Archive for the ‘Short Sales’ Category

11 months to close a Short Sale! According to a study just published by Deutsche Bank that ranked prime and subprime servicers. That’s the average time it is taking for Bank of America/Countrywide to close a short sale.

The study went on to rank GMAC at the top of the prime list at an average short sale closing time of 6 months. On the subprime side, the numbers were even worse with Ocwen being the worse with a time to process and close a short sale of 29 months, while Home Equity Servicing was the best of the subprime servicers at a closing time of 15 months. Why is all of this data important? Good question. Bank of America reported that 59% of its dispositions, or closings, are short sales.

Why would you not give NQS a try? National Quick Sale has an average closing time that is far less than normal servicer averages. Go to their website and give them a try. www.nationalquicksale.com

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I know it’s been a while but I have been busy with SAFE act tests. But this nugget was too good to not pass on. Earlier this week FHLMC (Freddie Mac) CEO Ed Haldeman stated that his company has seen over a 600% increase in the number of short sales that have closed with his company. The increase he was citing was tracked from 2008.

This is sign that banks are looking for ways to soften the blow of foreclosures entering the economy. Haldeman went on to say that “Freddie Mac is doing everything it can to prevent more foreclosures, and that short sales are becoming an ever popular tool in situations where foreclosure is imminent and modifications have failed.” Look for that number to increase even more dramatically as HAFA (Home Affordable Foreclosure Act) program starts to be implemented since its enactment in April of 2010.

What does this mean for the average Realtor? More business!

Stay tuned for more updates.

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I was asked yesterday what a deed in lieu of foreclosure was and is it a good alternative to a short sale? A deed in lieu of foreclosure is where a homeowner contacts his/her respective mortgage company and essentially deeds the house back to the mortgage company before the mortgage company forecloses due to non payment. A short sale is when a homeowner finds out what the market price is for his/her house, usually with the help of a realtor, and if the value of the home is less than what is owed they try to sale the home on a “short” of value “sale” or short sale. The lender that is carrying the paper has to agree once an offer comes in which usually takes about 2-4 months. Which one is better? For times sake it is the Deed in Lieu of foreclosure. But for liability sake it is a Short Sale. When a lender agrees to a short sale they almost never go after the homeowner for the deficiency or loss incurred by the lending institution. With a deed in lieu, the homeowner opens themselves up to a possible deficiency judgment that forces the homeowner to take the left over debt with them and pay it off over time. President Obama is supposed to introduce legislation that will make it impossible to get deficiency judgments against homeowners who short sale their properties.

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Let’s talk about short sales. The definition of a short sale is to sell a home short of what is owed to a lending institution thereby making them lose money. Short sales are used when a home owner decides that their property is no longer worth what they paid for and they don’t want to go into foreclosure with their lender. The homeowner will list their property with a real estate agent who, upon receiving an offer, negotiates with the lender to get them to accept a deficiency on their loan. As you can imagine lenders are not fond of losing money so they fight with the agent and homeowner to not accept the negotiated price. It is up to the agent to prove the deficient value and up to the homeowner to show that they can no longer make the payment. This process is a lengthy one and can take up to 6 months, even more in certain situations. But this is a far better alternative than foreclosure for all parties concerned. The homeowner gets to stay in the house, sometimes without payment, the agent makes a commission, and the lender gets the property back damage free. President Obama, HUD, FNMA, FHLMC, and most servicing company believe that this is a WIN/WIN for all concerned. So why is it this not the preferred method for upside homeowners to dispose of their properties? Simple, most lenders are stuck in the old REO (real estate owned) days where the homeowner is foreclosed on and physically removed from the property by law enforcement. I will compare the two methods of home transfer, REO vs. Short Sale, next week.

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