how long does it take for the primary and junior lien holder to negotiate in a short sale?
I am in the process of buying a short sale home. I heard from my agent last week and the primary mortgage lender and a junior lien holder were in the process of negotiating. Does anyone know about how long this process takes?
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This Market Chart presents current trends in foreclosures and pre-foreclosure activity statewide.
54,615 notices of default (NODs) were recorded in California in the second quarter of 2012, down from 56,633 one year earlier. 21,851 foreclosures (marked by trustee’s deeds) were recorded in the second quarter of 2012, a drop of 49% from one year earlier. Among California’s largest counties, the greatest one-year drops in foreclosures took place in San Bernardino (-51%) Riverside (-50%), San Diego (-50%) and Contra Costa (-50%) counties. [For further details and analysis of the most recent quarter’s NOD and foreclosure numbers, click here.]
Chart last updated 7/24/12
|2nd Quarter: 2012||1st Quarter: 2012||2nd Quarter: 2011|
Chart last updated 7/24/12
|2nd Quarter: 2012
|1st Quarter: 2012
|2nd Quarter: 2011
Data courtesy of Dataquick
These charts track the number of Notices of Default (NODs) and trustee’s deeds (TDs) recorded quarterly in California from 1994 to the present, along with the estimated percentage of NODs that have actually gone to foreclosure quarterly over the last four years.
Recording an NOD is the lender’s first step in the foreclosure process; the recorded trustee’s deed is the final step, at which point the property is placed in the Multiple Listing Service (MLS) as a real estate owned property (REO). The entire process takes place over a period of approximately four to five months, although this time period has recently been extended by government interference at both state and federal levels. As a consequence of this interference (designed to postpone NOD recordings and reduce trustee’s sales and evictions) we will not know the full impact of recent NODs on the total percentage of NODs which go to a trustee’s sale (and thus become REOs) until 2013.
An NOD is typically recorded when the homeowner falls more than three months behind on mortgage payments. NODs are thus a good, although not foolproof (due to adjustable rate mortgage (ARM) originations in 2005 and 2006) indicator of the financial condition of ownership in a given regional market. As such, they give a basis for predicting the number of foreclosure sales and the size of the REO inventory to come in the following six to eight months.
Copyright © 2012 by first tuesday Realty Publications, Inc. Readers are encouraged to reprint or distribute this information with credit given to the first tuesday Journal Online — P.O. Box 5707, Riverside, CA 92517.
Reality is that if you are dealing with real estate transactions you are going to be faced with having to deal with short sales. The majority of the homes on the market are still distressed properties whether they are foreclosures or short sales. Personally I cannot wait for the day when short sales are part of the history books and or when they do come back into fashion I am pretty much retired. Anyone that has dealt with enough short sales, knows that they can be a little challenging. Trying to get the bank to approve the short sale is never fun, but what is even less fun is trying to get a transaction on a home that has two loans and getting the second in agree is even less fun.
Another reality is that if the home owner is doing a short sale on his home for what ever financial reason that he can no longer keep the home, there is little to know equity or value in the home. The home is upside down on value and more than likely if they are two loans on the property the loan in second position more than likely will get little to nothing on what is owed to them. Typically the way it works is that you must get approval from the first before you can even attempt the approval from the first since the first in is in first position. Not only will you get approval from the first loan, before moving on to the second loan the first loan will also dictate how much the second can receive. Since the first is also more than likely not going to receive the full balance of what is owed on their loan.
Now I know that there is a lot of advertising and publicity about how banks are now more responsive to homeowners. There is even some legislation or proposed legislation to get the banks to become more responsive to the short sales we have. There is even material out there explaining how a short sale transaction is even more beneficial for the banks to do than a foreclosure. Now if that is the case one has to wonder why do some banks push for foreclosure or prefer that the homeowner go into foreclosure versus granting the short sale approval.
