Sarasota Real Estate Market News

Freddie Mac sets new short sale timelines, Fannie to follow

McLEAN, Va. – April 18, 2012 – Freddie Mac, the federally owned company that buys mortgages from local lenders, says it wants to make the short sale process easier on home sellers by updating its timelines for short sales and requiring better communication from lenders. Last year, Freddie Mac completed 45,623 short sales.

The initiative is part of the Servicing Alignment Initiative (SAI) Freddie Mac and Fannie Mae launched in 2011 at the direction of their regulator, the Federal Housing Finance Agency (FHFA). Yesterday, FHFA announced that Fannie Mae and Freddie Mac must adopt the new short-sale guidelines, and the latter announced compliance shortly after that.

“Freddie Mac’s new timelines are intended to help make the decision process more transparent and timely for short sales under the Obama Administration’s HAFA program or Freddie Mac’s traditional short-sale option,” says Tracy Mooney, Freddie Mac senior vice president, single-family servicing.

Freddie Mac proposals

• Loan servicers should make a decision within 30 days of receiving 1) an offer on a property under Freddie Mac’s traditional short sale program or 2) a completed Borrower Response Package (BRP) requesting consideration for a short sale under HAFA or Freddie Mac’s traditional short sale program. BRPs are standardized assistance applications developed under the Servicing Alignment Initiative.

• If a lender needs more than 30 days, it must give homeowners a status update at least weekly, and a final decision must be made in less than 60 days.

• If a servicer makes a counteroffer, the borrower must respond within five business days. The servicer then has 10 more business days to respond to the buyer.

Freddie Mac says it will use the new timelines to evaluate servicer compliance with the SAI and its own servicing requirements.

© 2012 Florida Realtors®

May 19, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Investors eye REOs as a ‘gold rush’

NEW YORK – April 16, 2012 – Investors are pouncing on foreclosure bargains and then turning the properties into moneymaking rentals, which has some drawing comparisons to a “Gold Rush” of sorts.

Diane Gozza, the executive vice president of Integrated Mortgage Solutions in Houston, recently wrote in an article for National Mortgage News that investors are eyeing the properties similar to how those risk-takers did back in the 1848 California “Gold Rush,” who also had dreams of striking it rich.

In recent months, investors have been buying up investment properties in bulk at rock-bottom prices.

They have plenty to choose from: The government-sponsored enterprises (GSE), which includes Fannie Mae and Freddie Mac, own more than 200,000 single-family foreclosed homes, and banks own about 600,000 more. To help accelerate the “rush,” the Federal Housing Finance Administration recently launched a pilot foreclosure-to-rental program, offering investors the chance to bid on 2,500 foreclosure properties owned by Fannie.

But some housing experts, including the National Association of Realtors® (NAR), have argued that such REO-rental programs aren’t needed because investors are already flooding the market to buy up foreclosures, making a government intervention unnecessary. (Read “NAR: REO Rental Programs Largely Unnecessary.”

“Taking into account the enormous stockpile of REO properties currently held by the GSEs, the auction and bulk investment in REO to rental properties may indeed be the next gold rush,” Gozza writes. “Much in the spirit of the 1848 gold rush, there will be risks and tough lessons learned. But this private-sector initiative has the potential to be the catalyst for a housing market recovery.”

Source: “Tapping into the Next ‘Gold Rush,’” National Mortgage News (April 10, 2012)

May 19, 2012 Posted by | News related to Buyers, News related to Investors, News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Bill could help short sale sellers in 2013

WASHINGTON – April 2, 2012 – Under U.S. law, a homeowner with an underwater mortgage who goes through a short sale has part of his or her debt forgiven by a bank. The amount forgiven is legally considered income, as if the lender gave the owner a monetary gift by saying, “You no longer have to pay this.”

As a gift, that money is income and taxable by the IRS when the homeowner fills out his yearly income taxes. However, a temporary law effective through Dec. 31, 2012, nixes that amount as homeowner income, making the debt forgiveness tax-free. A short sale in 2012, then, allows a homeowner to walk away free of debt.

As it stands now, that rule expires next year, and underwater homeowners who go through a short sale could be taxed on the amount forgiven.

