Feeling Financially Squeezed?

Lenders Primed for Short Sales in 2011

Short sales are a terrific option for homeowners struggling with unaffordable mortgage payments. In fact, lenders’ losses due to foreclosure are projected to increase at record rates in 2011, giving them more reason to pursue short sales. Lenders are projected to incur losses as severe as 85 percent in foreclosure! Meaning, after deducting the expense of the foreclosure process on a $100,000 loan, they may only get back $15,000!

It’s common sense that lenders will be looking toward the short sale solution. Even though they are accepting less than is owed on the property, they lose far less than in a foreclosure sale.

In fact, in the South Florida market area, short sale transactions account for 50-75% of all sales!

It may be a surprise to many that lenders actually want to work out a solution that benefits all parties. Oftentimes, the lender is seen as the villain in the situation. I’ve found that the lenders want to avoid foreclosure just as much as homeowners. I have a free report I can email you which talks more about working with your lender, and details all the foreclosure alternatives available to you.

Email me for the report or call me today; I can help you develop a plan to work with your lender and avoid foreclosure.

IMPORTANT GOVERNMENT DISCLOSURE: You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you will not have to pay us for our services. RE/MAX Preferred and Charles L Dinsmore III PA are not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

In the news - The Hokey Pokey!

Seems there are always ramblings in the news about the state of the real estate market – is it up, is it down,  do the Hokey Pokey and shake it all around!

REAL ESTATE IS LOCAL. There are no two neighborhoods exactly alike, so how can there be two “markets” exactly alike? Even if we build 2 homes exactly alike, and we place one on a beautiful lake, and the other next to a landfill, it is easy to see that one on the lake would be more desirable and have more value than the other.

At any given time, there will be some neighborhoods more desirable than others – thus more in demand. Higher demand means higher price. People have to have a place to live and they will live in the best place they can afford.

As prices came down in the market, everyone began to realize they might be able to finally afford a better place – so they “moved up” and the demand increased for the better neighborhoods. So, it follows that the better neighborhoods began to recover sooner due to increased demand, and the worst neighborhoods suffered as people moved away.

So, Florida can be in higher demand than say Minnesota. South Florida can have more demand than Tallahassee. Maybe some people prefer coastal Palm Beach to rural southwest Miami-Dade County.  There will always be a preferred neighborhood and price will reflect that demand.

Prices in most South Florida neighborhoods are stabilizing, and the better neighborhoods are starting to increase in value.  It is expected that interest rates will creep up this year to the high fives or more. Loans will become harder to get as banks become more conservative to meet government regulations.

If you are going to buy, now is the time!

Feel free to post any questions you have and I will try to get them answered in the next post.

Peace,

Chuck

If you know anyone struggling with mortgage payments, we can provide solutions for homeowners facing market hardships.

Strategic Default? Don't Walk Away!

3 Reasons the Term “Strategic Default” Is Misleading

In a recent study, the Chicago Booth/Kellogg School Financial Trust Index found that a full 36% of Americans would consider “strategic default”—another term for walking away from your mortgage—if they were underwater (owed more on their home than what it was worth).

Now that more than one in four American homeowners is “underwater,” I feel that it’s important for the community to know the truth about strategic default.

The truth is the foreclosure process carries with it credit issues, current and future employment challenges, issues with security clearance and possible debt collections. That’s why it is vital to explain the 3 reasons why the term “strategic default” is misleading:

1. There’s nothing strategic about defaulting on purpose, especially when you have options like short sales, mortgage modifications, and refinance (just to name a few) that may keep you from foreclosure.
2. The waiting periods to apply for a new mortgage loan are at least five years less in a short sale vs. a foreclosure.
3. A foreclosure will show up on your credit report every time you apply for a home loan, car loan, new job, etc., and will affect your financial situation for many years to come.

If you or someone you know is underwater and can no longer afford your mortgage payments, you need to create a genuine strategy to avoid foreclosure, helping to provide stability for you and our community.

If you have any questions about what steps you or someone you care about should take next, contact me today!

Peace - 

Chuck

Can I just walk away?

So, what is a short sale? Can I just walk away?

Short sales are not new. For as long as there has been lending, lenders have sometimes agreed to take less than what is owed to satisfy a loan.

A short sale in today’s mortgage crisis is when a lender agrees to take a pay off of less than what is owed on the mortgage for the property. They are accepting a “short” pay off, thus the term “short sale.” It will take several posts to cover the details of short sales, but I want to start today with a few definitions.

First, when you purchase a home with a loan, there are 2 parts to the loan – a note and a mortgage. By contrast, when you purchase a car, you only have a note. What is the difference? When you buy a car, the bank holds the title until you actually pay off the loan – right? You don’t actually own the car, the bank does, until they get all of their money. This is their collateral or security for your loan. If you do not pay, they come and get THEIR car!

But, when you buy a home, you actually own it. The title is in your name. If you stop paying, the bank can’t just show up one day, place your home on a truck and haul it away. They must go through due process of the law to foreclose your interest in the property, or to terminate your ownership before they can repossess it. You see, you have both a note which is the document setting out the terms of the loan (just like a car loan), and a mortgage (unlike a car loan) which is a separate document pledging your home as security interest for the loan. The mortgage explains what happens if you default on the note. It is what gives the lender the right to repossess your home, but only after going through the foreclosure process.

Each state has laws and regulations that lenders must follow in order to foreclose against your ownership. They also have rules that apply AFTER they foreclose. It’s not over when you think it’s over!

So what happens with the balance of the loan – does it evaporate? After foreclosure, the lender will usually sell the property. The balance of the loan and all fees, after the lender has re-sold the property is called a deficiency. In most states, including Florida, the lender can then go back to the court, show what the shortfall is, and get a deficiency judgment against the homeowner. The homeowner is still liable for the debt because even though the mortgage was foreclosed, the note – or promise to pay – is still there! THEY HAVE UP TO 20 YEARS TO CLAIM THIS DEBT!           

There are programs and ways to protect you. We will be discussing many of these over the next several posts, including buzz words like HAFA, HAMP, Loan Modifications, Short Sales, and Deed in Lieu.

Feel free to post any questions you have and I will try to get them answered in the next post.

Peace,

Chuck

If you know anyone struggling with mortgage payments, we can provide solutions for homeowners facing market hardships.

"Not another short sale!" whined the Realtor.

“ I swore after the last one that I would never do this again!”

Heard from a fellow Realtor while setting a showing appointment today on a short sale. Okay – we all know that they can be tremendous work. They take a long time. There are often multiple offers, and buyers fall out. And, worst of all, the banks can't make up their minds on what is needed from the seller! But, in the South Florida market, short sales represent almost 60% of the sales!

But - the profession owes it to the community to help them. After all - these are our customers - they are hurting. If they go to foreclosure, they may not be able to purchase another home for up to 10 years! Can the market really bear such a decrease in demand? When is is time to buy another home, won't the homeowner remember how you fought for them?

Short sales can prevent foreclosure and be less damaging on credit. They show on a credit report as "negotiated settlement" or "forgiven debt" in most cases. It is a kinder, gentler way to get out from under a crushing mortgage!

Know your options - contact a professional - communicate with your bank - pay attention.

Feel free to post your experience and questions,

Peace,

Chuck

IMPORTANT NOTICE: Government required disclaimer

Chuck Dinsmore, Charles L Dinsmore III PA, and RE/MAX Preferred are not associated with the government, and our service is not approved by the government or your lender. Even if you accept an offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

This is my first entry of a new Short Sale blog, designed to help homeowners who are having difficulty with their mortgages and want to avoid foreclosure.