Foreclosure Rates Decline on Both Quarterly, Annual Basis

You’ve probably heard or read it: foreclosure rates have declined for the last quarter and compared to last year’s. But what do those numbers really mean? Below is a straightforward article from one of our title companies. Please feel free to pass this along to your friends and family.

Please note: these statistics are national averages. The numbers for the Las Vegas area are not typical of the national rate. Feel free to call our office for up-to-date reports for foreclosures and sales in our local market and we would be happy to send you the latest figures.

The number of foreclosure filings for the second quarter of this year was the lowest reported since the fourth quarter of 2007, according to RealtyTrac’s Midyear 2011 Foreclosure Market Report released Thursday.

All categories of foreclosures showed decreases on both a quarterly and annual basis. Totaling 608,235 for the quarter, foreclosure filings showed an 11 percent decrease from the first quarter of the year and a 32 percent decrease from the second quarter of 2010.

The total number of foreclosure filings for the first half of 2011 was 1,170,402, demonstrating a 25 percent decrease from the previous six months and a 29 percent decrease from the first half of 2010.

According to RealtyTrac, 0.9 percent of all U.S. housing units received at least one foreclosure filing in the first six months of 2011. Monthly foreclosure filings for the month of June totaled 222,740, a 4 percent increase from May and a 29 percent decrease from June 2010.

June marked the ninth consecutive month in which foreclosure activity declined on a year-over-year basis. However, June showed month-over-month increases in default notices, scheduled auctions, and REOs.

While declining foreclosure filings might ignite encouragement, RealtyTrac CEO James J. Saccacio warns these numbers might not point to improvements in the market. “Unfortunately, with unemployment rates inching back up, consumer confidence weak and home sales and prices continuing to languish, this doesn’t appear to be the case,” Saccacio says.

Saccacio estimates that due to processing and procedural delays, up to 1 million foreclosure actions that should have taken place this year, will be delayed until 2012 or later. “This casts an ominous shadow over the housing market, where recovery is unlikely to happen until the current and forthcoming inventory of distressed properties can be whittled down to a manageable number” Saccacio says.

While Nevada, at 5 percent, ranked highest in the nation in terms of foreclosure rate, California showed the highest total number of filings at 263,500. Arizona ranked second in states with highest foreclosure rates at 2.82 percent, while also ranking third in terms of total foreclosure filings with 77,525 for the first half of the year. Florida had the second-highest number of foreclosure filings at 113,641. Other states ranking in the top 10 for total foreclosure filings included Michigan (61,005), Georgia (60,870), Illinois (60,636), Texas (55,442), Nevada (53,217), Ohio (44,419), and Colorado (25,744).

In addition to Nevada and Arizona, states ranking in the top 10 for foreclosure rates were California (1.96 percent), Utah (1.65 percent), Georgia (1.50 percent), Idaho (1.49 percent), Michigan (1.34 percent), Florida (1.28 percent), Colorado (1.19 percent), and Illinois (1.15 percent).

The average number of days a U.S. property spent in the foreclosure process in the second quarter of 2011 was 318, showing an increase from both the first-quarter average of 298 days, and from the average reported for the second quarter of 2010, 227 days.

The foreclosure process spanned the highest number of days in New York at 966 days on average, followed by New Jersey with 944 days and Florida with 676 days. Foreclosures took the least amount of time in Texas, only 92 days on average, and Virginia, where foreclosures averaged 106 days.

The average number of days from foreclosure to sale for REOs sold in the second quarter of 2011 was 178, a slight increase from the first-quarter average of 176 and from the average in the second quarter of 2010, which was 164 days.

U.S. properties in foreclosure that sold in the second quarter of 2011 averaged 213 days from the start of the foreclosure process to the sale, a decrease from the 228 day average in the first quarter of 2011 and increase from the 195 day average in the second quarter of 2010.

But wait! Foreclosure doesn’t have to be your only recourse! Have you thought about short sale? The Dulcie Crawford Group is conducting a FREE educational seminar that will discuss this and other possible strategies, on Saturday, August 27th, 1:30 PM. More information can be found at our website.

Please sign-up here.

