Renaissance Realty Group’s Blog: Georgia: Duluth

Delays - Why the Long Wait

Just ask any real estate or short sale investor about the most frequently overheard complaint would be and you are certain to receive the same answer - long waits. Lenders tend to take their time when reviewing and approving a short sale offer. Some are certainly better than others but as the short sale arena goes into overdrive, savvy short sale investors would do well to understand what is taking place behind the delays and how to address the most common causes.

1.    Multiple offers. One of the main reasons for a lender to take their precious time before approving a short sale is to consider multiple offers. Homeowners are increasingly entertaining several short sale offers in an attempt to get the best deal and maximize the likelihood of sealing a deal on their own timing. Ask homeowners if they are currently entertaining other offers or plan to do so in the future. Many short sale investors require contracts stipulating they are the only current offer on the table.

 2.    Lack of staff. Many banks are simply short on staff and unable to keep up with growing demand. Make it easy on overwork workers in every way possible; not only will they appreciate the reduced work but it certainly helps to present your offer in the best light possible.

 3.    Failure of the homeowners to prove financial hardship. Keep the lines of communication open and help the homeowner provide the appropriate paperwork in a timely manner. While it might seem a bit obvious, don't expect every homeowner to have the motivation required to follow-up even on something that is likely to help their own situation. Many people simply shut-down when overwhelmed.

 4.    Lack of other offers. While entertaining multiple offers is more frequently the cause of delays when processing short sale offers, the lack of any other offers especially on an otherwise, "attractive" property may also result in longer approval times or outright procrastination on the part of the lender. It's not uncommon to encounter a lender that rejects a short sale offer only to receive a lower net when a property goes to auction. Depending on your personal level of chutzpah, you may opt to date an offer then return with even lower offers until the property is accepted or rejected but don't expect threats to make any appreciable difference in the responsiveness - or lack thereof - of the lender. In fact, rather than speed things up you are probably more likely to get on the last nerve of some overworked bank employee.  Either way, remain analytical and don't fall in love with any one house or property...remember, it's a numbers game.

Maybe not the bottom bottom,m but we are seeing in this area of the country is the inventory of GOOD QUALITY Resale homes (REO/SHORT SALE and TRADITIONAL) is at a low and buyers are feeling like its less of a buyers market and more like it's a sellers market (even if the seller is the bank )

The federal government's gauge of home prices rose in January for the first time in 10 months.

The Federal Housing Finance Agency reported Tuesday that home prices increased 1.7% in January from the previous month, though they are still down about 10% from their April 2007 peak. The government noted that sales in January were "relatively low," which could skew the result.

The gauge reflects only homes with mortgages backed by Fannie Mae and Freddie Mac and excludes homes backed by subprime loans and the high-cost "jumbo" mortgages often used to finance the most expensive homes.

Analysts were cheered though skeptical of the report -- which hasn't reflected as much volatility in the market as other gauges -- and are looking to see whether next week's S&P/Case-Shiller index will show a similar increase.

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We can help you Avoid Foreclosure

 If you are facing financial difficulties and are behind on mortgage payments, or if your lender has contacted you in regards to foreclosing on your home, you are not alone. Georgia has one of the highest foreclosure rates in the nation. Renaissance Realty can assist you by explaining all your options, and negotiating directly with your lender for a short sale. Renaissance Realty specializes in marketing properties where a short sale may be a seller's last option before the home is foreclosed. The key to a successful short sale is to call the Renaissance Realty short sale specialist as soon as possible to discuss your options. The call and your information will be kept strictly confidential.

What is a Short Sale or Short Payoff?

A short sale (also known as a short payoff) is when a lender or lenders accept a discounted payoff on your mortgage and agree to allow the homeowner to avoid the cost of a foreclosure. In other words, when a homeowner owes more than can be collected through a real estate sale, a short sale allows them to sell their property to avoid a foreclosure and also reduce or eliminate the remaining mortgage debt.

A short sale may be the best way to keep your credit intact (or from getting worse) for future purchases and can usually help you exit from a property without having to pay anything. It will also save you money by not having to pay attorney's fees, go through an eviction process, make repairs to the home so it is marketable; and often the lender will cover the real estate fees.

How Do You Qualify?

Qualifying for a short sale is based on financial need. All lenders require proof of financial hardship. FHA, VA and conventional loans, along with each mortgage servicer, have their own criteria. If you are behind or about to fall behind in your payments we can get you qualified. The earlier in the foreclosure process you start, the higher our likelihood of success.

Department of Veteran Affairs has issued a Compromise Sale Agreement.

 DEFINITIONS RELATED TO "DISTRESSED PROPERTIES"

 BANK OWNED - Bank owned property is also called "investor owned" and "R.E.O" (for Real Estate Owned by the bank or lender).  These are properties that have passed through the foreclosure process (see below) and are owned free and clear by the bank or lender.

