One of the very first steps in the home buying process is determining how a Buyer will pay for their new home. Not only must a Buyer determine much they can afford, but how an offer must be structured–whether closing costs must be paid by a Seller, gift funds will be used for a down payment, how much of a down payment will be paid, and so on.

Having a great lender as part of the Buying team is critical, but especially so with short sale purchases.

It can be difficult for a lender to help a Buyer determine exactly how much they might need to close the sale. A good faith estimate on the front end of a short sale might not be appropriate; interest rates, dates of closing, and other terms may change before lender approval occurs several months later.

Will the Buyer have sufficient funds to close? Will they have sufficient reserves; will they be comfortable with their payment?

A GREAT lender prepares an estimate of costs at the beginning, then meets periodically with the Buyer throughout the process, updating them on the changes and making sure they understand the numbers. They help the transaction succeed – from start to finish.

Working with an agent experienced in both listing and assisting buyers with short sales … and considering their recommendations for a great short sale lender will ensure success and confidence as a buyer proceeds through the process.

With the number of real estate transactions on the upswing here in the Auburn, WA, south King County, and Pierce County areas, it only makes sense that we’ll also see more short sale transactions.

Around the water cooler, I’m hearing that some real estate brokers are fed up with the lengthy and time consuming process of working with short sale clients and have decided not to work with short sales any longer.

I can sure understand that attitude! Short sales are difficult, at best, and so many short sale listings never manage to close, whether due to unrealistic price expectations on the part of lenders, the physical condition of so many homes, buyers that get tired of waiting and walk away, or lenders that refuse to even look at offers (let alone counteroffer) thus letting a house ultimately go to auction.

Working short sales requires a team of experts that know what they’re doing and can address objections and legal issues as they arise. Agents must know the various programs involved, what the various banks require as far as what and when paperwork must be obtained, and how to counsel their clients. My team of experts, including lawyers, title reps, and escrow officers, know what they’re doing. We’ll be here during this upcoming 2012 year to answer your questions about short selling, listing your home at a price attractive to short sale buyers and to the banks involved in the process.

Call me when you have questions. I’ll do my best to answer them so that you can develop a strategic plan for moving forward – whether that involves short selling your house, keeping it, or allowing it to go through foreclosure.

*photo credit Jeff Turner via Flickr

Yesterday I posted information about

Ideally, the outcome of mediation might allow you to restructure your loan, save your home, or agree to sell it as a short sale. In fact, a decision maker for the bank is required to be present at the Mediation meeting – at least by phone. Of course, if no agreement is reached, the ultimate outcome might be to allow your home to proceed through Foreclosure.

This mediation step is a bit more complex than the informal meeting to which you are entitled right away (see yesterday’s post). Mediation must be requested by an attorney or housing counselor within 30 days of the bank or Trustee filing of the Notice of Default and must be held within 45 days of the referral to Mediation by the attorney. You’ll also be required to pay your half ($200) of the cost of Mediation hearing ($400).

Prior to Mediation meeting, both you, as the owner-occupant, and the bank will need to assemble a list of documents – yours will include financial documents such as tax returns, pay stubs, and so on. It’s an extensive list, but not difficult. Since you will be working with an attorney or counselor, they’ll assist you in determining exactly what documents you’ll need.

Note that the Foreclosure Fairness Act took place on July 22, 2011. If you received a Notice of Default prior to that date and foreclosure of your home has not yet been completed by the bank, you are also entitled to Mediation. You’ll want to contact an attorney experienced in the Foreclosure Fairness Act as soon as possible! Doing so can delay a scheduled auction!

As usual, you should also contact your Realtor© so that you are fully aware of your options and for the name of an attorney that is experienced in Foreclosure work.

In Washington State, folks that get behind on their house payments have options as described in the

One of the first steps a lender must take for a home in Washington is to send a letter to the homeowner describing their options – the first of which is the right to request an informal meeting with the lender before a Notice of Default is filed.

But here’s the thing … the homeowner has to make the request within 30 days from the date of the options letter.

• So … open every piece of mail that comes from your lender.
• Read it carefully and then  exercise your option to meet with the lender to discuss the situation.
• Do it by phone and ask insist that they confirm your request in writing.
• Follow up with a letter to them in writing — maybe even registered mail so that you have a record of your request.
• Keep copies of anything and everything you send and notes about every conversation you have with them.
• Get the names of the people with whom you talk … and write down the phone numbers and dates you make any calls.

and finally …

Engage an attorney to represent you at the meeting. Talk everything through with him/her … and with your real estate agent so that you know what your options truly are.

But first … Just Open the Mail!