NV Legislative Updates That You Should Know

The 76th Legislative Session adjourned on June 7th, and we want to share with you some of the more important bills that concern the real estate industry and therefore, may affect you as a property owner.

AB273 – Passed/Became Law
NRS 40.455 states that the holder of a mortgage can sue to collect a deficiency within 6 months after the foreclosure sale or trustee sale. The new law, AB 273, states that a holder of a second mortgage must sue within 6 months for deficiencies resulting from a foreclosure sale, trustee sale, short sale or deed in lieu of foreclosure. This is how the laws work together:

•  First mortgage loans – Deficiency collection lawsuits must be filed within six months after a foreclosure sale.
• First mortgage loans – Deficiencies can only be collected on first loans taken out BEFORE October 1, 2009. First loans taken out after that date are non-recourse loans.
• Second mortgage loans – Some collection lawsuits must be filed within six months. The six month limit on deficiency collections only applies to foreclosure sales, trustee sales, short sales and deeds in lieu of foreclosure that are sold or have sales closed AFTER July 1, 2011.
• Second Mortgage loans – Deficiencies can only be collected on second loans taken out BEFORE June 10, 2011. Second loans taken out after that date are non-recourse loans.

Note: New laws do not impact First mortgage loans for short sales – unless the deficiency judgment is successfully negotiated in the short sale, the lien holder has 6 years to pursue a deficiency judgment after a short sale.

SB 414 – Passed/Became Law

This bill does two main things:

• It prohibits a banking or other financial institution from unreasonably delaying its response to an offer for a short sale on real property secured by a residential mortgage loan. It makes it a misdemeanor for the bank to unreasonably withhold short sale approval, and spells out that acceptance or rejection of an offer should be received within 90 days.
• It also prohibits a bank from getting a deficiency judgment if they agreed to a short sale (under certain circumstances). Personally, I am not sure how this can be enforced against out of state banks, etc., but knowing that the law is there could potentially speed up the short sale process.

SB403 will make sure the Demand Letter from the HOA is good for 15 days. It also provides for noticing provisions if the demand changes within the 15-day timeframe.

FOR ALL OF US: DON’T TEXT AND DRIVE!
SB140 prohibits the use of a cell phone effective July 1, 2011 without the use of a hands free devise. You cannot text, IM, or browse the internet. This is considered a primary offense meaning you can be pulled over and cited. Warnings will be given until January 1, 2012 when they will begin issuing citations. So go get that hands-free gadget if you don’t have one already, and no more texting while driving!

This recap was provided by the Nevada Association of Realtors, (NVAR), which provides services to 15,000 REALTORS® throughout Nevada. NVAR is invested in the success of its members by providing services and advocating for private property rights.

80% of Las Vegas Homeowners are Underwater. What can you do to protect yourself and your assets?

Find out at the next FREE power-packed educational seminar that The Dulcie Crawford Group is hosting on Saturday, June 18, 10:30 AM. The seminar will also look into what the future holds for Las Vegas’ real estate market. As a Nevada property owner, you’re probably in the same situation as 80% of the population. Is Bankruptcy the safest and only option for you to dispose of a poor real estate investment? Are you thinking of walking away because you think there is no other way out? There are other options! You need the right strategies that give you all the alternatives available to you to get rid of an inopportune investment. Before you do anything, give us a chance to show you how WE CAN HELP.

Perhaps, finding out more about these other topics will benefit you too:

• Loan Modification — Solution or Myth?
• Short Sale Strategies that Lead to a Deficiency Release
• How to Walk Away from Debt But Still Protect Your Assets
• Asset Trust Protection—why you need to have one to protect your family
• 2011 Changes to the Government Aid Programs like HAMP and HAFA
• Do you need legal representation? We have partnered with a leading short sale attorney to offer you consultation fee for as little as $200

This power-packed presentation will be conducted by some of the industry’s leading resources for Nevada real estate. Get the facts straight from the experts who can help!

