Elizabeth & Justin Thayer

As Foreclosures Rise, More Sellers and Lenders Consider Short-Selling The headline news recently was that the number of mortgages entering the foreclosure process rose to a record level. Of the nearly 44 million mortgages, about 0.58 percent - that's 254,590 - or one out of every 172 loans, are now officially in foreclosure. Foreclosure occurs when borrowers have not made two or more payments and lenders respond by filing a legal notice and commencing a legal proceeding to take possession of the home. The record number of foreclosures does not appear to be evenly spread around the country. According to the Mortgage Bankers Association, the rate of mortgages in foreclosure would have fallen if not for big jumps in foreclosures in local markets of California, Florida, Nevada and Arizona, where investors who bought on speculation that values would rise are walking away from property that is now worth less than they owe. Also, in regions of Ohio, Michigan and Indiana, areas marked by large job losses in manufacturing are seeing big increases in foreclosures. A Foreclosure Alternative The prospect of foreclosure is difficult for a homeowner, but there is another option. A little-known alternative, once more commonly used in the real estate downturn of the early '90s, is the "short sale," which works like this: A homeowner falls behind on his or her mortgage payments, usually due to a job loss, rising debt payments, or both. Facing a situation in which the home value has fallen and cannot be sold for the amount of the mortgage owed, the homeowner works out a deal with the lender to sell the home for whatever the market will bear. If the amount of the sale is for less than the amount owed on the mortgage, the lender gets the proceeds and discharges the remaining debt. The homeowner will have to leave the house as soon as it is sold. Alternatively, with a foreclosure, homeowners who can no longer make payments are served with a notice of foreclosure, which essentially informs them to either bring the loan current or face the home being taken over and sold at a public auction, after which the homeowner will face eviction proceedings. While this process is going on, the homeowner can live in the house rent-free for up to a year, depending on that state's foreclosure and eviction laws. But this fact alone does not mean the foreclosure is better; in fact, it may be worse. Lose the House, but Not Your Credit According to sources in the mortgage industry, people who agree to a short sale with the lender do far less damage to their credit rating than those who go through foreclosure. While in both cases, short sale and foreclosure, the delinquent mortgage will negatively affect their credit rating, at least short sellers avoid having a "debt discharged due to foreclosure" on their credit reports. Mortgage and credit experts say that, after bankruptcy, having a foreclosure on your credit report is the worst result and will reduce your credit score by over 250 points. You could also have to wait up to three years to qualify for a mortgage at a reasonable rate. Short sales show up on a credit report as a "pre-foreclosure in redemption" status and can result in a credit score reduction of 100 points or less. After the sale, the mortgage may show up as "discharged." People who successfully complete a short sale may also qualify for a mortgage at a reasonable interest rate in as little as 18 months. So, if buying a home is a future goal, then a short sale is the better option for many. Homeowners cannot simply decide that they want to unload a home with a short sale; the lender must agree to it. The key to getting a lender to go along is to demonstrate two things: that you have no other financial resources to pay the mortgage, and that the sale price the buyer is willing to pay is the fair price the market will bear. If a lender believes it can get more for the house by taking possession of it and selling it themselves, then they will not go along with a short sale. To begin the process of a short sale, you first need to call the lender and speak directly with the person in the loan workout or short sale department. At GMAC ResCap, a large residential mortgage lender, there is a "foreclosure prevention department" with people trained to work with homeowners in exactly this situation. Their motivation is summed up by Steve Nelson at that company: "We pretty much know what our loss is going to be if we foreclose. If a short-seller results in a payoff that's better than that number, we're talking all day long with people who want to put a short sale together." Some lenders report a three- to four-times rise in the number of short sales over the past year. People who want to go this route should contact a local real estate firm and ask to work with a real estate agent who has actual experience with short sales. These specially trained agents will know the process and deliver the documentation that the lender requires to authorize the short sale. The agent can also find a buyer that is qualified to complete the transaction. If all goes as planned, the lender will receive all of the proceeds, typically not enough to pay off the loan. The remaining balance of the loan is discharged. But a homeowner agreeing to a short sale should also get legal advice to protect his or herself from future claims of the lender. In some states, only purchase mortgages are fully discharged. For all other types of debt (equity loans, refinancing, etc), the homeowner can be held personally liable for repayment in the future. For this reason, a lawyer's advice will include getting the lender to agree to fully discharge all mortgage debt involved in the short sale. Buying a Short Sale Home Buyers who can find a short-sale can get a good deal. The advantages of buying a property through a short sale include buying at a discounted price and buying a house where the sellers are still motivated to sell the home and may take care of it until it is sold. Some buyers think they can get a better deal by waiting to buy a house when it goes into foreclosure, but buying a house through foreclosure is risky business and not for first-time buyers or inexperienced real estate investors. You should get advice from an experienced professional. Hire a lawyer to help you with the eviction process if the home is occupied. Sometimes, tenants who are sued for eviction can retaliate. When sellers realize they will lose their home to foreclosure, they often stop caring for it. Many states require buyers to make certain disclosures to the owners, and failure to do so on the proper forms and in the required timeframes can result in fines, lawsuits, and even cancellation of the sale and loss of your money. It's typically advised to work with a realtor with experience in short sales, because they can help you research the market to find the properties where foreclosure notices have been filed as well as how much is owed by the lender. Typically, this can be done at the county registrar of deeds. They can also approach these homeowners for you to let them know that they are aware that the foreclosure notice has been filed and that, if the owner is interested, there is a buyer who could work with them to complete a short sale. Even if you find a home where the owner is willing to work out a short sale, don't assume the lender will go along with it. Once the seller agrees to your offer, your agent will need to send it to the lender for approval, and you will not have a deal until the lender OKs it. Expect a lender to negotiate a higher price; they will want to know they are getting paid the most they can get for the house. Since the lender is paying the realtor's commission, it will likely ask your agent to lower his commission, or you to pay some of it. Typically, the lender will not bear the cost of items that are typically paid for by sellers, such as inspections, and the lender will agree only to sell the property if the buyer agrees to buy it in "as is" condition. This makes it all the more important for a buyer of a property through a short sale to make an offer contingent upon approving a through home inspection.

