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Re-Entering the Market After a Short Sale? Let Us Help!

short sale gilbert az

When Can I Buy A Home After a Short Sale?

 

Back in 2009 and 2010, Arizona was hit with the opposite of a housing boom. Gilbert residents found themselves without a job, and without the means to make their mortgage. It was a hard time for the country, and our Gilbert families suffered, as did the housing market. But, because of the 2 to 3 year window that short sale home owners are required to wait, and the recent surge in the economy, Gilbert residents are finding their way back into the house market.

 

With that said, let’s take a look at the basic requirements for applying for financing after a short sale:

 

3 Years – If you’re looking to secure an FHA loan, one of the more popular loans here in Gilbert, you’ll need three years to pass since the short sale of your previous home. This period is called seasoning,

 

2 Years – Fannie Mae and Freddie Mac require a minimum of two years from the short sale of your home, as well as a 20% down payment. If you’re looking for a conventional loan, or similar loans, from these large lenders but don’t have 20%, you can wait a total of four years from your short sale and put down 10%. If you wait a total of seven years you’ll be able to put down less than 10%.

 

2 Years – After a short sale, you must wait 2 years before applying for a VA loan.

 

3 Years – All USDA loans require three years after your short sale.

 

Now, as with everything there are exceptions to the rule. If you worked with The Reeves Team from the very beginning on the short sale of your Gilbert home, and you have a strong paper trail showing that the short sale was due to ‘extenuating circumstances’ such as a death, divorce or disability, you might be able to beat the window and obtain funding early.

 

Above all, when buying a home after a short sale you will need the cash to prove that you are financially capable of not only affording the purchase price and closing costs, but the monthly payments as well. The best case scenario accounts for you having 30% for a down payment.

 

Ask the professionals at The Reeves Team about short-term, private lending. This lending is extremely popular for short sale loans, and in most circumstances your loan will become purchased by a much larger bank within a few years.

 

You do have options if you’ve experienced a short sale here in Gilbert. Your best bet, talk to an expert who has ample experience with short sales in Gilbert on both sides of the fence – from selling to buying. Give us a call today for more information.

 

“by Troy Reeves” at Google

How Soon After Foreclosure Can You Buy A New Home?

This is a question facing many homeowners who may be considering a “voluntary foreclosure” that is, to simply stop paying the mortgage and give up the home because of how much negative equity has been accrued, this is also known as a strategic walkaway. From their perspective, to continue paying a $375,000 mortgage on a home that’s now only worth $220,000, is simply throwing good money after bad.

University of Arizona law professor Brent White argues that so-called “strategic defaults” can potentially save homeowners hundreds of thousands of dollars and are morally no different from a business deciding to cut its losses on a venture. He argues this is really the only option.

whether or not it is the smart move financially, family’s will still need a place to live, and many will want to return to home ownership eventually, particularly those who gave up their previous homes as an economic choice, rather than out of necessity.

Five-year wait for Fannie, Freddie mortgages

If you lose your home to foreclosure, voluntary or otherwise, you won’t be able to qualify for a Fannie Mae or Freddie Mac conforming loan for at least five years and perhaps seven. Same for an FHA loan. Because conforming and FHA mortgages account for the great majority of home loans made in this country, particularly in the middle and lower price ranges, that’s a pretty big obstacle to overcome.

Of course, you can always seek a nonconforming mortgage, but those lenders will have their own guidelines for how soon they’ll lend after a foreclosure. They’ll also be likely to demand a 20 percent down payment and charge a relatively high interest rate.

A short sale or deed-in-lieu of foreclosure may be better strategies than simply allowing your home to go into foreclosure. With a short sale, you can qualify for a Fannie Mae/Freddie Mac-backed mortgage in as little as two years, and three years on a deed-in-lieu. And while both have the same impact on your credit rating as a foreclosure, your credit can begin to recover in as little as two years after any of them.

Credit impacts decline after two years

That’s not to say you’ll get a great interest rate after two years, but you can at least get a decent one. Of course, the full effect of a foreclosure, short sale or deed-in-lieu will remain on your credit for seven years, but the impact does begin to tail off significantly after the first two.

As for the effect on your credit score of a foreclosure or short sale, many mortgage advisers say you can expect a drop of 200-300 points, with the biggest drop for those whose credit was previously unblemished. However, much of that decline is due to the accumulation of missed or late payments that precede a foreclosure or late score.   Put the impact of a foreclosure or short sale by themselves at about 100-150 points.

If you’re faced with the possibility of losing your home, either involuntarily or as a deliberate economic choice, you’re probably better off pursuing a short sale or deed-in-lieu instead of simply allowing the property to fall into foreclosure. The effect on your credit score may be the same, but if you want to get back into home ownership within a relatively short time, either a short sale or deed-in-lieu will provide the quicker route back, provided your lender is agreeable to them.

Treasury Announces New Short Sale Process Legislation

us_treasury_deptThe U.S. Treasury Department released a plan intended to speed up and encourage the short sale process.

A short sale is the final step a homeowner may take before giving up on a house and letting it slide into foreclosure.  However, in the past the foreclosure process has been time consuming and has not delivered the desired results.  Currently 3 out of 4 houses that start the short sale process end up failing and falling into foreclosure.  If the process does close it takes on average 8 months before the transaction is complete, this makes if frustrating not only for the seller but for the buyer as well.

The new plan A lender must give a yes or a no answer to an offer within 10 days.  It will also offer incentives to sellers buyers and lenders to complete the transaction.  The incentives include:

  • Borrowers would receive $1,500 from the government in relocation expenses.
  • Servicers receive $1,000 from the government per transaction.
  • Second liens holders can receive up to $3,000 of the sales proceeds for releasing their liens.
  • First lien investors can receive $1,000 from the government for signing off on payments to subordinate lien holders.
  • Borrowers must be fully released from any further liability.