• Dulcie Crawford—Realtor, 13 years professional experience, Las Vegas native, Short Sale/Foreclosure Resource Specialist, Top Producer in Short Sale & Distressed Properties
• Atty. Carlos McDade, ESQ, Black & Lobello – One of NV’s Foremost Law Firms in Real Estate Short Sale Negotiation and Asset Protection Laws
• Atty. Martin Prybylski, ESQ, Robertson & Benevento – One of NV’s Highly Experienced Bankruptcy Attorneys

This is an event you don’t want to miss. Please mark your calendars:

Saturday, June 18th, 10:30 AM – 12:30 PM

Realty One Group Seminar Room

9089 S. Pecos Road Suite 3400, Henderson.

RSVP by June16 to reserve your seat at: http://dulciecrawford.com/ShortSaleSeminar.ubr.

Remember: It doesn’t cost you anything to attend but it can very well give you the much needed professional guidance you need so you can make the best decision. Please feel free to pass along this information to a family, friend or neighbor who you think can also benefit from it. If you have any questions or need help signing up for the seminar, please contact us at: 702.588.6842, 702.285.1990, or dulciecrawford@gmail.com.

FREE EDUCATIONAL WORKSHOP ON Saturday, May 14

UNDERWATER? THINKING OF SHORT SELLING YOUR HOME?
We are a few days away from this highly informative real estate workshop that The Dulcie Crawford Group is hosting, together with two of Nevada's foremost attorneys in short sale representation and asset protection and trust law.

Among the topics to be covered are:

• Loan Modification — Solution or Myth? 
• Successful Strategies to Negotiate with the Bank on Your Mortgage
• How to Walk Away from Debt But Still Protect Your Assets
• Short Sale Strategies that Lead to a Deficiency Release
• 2011 Changes to the Government Aid Programs like HAMP and HAFA
• Do you need legal representation?
• Asset Trust Protection—why you need to have one to protect your family

Mark your calendars:

Saturday, May 14, 10:30 AM to 12:30 PM
Realty One Group Seminar Room
9089 S. Pecos Rd Suite 3400, Henderson, NV

Please share this event with your family and friends who you think might benefit from the wealth of information that will be presented FREE OF CHARGE during the seminar.

To register, simply visit http://dulciecrawford.myubertor.com/ShortSaleSeminar.ubr

We hope to see you at the event!

GREAT NEWS FOR SHORT SALE FRUSTRATION

On November 30, 2009, the Obama Administration released guidelines and uniform forms for its Home Affordable Foreclosure Alternatives Program (HAFA). Modified HAFA rules for loans owned or guaranteed by Fannie Mae or Freddie Mac will be issued in coming weeks. HAFA does not apply to FHA or VA loans.

HAFA, which will help homeowners who are unable to retain their home under the Home Affordable Modification Program (HAMP), provides incentives in connection with short sales and deeds-in-lieu of foreclosure. HAFA is a complex program with 43 pages of guidelines and forms. We will keep you updated in future blogs and strive to simplify the jargon to see how this program can help you.

The program:

• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
• Uses borrower financial and hardship information already collected under HAMP.
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6%).
• Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note, or deficiency judgment is allowed).
• Uses a standard process, uniform documents, and timeframes/deadlines.
• Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to a $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders. Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.
• Does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program ends on December 31, 2012.
  

Who is eligible for HAFA?
The borrower must meet the basic eligibility criteria for HAMP:

• Principal residence
• First lien originated before 2009
• Mortgage delinquent or default is reasonably foreseeable
• Unpaid principal balance no more than $729,750 (higher limits for two- to four-unit dwellings)
• Borrower’s total monthly payment exceeds 31% of gross income

What else should I know?

• The deal must be “arms length.” Borrowers can’t list the property or sell it to a relative or anyone else with whom they have a close personal or business relationship.
• The amount of debt forgiven might be treated as income for tax purposes. Under a law expiring at the end of 2012, however, forgiven debt will not be taxed if the amount does not exceed the debt that was used for acquisition, construction, or rehabilitation of a principal residence. Check with a tax advisor.
• The servicer will report to the credit reporting agencies that the mortgage was settled for less than full payment, which may hurt credit scores.
• Buyers may not reconvey the property for 90 days.

RECENT RULING MAY HELP HOMEOWENERS TRYING TO AVOID FORECLOSURE / LV HOME PRICES RISE AS SALES TAKE SEASONAL FALL

In a recent report from the Las Vegas Review Journal by reporter John G. Edwards, homeowners fighting back foreclosure may have some hope to delay the process. This ruling made by U. S. District Judge Kent Dawson “makes it harder for lenders to foreclose on home mortgages” as it challenges the electronic system of recording the ownership of residential mortgages for the mortgage banking industry.