I have been dealing with a short sale transaction on 2021 Mariah Dr. , in Santa Maria, Ca. with Chase bank now for months. Now the first has agreed on to the transaction. Now I am the third agent working on this the first two pretty much gave up since Chase would not allow the short sale to take place. Each and every time it has been Chase bank that as stopped this short sale from happening. To the point where the representative has even advised the client your best option is to file Bankruptcy. Now Chase bank is in second position and knows very well how the short sale process works this is not their first short sale transaction as I am sure not their last. Now Provident bank that is in first position has been more than cooperative in getting this done. Chase bank that received tax payer funds has done nothing but stalled and stopped this short sale from happening. Chase bank one of the largest banks in the country has been reacting as if they have never been involved in a short sale transaction where they have been in second position.
Typically $6,000.00 is what the lein holder in first position typically allows the second to receive. Chase bank has even agreed to settle on a specific dollar amount only to later increase that dollar amount stating that the previous dollar settlement was no longer valid. Only to make the transaction even more impossible. According to the representative of Chase Bank since the real estate agents are making more money than they in the transaction they are. So they felt the need to increase the dollar amount to close the transaction to $24,000.00. It is unbelievable that this is the stance of one of the largest banks in the country to halt everything because the real estate agents are making more than they are. As well as offering or insinuating to the homeowners that they are better off to file bankruptcy. Why a bank that has already charged off this account and has basically considered this a loss and yet will not even let the client out of the lien. Is something that should be asked, whether there is an ulterior motive for the clients to just let this home go to foreclosure or is this the bank’s way of showing it is acting in a vindictive manner towards its former clients. As well as holding their financial situation hostage and forcing them to let the home go to foreclosure and file for possible bankruptcy since the loan on the home is a non-purchase money loan.
The problem with short sales is that they are anything but short. But it would be nice if all the banks were truly as responsive as all the marketing materials they seem to promote. As well as all the rhetoric that the govt. seems to promote as well to getting the banks to become more responsive in handling these transactions. So the sooner all these distressed properties can be flushed out maybe the sooner we can actually be on to a road of recovery.
For the most part everyone knows by now, the numbers of homeowners struggling with foreclosure that are increasing. Countless homeowners are having trouble making their mortgage payments and are a missed payment or two away from a notice of default. True they will be having to deal with how to fix bad credit and in the future how to get credit score back up. But until that time you don’t want to be scammed if you are trying to save your home many of the homes in Santa Maria are for sale are either a short sale or even a foreclosure. The reality is that the Santa Maria real estate market here in Santa Maria, California has been hit hard with values falling to over 50% of what their values were in the peak.
Many people will investigate any alternative to try and spare their house from foreclosure. This opens the door to scammers. The fact is, mortgage modification and foreclosure relief scams are popping up everywhere you go. As a homeowner you’ll want to know that they are out there and what to look for in order to steer clear of them. A scammer cannot only cost you money but can cost you vital time that you could use to save your house or get ready to move. You need dependable information on foreclosure or the short sale procedure in a timely manner.
Nearly all the ads you’ll notice will claim to help you save your home from foreclosure or lessen your house payment to an easily affordable level. Additionally they infer that they are associated with a government program or enjoy a direct line to your loan company. They don’t. Certainly, there are honest businesses around that legitimately make an effort to aid homeowners yet, sadly, there is a high number that are simply scams.
Scammers are simple enough to spot simply because they generally ask for money up front. But, they’ve got other sorts of strategies as well. Look for these clues:
1. Someone who demands money at the start before they actually do anything. Many states have recently passed laws regulating money paid in advance for mortgage modification or foreclosure services. The most effective rule of thumb should be to not pay for anything in advance.
2. The scammers have ways of tracking down property owners who have missed payments or have their properties scheduled for auction. They then target these house owners knowing that they are more susceptible since they will be in a troubled situation. When you are one of these homeowners be extra vigilant in any dealings you may have with foreclosure rescue or mortgage modification companies.
3. Some scammers attempt to get you to sign the deed to your house over to them claiming they are going to make the payment on your property. They will not.
4. You should not make a mortgage payment to any person besides your lender. More than likely, you will not see that money again and neither will your lender.
5. Be aware of the phrasing of certain promotions that make it sound like they work directly with a government bailout program. They almost certainly do not. They more than likely would just like to make you another high fee, high interest consolidation loan which will only buy you a little time at great cost.
