Why Short Sales Take So Long…

Why Short Sales Take So Long

 

When buyers hear the term “short sale,” they typically think about distressed sellers and good deals — especially in markets where prices have ticked upwards. But the word “sale” can be misleading. In fact, many real estate agents have renamed “short sales” as “long-and-drawn-out sales.”

Here’s why short sales often take a long time to complete.

Banks and Bureaucracy

In a short sale, you need the seller’s bank to approve before you can close. Banks require dozens of pages of paperwork to evaluate whether or not to approve a short sale. Since the seller is asking the bank to accept a sale price that’s less than the mortgage amount, the bank needs to verify that a short sale is the right thing to do. Banks want to make sure the seller is indeed unable to stay in the home and can’t afford to pay off the difference between the market value and the bank’s loan amount.
Just as a bank scrutinizes a buyer’s finances in order to approve their loan, the financial institution wants to closely examine the seller’s finances to be sure that it is not giving its money away. With many thousands of dollars at stake, banks don’t want to rush through this process. By comparison, when you’re buying from a person, he or she is more motivated to keep things moving.

Paperwork Gets Lost in the Process

Banks require many documents, disclosures and signatures to complete a short sale. Many times they request that they are faxed in. If just one signature or page is missing from a file, the bank will likely hold off on the process until the file is complete. Given that these banks are losing money on short sales, they don’t allocate the same amount of resources they would to the customer service department for paying (and profitable) customers. With limited staff and so much paperwork, things get lost — and then the short sale process drags on.

Two Lenders = Double the Time

Many times a short sale seller has two loans. The larger loan is being shorted while the second, smaller loan — usually a home equity line of credit — is being completely wiped out. Often, these loans are with two separate banks. Each bank has its own system that doesn’t in any way communicate with the other bank’s system. The second bank may approve the short sale but put on a 30-day expiration. If the first bank’s approval comes at day 31, the seller must go back to the second bank and start over. As you can see, this too can drag out the short sale.

How to Expedite a Short Sale

Is it possible to work the system and speed up short sales? Absolutely.

If you’re selling a home as a short sale, don’t use an agent who doesn’t not have short sale experience. There are so many areas where short sales can get tripped up, so look for an experienced agent who knows how to push through the process.

If you’re a buyer and you found a short sale home you love, determine if the agent is an expert in short sales. If the agent doesn’t have much (or any) short sale experience, expect a long, rocky road.
Short sales are a different animal from traditional home sales — from how they’re priced, how they’re marketed and the lengthy sales timeframe. A savvy short sale agent will know exactly what they’re dealing with and what to expect, and can shorten the process immensely.

Best Regards, Chris Mesunas.

 

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House Passes Flood Insurance Bill…

House passes flood insurance billDeborah Barfield Berry and Ledyard King, Gannett Washington Bureau

 

Congress moved closer Tuesday to final passage of legislation that would roll back sharp increases in premiums under the National Flood Insurance Program.

WASHINGTON — The House voted overwhelmingly Tuesday to approve bipartisan legislation that would block dramatic increases in premiums paid by some property owners covered under the federal flood insurance program.

The 306-91 vote follows a Senate vote on Jan. 30 approving similar legislation. The Senate could vote on the House version by the end of the week.

"Relief is on the way,'' Rep. Maxine Waters, D-Calif., said before the vote.

Under the House bill, called the Homeowner Flood Insurance Affordability Act, premiums under the National Flood Insurance Program (NFIP) could increase no more than 18% per property annually.

The legislation was crafted by Republican Rep. Michael Grimm of New York in response to premiums that in some cases had increased tenfold.

Rep. Bill Cassidy, R-La., who worked on the compromise, said the House measure strikes "the right balance'' between fiscal solvency for the flood insurance program and consumer affordability.

Supporters of the measure, including Gulf Coast lawmakers, said the increases were making it impossible for many people to keep their homes or sell them.

Critics, however, say taxpayers will be left to foot the bill for the financially troubled insurance program.

The premium increases were required under a 2012 law known as Biggert-Waters that was designed to designed to make the government's flood insurance program financially solvent by bringing rates in line with true flooding risks.

Premiums under the program have been heavily subsidized by taxpayers, and the program is $24 billion in debt.

The House measure also would repeal a provision in the Biggert-Waters law that increases premiums — up to the full-risk rate over five years — when the Federal Emergency Management Agency adopts new flood maps.

Waters, a co-author of the 2012 Biggert-Waters law, worked with Republicans on the recent compromise.

Under the compromise, homes that met code when they were built would be protected from rate spikes due to new flood mapping.