About half of all U.S. mortgages “whose loans have been securitized, sliced and diced are now held" by Mortgage Electronic Registration Systems Inc., or MERS, according to a blog posted by securities analyst Barry Ritholtz.

According to the article, “The case, heard by a panel of federal judges in November, concerned whether Mortgage Electronic Registration Systems Inc. could foreclose on residences on behalf of lenders.”

The electronic system records the ownership of residential mortgages for the mortgage banking industry.

Dawson said the company could not foreclose on a home, because it did not provide evidence that it held the note on the residence and didn’t show that it was an agent of the lender.
The case started in bankruptcy court two years ago.

MERS officials asked bankruptcy Judge Linda Riegle for permission to start foreclosure proceedings against a property owned by Lisa Marie Chong. Bankruptcy trustee Lenard Schwartzer objected, saying the electronic system was not a “real party in interest” in the mortgage loan.

Like many mortgages, Chong’s loan had been securitized, meaning it had been pooled or packaged into a security held by investors.

Mortgage Electronic Registration Systems Inc. was unable to show that it had possession of the note. The bankruptcy judge ruled in Schwartzer’s favor. The decision was appealed to federal court.

In his decision Tuesday, Dawson said "the registration system does not lose money when borrowers fail to make payments on home mortgages." Dawson found that the Mortgage Electronic Registration must at least provide evidence that it was a representative of the mortgage loan holder, which it failed to do.

“Since MERS provided no evidence that it was the agent or nominee for the current owner of the beneficial interest in the note, it has failed to meet its burden of establishing that it is a real party in interest with standing,” Dawson said, affirming the bankruptcy court ruling.

Real estate attorney Tisha Black Chernine said the ruling is good news for struggling borrowers and homeowners in general.

“It will have a dramatic effect on lenders being able to foreclose,” she said.

Because the decision makes it more difficult to foreclose, she hopes lenders will be more willing to negotiate with homeowners struggling to meet mortgage payments by approving short sales or making other concessions.

In a short sale, a lender agrees to allow a homeowner to sell his home for less than is owed.
This is particularly helpful, because many homeowners owe far more than their homes are worth since home prices have fallen. Houses sold in short sales typically go for 30 percent more than homes sold after foreclosure, Black Chernine said.

Appraisers looking at the short sale price will use it in determining the market value. Thus, avoiding foreclosure results in higher market values for other houses, she said.
“It should help buoy home prices,” Black Chernine said.

Bill Uffelman, chief executive officer of the Nevada Bankers Association, predicted that most foreclosures will be able to proceed, because the real mortgage owners and notes will be able to be identified in most cases.

However, he said, many homeowners facing foreclosure may be able to stay in their homes longer because of the delay.

“In the end in 99.9 percent of the cases, ownership of the note will be proved,” he said.
While the decision is believed to be the first of its kind in Nevada, the Kansas Supreme Court made a similar finding in a similar case.

LV MEDIAN PRICE RISE, SALES SLOW DOWN TYPICAL OF HOLIDAY SEASON
On another front, the recent statistics released by the Greater Las Vegas Association of Realtors show that Las Vegas’ median price of homes sold in November was $140,000, about $900 higher than October. The median price was $138,000 in September.

The traditional holiday sales slowdown of homes and condos took place in November while prices edged up slightly again, according to the report.

Analysts say the increase is a further reflection that home prices have stabilized for now. Overall, home prices are down 25 percent from November 2008.

Condo prices fell 2.9 percent in November to $68,000. Prices are 25 percent below where they were in November 2008.

Demand for homes and condos tend to soften in November, December and January because of the holidays, but sales last month eclipsed November 2008.

The GLVAR reported 3,117 sales of new homes in November, a 43 percent increase over November 2008. The 726 sales of condos and town homes was 85 percent higher than November 2008.

Compared to October, however, sales of homes fell by 12 percent and sales of condos and town homes fells by 15 percent.

