. They reached 53.5 percent a year earlier.

• Bank-owned REOs increased in January to 25.9 percent, up from 24.6 percent in December. REOs reached 30.8 percent in January 2011.

ATTITUDES SHIFT

A survey of homeowners last month showed that 83 percent of those who bought short sales were satisfied with their purchase, according to online real estate resource HomeGain. Short sale buyers were the most satisfied of any other sale type, the study indicated.

As short sales continue to flood the market, the survey shows attitudes are changing among home buyers and real estate agents, who once avoided short sales because of the stigma associated with longer escrows and high fallout rates.

But the fact is, short sales are the best values around for home buyers. And buyers are coming around. Here’s why:

Better Prices: In the hierarchy of pricing for a neighborhood, new homes and standard equity sales trend to the top of the price range. Short sales and REOs sell near the bottom.

Banks are willing to accept a lower price on a short sale because it’s their favorite method to avoid having to foreclose on the property. And foreclosures mean the bank will lose 8 percent to 12 percent more than from a short sale.

Better Condition: Short sales tend to be owner-occupied homes in better condition than vacant bank-owned properties. They are less likely to be vandalized, squatted on or stripped of appliances and fixtures. Homeowners tend to maintain their homes during the short sale process, as well.

Less Competition: Because many buyers and agent avoid short sales, there is less competition among buyers. Many buyers aren’t willing to wait for a short sale, which can add a couple months to the purchase timeline. But for those who are willing to wait, the payoff is handsome.

SHORT SALES DOMINATE

Nearly 40 percent of homes on the market in the Inland Empire are short sales, and in some neighborhoods, that number soars to 65 percent, according to the California Regional Multiple Listing Service.

Because short sales have become more socially tolerable and economically acceptable, consumers choose them as the best remedy to their economic woes.

Short sales have a less-severe impact on credit history and allow a consumer to re-enter the housing market sooner than if they had a foreclosure in their past. A short sale also gives a homeowner the sense of control to handle their problems on their own terms.

More and more agents have gained experience and are better equipped to help guide their clients through the often-frustrating and sometimes treacherous short-sale process. Though the majority of agents still have little or no actual experience, those who have successfully completed more than 50 short sales can be counted on to help protect homeowners from the liability and tax consequences of such a transaction.

Legislators have created laws to protect homeowners impacted by the current recession from deficiency judgments and hefty tax bills.

And banks have created entire departments to handle the rising tide because short sales most often represent the solution that nets banks the most money.

Want to know if a short sale is right for you? Call us today at 951-778-9700, and we’ll help you evaluate your situation.

Nearly 1 million homeowners have received a permanent modification through the Home Affordable Modification Program, far less than originally anticipated, according to figures released this week by the U.S. Treasury Dept.

HAMP, the Obama government program that promised to modify up to 4 million home loans when it launched in April 2009, restructured mortgages for 930,000 homeowners as of the end of 2011, Treasury reported.

In Riverside-San Bernardino counties, 47,426 (5.1 percent) permanent HAMP mods had been completed, with 43,253 still active at the end of 2011. Among major metropolitan areas, Riverside-San Bernardino was No. 5 on the list for total number of HAMP modifications.

Banks have completed 2.6 million non-HAMP modifications through their own proprietary programs since April 2009, according to the non-profit agency Hope Now. More than 5 million homeowners have received a modification of some sort since 2007.

Treasury reports that redefault rates are less than 10 percent for HAMP mods after six months. But redefault rates surpass 50 percent for other proprietary programs.

Modifications can be a great solution for some homeowners, but for many in California whose homes are worth half of what they owe, a loan mod simply may delay the inevitable.

After a modification, many still can’t afford modified payments or don’t want a balloon payment. Some get accustomed to making no payments and have difficulty changing old habits. But many more still can’t fathom how impossibly upside-down their homes will be for the next 10-15 years.

And that’s why – despite lip service from banks, despite empty election-year promises – banks do not like modifications.

The process can be frustrating and time-consuming, and for those who have missed too many payments, the foreclosure process continues in a parallel path. If the bank rejects a loan modification, a foreclosure sale can quickly follow.

Homeowners who do not or cannot benefit from a loan mod often choose a short sale to help avoid a financially and emotionally devastating foreclosure on their record. A short sale now can allow a consumer to re-enter the housing market after just two years to buy another home, before prices again begin to increase.

Still, federal officials continue to praise the HAMP program. With time and experience, they say, the program appears to be improving. Though only about half of all homeowners who were offered HAMP trial modifications actually received a permanent mod, standards have been smoothed out, and more people are qualifying now.

Treasury reported that in the last 18 months, 84 percent of those in trial programs received a permanent modification after an average of only 3.5 months in the trial program.

President Obama last month announced broad new eligibility requirements for homeowners and has also proposed further expansion of the HARP refinance program to include homeowners whose loans are not administered by Freddie Mac or Fannie Mae.

“Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief,” Raphael Bostic, HUD assistant secretary, said in a press release.

The Treasury Dept.’s report card highlighted some reasons for optimism, but Bostic cautioned that the market could go either way in the future and that everyone must “remain diligent” to heal the housing market.

The inventory of available homes for sale has decreased from a year earlier and the supply of “shadow inventory” homes that are not yet on the market have decreased by about 10 percent to 3.6 million, Treasury reported. Meanwhile, sales of existing homes have increased while foreclosure starts fell at the end of last year.

Still, the number of homeowners who are at least 60 days behind on their mortgage payments increased in November last year to 2.77 million, up slightly from October, Hope Now reported.

Want to know if you qualify for a HAMP loan modification or short sale? Call our office today at 951-778-9700 and we’ll help you evaluate your situation.

Standard Sale: 4716 Oakwood Pl, Riverside, CA 92506 -- $224,900

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