Jim Miner in Phoenix, Scottsdale, AZ. Short Sales in English & Korean

I found an interesting piece written by Suburban Mortgage so I have pasted into this Blog.

Short Sale vs Foreclosure How Do These Affect Credit? Lending Institutions Treat Each of These Differently

What does "short sale" mean? A short sale in real estate occurs when the outstanding obligations (liens) against the property are greater than what the property can be sold for. If the lender agrees to a short sale, they are buyng back the loan for less than what they are owed. This is not something a lender has to do, but it is an option for them. Why would they consider this? The real cost for the lender in a foreclosure action is that they have to carry the loan until they can sell the house. They have to pay the taxes and insurance and HOA fees. So in many cases it is more beneficial for them financially to take the short sale. www.fb.com/jimminershortsales So How Does Each of These Affect the Owner's Credit? Typically the loan will show up on a credit report as "settled for less than the full balance". this will have a negative impact on the borrowers score, however, it will be less than if it shows as a"foreclosure". How much it will actually affect the score will depend on the rest of the borrowers credit history. The higher the score to start with the harder this type of entry will hit the score. An additional consideration is if the lender issues a deficiency judgement. If the lender takes this route, it will show on a credit report just as any other judgment would. This creates another major hit on credit. It is, of course, best to have an experienced Realtor and or attorney review the documents to make sure the lender is not requesting a deficiency judgment on the short sale approval. The one instance where a lender will NOT consider a short sale is if the borrower is in bankruptcy. Lenders consider a short sale payoff as a collection activity and collection activities are prohibited once a person has filed bankruptcy.

FHA could remain in business, we can remain in business, Buyer still gets financing.

All of this is a good thing.

The info. below is pulled out of another report.

FHA loan limits raised

Members of U.S. Congress have reached an agreement on a measure
that would increase the maximum size of mortgage loans that can
be insured by the Federal Housing Administration (FHA). The
measure would only impact FHA's loan limits, restoring the cap
for mortgages the government insures to as high as $729,750 in
high-cost real estate markets through 2013. The FHA's loan limits
dropped at the end of September for mortgages insured by the FHA,
as well as the government-sponsored enterprises (GSEs), Fannie
Mae and Freddie Mac. The higher loan limit was temporarily raised
for Fannie, Freddie and the FHA during the financial crisis and
it automatically dropped back to $625,500 on Oct. 1.

The measure is part of the Fiscal Year 2012 Agriculture,
Commerce/Justice/Science (CJS), and Transportation/Housing and
Urban Development (THUD) Appropriations Bill, also known as the
“Mini-bus” (House Report 112-284). "Legislation pending in
the House and Senate will restore the higher mortgage loan limits
for the Federal Housing Administration and is essential to help
stabilize the nations housing financial markets," said Bob
Nielsen, chairman of the National Association of Home Builders
(NAHB). "The FHA program is fully self-supporting, and a great
example of a public-private partnership with lending
institutions. Restoring the loan limits will provide millions of
potential consumers in markets throughout the nation access to
safe, affordable mortgage financing."

Well, Jim Miner is happy since FHA is about 90% of the lending market to homebuyers. Nice to know the holidays did not get blown up.

Jim Miner wonders who at Fannie Mae understands the word POSTPONEMNET? It would appear no one does.

Mortgage finance giants Fannie Mae and Freddie Mac received the biggest federal bailout of the financial crisis. And nearly $100 million of those tax dollars went to lucrative pay packages for top executives, filings show.

The top five executives at Fannie Mae received $33.3 million in 2009 and 2010, while the top five at Freddie Mac received $28.1 million. And each company has set pay targets of as much as $17 million for its top managers for 2011.

That's a total of $95.4 million, which will essentially be coming from taxpayers, who have been keeping the mortgage finance giants alive with regular quarterly cash infusions since the Federal Home Finance Agency (FHFA) took control of the companies in September 2008.

NOW I GET IT! the Fannie Mae Executives turned over their bonus program to the short sale negotiators. The Executives said, in light of the fact that Fannie Mae is losing so much money why don't we POSTPONE OUR BONSUS. The Short-Sale Negotiator said "NO WAY WE DO NOT GIVE POSTPONEMENTS", therefore the Executives received their bonsus.

Consistency is the name of the game, after all isn't it just a game. We are just dealing with those little things like people's homes and credit rating.

Will the next wave of defaults be the FHA borrowers?

From 2001 through 2005 there were not a lot of FHA loans generated because the prime borrower used conventional financing and the sub-prime borrower used a sub-prime lender. However from 2006 to now, most of the loans that are generated are FHA and that number is approx. 90%-95%.

As we all know the prices of homes have fallen anywhere from 10% to as high as 90% and that puts all of these FHA loans in the position of being "upside down" (this is when the market value is less than the principal balance of the loan). The borrowers for the most part have been first time home buyers, which means down-payment poor and payment rich, as a result the down-payment on these loans is usually 3% to 3.5% and a large percentage of these borrowers received 3% concessions from the home seller. So for all intent and purposes, the buyer is getting 100% financing.

Loan default studies have been completed and the consensus is, when the market value of the home falls below 75% of the loan principal balance the homeowner is very likely to default, which will lead to a short-sale, DIL, or foreclosure. If the homeowner has 97% to 100% financing, they really do not have a lot of "skin in the game", which makes it very easy to walk-away from the purchase/investment.

As the FHA homeowner continues to watch the value of their home decline the incentive to walk-away from the loan increases. It has now reached the point where the FHA will pay $1,000.00 to the seller if they will complete a short-sale within a specified period of time, versus just walking away from the home and letting it go to foreclosure.

I do not know where we will end up with the FHA, however a serious financial problem for the FHA could possibly lead to the FHA withdrawing from the market or change borrowing conditions, and that could lead to a real problem for the housing market.

I, Jim Miner, want to take these few lines and say thank you to all of the Men and Women who have served and are serving in the United States Military.

Have you ever noticed, when you say "thank you" to a military person that is one of the most appreciated "thank you's" you will ever make. A person has lost a limb, eye sight, and/or more body parts, and this person is so pleased you took the time to say "thanks". If you have never told this to one our finest, try it, you will not be disappointed, but as a forwarning, it may be you who gets tears in your eyes.

I am like you folks, I have those days where I truly believe the Short Sale Negotiator is a "living brain donor", and my frustration is running at an all time high, but you just need to see some of our military folks going through some form of therapy and you realize you will make it to the end of the day.

If you have lost a friend or family member who is in the military my sympathy goes out to you and I say,

"GOD BLESS AMERICA"