Foreclosures & Short Sales

5 Tips for Selling a Home in a Successful Short Sale

Short sales are a last resort for home sellers trying to avoid foreclosure. For struggling borrowers, a short sale could really offer the only chance to avoid foreclosure and all of the financial repercussions that can go along with it. While short sales still ding a borrower’s credit, it can be better financially to sell a house in a short sale than to go through foreclosure.

That being said, short sales are still stressful, time-consuming and complicated. Here are five tips to help you successfully navigate the process of short selling a home.

  1. Pick your short sale team. Like the purchase of a home, a short sale is not a process you should go through alone. You should work with a team of short sale experts, which includes a real estate agent, real estate attorney, and your accountant. Interview several people for each position on your team and evaluate them carefully. Remember that you’re placing some of your financial future in their hands. Pick the best you can afford.
  2. Understand the financial implications of short sales. What happens to your mortgage once a short sale is over depends on several factors. It's important for borrowers to fully understand whether the lender has agreed to waive the mortgage deficiency from the sale price or if the balance of the loan that is left after the sale will be due. You can try to negotiate your way out of a deficiency or try to avoid a deficiency judgment by pursuing a short sale through the Home Affordable Foreclosure Alternatives program, or HAFA. Either way, there will...

Unemployed FHA Borrowers Get a Slight Reprieve

Homeowners that have loans received with the assistance of the Federal Housing Administration could have some relief in the case that they become unemployed. Loan servicers collecting payments on FHA-backed loans will now be required to allow qualified unemployed borrowers to miss up to 12 months of mortgage payments before beginning foreclosure proceedings.

The FHA's current three to four months of required unemployment forbearance is "inadequate for the majority of unemployed borrowers," Housing Secretary Shaun Donovan said in announcing the change.

"Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six," Donovan said. "Providing the option for a year of forbearance will give struggling homeowners a substantially greater chance of finding employment before they lose their home."

Although not all borrowers will qualify for the special forbearance program, the Obama administration is removing some hurdles to qualification. Servicers must provide any borrowers who are denied forbearance with the reason for denial. The borrower must be allowed at least seven calendar days to submit additional information that may impact their evaluation.

All FHA-approved servicers must participate in FHA’s loss mitigation program, which includes the special forbearance program. All servicers participating in the Making Home Affordable Program will also be required to extend the minimum forbearance period to 12 months whenever possible under new guidelines.


Minnesota Foreclosures Continue to Drag on the Real Estate Market

The foreclosure crisis is far from over. Last year there were 25,673 foreclosure sales in Minnesota, an 11% increase over 2009 and the second-worst year on record.

According to a new report from the Minnesota Home Ownership Center, more than half of all of the foreclosure sales in the state last year happened in the Twin Cities metro area, where sheriff’s sales rose 9%. In greater Minnesota the number of sales was up 16%.

Foreclosures have been a drag down the housing market, pushing prices down and leaving an excess in available housing inventory. The situation was particularly bad in some of the communities north and northwest of the Twin Cities. Anoka and Hennepin Counties had the highest foreclosure rate statewide last year.


Impending Flood of Foreclosure Homes

A new study from the CoreLogic real estate research firm shows that the number of houses in foreclosure or soon bound for it is increasing. As of August, this "shadow inventory" of distressed homes not yet on the market has grown 10% since last year.

Analysts are keeping a close watch on the number of possible future distressed sales because of the effect they have on home prices throughout the market. Foreclosure and short sale homes often directly compete with traditional listings, dragging down the prices of homes that might surround it. Additionally, untended bank-owned listings that are boarded make nearby houses seem less desirable.

When comparing the supply of listings for houses that are 90 days or more delinquent with the current sales pace, Minnesota ranked 13th nationwide, beating out even Michigan and several other states with metro areas that are worse off than the Twin Cities.

Those rankings, however, are not an indication of the overall health of a market.


Home Affordable Refinance Program Extended

The Home Affordable Refinance Program was set to expire in June, but the Obama administration announced Monday that borrowers with little or no equity in their homes will have another year to take advantage of the refinancing program.