The Washington State attorney general’s office recently released three videos that explain your rights and options should you be facing a foreclosure or short sale of your home.

As an active Realtor®, I frequently receive phone calls from people that are already behind on their payments, or feel as though they will soon be in trouble with their mortgage. Sometimes, the call is from someone that is trying to get out from under a home that has lost significant value and is now worth far less than what they owe. Each of these types of calls requires a knowledgeable response and action. Sometimes the best response is to refer the person to an attorney. Most often, however, it’s a chance to help education the caller as to their possible options based on their personal situation.

The three videos provided by Rob McKenna (Washington State Attorney General) and his staff explain some of the options available and the impact of these options on the consumer who may be facing a foreclosure or short sale of their home.

Each of the videos is moderated by Annie Fitzsimmons, the legal counsel for Washington Realtors. They are easy to understand and just a few minutes long. If you are facing a foreclosure or short sale, I urge you to take the time to view these videos, then give me a call if you have any questions or if you would like to discuss them.

In Part One, Mr. McKenna provides an overview of the options that are available:

In Part Two, Marc Cote, a Certified HUD Housing Counselor, discussses what will happen when you meet with a HUD Housing Counselor, what you need to be prepared for the meeting, and the options available when working with a HUD Counselor:

Part Three, presented by Rob Dickson, Lawyer and Short Sale Negotiator, discusses the short sale process, along with some of the difficulties that are faced when negotiating a short sale.

Obviously, at this moment many of us that are homeowners are facing significant loss of value in our homes and sometimes it takes just the smallest event to trigger an inability to make mortgage payments. Should that happen to you, please contact me at 206.300.8421 or gabrielle@gabriellenemes.com just to talk … and take advantage of the resources outlined in these videos.

However, Foreclosure Radar does offer some interesting charts and graphs for foreclosure data. Interesting enough that I thought I’d post them here and then watch the stats for a couple of months to see how they compare, overall, to the stats I run and am able to gather off the NWMLS (NorthWest Multiple Listing Service).

So, with a bit of hesitation, but why not? going on, here are the pertinent September 2010 foreclosure statistics as posted by Foreclosure Radar for Auburn, WA.

Auburn,WA – Foreclosure Filings

Foreclosure Filings is meant to display the number of Notice of Trustee Sales that were filed. A Notice of Trustee Sale is filed no sooner than 30 days after the homeowner receives a Notice of Default.

Auburn,WA – Foreclosure Inventories

Foreclosure Radar explains this chart as:” Preforeclosure inventory is an estimate of the number of properties that have had a Notice of Default filed against the property, but have not yet been Scheduled for Sale. The Scheduled for Sale inventory indicates those properties that have had a Notice of Trustee Sale filed, but have not yet been sold or had the sale cancelled. The Bank Owned (REO) inventory indicates the number of properties that have been sold Back to the Bank at the trustee sale, and which the bank has not yet resold to another party.”

Auburn,WA – Time to Foreclose

There’s an error in the explanation for this chart, but even so I found it a bit disturbing. The Time to Foreclose illustrated here is meant to display the number of days after the Notice of Trustee Sale is filed before the bank actually forecloses. Statutory guidelines indicate that a minimum of 90 days must occur after the the Notice is recorded. As a agent that assists homeowners in selling short sales, I can tell you that in nearly every instance I’ve handled thus far, at least one auction postponement has occurred. What I believe this chart illustrates is that most homeowners are either unsuccessful in selling a short sale, or that they just didn’t try. These are, overall, very tight to that 90 day window!

Here’s the explanation from ForeclosureRadar: “Time to Foreclose—The average number of days between the filing of the Notice of Trustee’s Sale and the final sale at auction for foreclosure sales that occurred during the specified month. Time to Resell—The average number of days between the final sale at auction and when the property was resold by the bank or 3rd party.

As seen here, researching data from multiple sources helps provide a more complete view of what’s really happening in the world of foreclosures and short sales. Be sure to check in here regularly for updates based on real, locally produced, data.

As always, if you are behind in your payments now, or anticipate being so in the near future, please give me a call. A short sale is often the best solution to avoid foreclosure. I can help.

See here’s the thing. Like much, if not MOST, of the country, the value of my house has dropped substantially. So has my income, but I’m STILL WORKING! Of course my income is now only about 2/3rds of what it was when I bought my house because I had to take a cut in pay to keep my job.

But I’m STILL WORKING and I’ve never missed a payment. I’ve now built up all of my credit cards to their limit and raided almost 100% of my 401k so that I can make my mortgage payments, yet I’ve NEVER missed a payment.