Despite the slowdown, GLVAR President Sue Naumann said the extension of an $8,000 tax credit for first-time homebuyers and creation of $6,500 tax credit for other buyers should spur sales in 2010.

Investors and first-time buyers continue to dominate the sales market, according to the GLVAR.

The percentage of homes purchased with cash in November was 41 percent, nearly matching October, Naumann said. Many investors rely on cash deals.

The number of sales of foreclosed upon homes continued to drop in a reflection of limited supply that’s on the market, analysts said. The GLVAR reported 61 percent of all sales in November were bank-owned properties, down from 64.5 percent in October.

Initial Effects of the Federal Bailout Program

The market is seeing transition as the Federal Bail Out program begins to trickle in to the many sectors of the credit and housing economy.

I have personally seen a trend from the mortgage note holders on my short sale listings to start to pull back from approving short sale transactions. Instead now they are approving loan modifications which were initially turned down the first time the homeowner/seller called the Home Retention Department for assistance in a loan modification. This is a frustrating experience for me as a Listing Agent, as I end up losing listings that I have managed to market and get viable offers for. This of course depends on the lender with whom we are dealing with, some lenders are still co-operating with us towards a successful short sale transaction. This new trend for short sales is beginning to show that they will not be the 1st priority of the lender/mortgage note holder until they have exhausted the new options of the Loan Modification departments that now have federal subsidies to buy down the original mortgage note to what the actual current appraised value is, which is an incredible deal for the financially strapped homeowner.

I have one client that was nine months behind on their mortgage, was initially turned down for loan modification. We had several viable short sale offers in to the bank for approval and the seller tried one last time to see if the new bailout program gave them a second chance. They have been given the wonderful news that they have been accepted to have the loan modified and the original note amount reduced to current appraised value. This family deserved this, I was happy to hear the news, despite my losing a transaction. They truly loved their home and tried desperately to keep it despite their worsening financial conditions.

The upside of this is that I see that the government’s recent actions to promote stimulus for the mortgage lenders to negotiate with homeowners to retain properties in default or that are likely to go into default has begun to work and move in the right direction. I feel that the inventory of short-sale and foreclosure properties will be coming to an end. This new housing trend is something I look forward to in the near future. As a professional Realtor dealing with the banks and mortgage lenders on these financial issues it is a time consuming and sometimes challenging process.

I have included below the Interest Rate update report from my preferred lender Aaron Gordon at Countrywide Home Loans. This last Wednesday we again saw a large drop in the interest rates to 5.75% with one point paid to the lender; an incredible deal in this market when home prices are at historic lows. To be able to buy during the perfect storm of low rates and low home prices is one that I know will not last forever. I recommend that buyers that have been on the fence to buy, take the time to get online and keep updated of the market conditions so that they can take advantage of the incredibly priced deals available today. If we all had crystal balls we would have known exactly when the last market upswing was going to peak, but we don’t and so looking back we should learn that even the media is usually late to report when the market conditions have changed, usually the news is late to report on average six to eight months.

Morgan Stanley just announced this week to its international investors that it was time to get back into the stock market again. It is a New Year coming and a whole new government will take over on January 20th, 2009. I feel a new optimism for the coming year. I just purchased a bank owned home that I feel was a super steal for the quality of home that I was getting. The home I purchased was selling for $850K in 2004, and I bought it for $529K including closing costs that included rate buy down and money for repairs as well. I invested in new carpet, paint and appliances; and my appraisal came in at $590K at close of cscrow. I feel that the home is worth $650K already due to the rehabilitated condition. I made this investment NOW as I believe the time is right to invest again and that I will not be saying to myself next year that I wish I had, but I am glad I did!

I again will adjust my business to adapt to the changes of this evolving market, and continue to keep myself updated and educated on the changes still to come, so that I can serve my clients the way they deserve to be represented.

Please feel free to call and discuss any questions you may have with me. I always appreciate any referrals you have for buyers and sellers that need professional assistance in the Las Vegas and Henderson Real Estate Market.

I also have a new Website dedicated to understanding the Foreclosure Market, please visit or refer it to anyone that is in need of clarification of this complicated Foreclosure Market. http://www.understandingforeclosureslasvegas.com


Gordon Team - Weekend Rate Report – November 7, 2008
"INTEREST RATE DROP ALERT!"