So far it has reached fewer than 200,000 of the up to 5 million borrowers federal regulators hoped it would help. However, market conditions have not changed significantly since the program was launched last year. So to give lenders more time to implement the plan and to support market stability, the initiative will be extended to June 2011.

The program is aimed at the millions of borrowers whose home values have been diminished by a weak housing market. It also meant for people who owe more than their houses are worth, making it impossible for them to take advantage of historically low mortgage rates....

Successful Programs Put Buyers into Foreclosed Homes

Forgivable-loan programs aimed at helping lower-income home buyers have put nearly 200 participants into foreclosed houses in Minneapolis and Brooklyn Center. Both cities have offered up to $10,000 for closing or down payment costs to eligible participants who buy foreclosed homes. The interest-free loans are forgiven if the buyer lives in the home for five years.

In Minneapolis, 147 participants have bought homes this year in foreclosure-ridden neighborhoods, mostly in the north, northeast and south-central parts of the city, said Cheris Shoquist, city foreclosure project coordinator.

About 50 others have bought foreclosed homes across Brooklyn Center since that city's program began in March, said Gary Eitel, community development director.

The Brooklyn Center City Council has been updated on the program and has decided to continue it. It gets its funding from $1 million in new taxes generated by a commercial tax increment financing district.

Minneapolis allocated an additional $500,000 to its program after the first $500,000 was snapped up last year by 50 home buyers. At that time, the program had no income limits, but the second installment allows buyers to have up to 120% of the metro-area median household income of $81,000. The city added another $1.5 million to the program from a grant from the Federal Home Loan Bank.

Brooklyn Center limits its ReNew Loan program to lower-income, first-time buyers. The ReNew Loan program provides up to $10,000 to each eligible buyer for closing fees or down payments on vacant homes that the seller has registered with the city. Single buyers or couples can have up to the metro median household income; families of three or more can have up to 115% of the median income.

Buyers also may be eligible for up to $8,000 per home from the Pohlad Family Foundation.


Wells Fargo Partnering with Twin Cities to Reduce Foreclosures

Are you late on mortgage payments, facing foreclosure and have a loan through Minnesota's largest home lender, Wells Fargo? Don't ignore your mail.

San Francisco-based bank Wells Fargo & Co. will turn to the Twin Cities  for help in reaching troubled homeowners. Early next year, Wells Fargo and the two governments of Minneapolis and St. Paul will hold joint workshops where people late on their mortgages can apply to have their loan payments reduced.

Invitations to the events will have Wells Fargo's and the city's names on the envelopes and letterheads in the hopes of getting beleaguered mortgage holders' attention.

This is the first time that Wells Fargo has joined with city governments to reach struggling homeowners facing foreclosure. The partnership comes after the Mortgage Bankers Association announced that 6.98% of nearly 900,000 mortgage holders in Minnesota, or about 62,000 people, had fallen behind on their payments: A record high.

Wells Fargo isn't the first bank to work with the cities, but it is the largest. And it took two years and some urging from city leaders to get to this point. Read more about what it took to get Wells Fargo to the table.

The details of the program were vague, but this is what was printed in the Star Tribune:

There would be an unspecified number of workshops in which borrowers could apply for assistance through the U.S. Treasury's Home Affordable Modification Program (HAMP), a program for reducing monthly mortgage payments. The bank has also agreed to help stabilize neighborhoods by identifying blighted properties and donating them to the cities or to nonprofit groups. On Friday, Wells Fargo presented each city with a $62,500 grant to help first-time home buyers with down payments.

So far, Wells Fargo, Minneapolis, and Saint Paul haven't set targets...

Mortgage Delinquencies Reach an All-Time High in Minnesota

92,500 Minnesota homeowners are facing or are in foreclosure. The Mortgage Bankers Association says that roughly 62,000 Minnesota mortgage holders were behind on their payments in the third quarter, a record high. Loans in the process of foreclosure rose in the state and the nation from July through September of this year.