To find short sales for sale or get help with a house you cannot afford call 541-543-7287 or visit www.teamthayer.com

There are a few ways to find great deals on foreclosed homes and short sales. The most popular but the least effective is cold calling off a default list. You can get this list from your local Title and Escrow company however these are rarely folks who are interested in selling but usually people who are trying to save their homes. They are usually highly offended by the uneducated offers from Real Estate novices who's experience consists of a video course they bought at 2 am from a Saturday night infomercial. I have seen company's actually selling these lists for anywhere from $10-$100. DO NOT BUY A DEFAULT LIST. You can get this info from your local Real Estate broker or title company for free. One thing most people do not realize is the default amount on the list IS NOT WHAT YOU CAN BUY THE HOUSE FOR! It is the amount of the first position lien. There are often several other liens that must be dealt with before a title can be cleared. The other popular but worthless way to find deals in drive around looking for run down houses people might sell for a good price. You might as well drive around and try and find money people drop by accident.WHAT A WORTHLESS WASTE OF TIME!!!! The very best way to find an amazing deal on a foreclosed property or short sale is to contact a Real Estate broker who specializes in distressed properties. These pros know where they are and how to negotiate SUCCESSFULLY with the banks. YOU WILL NOT SAVE MONEY DOING IT ON YOUR OWN.This is called stepping over dollars to pick up pennies! Don't do it! I have watched several investors spend months or even years trying to get banks or anyone to listen to them and look at their ridicules offers with less earnest money than they spent on the get rich flipping houses books they just bought. The market is to good right now to waste time. Use the following criteria to find a Broker who can help you take advantage of this home buying investors dream market we are in.

1. Find a broker who is currently being hired by the banks to do BPO's (broker price opinions) , and have REO (bank owned) property for sale as well as work as a buyers agent specializing in REOs, short sales, etc. They will be able to give you the first shot on their bank owned listings as well as having connections with the old boys clubs that often have the bank owned markets cornered.

2. A investment buyers agent should be an expert in short sale negotiation with at least 10 successful short sales under their belt. I am on a personal level with as many bank asset managers and employees as possible. I make sure they know me and like me. This allows me to really navigate the bank and pull favors to the advantage of my clients.

3. Willingness to show you allot of properties is key. I take my clients to see 15-20 houses minimum. You cant know you have the best deal unless you see what the competition is about. 4. Information speed is key. My buyers see the new important listings as soon as they come on the market. this gives them an incredible advantage.

5. Tie the deals up fast! Even in this buyers market the best deals often are sold with a bidding war. I tie up my buyers possible purchase before this has a chance to happen.

For Lane county Oregon go to www.teamthayer.com If you are outside of Oregon I can still help so log on to my site or call me @ 541-543-7287

Short sale! This is where the bank forgives a portion on the loan in for a lump sum payment from the sale of a house. Over the last 6 months I have seen the short sale get easier as banks and REO company's are getting loaded down with the amount of defaults. I have been able to get rid of all other types of other liens along with the home loan including lawyer fee's. It seems everyone is understanding the problem and moving faster to cut their losses. I have been able to get banks to take as little as 10% on what is owed to them. I have given a brief outline of my process in the steps below.