Here we go again!! Rates have come down substantially since Monday.
CONFORMING 30 YR FIXED RATE
5.500% with 2 points
5.625% with 1.5 points
5.750% with 1 point
5.875% with .250 points
6.000% with no points

FHA / VA - 30 YR FIXED
5.500% with 2 points
5.750% with 1.5 points
5.875% with 1 point
6.000% with .250 points
6.125% with no points

NOW is a great time to lock or shop around for a better rate!! Let's hope they stay this way for a while but don't chance it. LOCK TODAY!!

WEEKLY RATE REPORT:
Rates are down from last week. Consumer spending is down and we are facing a weaker job market. This made rates go down. However, don’t plan on them staying that way long. Lenders are tightening lending standards due to a soft economy and record foreclosures. The risks are rising. When risk increases, the price of money reflects the risks. A recent survey of senior loan officers found that about 70% of banks raised their lending standards for prime mortgages. About 90% of banks that offer nontraditional mortgages raised theirs too. Find a rate you like and lock!!

NEW GUIDELINE ANNOUNCEMENTS THIS WEEK:
Construction loans are back in soft markets like Las Vegas. If you have a client who bought a lot but could not secure financing, he can now get a construction loan to finish his dream home. This is great news. Since this is a specialized product, it may not help your business directly. However, it’s one of the more risky loans there is. Bringing it back is a great sign. It shows a measure of lending confidence coming back to our market.

TIP OF THE WEEK:
Escrow Holdbacks Allowed for Repairs and Improvements on Bank-Owned Properties You can now do escrow holdbacks on existing Countrywide REO properties when using conforming loans programs (not including FHA) and a Countrywide loan officer. These holdbacks are allowed in financing of Countrywide-owned properties purchased at either an REO auction or non-auction sale where there is a certain amount of rehabilitation work needed. An escrow holdback is a portion of a loan held in escrow until an additional requirement, usually repairs or unfinished work, is completed. The loan may close and the borrower may occupy the home while incidental work is in progress. Common examples of improvements that may involve holdbacks include exterior painting or flooring, where the property is livable. The cost to make repairs or rehabilitation is placed in an escrow holdback account, along with reserve funds (20% of the repair budget) to ensure completion of work. In all cases, the property must be habitable or livable, and the 20% reserves are required to be escrowed along with the cost to complete.

• Detached SFRs only (no PUDs)
• Owner-occupied only
• Conforming conventional programs only
• Purchase transactions only for Countrywide REO properties
• New and existing construction allowed
• Maximum 95% LTV Allowed
• Mortgage Insurance is required on loans over 80 LTV
• Full appraisal required
• Property does not need to be purchased at an auction
• The property must be livable and must have evidence of working utilities, bathrooms, etc.
• Items such as paint, floor coverings or minor wall damage does not affect livability
• Health or Safety Hazards Escrow Holdbacks are NOT allowed for properties with Health or Safety Hazards
• Minimum Escrow Withhold Amount 120% of the total estimated cost to complete the required work must be held in escrow
• Completion of Work Must be accomplished within 120 days from the loan closing

Why Short Sales Make Sense Even if You Have to File a Bankruptcy

Many bankruptcy attorneys are telling their clients to not do short sales. This may make sense from the attorney's point-of-view, but there are reasons why you might want to consider a short-sale even if you have decided to file bankruptcy:

BUT if you factor in the long term goals of most people, like owning a home, it makes sense to do everything you can to ensure you have a clean credit file. Short sales look better on your credit in the long run, but sometimes people just cant deal with more stress, thats just how it is and they will simply deal with the resulting consequences later when they are in a better state of mind.

It should be noted here, because I'm sure some guy that's been doing short sales, or mortgages or selling Hyundai's for a tenth of the time I have...(I've never sold Hyundai's, just the other stuff) will make some comment about how despite my opinions short sales are still a negative item on your credit.

He would be correct, its just like settling a credit card for less than you owe, it will most likely report on your credit that you did not fully pay the debt. Sometimes we are successful at getting the lender to report it as paid in full, but you shouldn't rely on that as any kind of a certainty...if it happens its a nice bonus, but don't plan on it. So it is BAD, but it IS NOT as bad as a foreclosure nor is it as bad for as long as a foreclosure.