Biggert-Waters imposes 25% rate hikes on some but not all properties that have received premium subsidies through the NFIP. The program, run by FEMA, has traditionally charged premiums at about 40% to 45% of their full cost, with taxpayers subsidizing the rest.

The Senate-passed bill, by Democratic Sen. Robert Menendez of New Jersey and Republican Sen. Johnny Isakson of Georgia, would delay some of the premium increases for four years. The Federal Emergency Management Agency would use the time to complete a study of how to make the higher rates affordable.

"I'm encouraged by this progress and hope we can bring the bill over the finish line very, very soon," Menendez said Tuesday.

The successful effort to win passage of the bill reflected a rare moment of bipartisanship in a highly partisan Congress.

But conservative lawmakers and government watchdog groups oppose the effort to roll back the increased premiums, saying taxpayers should not have to subsidize flood insurance coverage for homeowners who build or buy in high-risk areas.

"It's not going to be very affordable for taxpayers,'' said Steve Ellis, vice president of Taxpayers for Common Sense. "This program, that's $24 billion in debt to the Treasury, is going to be saddled with these changes.''

Critics of the legislation complain it didn't go through the regular committee process.

"Everybody we talked to, virtually without fail, recognize that these delay and repeal efforts are damaging and counterproductive,'' said Andrew Moylan, a senior fellow at the R Street Institute. "Rushing a vote the way that they are is an indication that in their heart of hearts, they know it's the wrong thing to do.''

Rep. Randy Neugebauer, R-Texas, chairman of the House Financial Services Subcommittee on Housing and Insurance, opposed the measure, saying the federal flood insurance program is in "deep debt and it's putting taxpayers at risk for another government bailout.''

"Maintaining these subsidies hurts everyone in the long run,'' Neugebauer said.

In addition to capping annual premium increases at 18%, the House bill also would allow people buying homes covered under the federal flood insurance program to pay the subsidized premium rate at first, rather than the higher rate reflecting true flooding risk.

The House bill would be financed through small assessments on all NFIP policyholders that would go into a reserve fund for FEMA to pay future claims.

 

Buying vs. Renting…

Buy vs. rent: What you'll pay in the 10 biggest cities

Despite rising home prices and climbing mortgage rates, it's still cheaper to buy a home than rent one in these 10 major cities, according to Trulia. Here's how much you'll save.

Despite rising home prices and climbing mortgage rates, it's still cheaper to buy a home than rent one in major cities across the country, according to real estate web site Trulia, which analyzed data in 100 metro areas.

But home prices are just one factor to consider. Deciding whether to buy or rent also depends on the location and how long you plan to stay there. In most of the Rust-Belt cities, like Toledo and Detroit, the math overwhelmingly favors buying. In more expensive coastal markets, like Los Angeles and New York, it's a closer call.

Nationwide, homebuyers who remain in their homes for seven years will save an average of 38% over renting, Trulia found. A year ago, buying was 44% cheaper.

That means all of the initial transaction costs of buying a home — the broker's commission, title insurance, legal fees and other closing costs — will be offset by benefits, like tax write-offs and price appreciation. And those costs will become cheaper than the total costs of renting, which include insurance and agent commissions.

Best Regards, Chris Mesunas.

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Mortgage Availability Improves…

MORTGAGE AVAILABILITY IMPROVES

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According to a new survey from Fannie Mae, credit availability is improving. For the first time in over three years, the majority of consumers believe it's easier to get a mortgage.

Doug Duncan, Fannie Mae's chief economist said, "The gradual upward trend in this indicator during the last few months bodes well for the housing recovery and may be contributing to this month's increase in consumers' intention to buy rather than rent their next home."

The Mortgage Bankers Association (MBA) says consumers are correct – credit availability has increased, particularly in the jumbo and refinance loan markets.

Explained Mike Fratatoni, chief economist for the MBA, "The market continues to adapt to the new QM [Qualified Mortgage] regulation by eliminating products that do not fit inside of the QM box. This tightening is being offset, both in the market for higher balance loans, where lenders continue to loosen terms for jumbo loans, and in the refi market, where more lenders are offering streamline refinance programs."

But there could be other reasons that credit is more available. Credit reporting agency Transunion announced that the mortgage delinquency rate for the fourth quarter of 2013 was 3.85 percent, down from 5.08 percent.

Delinquencies have been steadily declining over the past two years, while improved home sales and rising prices have allowed many homeowners on the edge of delinquency to sell their homes and get into something more affordable.

Credit has been extraordinarily tight since 2008, as lenders struggled with federal claims of mortgage fraud. For years, lenders raised credit standards beyond what was required to qualify for federally guaranteed loans and loans destined for purchase by the securities industry.

