Short Sale Revolution

Read through this article below. This change is currently pending and could revolutionize the short sale process. What it is attempting to do is require a response from lien holders within 10 days. Let me know your thoughts. 

WASHINGTON – Jan. 12, 2010 – The federal government is setting guidelines for short sales of homes, giving lenders a 10-day limit to respond to offers, freeing borrowers from debt and providing financial incentives to lenders.

The new rules seek to address the many criticisms of short sales and figure to play a significant role in South Florida, where distressed properties dominate the market as the housing slump meanders into a fifth year.

“The cloud could be lifted,” said Domenic Faro of the Fort Lauderdale Real Estate firm. “This could bring us back to some normalcy.”

In a short sale, the homeowner unloads the property for less than what’s owed on the mortgage, and the lender forgives the difference. Nearly half of all single-family mortgage holders in Palm Beach, Broward and Miami-Dade counties are “under water,” meaning they owe more than their homes are worth, according to third-quarter data from Zillow.com, a Seattle-based real estate firm.

While short sales are considered the perfect solution for “underwater” homeowners on the verge of foreclosure, the deals often drag on as lenders take weeks or months to respond to offers. Frustrated buyers walk away during the delays. In some cases, lenders insist that borrowers share in the financial loss, holding up the transactions even longer.

To speed up the process, the U.S. Treasury is calling for lenders to respond to short sale offers within 10 business days. Sellers are eligible for $1,500 moving allowances, and they will not be on the hook for repayment of any debt.

Also, lenders will get $1,000 to cover administrative and processing costs, while investors owning the mortgages will receive a maximum $1,000 for allowing up to $3,000 in short sale proceeds to be distributed to less senior lenders. Loan servicers participating in the Obama Administration’s Home Affordable Modification Program are required to follow the guidelines.

The rules do not specifically apply to loans guaranteed by Fannie Mae or Freddie Mac, which represent about half of all U.S. mortgage debt. The two government-run mortgage companies are working to finalize their own guidelines.

The Treasury plan, which must be implemented by lenders no later than April, is meant to help sellers like Dawn Sclafani, who has been waiting since October for her lender to approve a short sale offer on her Margate home. A buyer has offered $155,000, and she owes $233,000.

Sclafani, a 50-year-old psychologist, said she’s eager for the bank to approve the deal so she can put the experience behind her.

“I want to move on … but I can’t until somebody gives me permission to,” she said. “I’ve heard that this is a horrendous process. The banks are just not very cooperative. I do believe these new rules will help.”

U.S. Rep Ron Klein, D-Boca Raton, agrees, saying the guidelines are meant to make short sales “a more usable tool.” Klein points out the rules provide standardized paperwork for all short sales and give buyers and sellers a more reasonable time frame for whether or not the sales will happen.

But Klein and others say the government may have to increase the financial incentives. The $3,000 cap on short sale proceeds is not sitting well with second lien holders, who have been demanding more money from sellers, the first lenders and real estate agents in exchange for releasing their claims and allowing the short sales to proceed.

“This is a great program if all these mortgages had only one lien holder,” said Travis Hamel Olsen, chief operating officer for Loan Resolution Corp., an Arizona company that helps lenders complete short sales. “But many of these properties have two liens.”

Meanwhile, some local real estate agents remain skeptical of the guidelines.

Broward County agent Ron Rosen, who urged Klein last summer to push for new regulations, said he thinks “the banks will still play their little games with people and make life difficult for everyone.”

Edward Goldfarb of RE/MAX PowerPro Realty in Davie doubts the Treasury will enforce the new rules. “There’s no teeth to them,” he said.

A spokeswoman for the Treasury says it will hand down “substantial” penalties to lenders that don’t comply. They can include the withholding or reduction of payments and requiring improperly rejected loans to be modified.

Lenders have blamed short sale delays on the complicated nature of the transactions, sheer numbers of deals and on borrowers who don’t submit proper paperwork in a timely manner.

In many cases, the banks are not to blame, said Ward Kellogg, chief executive of Boca Raton-based Paradise Bank. Still, he thinks the guidelines are necessary to force lenders to clear the market of so many distressed properties.

“I think the pressure on (the banks) is a good thing,” Kellogg said.

Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Paul Owers. Distributed by McClatchy-Tribune Information Services.

Now Is The Time!

Starting the first quarter of 2010 we have had an incredible push forward to continue the strength of the housing market from the fourth quarter 2009. Prices, in Orlando area, have continued to slowly rebound and stabilize, and the average days on the market has continued to fall. Buyers are becoming wisely competitive and sellers, in many cases, have resolved to a stark understanding of pricing. In Seminole County we are seeing a supply of home around 7.7 months of inventory. For comparison purposes, in “Boom” times the Orlando Regional Realtors Board (ORRA) reports a low of 1.15 months in April of 2005, and a high of 31.64 months in January of 2008. Undoubtedly, we are heading in the right direction. 

Now the sobering subject of availability of funds. The funds have been readily available for the last year for credit worthy borrowers. This packaged with the homebuyers tax credit and low rates have been a now brainer for many borrowers. With this availability accompanied with consumer confidence continuing to rise, as well as prices still falling slightly, borrowed funds are forced to rise. It goes back to the basic laws of supply and demand. There is simply not enough funds for every American to buy property with 4.5% interest rates. Interest rates are the hedge against this type of predicament. 