However, a bipartisan bill introduced late last week by U.S. Senators Debbie Stabenow (D-MI) and Dean Heller (R-NV) – the Mortgage Relief Act – would extend that rule past Dec. 31 if approved by both the House and Senate and signed by President Obama. Senators Robert Menendez (D-NJ), Sherrod Brown (D-OH) and Jeff Merkley (D-OR) cosponsored the legislation.
“It is bad enough that so many families are faced with mortgages that now exceed the value of their home,” says Stabenow. “But to add insult to injury, without this bill, the IRS would once again require these families to pay hundreds or thousands of dollars in additional income tax when they sell or refinance their home. That’s just wrong.”
Stabenow championed the original Mortgage Relief Act of 2007 designed to fix the problem that now expires at the end of 2012. Stabenow and Heller’s new bill will extend this tax protection for underwater homeowners through 2015.
Approximately, 20 to 25 percent of American homeowners are currently underwater on their mortgages.

© 2012 Florida Realtors®

May 19, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

REO discounts to grow even bigger?

NEW YORK – March 26, 2012 – Foreclosures are expected to pick up as soon as banks begin to clear their backlog of troubled loans – RealtyTrac is projecting a 25 percent increase in 2012.

If an increase does occur, some housing experts wonder how it will impact overall home prices, and whether the discounts for REOs will be even larger this time around. For example, in metro areas like Las Vegas, the average foreclosure sells at 6.1 percent less than a non-foreclosure home. In Miami, the foreclosure discount is 7.1 percent, according to data by LPS Applied Analytics. In some places, it’s even more.

“A spike in sales of bank-owned homes can be bad news for other sellers,” The Wall Street Journal reports. “And foreclosure sales make it hard for prices to rise overall since they boost sales activity at the lower end of the market.”

This time around, however, housing experts don’t expect the discounts in distressed properties to grow.

“More often than not, prices are determined more by demand than supply,” Paul Dales, senior U.S. economist at Capital Economics. Areas with a high number of REOs may have greater demand for REOs in good condition and less supply for other properties. Plus, Capital Economics predicts that demand will improve nationwide this year as the housing markets starts to recover.

Source: “Will the ‘Foreclosure Discount’ Grow This Year?” The Wall Street Journal (March 14, 2012)

May 19, 2012 Posted by | News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

More homeowners in foreclosure stay put

NEW YORK – March 8, 2012 – More lenders are allowing homeowners in default to stay-put in their homes longer – and even negotiating special arrangements with them, such as the lender paying the home insurance if the homeowner pays the utility costs.

Why the postponement? Banks don’t want the cost of maintaining more homes on their books. Many municipalities are forcing banks to better maintain foreclosed homes, which has been adding to the costs.

By the end of January, more than 644,458 homes were under bank ownership; and about 710,725 are in the foreclosure process, waiting to add to that number, according to RealtyTrac.

“Under normal circumstances, the banks would be able to cover the cost of maintenance, upkeep and property taxes by just reselling the property, but these are desperate times, and banks are resorting to somewhat desperate measures in some cases,” Daren Blomquist, a vice president at RealtyTrac, told The New York Times. “It is more of a factor now because property values have come down and will not cover all these costs when the banks resell the property – if they can resell the property.”

In 2007, the average time it took to complete a foreclosure was four months. By the end of 2011, that has stretched to a year. In some states, the slowdown is even more pronounced, such as in Florida where defaulting homeowners often stay put for more than two years, or in New York in which foreclosures in 2007 took 263 days to complete and in 2011 averaged 1,019 days.

Source: “Lenders Increasingly Allow Foreclosed to Stay,” The New York Times (March 4, 2012)

May 19, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Banks offer more cash incentives for short sales

ATLANTA – Feb. 15, 2012 – More banks are offering homeowners incentives to sell their houses in a short sale to avoid costly foreclosure expenses for the bank. In fact, some banks are offering struggling homeowners as much as $35,000 to do a short sale, according to CNNMoney.

Many homeowners have been surprised at banks’ recent willingness to approve short sales.

“Initially, the homeowners are skeptical,” says Elizabeth Weintraub, a real estate professional in Sacramento, Calif. “The bank may have already turned down their request for a modification. Then, one day, they call and say, ‘Let us give you some cash.’”

For banks, the incentives have proven to be a smarter move than letting a property fall into foreclosure.

“The first choice is a modification, but if that’s impossible, then a short sale is a faster, more efficient solution,” says Tom Kelly, a spokesman for Chase Mortgage.