As the government leveled fines and made repayment settlements with many of the big banks, lenders are more willing to make mortgage loans. With the most toxic loans before 2008 foreclosed and disposed, lenders have more confidence in loans generated since them.

In fact, Transunion also reported that more loans were generated to borrowers with less-than-perfect credit in Q4 2013.

"We are on the downward slope of the mortgage delinquency curve, so we expect to continue seeing delinquency rates that have not been seen for several years," said Steve Chaouki, head of financial services for TransUnion.

With job gains growing, relatively low interest rates available and a tight supply of homes insuring equity gains, mortgage delinquencies should continue declining, and buyers should feel more confident in their decision to buy a home in 2014.

 

Assuming a Home Loan…

Real Estate Q&A: Is Assuming a Home Loan a Good Idea? Do I Need More Than One Title Insurance Policy?

Sacramento County Home Prices Remain Steady…

Sacramento County's median home price remains steady

 

 

Whats ahead for 2014 housing market….

What's ahead for 2014 housing market

Julie Schmit, USA TODAY10 a.m. EST January 1, 2014
 

The housing recovery hit high gear in 2013 with bigger than expected price gains and solid home sales. This year isn't likely to be as exciting. Rising mortgage interest rates will price out some potential buyers. Instead of double-digit price gains, look for single-digit ones, economists say, while existing home sales remain at last year's level.

Sound boring? "You want boring in the housing market," says Svenja Gudell, Zillow director of economic research.

Here's what's ahead for:

• Home prices. They were the highlight of the 2013 housing market, up 12.5% in October year over year, CoreLogic says. Prices are now 20% off their 2006 peaks after falling more than 30%, shows the Standard & Poor's Case-Shiller index.

Economist John Burns looks for a 6% gain in 2014. Many others see smaller increases ahead. Zillow forecasts just a 3% rise.

Prices will likely rise more slowly as more homes come on the market, fewer investors bid for homes and higher ownership costs — including interest rates and home prices — take a bite out of housing affordability, housing experts say.

Still, U.S. housing remains 4% undervalued when compared with other economic fundamentals, such as consumer incomes and the cost to rent, says Jed Kolko, Trulia economist. At their 2006 peak, home prices were 39% overvalued based on the same metrics, Kolko says.

•Existing home sales. They've started to slow. In November, they were down year over year for the first time in 29 months, National Association of Realtor data show.

The dip was driven by higher interest rates and a tight supply of homes for sale. It doesn't mean the housing recovery has come off the rails, because home prices and housing starts continue to improve, says Capital Economics economist Paul Ashworth.

Existing home sales, which came in at a 4.9 million seasonally adjusted pace in November, are expected to be about 10% higher in 2013 than 2012 and stay about the same at 5.1 million in 2014, NAR forecasts. That's roughly back to 2007 levels but below the inflated levels preceding the housing crash.

New-home sales, which make up a smaller part of the market, have more room to grow. They hit an annual pace of 464,000 in November, up almost 17% from a year ago but still below the 700,000-a-year pace generally considered healthy.

The new year will be different for home buyers, though.

Look for fewer bidding wars and a less frantic market, says Glenn Kelman, CEO of brokerage Redfin. Its data show bidding wars recently falling to one of two offers handled by Redfin agents, down from three of four at the peak in March.

Homes are taking longer to sell, and more sellers are also reducing prices to win sales, Kelman says. At the same time, the supply of existing homes for sale edged up to 5.1 months from 4.9 months in October, NAR says. That's still below the six-month supply that Realtors generally consider to be a balanced market for buyers and sellers.

Supply should get closer to that level in 2014, Kelman says.

Donaee and Jeff Reeve hope he's right. The couple sold their Seattle-area home in just 10 days amid a hot June market. They've been renting as they search for a new home with a few acres. Meanwhile, prices have risen. The lack of suitable homes for sale is "discouraging," says Donaee Reeve, 36, a dental hygienist.

• Housing construction. This part of the housing recovery has been a laggard.

November's data showed an improvement, with housing starts topping 1 million on an annual basis, the Commerce Department says. That was up almost 30% from a year earlier, but it's still far below the norm. Starts averaged 1.5 million a year before the mid-2000s housing boom.

Construction won't return to normal this year, but it will strengthen enough to be the main driver of the housing recovery as home price gains shrink, says investment manager Goldman Sachs Asset Management.

It sees housing starts increasing 20% a year for the next several years as household formation picks up with the strengthening economy.

More home construction means more jobs for construction workers, plumbers, civil engineers and others in the building trades, as well as related industries such as furniture manufacturing, it says.