By law, foreclosure stays on your credit for 7 years. Bankruptcy also remains 7 to 10 years depending on what chapter you file under. The major CRA's or Credit Reporting Agencies such as Trans-union, Experian and Equifax do not release to the public how they calculate credit scores, however there are ways out there to simulate how events like bankruptcy and foreclosure factor in to your score, and typically a settled account such as a short sale or a credit card settlement, will affect your credit score negatively for 12 months. After that first year these simulators suggest that the negative impact begins to greatly diminish.

Read more...

===========================
If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Nevada Department of Business & Industry Names Short Sales as One Alternative to Foreclosure

There are a number of ways that upside-down homeowners can avoid foreclosure. Short Sales are an important alternative among them.

SHORT SALE

In a short sale, you sell the house for less than you owe. You can't do a short sale without the lender's permission.

With a short sale, you make necessary repairs to the house; pay the real estate commission, taxes and government fees; and give the lender whatever money is left over -- a partial payment.

Read more...

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Myths about Foreclosures from Home Ownership Preservation Foundation

The Home Ownership Preservation Foundation helps home owners stay out of bankruptcy. Their site is worth visiting. We especially liked the Myths:

MYTH: My mortgage company would rather foreclose on my home than keep me in it. The mortgage company sustains an average loss of about $58,000 when foreclosure occurs (TowerGroup study). They are in the business of providing mortgages - not owning or selling homes - and would always prefer to keep you in your home. By calling the Homeowner's HOPE Hotline™ at 888-995-HOPE, we'll help you work with your mortgage company to pay back your loan and stay out of foreclosure.

MYTH: I’m getting many offers of “help” from a variety of different people. Are they all scams?

Because of the public nature of foreclosures, anyone is able to access foreclosure listings on a daily basis. These include the owner's name and address at the very least, and in some states, they could include other sensitive information. Armed with this data, scammers can take advantage of a desperate owner. Here's what to look for to avoid foreclosure scams:

1. Your home's ownership changes hands. A common scam is where a party buys your home, then lets you rent it back. It sounds good at first, but you're losing your property, and your new landlord can now legally kick you out of your home with little to no notice.

2. You're asked to pay something up-front and/or you're asked to stop making mortgage payments. Usually, these scams involve paying large sums of money to some sort of "foreclosure prevtention service." These services offer to do what our counselors do: counseling, a budget and approaching the mortgage company to consider a payment plan. But the services don't do always do this work thoroughly, or follow through at all. The most important thing to remember when it comes to any foreclosure service is this: Foreclosure advice and direction should always be free.

3. You're under pressure to act immediately. Some will prey on the stress and anxiety surrounding the foreclosure process by convincing owners to sign things they don't understand. Don't sign anything without either first talking to an attorney, your mortgage company or a nonprofit foreclosure prevention organization like the Homeownership Preservation Foundation.

=========================================================
If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Short Sales and Your Credit Score

From a great article on Short Sales & Credit:

It is quite possible to do a short sale and still have decent credit afterwards. When you do a short sale, you can sometimes negotiate with the bank about two major issues: how they report your credit, and how whether they can go after you later for their financial losses.

The reason you can sometimes negotiate this is that you are not letting your house go through the foreclosure process and leaving it to the bank to deal with. When you do a short sale you are helping the bank. You are getting rid of a problem for them.
Most people don't realize that when they tell the bank that they are not going to be able to pay their mortgage anymore, the bank has a problem. And by selling the house, you are saving the bank tens of thousands of dollars they would otherwise spend going through the foreclosure process, getting the house back and fixing it up, marketing it and selling it.

Since you are doing this for the bank, you can make some requests in return. Especially if you have someone sharp helping you with the short sale.

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Short Sales Help Homeowners Avoid Foreclosure

This is an article from last year about Short Sales. While the market has change, the concept is still the same: Selling Short hurts, but not as much as foreclosure.

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Foreclosure and Bankruptcy

RealtyTrac has great information regarding how bankruptcy can sometimes save your home from foreclosure:

If you file for personal bankruptcy under Chapter 7 a so-called "automatic stay" is placed on all your creditors, including the foreclosing lender, by the court. HOWEVER, the stay is only a temporary fix to the situation.