1. Order and fill out the banks short sale packet right away. Do not wait until you have an offer.

2. Contact the banks asset manager for that home right away and let them know you are going to get them as much money as possible but due to the market it will probably be short. If their is a first and second contact them both. You usually just need to negotiate with the second if their are two liens but if the house value is worth under the first as well this is OK. You will need to negotiate with them both equally.

3. Advertise your situation. Add the wording pre-forclosure and /or short sale to all of your advertising including directionals and yard signs. This will spark more interest and more chances at higher offers.

4. Price the property at what is owed for 1 week then lower the price every 2 weeks until you are in a range you know will get offers or you get an offer. You will be able to use the MLS history as proof you tried to market the property at higher prices.

5. The closer you are to the sheriff sale date the more aggressive you should drop the price. I usually drop $10-$20k every two weeks until an offer comes in, and it always does.

6 All of the seller financials should be already turned in however the REO company or bank will want new bank statements and pay stubs if it has been 3 months so turn them in before they have to ask. Turn in the following with your offer.

A. Your own CMA

B. A letter in your own words explaining the current area market condition.

C. The listing history from the MLS proving you tried to get more out of the property.

D. Current bank statements and pay stubs go three months back to cover you bases.

E. A letter from the seller detailing the severity of their current financial crisis.

F. You own photos and description of the property including any problems that prevented any sales at a higher price. ( Do not try and beat up the property but explain any showings or past offers that may have been retracted by poor conditions or needed repairs) The key here is to let the asset manager know that you are trying to get as much money as possible for the property.

7. Remove the lockbox to prevent any other Realtor from doing a BPO without you input. When the REO company sends out the Realtor to do the BPO meet them at the property and provide your own comps. to them to make sure your values match up .

8. Now you just have to work it out with the asset manager. If you have done the previous steps correctly you should be able to get the asset manager to guide you to a deal that works for everyone. The offers have to close to actual value if you expect to close. They can still be a great deal for the seller but need to be realistic. Reject ridicules offers right away and turn them in to the asset manager. It's going to be up to you to figure out what is aggressive vs ridicules but can make all the difference in how the asset manager works with you.

If you need Short sale help in Lane county Oregon or just have questions please call Justin Thayer @ 541-543-7287

For additional information on short sales go to www.teamthayer.com

We have been seeing record numbers of foreclosures, record numbers of bank repos and record numbers of short sales. Homeowners are faced with rising mortgage payments when their once low adjustable rate mortgages reset and climb. A short sale has been a common answer to losing a home through foreclosure.

But now there's a new answer; the short refinance FHA Secure. The short refinance works exactly the same as a short sale with the exception that the homeowner remains a homeowner. In a short sale, once an offer comes in it gets presented to the bank along with an application package from the seller to the bank asking to take a discount on the current mortgage. Once the bank accepts the offer for less than what the seller owes the bank they have agreed to a short sale. A short refinance works in much the same way as a short sale only in the case of a short refinance the "offer" presented to the bank is actually a copy of the homeowner's brand new short refinance FHA Secure approval. The short refinance approval, along with all the supporting documentation, is then submitted to the bank requesting a discount. Once the bank accepts the discount, they have accepted a short payoff and agreed to a discount on the loan allowing for the short refinance.

A major benefit of the short refinance is that it allows borrowers to keep their homes. The short refinance delights homeowners because they get a new start with a lower mortgage payment and a lower mortgage balance.

Why would the bank agree to a short refinance and not just foreclose on the property? Simply put foreclosing on a property requires large amounts of legal fees and then the home is typically sold at a substantial discount off of the fair market value. The short refinance allows the bank to avoid the majority of the legal fees and let's the new lender make its largest loan based on the fair market value.


For more information on the Short Refinance FHA Secure contact:

Justin Thayer

Keller Williams

541-543-7287

To learn about Team Thayer Go to www.teamthayer.com

With all of the doom and gloom we have been hearing about the housing market I would like to mention how things are going in my neck of the woods. We where # 13 for appreciation in the nation last year. We definitely are not in a sellers market but most of the sellers are just needing to adjust to a normal market and yes you are going to have to work to sell your home. On the other hand this is one of the best times to buy because of the great inventory and medium range prices. You can buy a nice home for $250000 and expect it will appreciate over the next 3-5 years. I have a client who is an investor who has been telling me about some of the crazy deals he is getting in other markets around the country buying houses for under $5000. I wonder if he will ener be able to sell them. All in all this is just a stable market and a nice place to live. Nice people, lots of culture, more things going on than in most cities twice the size! Just take a look a the pics below. You can check all thing lane county Oregon Real Estate @ http://www.teamthayer.com/