Construction alone will add 300,000 to 500,000 jobs a year to the nation's job base for the next three years, GSAM predicts. That's up from about 100,000 in 2013.

"The construction revival is primarily a matter of when, not if," says Tom Teles, GSAM head of securitized and government investments.

• Mortgage rates. Sarah and Andrew Katz know home prices are going up, and mortgage interest rates, too. But they're still convinced it's a good time to buy a first home. They've set their sights on spring.

"We're banking on interest rates staying under 5%, but they are what they are," says Sarah, 29, who works in public relations in Manhattan.

The couple better not wait too long, economists warn.

Average rates for a fixed 30-year mortgage will rise to 5.5% by the end of 2014, says Lawrence Yun, NAR chief economist. Rates have already risen about 1 percentage point in the past year as the economy has strengthened. They'll be pushed up further as the Federal Reserve winds down its $85 billion monthly bond-buying program.

Each percentage point increase in mortgage rates makes homes about 10% more expensive in terms of higher housing payments.

Another factor could weigh on borrowers. Starting in January, lenders must make home loans that meet new federal qualified mortgage standards or face greater liability from borrower lawsuits, should the loans go sour.

At least 5% of mortgages extended in 2013 wouldn't meet the new standard, Yun says. More than that will likely face additional scrutiny from lenders as they implement all parts of the new rule, says Brian Koss, executive vice president of lender Mortgage Network.

He says the higher rates and tighter rules will likely drive some home buyers out of the market or into lower-priced homes than they could have afforded last year.

"People have gotten spoiled," Koss says. Higher rates and home prices will test the strength of the housing recovery in 2014, he says.

 

Easy Affordable Fall Makeover Ideas…

Ultimate Fall Makeover: Easy Budget Friendly Outdoor Projects

 

Rent Vs. Buy: Six Questions Newlyweds Need to Ask

This is a great article that I have shared with others!

The newlywed year is full of milestones including, of course, your first married home together.

Rent vs. Buy: Advice for Newlyweds

It is often a natural step many couples take after tying the knot, but choosing whether to rent or buy is an important decision that needs to be made together. There are some major lifestyle factors that impact that choice.

When you are ready to have a serious conversation about your future home, set up a date with each other either at home or in a place where you can talk quietly and at length. Turn off your phones and other distractions so that you can truly focus. The six questions below are conversation starters to help you evaluate whether or not now is the right time for you to look at buying a home.

1) Where do we see ourselves in the next five years? If you are planning to move to another state…

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Rapid Home Prices May Slow

Rapid home price gains will slow

  @CNNMoney August 1, 2013: 5:14 PM E

san jose house sale

San Jose, Calif., saw huge home price gains during the 12 months that ended March 2013, but it's expected to gain just 7.4% in the current period.

NEW YORK (CNNMoney)

Home prices have been seeing rapid gains in recent months, but don't expect that to continue.

While double digit gains have been common, home appreciation is projected to drop to 6.5% during the 12 months ending March 31, 2014, according to a report released Thursday. That will follow a 10.2% jump for the preceding 12 months, the first double-digit increase since the peak of the housing boom seven years ago.

The forecast is based on the CoreLogic Case-Shiller home price indexes and covers 384 metro areas and more than 80% of the total U.S. housing market.

Related: 10 most expensive cities in the world

Dr. David Stiff, chief economist for CoreLogic Case-Shiller, expects home prices in most markets to continue to increase significantly for several months before slowing down.

"Record levels of affordability, a slowly improving job market and very small inventories of new and existing homes for sale will continue to drive U.S. home price appreciation during the summer," he said.

In the handful of markets where prices have recently declined, Stiff said they'll likely turn positive before the year is out. Even with the dramatic price increase recently, he remained unconcerned about a new bubble, as "home prices remain 26% below their peak nationally and are even lower in some metro areas."

Related: Housing markets where cash is king

San Jose, Calif., was the biggest winner over the 12 months that ended in March 2013, with an increase of 23.7%, but it's forecast to gain just 7.4% in the current period.

Phoenix and Sacramento will also see a significant slowdown, with price gains dropping from above 20% to the single digits.

Related: 10 big, booming cities

Other markets will take up some of the slack. Prices in Hartford, Conn., should increase by 9.8% after recording a 1.2% year-over-year gain through March 2013. Baltimore and Philadelphia will also see their prices jump.

Stiff has consistently projected stagnation in Florida housing markets, and this year is no different. He thinks prices will dip in Miami by 2.7%; Fort Lauderdale by 2.6%; and Orlando by 1.6%. Tampa is a lone bright spot, where prices are expected to rise 2.3%. To top of page

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