Chapter 7 never permanently stops home foreclosure. It only gives you relief from unsecured creditors like credit cards and prevents certain creditors from pursuing collection action against you. It does NOT discharge debts such as taxes, child support, alimony or student loans, nor can it give you relief from other secured creditors — like your lender — whose debt is secured by the home you're living in.

In fact the "automatic stay" is only effective so long as the court wants it to be in place. At any time the court can grant your lender's motion for "relief from the automatic stay." Once the court grants that motion the foreclosure against your home can proceed to conclusion.

One viable exception does exist, however, by filing for a Chapter 13 bankruptcy. Under Chapter 13 you are allowed to sit down with your creditors and arrange a payment plan to pay back what you owe them over a given length of time and usually on a lower payment schedule. Once accepted, the creditors, like your lender, must abide by the terms of the plan.

…In essence, then, through a Chapter 13 debt reorganization plan you can cure the default and save your home. However, you must realize up front that not everyone qualifies to file for bankruptcy. There are certain threshold qualifications that must be met which were tightened up when the U.S. Bankruptcy Code was revised a few years ago.

Read more...

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

Credit Score Truths and Tax Myths of A Short Sale Vs. Foreclosure

A Great Summary by Aaron Gordon of some of the issues regarding the decision between selling short and going into foreclosure.

Some Highlights:

#1) WILL MY CREDIT SCORE DROP LESS IF DO A SHORT SALE INSTEAD OF A FORECLOSURE?

The short answer is "don't count on it." No one can answer this question for you correctly and that is because every case is different.

#2) WILL I BE ABLE TO BUY ANOTHER HOME QUICKER IF I DO A SHORT SALE INSTEAD OF A FORECLOSURE?

Once again, chances are no. Keep in mind, lenders make mortgage loans based on your ability and willingness to repay the loan. We determine this based, primarily, on your past credit history. Especially your past mortgage history.

#3) IS IT TRUE I AM NOT RESPONSIBLE FOR DEBT FORGIVENESS IN A SHORT SALE BECAUSE OF THE NEW MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007?

First let say, IN BOLD, I am not a tax professional. It's of the utmost important that you seek the advice of a tax professional before proceeding with a short sale or foreclosure.

The Mortgage Forgiveness Debt Relief Act of 2007 was primarily started so that people, who were upside down in their homes, could refinance their home using an FHA loan and then the second mortgage holder would write off some of their loan to enable this. This kind of loan hasn't caught on because most lenders didn't go for it.

...The bottom line here is before you do this, meet with your accountant to discuss the ramifications. There are too many possibilities to go over here.

If you get a 1099-C form in the mail, after a short sale that looks like this, http://www.irs.gov/pub/irs-pdf/f1099c.pdf, you need to head to your accountant immediately.


#4) BASED ON ALL OF THIS, WHY WOULDN'T I JUST LET MY HOME GO INTO FORECLOSURE?
For one, because you are giving the lender a chance to recoup some of their money. It is far cheaper for a lender to negotiate a short sale with you and your buyer than it is to rack up attorney fees and other costs in a foreclosure.

Foreclosure can take eight months to a year and in a declining market, your decision could cost them $100,000's more than a short sale.

The next reason is because some believe, as we discussed earlier, it may be easier to rebuild your credit after the process. Your credit will likely be destroyed either way, but the road back to a respectable credit score may be shorter in a short sale, according to many experts.

Finally, and probably the top reason for a short sale, is depending on what kind of loan you have, and in what state, the lender may be able to go after you personally for a deficiency judgment at a later date. In Nevada, where I live, lenders have three months after the sale to try and obtain a deficiency judgment.

Click here to read the full article.

Mortgage Forgiveness Debt Relief Act 2007

In December, Congress pass the Mortgage Forgiveness Debt Relief Act to provide some relief through loosening the tax laws and empowering FHA to help with refinancing. This will help a number of homeowners who are in trouble. Here are three sources that explain the law and its implications for homeowners:

Library of Congress Summary

IRS Summary

Article from Las Vegas Review Journal

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.