Jun 16, 2010 by MichaelS.Dunn.

This is my response to a question asking about programs for short sales and whether short sales were possible for investment property:

That program is called HAFA and is part of HAMP. That is: Home Affordable Foreclosure Alternatives act which is part of the Home Affordable Modification Program which was instituted with the agreement banks made to receive Tarp funds from the recovery program! Whew!

http://www.roaringforkproperty.com/foreclosure.html

Anyway, the program works really well for:

1. People who are upside down on their primary residence.

2. People who have had a legitimate financial hardship that has caused them to not be able to keep up with their payments.

Investment properties are tough to get approved, but you could always call the lender or apply for a Short Sale Approval. You can get this approval before you even list your property for sale. The lender will base their decision on two main things:

1. Whether they are convinced that you cannot afford to keep the property and whether it is imminent that it will lead to a foreclosure if they do not except a short sale and:

2. Whether that short sale or the foreclosure would be more costly to them.

It is really just a matter of whether the lender is convinced that they will have to foreclose and which alternative costs them the least.

A good article : http://www.businessweek.com/the_thread/hotproperty/archives/2007/03/the_new_exit_strategy_a_short_sale.html

My advice would be that if you can afford to keep up with the payments for another year or so then hold on to the properties. I think rental rates will start to come up within the next year, and home values will start to climb, very slowly, again in summer 2012. (Just a guess based on national inventory levels.) One other option if you just want to get out from under the place is a deed in lieu. Again the bank needs to be convinced that this is a property facing imminent foreclosure, and then there are times that they may just take a quit claim deed in return for a release from the debt.

If you are going to proceed with either course of action, make sure to let me know. I have specialized training in handling these and there are a lot of pitfalls to be avoided. Specifically, you want to make sure the bank not only releases the lien and the deed of trust(or mortgage) but also gives you a signed waiver of the deficiency so that they cannot go back after you for a judgment on the loss. The other fallout is the fact that the IRS will treat the portion of the debt that is forgiven as ordinary income unless it was on your primary residence. That can add up to a large tax bill for money you never even saw.

-Mike

Posted in Short Sale, Selling | No Comments »

Jun 07, 2010 by MichaelS.Dunn.

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®.The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”

NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.

Pending Home Sales Index by region:

• Northeast: jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago.
• Midwest: rose 4.1 percent to 104.2 and is 17.9 percent above April 2009.
• South: slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago.
• West: increased 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.

“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues.”

He added that there could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.

Source: NAR

Posted in Market Data | 1 Comment »