But the ratio between my mortgage and my house value is laughable. I’m so far upside down, I might just as well keep tunneling. Maybe I’ll end up in China like my Momma used to say.

And my friend, the very educated and talented REALTOR, says that the best way for me to get out from under this mess is to short sell my house because, like my income, it’s only worth about 2/3rds of what I paid for it five years ago. I even consulted with that real estate attorney who says maybe I should just let the house go back to the bank.

But, you see, I’m a responsible person. I make a commitment and I stick to it. Again, let me stress, I’ve NEVER MISSED A PAYMENT! It won’t be long now though. I just can’t continue to make payments at that fantastic 6.8% interest rate I had five years ago.

Here’s my proposal: My income supports a purchase that’s 2/3rds less than the current mortgage on my house. And interest rates have dropped below 5%. I CAN AFFORD THAT! And I can save you thousands of dollars and all of us can come out of this without egg on our faces and tons of embarrassment if you’d allow me to just buy back my own short sale property. Well, technically we shouldn’t have to go all the way through the short sale process. That’s messy, lengthy, expensive, and totally unnecessary!

So let’s do this: You process your own unbiased and fully researched Broker Price Opinion and I’ll pay for the appraisal. And then we’ll agree that the value of my house is 2/3rds of what it was. And then you’ll rewrite my mortgage/loan for that number at the current interest rate of less than 5%.

You’ll save money. You’ll not have yet another house sitting in your “bad loans” portfolio. And I’ll get to stay in my house and continue to maintain it, thus saving my neighborhood from further decline and dropping my house value even more. And my credit score will stay reasonable since we won’t have to go through all that “miss a payment or two or three so we’ll look at your short sale offer” business. My kids will continue to grow up in the same house at the same schools with the same friends in the same neighborhood, thus continuing to contribute to their sense of security. (We need these future secure workers to pay for their own houses and cars someday, thus helping to ensure your bank’s longevity.) We’ll all be winners.

How about it, Mr/Ms Bank President? Doesn’t that make loads more sense?

Sincerely,

Struggling Homeowner
i.e., Your Next Foreclosure Client

Being held from 11am – 5pm at the Chase Homeownership Center, 16400 Southcenter Parkway, Suite 200 in Tukwila, homeowners should bring their most recent tax returns, W-2s, monthly bank statements, pay stubs and proof of tax, insurance, and homeowner association payments.

HURRY!

The business of real estate … and more specifically at this current time, the business of short sales affects everyone. Not just current homeowners, but home buyers, home sellers, renters. Everyone. We all are touched by housing prices, banking practices with regard to home mortgages, interest rates, etc. I’m sure it comes as no surprise to realize that our economy is hugely affected by whatever is going on in the real estate market.

Short sale listings and purchases will continue to be part of our local economy for another few years. As I write this post on September 17th, I can see that of the 497 active single family residential listings with Auburn addresses, 138 of them are short sales! Almost 28%!

If you need an agent with unparalleled business standards to help you with the process of a short sale … or just to talk through your options should you be facing an inability to make your current mortgage payment for whatever the reason … please don’t hesitate to let me know. I’ll do whatever it takes to be of assistance to you.

Note: If your home is currently listed or if you are working with another licensed real estate broker, this post is NOT intended as a solitation.

No foreclosure!

A Deed-in-Lieu of Foreclosure is a process where the lender agrees to take the deed to your home rather than pursue a foreclosure action against you for nonpayment of your loan. This option is easiest where there is only one mortgage, and where there are no other liens.

Depending on your lender, a payment might be offered to the holder of a second mortgage or home equity loan, but that lienholder must also agree. Further, if you have yet additional liens against your home, such as tax or utility liens, your bank will likely not even consider this option. Your bank wants your home with “marketable title” … i.e., a clean and clear title without other encumbrances.

While this seems as though it might be an easy and logical solution, what’s important to remember here is that a bank isn’t in the business of owning real estate. They don’t want your home, especially if there’s no equity to be gained in taking it.

While definitely a generalization, there’s certainly truth to the statement that where banks readily accept Deeds-In-Lieu is where a home has equity in the current market and can be quickly liquidated at a profit to the bank. Great if you’re behind in your payments and absolutely must leave the loan obligation and there’s equity in the house. However, if there IS equity, why not try to refinance or pursue a loan modification first?

It’s also important to know that some banks won’t even consider a Deed-In-Lieu of Foreclosure unless you’ve already been rejected for a Loan Modification and/or were also unsuccessful selling your home as a Short Sale.

The information presented on this Site should not be construed as legal or financial advice. You are advised to seek consultation with a qualified Attorney and Accountant. ©Gabrielle Nemes, 2010