More information will be released shortly.

If you have any questions on the new program please contact Remax Alliance.

Fannie Mae and Freddie Mac To Overhaul Short Sale Process

New Fannie and Freddie Short Sale ProcessBreaking news in the real estate community. This week Gabrielle Harrison the VP of REO sales for Fannie Mae, and Ingrid Beckles the Default Asset Manager at Freddie Mac announced an overhaul to the short sale process at the two companies.

A crowded room at the 5 Star Conference this week erupted as Gabriele Harrison announced that Fannie Mae will be using asset management companies to handle their companies short sale requests in the future. Fannie Mae, the single biggest player in the mortgage market, will be informing clients that they will need to work with asset management companies when “short selling” their property.

An asset management company acts as a middle man between the banks that own the mortgage and the client that is trying to short sale the property. Asset management companies are already big players in the Foreclosure market, but up until now have not worked with short sale properties. The change that Fannie Mae and Freddie Mac are making should have some positive effects. Because most major banks use them for their foreclosed on properties, making the shift to Short Sale homes should be fairly straightforward. Using one company for all short sales will also streamline the process and speed up the time it takes for a client to short sale their house.

However, the new process is not great news for everyone. Since the housing collapse in late 2006 real estate agents have struggled to stay afloat, many agents have turned to short sales and working with distressed properties to help them stay afloat during the down market. When Fannie and Freddie start working exclusively with the asset management companies they will essentially be cutting out these agents. Fannie and Freddie currently own roughly half of the mortgages in America, if other big banks follow the lead small real estate agents will be all but cut out of the picture.

Details on the short sale process are still to come. We have put in calls to Mrs. Harrison (Fannie Mae) and Mrs. Beckles (Freddie Mac) however they were both unavailable for comment. We will keep you up to date on all the new developments as they come. We are still doing research but thought this information was worth sharing even in its primitive state.

Is buying a short sale the best deal?

father-timeThe phrase “short sale” has made its way into the every day language of home buying. I talk to people every week who are looking for a home and want me to send them a list of short sales. When I ask them why they want short sales they usually respond with something to the effect of “That is where the best deals are.” There can be some good deals in short sales, but are short sales really the best option or best deals for buyers?

If you are a seller a short sale may be your only option, but if you are a buyer a short sale should often be your last option. Contrary to popular belief, a short-sale is not often going to be the best buy for a home shopper. In a rare case where a home may be going to foreclosure in just a couple of weeks and a buyer can come in and make a purchase in cash and close in just a couple weeks, then there may be a good deal, if you can get them accepted. But for most buyers this is not the situation.

More often than not the better deal is going to be in the bank owned foreclosure property. These properties are often selling for 10% to 15% below conventional sales and banks are looking to work with buyers to get rid of them. One of the big differences with short sales vs. a foreclosure property is the time and patience it will take. If you want or need to be in a home in the next three months forget about even stepping inside a short sale listing. It is very common for it to take as much as 10 to 12 weeks just to hear from a bank if they will accept an offer or not. If there is counter or conditions set it could add as much as another four to eight weeks on top of that if negotiations are needed. We currently have one offer on our team that a buyer made on short sale listing which we presented to bank the first week of December and we are still waiting for an answer ten weeks later. No matter how many times we call, we still wait.

During those months that you wait for an answer hundreds of foreclosure properties could come on the market that are better deals than the one you are waiting for. During that time you are off the market completely because if the bank does accept the short sale it is a binding contract you signed. If you were to work on a bank owned foreclosure property over a short sale you are most likely to get an answer from a bank in under a week. If that deal does not go through then there are hundreds of other properties to choose from and you did not waste three to four months waiting to hear an answer.

Another problem that short sales present to buyers is the amount that actually get to closing. Less than 20% of all short sales actually get accepted and go to closing. If you were to put an offer in for a short sale you are taking yourself off the market for up to three months with only a 20% chance at best the deal will get done in the end.

What you need to talk to your lawyer about when considering a short sale

shortsalesShort sale, it may be the most used word in real estate in 2009, but some times a real estate agent may not be enough and you may need to talk with a lawyer. A short sale is just one of the tools you can use when you are struggling with a mortgage.

I found an article over at RISMedia that talks about some things homeowners need to do so they are not taken advantage of during a short sale. It was good enough that I thought I should share it with you. You can read the whole article here.

Here is the articles list of the top 10 questions to talk over with your attorney when you are considering a short sale:

1. What is a better or more likely outcome for me and why?
– A short sale or a repayment plan?
– A short sale or a forbearance plan?
– A short sale or a loan modification?
– In the case of an FHA loan, a short sale or a partial claim?
– A short sale or a short sale/assumption agreement?
– A short sale or a deed-in-lieu of foreclosure?
– A short sale or a bankruptcy?
2. How do I know if my property and I may be considered for a short sale?
3. How would I initiate the short sale process?
4. Which process has a more adverse effect on my credit rating: short sale, foreclosure, bankruptcy, or deed-in-lieu of foreclosure?
5. What types of hardships would a lender generally consider favorable toward my appeal for short sale consideration?
6. On average, how long does a short sale process take?
7. What are the tax implications of a short sale?
8. If a lender agrees to the short sale option on my property, can the bank still proceed with a foreclosure?
9. Is there a real estate commission paid in a short sale? If so, who pays it?
10. When is a bankruptcy preferable to a short sale or to a foreclosure?