Nationwide, there are about 4.3 million mortgages that are at least 30 days past due. That's the highest since the association started tracking data in 1972. Minnesota ranks 39th in the number of delinquencies but 15th in foreclosures started. Florida, California, Arizona and Nevada lead the nation in mortgage problems.

The Minnesota Home Ownership Center, which provides housing counseling, is seeing demand for its services grow. The group counseled 12,000 individuals last year. They expect to serve 15,000 consumers by year-end.
Of concern to the state's housing experts is the shift from the bulk of troubled loans being the subprime variety to being prime loans -- a sign the rising unemployment is crimping the ability of some homeowners to keep current on their loans. Prime loans are available to borrowers who can prove their income, have good credit histories and who have shown that they pay their bills consistently and on time.

The number of delinquent prime loans in Minnesota climbed 5.17 percent in the third quarter compared with the second quarter and the percentage of prime loans in foreclosure grew 2.41 percent. Nationally, prime delinquent loans rose 6.94 percent and foreclosures grew 3.2 percent. The association's numbers aren't seasonally adjusted.
The trend seems to reflect of the state of the economy. People who have otherwise been able to make their payments are now being impacted by a decrease of income or unemployment. The effect the foreclosure homes may have on the market is to continue holding down prices and keeping...

Some Twin Cities Real Estate News Food for Thought

The Associated Press recently came out with an article that basically said that $1 million dollars is going a lot further when it comes to buying homes these days. Even so, sales of homes over $1 million are down by more than 50% from four years ago. For people who have that kind of money and are searching in that range, now is the time to buy. Though that's interesting, most of us aren't trying to purchase or sell million dollar homes.

But the article did talk briefly about how during the housing boom, median real estate prices increased so much, so fast and homes were in such high demand that median prices skyrocketed. The article gave the example of Santa Clara, Calif. having a median price that hit $836,780 in 2007.

That does apply to the average buyer. Many potential first time home buyers, and even "move up" buyers" were priced out of the market before they even started their search for a new home. The figures inspired a search to find a similar median sale price statistic for Twin Cities real estate. It was truly an eye opener. Here are the introductory paragraphs to the article:

Home sale prices dipped in 2007 for the first time in at least 20 years and are expected to remain flat or fall slightly in the coming year, officials from several Twin Cities-area real estate groups said Wednesday.

The decline is bad news for anyone trying to sell a house and also is an indication of downward pressure on housing prices across the metro area -- sobering news for anyone who bought at the peak of the market or has borrowed heavily against the value of their house.

Between foreclosures and the mortgage crisis, we now know how much this of an understatement this might have been.  Now its a buyers' market and not only is a million dollars going further, lower prices are buying a lot more house...

Tips for Selling a Vacant Home

It is hard enough to sell a home in the current real estate market.  There are special considerations which much undertaken when it comes to selling a vacant home in particular, though.  The idea a home is sitting vacant is almost an immediate turn-off for potential buyers.  Vacant houses are in the news a lot today, with reports of vandalism, thefts, and deferred maintenance.  Additionally, a home that looks comfortable when it is furnished could look bare and flawed to potential home buyers when it’s empty.  Not to worry, selling a vacant home isn't impossible.  If you absolutely have to leave a home vacant before you sell it, try to follow these tips:
  • First impressions are more important than ever. Vacant or not, a home for sale must absolutely have curb appeal.  Ensure that the exterior of the home and its surrounding grounds are being well kept.
  • If your house is on the market in fall, be sure whoever is tending to the yard also keeps the leaves cleaned up. Likewise, if it's winter and you live in a snowy area, be sure driveways and entrances are cleared for people coming to take a tour of the home.
  • Improve landscaping before you leave. Plant some new shrubs, lay down some fresh ground cover, or brighten it up with some colorful annuals.
  • Paint or fix up the front entryway.  Once the potential buyers have crossed the lawn or sidewalk to make it to the front door, you don’t want the entrance of the home to scare them off.
  • Touch up the paint in every room on any walls that have been scuffed. You will probably mark up the walls just moving the furniture out! You may even want to repaint some rooms entirely if they are painted too brightly, as these colors look best when there are furnishings or wall decorations to fill the space.
  • ...