SHORT SALE HELP ON THE WAY???

Business
Sunday, Jan. 17, 2010
Rules aim at short sales Policies to speed up process
By Paul Owers - Sun Sentinel

FORT LAUDERDALE, Fla. -- Financially stressed homeowners left hanging while their banks consider whether to approve the short sales of their properties may benefit from new federal guidelines that give lenders a 10-day limit in which to respond to purchase offers.
The rules from the U.S. Treasury, which also allow financial incentives for sellers and lenders, could figure prominently in the Grand Strand's housing market, where short sales have become extremely popular during the market's rut. A short sale occurs when the bank agrees to sell the house for less than what is owed on the mortgage so the seller can avoid foreclosure.
Gary Balanoff, a real estate agent with Re/Max Select in Oviedo, Fla., tells his clients to expect at least a 60-day wait when they try to buy or sell a home via a short sale.
Poll Do you think new federal rules will help speed up short sales along the Grand Strand?

New rules designed to speed up short sales
New rules designed to speed up short sales
Financially stressed homeowners left hanging while their banks consider whether to approve the short sales of their properties may benefit from new federal guidelines that give lenders a 10-day limit in which to respond to purchase offers.
The rules from the U.S. Treasury, which also allow financial incentives for both sellers and lenders, could figure prominently in Florida's housing market, where about one in every five existing-home purchases involves a short sale.
Gary Balanoff, a real-estate agent with Re/Max Select in Oviedo, Fla., tells his clients to expect at least a 60-day wait when they try to buy or sell a home via a short sale. And as Treasury's expedited short-sale process emerges between now and April, he said, he's not going to tell his clients any differently.
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Obama expands housing help to include second mortgages
Obama expands housing help to include second mortgages
WASHINGTON — The Obama administration expanded its efforts to prevent Americans from losing their homes, unveiling a program Tuesday that's designed to give financial incentives for companies to modify the terms of troubled second mortgages.
The new effort builds on the Making Home Affordable program, which was announced on Feb. 18 to arrest the rising rate of foreclosures by lowering homeowners' monthly payments. The administration now will give cash rewards to mortgage servicers, who act as bill collectors for investors who own pools of mortgages.
As many as 6 million homeowners nationwide are thought to be at risk of foreclosure over the next several years, potentially prolonging the worst housing slump in modern times and delaying an economic recovery. The administration hopes to help 4 million of these homeowners avoid foreclosure.
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Don't know what liquidity is? Derivatives? Hedge fund?
Don't know what liquidity is? Derivatives? Hedge fund?
A number of financial terms have become a part of the daily conversation as the worst financial crisis in decades has deepened, affecting companies, industries and ordinary people. A slowdown that began in the real estate market has led to bank failures, plunging stock prices and an economy that may be hurtling toward a deep recession. The glossary below list short definitions for these terms. Basis point: One one-hundredth of 1 percentage point. Changes in interest rates are measured in basis points. So if the target Federal Funds rate was at 2 percent and it was cut by 50 basis points, the new target rate would be 1.5 percent. Collateralized debt obligations: A security backed by underlying bonds or other fixed-income assets. CDOs are made up of different tranches that are rated according to risk; the riskier tranches pay higher interest rates to investors. Credit rating agencies have been accused of failing to account for the risks that many CDOs posed and mistakenly gave them AAA ratings, the highest
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Real Estate Mailbag
Real Estate Mailbag
DEAR BENNY: I live in Iowa, while my sister and her husband live in Florida. We want to buy a home together in Florida. They will pay for 50 percent of the home and I will pay for 50 percent. We will all be listed on the deed. What is the best way to hold title to the property? It is our intent that should any of the parties involved die, anyone left should have a right to live there for the balance of their life. What is the best way to designate how the property transfers upon the death of the last party involved? --Mickey
DEAR MICKEY: I don't practice law in Florida, so my answer has to be general in nature. You should consult with a local attorney in that state. Oversimplified, I recommend that title be held as follows: sister and her husband as tenants by the entirety as to half of the property and as tenants in common with you as to your half.
This way, if you die first, your last will and testament will provide guidance as to how you want your half to be distributed. You could make your sister
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Mailbag
Mailbag
DEAR BENNY: With mortgage loan rates at record lows, I'm thinking of refinancing my 30-year fixed-rate loan. The lender is recommending that I roll into the refi amount the balances I owe on my car and two credit cards. The advantages would be that they'd be "paid off," the interest rate on the amounts would be lower than I'm currently paying on any of them, and the interest paid would be tax-deductible. But I see a big disadvantage, too. The total of the amounts on those five-year (on which I still have three years to pay) and revolving loans would now be amortized over 30 years! Does it make sense to do that? How can I figure out if it's a smart move or not? --Janet
DEAR JANET: I think it's a good idea, but only you -- and your pocketbook -- can make the final decision. The interest you pay on your car loan and on your credit cards is not deductible for income tax purposes. So your lender is offering you a deal whereby you pay less and at the same time have the opportunity to deduct the mortgage interest
And as the Treasury's expedited short-sale process emerges between now and April, he said, he's not going to tell his clients any differently.
"It's a very, very tough process to get some degree of standards," Balanoff said of short sales. "I think this will help -- it will put more pressure to comply and get quicker results. ... Three or four months of waiting for an answer is not doing anyone any good -- even lenders."
The effect of the new rules will likely be somewhat limited because only banks that owe the federal government TARP bailout funds must comply.
And according to Balanoff, even when certain banks do push for faster short sales, there is so little consistency among mortgage negotiators that he doesn't expect the new deadline measures to be applied or enforced evenly.
Many of the single-family mortgage holders along the Grand Strand are "under water," meaning they owe more than their homes are worth.
While short sales are considered an ideal solution for banks and for "under water" homeowners on the verge of foreclosure, the deals often drag on as lenders take weeks or months to decide what to do.
Frustrated buyers sometimes walk away during the delays. In some cases, lenders insist that the borrowers share in the financial loss, which holds up the transactions even longer. As a result, homes stay on the market, prolonging the housing downturn.
The Treasury rules, in addition to imposing a 10-day deadline for bank decisions, call for sellers to receive $1,500 moving allowances -- and for the sellers to not have to repay any of the 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 as much as $3,000 of a short sale's proceeds to be distributed to less senior lenders.
The 83 loan servicers participating in the Obama administration's Making Home Affordable loan-modification program, including Bank of America and JPMorgan Chase, are required to follow the guidelines for all borrowers who have requested short sales or who did not complete loan modifications.
The rules do not specifically apply to loans guaranteed by Fannie Mae or Freddie Mac, which constitute about half of all U.S. mortgage debt.
The two government-run mortgage companies are working on 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 South Florida home. A buyer has offered $155,000, and she owes $233,000.
Sclafani, a 50-year-old psychologist who lives in Margate, Fla., said she is eager for her bank to approve the deal so she can put the experience behind her.
U.S. Rep Ron Klein, D-Fla., said the guidelines are meant to make short sales "a more usable tool." Klein notes that the rules provide standardized paperwork for all short sales, and give buyers and sellers a more reasonable time frame for finding out 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 to less-senior lenders 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."