Avoid Foreclosure! There are alternatives!

Avoid Foreclosure! There are alternatives!

1. Loan modification. Be aware many companies have sprung up which claim to do loan modifications for a fee. Some are legitimate; many are not. Banks are very reluctant to do a loan modification due to an almost 40% subsequent default by the borrower.

2. Short sale is the preferred choice by most banks. They do not want to own any more foreclosures! Call or email for details. 352-547-1086 or Bassobb@kw.com or BobtheRealtor.net

3. Deed in lieu of. Banks are reluctant because they do not want to own more real estate. In many cases, they will come after the borrower for the deficiency.

4. Foreclosure. Last resort in most cases.

5. Bankruptcy. Last resort for severe financial difficulties.

Note a short sale damages your credit but not nearly as bad as a deed in lieu, foreclosure, or bankruptcy. Also, after a short sale, you may qualify to purchase another home in as little as 2 years. Whereas, the last three alternatives can prevent a purchase for 3-7 years.

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Has the Real Estate Market Stabilized?

Has the Real Estate Market Stabilized? Contact me for a free report!

Ocala existing home sales up 27%

Ocala existing home sales up 27%

Realtor cheers tax credit for first-time homebuyers; median prices still falling.

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By Anthony Clark
Staff writer

Published: Friday, September 25, 2009 at 6:30 a.m. Ocala Star Banner
Last Modified: Thursday, September 24, 2009 at 11:46 p.m.

Ocala home resales were up 27 percent in August from the prior year with 262 sales compared with 207, putting the area close to the statewide trend that saw sales increase 28 percent in the same period.

The sales numbers also put Ocala back on a positive month-over-month trend with the second-highest sales total of the year after climbing every month to a high of 311 in June before dropping to 255 in July. The June totals were the most existing single-family homes sold since March 2007, which had 400 sales, according to Florida Realtors, formerly the Florida Association of Realtors.

The median sales price dropped 18 percent, from $130,300 to $107,400.

Statewide sales continued a full year of positive annual sales, while the median price was down 22 percent, from $188,500 to $147,400.

Florida Realtors President Cynthia Shelton, an Orlando broker, said she was encouraged by the positive annual sales trends but that the market still needed time to absorb the housing inventory to help stabilize prices.

“That is why it is critical for Congress to extend the first-time homebuyer tax credit into 2010,” she said.

Buyers are running out of time to take advantage of the $8,000 credit to close by the Nov. 30 deadline.

One in three sales in August were to first-time buyers, The Associated Press reported.

Foreclosures and other financially distressed sellers account for about 30 percent of sales, which is driving down median prices.

U.S. sales dropped unexpectedly by 2.7 percent from July to August after four months of gains, but were still up 3.4 percent from a year earlier, according to the National Association of Realtors.

The national median price was down 12.5 percent from a year ago, from $203,200 to $177,700.

5% Interest Rates will be ending soon!

5% Interest Rates will be ending soon!

The Federal Reserve, in a move aimed at keeping interest rates low for home buyers through early next year, decided to extend and gradually phase out its purchase of mortgage-backed securities. (WSJ 9/23)

Read between the lines.  The purchase of mortgage-backed securities is what sparked the significant drop in rates last Spring.  ”Phasing them out” will allow interest rates to rise.  Remember a 1% rise in rates is equivalent to a 10% increase in purchase price over the life of a mortgage!

The perfect buying storm:

  1. $8,000 tax credit
  2. Historically low interest rates
  3. Historically high afford ability (prices back to 2003-2004 levels)

Short Sales help you avoid foreclosure

Short Sales Help You Avoid Foreclosure!

A short sale means you sell your property for less than what is owed to the bank and the bank takes the loss. You must be able to show a financial hardship and preferably it is your primary residence. A short sale hurts your credit badly but not as bad as a foreclosure. After a short sale you cannot purchase a home again for ~2 years, whereas it is 3-7 years for a foreclosure. The IRS used to tax you on the loss as if it was unrealized income, but there is currently a 3 year moratorium (ends January 2010) on primary residences. In most cases we are able to get a full satisfaction of debt from the bank, so that you do not have any further obligation to them.

Each lender has their own process for handling a foreclosure and/or a short sale. But in general it goes like this. An owner who can no longer afford their mortgage due to job loss, medical or other hardship stops making payments or continues for less damage to credit. The banks sends notices of delinquency to the owners for about 1-4 months and then files legal summons (Lis Pendens or notice of foreclosure proceedings with the county court). Foreclosure usually occurs 12-18 months after the homeowner stops making payments.

To avoid foreclosure, ideally the home owner should list their home for sale as soon as possible after the financial hardship occurs. It is vitally necessary to use an agent well versed in the short sale process. If done correctly the property is priced such that an offer occurs in 1-4 months. If the seller accepts the offer it is then sent to the bank along with the seller’s hardship letter and other documentation to prove the hardship. These documents are very similar to those required when applying for a mortgage. Then negotiations begin with the lender (or lenders when there are other mortgages on the property). Once the bank accepts the offer (1-3 months), then a closing is scheduled very much like in a normal sale.

It usually takes 1-3 months to get an offer. And then it takes 2-4 months to negotiate with the bank. Once the bank accepts, it closes in 15-45 days.

My approach to listing short sales is to price it at or just below market value. Then I reduce the price every 2-4 weeks until I am the lowest in the neighborhood or until I know that the bank won’t take any less.