With a foreclosure, homeowners stop making their mortgage payments and usually property taxes as well. They also often put off maintenance issues, which can cause the home to lose value even more. Foreclosed homes sold, on average, for 22 percent less than homes not in foreclosure in December, according to National Association of Realtors®’ data. For comparison, discounts for short sales were about 14 percent.

“I’ve seen a lot of foreclosures for sale where it would cost a lot more than $20,000 to get them into condition to sell again,” says John Hayton, a short sale specialist in Orlando, Fla.

Source: “Banks Pay Delinquent Borrowers $35,000 to Sell Their Homes,” CNNMoney (Feb. 10, 2012)

May 19, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Beat the competition in buying foreclosures

NEW YORK – Feb. 7, 2012 – While bank-owned homes are plentiful in many markets, they aren’t always easy for a buyer to get. Foreclosures sell at bargain prices – sometimes at 35 percent discounts when compared to nonforeclosures. But the ultra-low prices attract investors and all-cash offers, which makes it difficult for other buyers’ bids to win out.

So how can buyers beat the competition to get a foreclosure?

Get the first look: Fannie Mae and Freddie Mac’s First Look program offers first-time homebuyers and others who need financing and are looking for a primary residence the first opportunity to see bank-owned homes before investors. Buyers have a 15-day window to submit offers before investors have the opportunity to start bidding. Homebuyers can search for Fannie Mae’s REO properties at Properties owned by Freddie Mac can be found at

Submit a competitive offer: Homes priced at heavy discounts are usually in high demand and attract multiple bids. Lowball offers won’t likely get far. Some housing experts suggest starting with your best offer. “My advice is to offer the most you feel you would ever pay for the property,” said one recent foreclosure buyer.

Make a large deposit: If a buyer wants to get the banks attention, they could offer a larger than typical good-faith deposit. But if the buyer has to back out of the deal for some reason, he or she may be risk losing the deposit.

Even if buyers really want the property, don’t let them cave in to unreasonable demands, like waiving a home inspection. Otherwise, it may be a decision they quickly regret if the home is later found to be rife with problems.

Source: “How to Beat the Competition and Buy a Foreclosure,” Sun Sentinel (Fla.) (Feb. 5, 2012)

May 18, 2012 Posted by | News related to Buyers, News related to Investors, News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Short sale sellers need to close in 2012

WASHINGTON – Feb. 3, 2012 – If a bank writes off debt in a short sale, it’s a “taxable event,” and the lender tells the Internal Revenue Service about the deal by submitting a “Form 1099-C, Cancellation of Debt” at the end of the year. Home sellers must acknowledge the amount when they fill out their federal taxes. Through Dec. 31, 2012, however, the federal government forgives any tax liability associated with forgiveness of a mortgage loan.

“In general, homeowners believe the government will extend this tax provision,” says San Diego Realtor Joy Bender. “However, as evidenced by the First Time Homebuyer Credit expiration in 2010, you can’t always count on the government to bail you out.”

The government generally considers forgiven debt to be income. If a seller has signed legal loan papers to take out a $200,000 mortgage and the lender accepts $100,000 in a short sale, for example, the seller received the equivalent of $100,000 in free money by government estimates. As a result, the IRS taxes it. For tax year 2012, however, the government still forgives the debt; in 2013, it might not.

The tax amount can be significant. On a debt of $100,000, a short-sale seller in the 25 percent tax bracket could end up owing $25,000 in income taxes.

Since short sales can take months and even fall through, homeowners considering a short sale may want to start the process sooner rather than later.

© 2012 Florida Realtors®

May 18, 2012 Posted by | News related to Sellers, News related to Short Sales and Foreclosures | Leave a comment

Typo involving 80¢ nearly cost man his home

LARGO, Fla. – Jan. 17, 2012 – When Tom Mudie was approved for a mortgage modification program, he thought his foreclosure troubles were over.

Bank of America lowered his monthly payment by nearly $200. All he had to do was make the new payments – on time for three months – and the new amount would be made permanent.

But a simple error – hitting a “0” on his telephone keypad instead of an “8” – threatened not only to cancel the savings but also to cost him his home.

“I want to keep my home,” Mudie said. “And to lose it over 80 cents is crazy.”

Mudie paid his second trial mortgage payment by phone. The keypad mistake meant that instead of paying $615.82, he paid $615.02. He was three quarters and a nickel short.

