Tag Archives: foreclosure

HAFA Not The Crowbar We Need

Posted by Michael Hughes   March 10, 2010

Washington perpetuates the Short Sale into a Foreclosure problem with their half baked programs to fix problems that took years to create.

Here is the analysis by the NY Times:

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. (known as a short sale) because the bank will not accept the offer the frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

This is not incentive enough for a bank to have a decisive moment. It makes no sense. The reality is that Washington has not been able to create a program to fix the problem. It’s not working. The reality of the housing market is far from Washington bureaucrats.

If you have questions regarding this article or are thinking you will Buy A Home In Boulder please call me 303-359-6627 or e-mail Michael Hughes at Fuller Sotheby’s International Realty in Boulder, CO


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Home for sale Boulder;HAFA Starts April 5, 2010 (Short sale vs. Foreclosure)

Posted by Michael Hughes  February 19, 2010

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If you have a home for sale in Boulder, a short sale as it were the lender agrees to take less than the full amount the homeowner owes on the mortgage. The transaction is saying that the value of the house is lower than the amount due, sometimes significantly so.

These deals appeal to homeowners, not so much (yet) for banks. The homeowners’ credit score and ability to borrow will be damaged, but not as much as if the house goes into foreclosure.  And the IRS is not that forgiving on what is considered unearned income or deficiency judgement (the difference between what you owe and the distance between that and what is accepted by the bank). HAFA may remedy that.

The easiest short sale is one where there is only one lender. Easy being the operative but relative word. Short sales to this point have not been easy nor fast. When there are two or more lenders it is almost impossible to get them to come to agreement on which parties will receive how much.

If the banks would just enlighten up and start accepting these offers the log jam of short sales and foreclosures would soon be behind us. Short sales are definitely less costly than a full blown foreclosure and they are quicker.

Foreclosures still outnumber short sales but (short sales) are the only way we can get these inventories lower and to what the new “normal” as far as supply and demand (absorption) will be when the dust settles. The shell shocked confidence of Americans is playing into this big time.

The Treasury’s HAFA program will probably increase short sale activity significantly. Under HAFA, the lender settles on an approved price in advance. A lender must provide “Either a list price approved by the servicer or the acceptable sale proceeds, expressed as a net amount after subtracting allowable costs that the servicer will accept from the transaction.” This will help speed up the transaction and minimize short sale fraud.

Under HAFA, the servicer must “allow a portion of gross sale proceeds to be paid to subordinate lien holders in exchange for release and full satisfaction of their liens.” That helps with the 2nd lien problem and is great for the homeowner because there will be no deficiency judgment (also, upon closing, the first mortgage holder has to agree to release the borrower “from all liability for repayment of the first mortgage debt”). This is much better than “walking away”! Take action before it is too late and you are going in to foreclosure.  Call me today. You can avoid foreclosure. It is a matter of take the band aid off quick or remove it hair by hair. Which would you prefer?

HAFA starts on April 5, 2010 and is limited to homeowners with an unpaid principal balance less than or equal to $729,750.

If you NEED HELP WITH A SHORT SALE or have questions regarding this article or Boulder Real Estate please call me 303-359-6627 or e-mail Michael Hughes at Fuller Sotheby’s International Realty in Boulder, CO


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Short Sale Better Than Foreclosure

Foreclosure vs. Short Sale
By Michael Hughes
Do you avoid pain whenever possible? Better the “S” word (ShortSale) than the “F” word (Foreclosure). Many folks are going in to foreclosure not even considering the less painful and less impacting financial option of a short sale. In desperation, many people try selling their home themselves to save on realtor’s commissions, pricing it just above market and what they owe, only to end up in foreclosure. It is a difficult choice but when given the facts the choice becomes much less painful and simple.
Homeowners can avoid foreclosure if they act quickly. I have helped many home owners avoid foreclosure by negotiating a short sale for them. Some people just don’t understand the long term effects of foreclosures, or are afraid of considering a short sale because they think it will cost them more money. That is simply not true. Here are the facts that show the benefits of a short sale compared to a foreclosure:
Short sales generally do not influence credit scores, late payments or default in payments can put downward pressure on credit by 50 to 150 points. A short sale is not a critical mark on your credit report, most credit bureaus mark it as a paid note. If there have been no late payments, some buyers can buy again immediately. If there have been late payments, two years is required to apply for a Fannie-Mae backed mortgage, or 3 years for an FHA loan. Short sales help the economy because the banks have less debt, the homes are kept by individual owners who take care of them, and the bank will pay the realtor’s commission who helped sell the home.
Foreclosures generally drop the FICO and other credit scores from 200 to 400 points. Foreclosure will remain a derogatory mark on credit reports for 7 to 10 years. Most cases must wait at least 7 years before buying again, if the home was a primary residence it may be shortened to 5 years. Foreclosed homes can ruin a neighborhood, causing even further deterioration in the market values surrounding the home. Some people strip the home of valuables and leave the home abandoned.

Ican help you. If you have questions about this article or houses in Boulder or Boulder Real Estate give me a call anytime. Michael Hughes-Fuller Sotheby’s International Realty 303-359-6627 or you can visit my website at www.BolderRealEstate.com

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