Fannie’s Guidelines On Preforeclosure Events

Fannie Mae has adjusted their underwriting criteria for borrowers who have experienced a “preforeclosure event.”  This is for preforeclosure sales, short sales, or deeds-in-lieu of foreclosure.  Starting in July, Fannie Mae has changed the waiting period after the event and based it on the loan to value for the transaction and any extenuating circumstances.  In addition, Fannie is updating the requirements for determining that borrowers have re-established their credit after a significant credit event.  To summarize it, the more money you put down the less time you have to wait. 

http://r20.rs6.net/tn.jsp?et=1103308098656&s=1892&e=001a2QeXhFsydOL46gRJEL6kp1zM9Ipbb_On_dvfYmrAaw9DvtD59Krs6Q6H-vyHM9wOxPDItHGFEzHfl3AZp7HSbwM73nCKx1zNHmuYk0NMVgdHyjhdWOKA4LqUOEwsZfDFBQI5ehiAqXCb-fLrRhLFKTVyWWGgXZyW7emIeDcTbU40XzwCPrWRVMpHUcVsou2

Short Sale Help Starts April 5th

This is to encourage banks and homeowners to do a short sale.  The program will probably make many unhappy but a short sale can be more beneficial for the banks and investors.  For those that are unhappy about this, don’t worry, like most of the programs meant to help the housing crisis only a few will get the help because the banks won’t go along with it.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

http://www.msnbc.msn.com/id/35756755/ns/business-the_new_york_times/ 

Banks Are Going After Deficiency Judgments

Even in short sale situations.  I am copying and pasting what I feel is important because I am not an attorney. 

“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”  

“What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.”

I think you are going to see people buying these judgments for pennies on the dollar and going after everyone just to try to get something.  I believe this is already starting to happen.

http://money.cnn.com/2010/02/03/real_estate/foreclosure_deficiency_judgement/index.htm?section=money_realestate&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_realestate+%28Real+Estate%29

Short Sale Fraud By The Banks

Wow, that’s all I can say.  This is a must read article.  This is a violation of RESPA.  Something needs to start being done about what is going on.  It just never stops and this housing mess will end up repeating itself at this rate. 

“But here’s what’s not legal and what’s apparently happening quite often recently. Since many second lien holders are getting very little, they are now allegedly requesting money on the side from either real estate agents or the buyers in the short sale. When I say “on the side,” I mean in cash, off the HUD settlement statements, so the first lien holder doesn’t see it.”

http://www.cnbc.com//id/34877347 

Short Sale Rules Could Change

I am only writing about this again since it was in the Sun-Sentinel.  I wrote about this on my blog back on December 1^st, 2009.  I hope this does go through but we will see how well it works.  There have been so many initiatives that have failed so if you are looking at a short sale now based on this report you better be patient. 

“Homeowners stuck while banks consider whether to approve short sales could benefit from new federal guidelines that give lenders a 10-day limit to respond to offers.”

http://www.sun-sentinel.com/business/fl-short-sale-changes-20100111,0,2830786.story

Principle Write Downs

Don’t expect banks to be forced to reduce principle balances because it would create a moral hazard.  But there is another article below backing up what I have said.  I know this makes a lot of people unhappy.  Since this is unlikely to happen they need to make the short sale process a lot smoother because I feel that is the better route. 

A short sale done quickly and correctly will reduce the banks expenses on taxes, association dues, etc.   I think what a lot of people forget is that a lot of these properties go uninsured along with vandalism and stealing of appliances, etc.  To me it is a no brainer but then again, who am I?

http://online.wsj.com/article/SB20001424052748704081704574652660161217386.html#mod=todays_us_money_and_investing 

Should You Buy A Distressed Home?

You certainly can but you need to be very careful.  Always consult a real estate agent who is an expert with foreclosures and short sales.  One of the most important thing to have done is a thorough inspection.  There can be a lot of hidden costs involved when it comes to repairs and damage and you need to make sure the inspector checks EVERYTHING.

The other very important thing is whether there are any title issues.  Many will use the title company that the bank recommends because they will pay for your title insurance.  I am a big believer in “you get what you pay for.”  The title companies that these banks use are sweat shops.  They have so many transactions going on that they cannot keep up.  I highly recommend using an attorney to do the whole transaction.  At the very least if you are going to use the banks title company, higher an attorney to represent you because the title company the banks suggest certainly isn’t looking out for your best interest. 

In South Florida and especially Fort Lauderdale, you will see 2 title companies on a lot of deals.  I will not name names but be careful. 

The property can also be vandalized in the process of the loan or while you are waiting for the bank to approve the short sale.  I have seen air conditioning units stolen and many other items.  There is only so much you can do about this.  It’s almost out of your control. 

http://online.wsj.com/article/SB10001424052970203803904574430860271702396.html?mod=rss_PJ_Main 

Foreclosure Buying Tips

For South Floridians, this is a must read article.  We all know the attractions of buying a foreclosure but the pitfalls are the big part.  This part is the most important in my mind:

“Before making a buy, investors need to do their homework carefully—that means hiring a contractor to complete a home inspection for big-ticket problems, like structural damage or costly mold.”

http://www.cnbc.com/id/29553764 

Short Sales Getting More Complicated

Yeah I can’t believe that statement either and didn’t until I read the full article.  It all boils down to the mark-to-market accounting rule changes where banks used to have to write down the value of their assets on their balance sheet even if it weren’t a bad assets.

“Real estate industry experts say banks are becoming more reluctant to agree to short sales, in part because the change in mark-to-market accounting rules gives them less incentive to take less than the mortgage is worth. As a result, they say, banks are holding out for what Realtors say are unrealistic offers.”

http://www.cnbc.com/id/31544746 

Short Sales To Become Simpler?

Short Sales To Become Simpler?

That is what is being said and it could help to clear up some of the backlog.  “The Obama administration on Thursday laid out additions to its housing-rescue plan that are designed in part to make it easier for financially troubled homeowners to sell houses that are worth less than their mortgages.”

http://online.wsj.com/article/SB124230792743919395.html#mod=todays_us_page_one