6. Getting a letter from a real estate agent offering you free services to do a loan modification. Unless they are a govt sponsored consumer group they do not receive any funding so what is the motive to offer you this service for free? That truly involves lots of paperwork as well as time on the phone? Well its to eventually get you to sell the home on a short sale so that they can earn a commission on selling your home but not necessarily help you get the loan modification as you may have been hoping for.
Ok, so what if you’ve recently been scammed? Well, you possibly can report the issue to the Federal Trade Commission (FTC). They have a web based complaint assistant and have a hotline at 1-877-FTC-HELP. You can also uncover good information regarding foreclosure or short sale consequences online. There are many benefits to doing a short sale as well but you will have to read about that on my other blogs. One thing to keep in mind regardless of what you plan on doing is that the Mortgage Debt Forgiveness Act of 2007 expires in 2012 and there will be tax consequences that will occur after that. Please seek some legal counsel as well as some tax council as to what you want to do next year if you feel that maybe you will not qualify for a loan modification to avoid some serious tax consequences from the I.R.S.
There is also the NeighborWorks America group that educates the general public about loan modification scams. The best way to avoid these scams would be to educate yourself on the many varieties of scams and be very cautious about any individual offering to help modify your loan or save your house from foreclosure.
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There is alot happening within the realm of real estate every where not just in the Santa Maria real estate market and that holds true with just about all the mortgage home loans having to go bad, and unless you have been existing under a rock then you ought be some what familiar with the expression short sale which has come to be as familiar as the word foreclosure. Quite a bit of of you that live in either a house or condo regardless of whether or not you own it or not, you have had reminders left on your building, that there are a whole lot of people eager to accommodate to do a short sale and that it is much better for someone to do than it is a foreclosure, (I have left a few myself on a few doors). For those that do not know what a short sale is, which is basically when a homeowner sells his place for less that what he currently owes. now there are some benefits to doing a short sale, first one is when do you need to be a homeowner again?
Supposing that you may be able to compel your lender to allow you to do a short sale even if you have not missed any payments. Then FHA will allow you to acquire another home the next day, as long as the home you are acquiring is not at all superior to the home you now have. The challenging part will be getting your lender to let you to do the short sale, a lender may refuse to allow you to do a short sale, as stated before this is the difficult part procuring the approval when you have not missed a payment and a short sale transaction normally takes months to close. Assuming that you do miss payments and you do a short sale, FHA guidelines now state that you have to wait at least 3 years, before you could purchase another home provided that you were to try to acquire a FHA loan. This is where carrying out a short sale and just letting your place go to foreclosure genuinely does not at all make a difference in you getting financing again. Now the 3 years is from the date of closing not at all from the date you stopped making payments or the time you initiated the process towards your short sale or foreclosure.
But now moving on to other loans outside of simply an FHA there are a few differences when it comes to obtaining a loan other than a govt. loan, and doing a conventional loan. Currently Freddie Mac and Fannnie Mae are the two largest investors at this time. These two humongous govt. sponsored corporations acquire pretty much all the mortgages out there that the banks are now doing, reality is that most of the homes in Santa Maria are being done via FHA. With the condition that you do a short sale and from the date of closing your transaction your waiting period is merely 2 years to buy another house. In any event please keep in mind if you are on a separate loan whether it is investment property or you co-signed on it, there can be no mortgage lates within the 12 months of application. With the condition that you foreclose then the waiting period is 5 years from the date of your foreclosure date. That is a huge difference in regards to getting back in the market in addition to becoming eligible to obtaining sponsorship and becoming a homeowner again. Then it depends on credit, what is your credit going to be, its a fact that after doing a short sale or foreclosure you will be dealing with bad credit but its only temporary???
Keep in mind houses are so very much less now and I seriously doubt they will be doubling in 2-3 years time in essence if the house is unaffordable now you can be in a preferable financial position in 2-3 years in addition to with less stress. In closing on the assumption that you find yourself in a position of conceivably having to do a short sale or losing your house you are not alone and for many when taking their finances into consideration a number of homeowners have come to learn after some time that it could be a blessing in disguise.
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