Freddie Mac is projecting rates to move from just over five percent today for 30-year loans to over 6 percent or higher later in 2010. The Federal Reserve has also scheduled a phase-down of its multi-billion dollar purchases of mortgage backed securities. The point of all this is to note that if you are considering purchasing, or selling, you need to get serious now. Buyers will see a tremendous increase in cost, and sellers will see a decrease in buyers due to availability of funding. Now is the time to purchase or sell while rates are low and prices are stabling. Competition is low between sellers and everyone benefits from the new extended and expanded tax credit. Lock down your financing now and don’t wait. 

Best Bites in Oviedo (Part 1)

My family and I moved here to Oviedo in 1994 when I was still a little guy. Coming originally from Alabama it was in our blood to find the local favorites, because the day revolves around what for breakfast, lunch, & dinner. To this day I find it humurous everytime I am sitting at an early breakfast, and the discussion is about where we are eating lunch. Nonetheless, we found the places to eat.

The first place we stumbled upon was "Big John's." When my youngest brother was born my dad made it a new year's resolution to take my brother and I to Big John's every Friday for breakfast to spend a little more quality time with us. This started almost 13 years ago, and it has been a rare event that any of us have missed. Big John's offers a full breakfast special including eggs, pancakes, and bacon for about $3. This isn't all they offer but it's pretty much the only thing I've ever ordered.

Big John's is on 434 in downtown Oviedo just past the Post Office. Don't let the outside fool you, the food is excellent, and the people are great. Also, just so you're not surprised Big John has now become Big Joe since we have been going there.

Stay tuned for the next local restaurant. This one is where we have our Monday morning Core Group meetings...

Amendment 4 -- 2010

On the Florida ballot in 2010 is Amendment 4 to the Florida constitution requiring voters to approve all local comprehensive land use plan changes. The “vote on everything” amendment has been written by some of the states most extreme special interest groups. The group has tried and failed three times to place their amendment on the ballot and have finally found enough signatures to qualify.


Being passed off as an advocate for “Hometown Democracy,” “Amendment 4” to the status quo is more appropriate. In fact, this amendment would have required an average of over 10,599 additional local votes per year in Florida, and had Amendment 4 been in place in 2006, the voters of Carrabelle - a small Franklin County town - would have seen 617 separate questions in a single ballot!

For more information on this issue refer to: www.florida2010.org.

Location, Location, Location?

There have been three key words that have surrounded the world of real estate since its beginning. They have defined good investment decisions, home buying decisions, and become a rule of thumb for everyone from first time homebuyers to billionaire tycoons. Location, Location, Location has been the keystone for every real estate purchase. Now, with the tides changing to a slower marketplace in a down economy these words have also begun to evolve. In our current residential marketplace in Central Florida those words have become Price, Price, Price.

We have seen time and time again, great homes, in great locations sit vacant for months and months. On the flip side, we have seen subpar homes, in mediocre neighborhoods receive three and four offers the first day on the market. This has become a trend that is carrying across all price ranges in all neighborhoods. There are a few reasons for this trend. First, buyers are more educated now than they ever have been in the past. The internet has allowed buyers to search through all the available homes on the market without ever leaving their couch. By the time they get out and begin physically looking at properties they are so aware of what it is they are looking for that they are much quicker to write an offer. The key to getting these offers is to have it priced at a point where they are willing to schedule a physical showing. Secondly, investors are a pocket of buyers that have not previously been competing with residential home buyers. Investors can smell value before it hits the MLS and are prepared to write an offer, sometimes, sight unseen.

With all this being said, if you are attempting to sell a home you need to be aware of the circumstances. Pricing for a quick sale does not mean a cheap sale. Well educated buyers are willing to pay market value for a home. Often times sellers price a home with “negotiating room” which leads to them losing much of their buyers market and ultimately taking less for their property due to a lack of demand. Weary sellers can’t negotiate well and never will. Get the most out of your sale by competitively pricing your home.

Keep the new rule of thumb in mind. PRICE, PRICE, PRICE!

Tax Credit Passes House and Senate

"WASHINGTON – Nov. 5, 2009 – The $8,000, first-time homebuyer tax credit has not yet been extended beyond its Nov. 30 end date, but it’s very close to gaining a longer life.
The extension was added as an amendment to an existing bill, HR 3548, that extends unemployment benefits. The U.S. Senate passed that bill on Wednesday and, after debate, the U.S. House passed HR 3548 this afternoon. It now needs only President Obama’s signature to become law, and the White House has indicated it will sign it, perhaps as early as tomorrow.
Until the president signs the bill, however, it is not law.

In addition to extending the tax credit for first-time homebuyers under the current rules, the bill adds a smaller tax credit for move-up homebuyers who have lived in the house for five of the past seven years. The bill also increases the income limits of homebuyers from $75,000 (single) to $125,000; and from $150,000 (married) to $225,000.
Florida downpayment assistance
After the president signs the bill and extends the tax credit, the Florida Homebuyer Opportunity Program – a downpayment and closing costs assistance program relating to the federal tax credit –automatically gets extended too. The state still has about $28 million available for homebuyers. The money is essentially a loan to first-time buyers; they receive it upfront, use it for a downpayment or other costs, and pay it back once they get their federal refund."

Money in the toilets...

WASHINGTON – Oct. 6, 2009 – More than 80 percent of new single-family homes have at least two bathrooms, which occupy an average of 300 square feet of floor space, or 12 percent of the total area, according to a study by the National Association of Home Builders.

The home builders’ study reports a major return on value for extra bathrooms: “When the number of bathrooms is approximately equal to the number of bedrooms, an additional half-bath adds about 10 percent to the home’s value, and one additional bath adds about 19 percent.”

A mid-range bathroom remodel, which costs $10,500 on average nationwide, repays a homebuyer at least 100 percent of the outlay when the property is sold, the homebuyer study concludes.

http://www.floridarealtors.org/