The mistake meant that, in the precise calculus of the computer, Mudie broke his modification contract. He was kicked out of the program.

Banking and government officials say his story reflects a broader trend of simple mistakes with consequences that are all out of proportion, hurting homeowners’ modification chances.

When he realized what happened, Mudie said, he contacted a customer service representative who told him to send a check for the 80 cents. That would clear up the problem, he said he was told.

“I did everything they told me to,” Mudie said. “I wrote the check for 80 cents, as crazy as that sounds. I included it with my next payment. They cashed it.”

But the next month, Bank of America sent back the 80 cents – plus the next payment he had made. Then a letter from the bank arrived bearing bad news:

“Your loan is not eligible for the Fannie Mae modification program because you did not make all the required trial period plan payments by the end of the trial period.”

It goes on to say the foreclosure is back on track. Then other alarming paperwork arrived.

“This home transition guide is through the United Way,” read one pamphlet.

“When you start seeing that,” Mudie said, “you start thinking charities and stuff. So I knew that I am in trouble.”

Bank of America spokeswoman Jumana Bauwens said it all boils down to the computer glitch. Just like Mudie, she said, the bank made an error when it booted him from the program.

Bauwens took a closer look at Mudie’s account and said the bank is in the process of crediting him for the payment he made. She said that because the problem partly was caused by the bank, he’s back on track with the plan for lower monthly payments.

“He’s in the process of getting a permanent modification,” Bauwens said. “The paperwork is not finalized, but that 80 cent error is not going to create any additional issues for him.”

Though Bank of America services Mudie’s loan, government-backed Fannie Mae actually owns it.

Andrew Wilson, spokesman for Fannie Mae, said he has heard of simple mistakes getting out of hand before. Computers, he said, see things in black and white. Homeowners should be able to get beyond them and fix the problem.

Anyone having difficulty getting help from a servicer can call Fannie Mae directly if they are among the many with a Fannie Mae loan.

Homeowners can reach Fannie Mae’s Tampa Mortgage Help Center at (866) 442-8554.

As for Mudie, he’s happy for another chance to keep his home.

But from now on, he said, he’ll pay by mail.

Copyright © 2012 the Tampa Tribune, Tampa, Fla. Distributed by MCT Information Services.

February 6, 2012 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Avoid foreclosure with help from HUD-approved agencies

WASHINGTON – Jan. 17, 2012 – In recent years, many people have turned to individual agencies, housing counselors and lenders to avoid foreclosure – but many found themselves paying scammers who took money and failed to protect them.

In a new information campaign, the Department of Housing and Urban Development (HUD) is telling homeowners that anyone at risk of foreclosure can receive free counseling from HUD’s nationwide network of approved counseling agencies.

Available services

Although each agency offers specific services, each generally offers the following types of help:

• General counseling in matters related to housing
• An evaluation of a homeowner’s specific situation
• Counseling on ways to avoid foreclosure
• Help with refinancing through HUD’s various programs or with lender negotiations

HUD-approved agencies cannot charge for their foreclosure counseling services. However, they can charge a reasonable fee for other services, such as general housing education, pre- and post-sale counseling, and other services.

Preparing for a first meeting

A homeowner does not have to be in the foreclosure process to seek counseling. In fact, HUD advises anyone who thinks he might have problems in the future to contact a mortgage counselor sooner rather than later. Before a first meeting, HUD suggests having the following information ready:

• Household monthly income and expenses
• Current monthly mortgage payment amount
• Latest mortgage account statement
• Any relevant communication with your lender regarding late mortgage payments

“It is also a good idea to have a sense of what you want to accomplish with the help of the approved counseling agency – keeping your home, selling it, refinancing, etc.,” HUD says in a release.

Working with a non-approved agency

To avoid a scam, HUD advises homeowners to take the following steps if working with an agency no approved by HUD:

• Avoid paying for foreclosure counseling services. HUD-approved agencies provide these services at no cost.
• Resist any tactics that pressure you into signing documents without enough time to go over them carefully.
• Do not sign over the deed of your house to any other person or organization.
• Make your mortgage payments only to your lender or an institution approved by your lender.

To find a HUD-approved agency in Florida, visit HUD’s website.

© 2012 Florida Realtors®

February 6, 2012 Posted by | News related to Sellers, News related to Short Sales and Foreclosures | Leave a comment