DEFAULT - A legal condition brought about by a borrower/homeowner failing to pay to the bank/lender the agreed monthly mortgage payment for several months.  Default normally is not declared until after at least two months of Delinquency (see below) and the filing of a formal Notice of Default (N.O.D.) by the bank/lender

DELINQUENT - A behind-schedule condition in which the borrower/homeowner owes one or several payment(s) to the bank/lender.  Normally a pre-condition for the filing of a Notice of Default (N.O.D.) by the bank/lender.

  FORECLOSURE - A process whereby a bank or other lender recovers real property from a defaulting borrower/homeowner.  In Georgia  the process takes about three months minimum from the time the bank/lender files a formal Notice of Default (N.O.D.) with the County Recorder.  Technically, there is probably not such a thing as a "foreclosure property", since it is a process and not a condition.  Properties may be termed "pre-foreclosure", meaning that they are "delinquent" and that a "N.O.D" is anticipated; alternatively, they may have been "foreclosed", in which case the term is meaningless as the property is now "bank owned" or "R.E.O.", but the term "foreclosure" is often used (incorrectly) to describe any of these conditions.

 SHORT PAY - A settlement between a borrower/homeowner and a bank/lender (most often negotiated by a real estate professional) whereby an owner can avoid foreclosure and satisfy mortgage indebtedness by paying off less than the balance due the bank/lender.  Lenders are not obligated to engage in the process and the borrower/ homeowner must "prove" an inability to continue payments.  It can be described as being very much like "reverse qualification" for the original loan, a sort of "loan disapproval".  An important change in the tax law concerning short payoff (the correct term) occurred on January 1, 2008: previously, the amount "forgiven" by the bank/lender was taxable to the borrower/homeowner as ordinary income; until the end of 2009, that tax is forgiven on purchase money (not refinanced) debt that is forgiven by the banker/lender/

so what does it take to get a Home Loan Modification under the NEW program Home Affordable Modification

 program The Obama administration kicked off today March 4th2009. It sounds simple but as an agent that has been working with home owners with loan modifications and short sale in the past what should be a no brainier some how always seems to turn into along drawn out process.

Loan Modification Terms and Procedures

Participating servicers are required to service all eligible loans under the rules of the program unless explicitly prohibited by contract; servicers are required to use reasonable efforts to obtain waivers of limits on participation.

•Participating loan servicers will be required to use a net present value (NPV) test on each loan that is at risk of imminent default or at least 60 days delinquent. The NPVtest will compare the net present value of cash flows with modification and without modification. If the test is positive

- meaning that the net present value of expected cash flow is greater in the modification scenario - the servicer must modify absent fraud or a contract prohibition.

•Parameters of the NPV test are spelled out in the guidelines, including acceptable discount rates, property valuation methodologies, home price appreciation assumptions, foreclosure costs and timelines, and borrower cure and redefault rate assumptions.

•Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income (DTI).

•The modification sequence requires first reducing the interest rate (subject to a rate floor of 2%), then if necessary extending the term or amortization of the loan up to a maximum of 40 years, and then if necessary forbearing principal. Principal forgiveness or a Hope for Homeowners refinancing are acceptable alternatives.

•The monthly payment includes principal, interest, taxes, insurance, flood insurance, homeowner's association and/or condominium fees. Monthly income includes wages, salary, overtime, fees, commissions, tips, social security, pensions, and all other income.

•Servicers must enter into the program agreements with Treasury's financial agent on or before December 31, 2009.

 As a leading REO agent in Gwinnett County Georgia I often get asked about FHA and FHA 203k loan requirements and limits so time to pass along my cheat sheet.  

FHA Mortgage Guidelines

FHA insured loans require mortgage insurance to protect lenders against losses that result from defaults on home mortgages.


FHA mortgage lending limits vary based on a variety of housing types and the state and county in which the property is located.


Before you start the loan process, you'll want to be prepared for the loan application. Have your information organized and ready for your loan officer. Be prepared to pay for property appraisal and a credit report.


While FHA defines which closing costs are allowable as charges to the borrower, the specific costs and amounts that are deemed reasonable and customary are determined by each local FHA office.


In order to prevent homebuyers from getting into a home they cannot afford, FHA guidelines have been set in place requiring borrowers and/or their spouse to qualify according to set debt to income ratios.


An FHA loan applicant's past credit performance that demonstrates good credit history and a solid track record of timely payments will likely be eligible for the mortgage.

I am not sure how many times I have tried to read understand and relate this imformation to my daily Real estate Real World .. I guess we will all be back in scholls soon learning all the ins and outs of the plan. in the meantime here is what is know.

The Department of Housing and Urban Development (HUD) released this Q&A about the Homeowner Affordability and Stability Plan, which was announced by President Obama on Wednesday, February 18, 2009.

Here are some answers to most-asked questions about the plan:

 Part 2

 6. What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30- or 15-year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.


7. Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.


8. How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.


9. When can I apply?
Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.


10. What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

* Information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
* Your most recent income tax return
* Information about any second mortgage on the house
* Payments on each of your credit cards if you are carrying balances from month to month, and
* Payments on other loans such as student loans and car loans.