Impact A Vacant Foreclosure Has On A Neighborhood
December 20, 2010 by Ryan Davison · 1 Comment
There are those suggesting that anyone not paying their mortgage be evicted immediately must realize what’s left behind is a vacant house. And that vacant house seriously harms the surrounding houses and the neighborhood as a whole. We are already at above historic norms for vacant property.
Let’s take a look at the affect vacant property has on surrounding homes.
Vacant Foreclosures have deferred maintenance which makes them readily noticeable. That leads to a whole plethora of challenges for the neighbors. Pests move in, and in many cases, so does crime.
Studies have shown that just one vacant Foreclosure in a neighborhood can cost the other homes 1% in value. In a neighborhood of fifty homes worth $250,000, each innocent homeowner looses $2,500. If you multiple that by fifty, the neighborhood lost $125,000 in net worth.
According to http://www.responsiblelending.org
A California home that neighbors a Foreclosure has lost an average of $51,174! Don’t worry were not the worst, our neighbors Nevada are at $54,676.
One way to prevent all of these vacant Foreclosures is by doing a Short Sale.
Distressed properties sell at discounted values: Foreclosures at 65% of full value and Short Sales at 85% of full value. Typically with a Short Sale the home owners stay in there house until it sells. Doing 2 things, keeping a vacant home out of the neighborhood and sell for 20% more money then a Foreclosure. Thus not affecting your neighbors and community quite as much. Also with a Short Sale, if it’s considered your primary residence you can be eligible for a program called cash for keys. Which is between $2,500 and $3,000 dollars. Don’t forget the credit consequences by doing a Foreclosure. With a Foreclosure your credit will suffer 200-300 points vs a Short Sale your credit will suffer 80 to 100 points.
Before you decide to do a Short Sale or Foreclosure make sure you talk to your accountant or a lawyer. Also make sure who ever helps you with a Short Sale is either a reputable person or company. There are a lot of companies and individuals trying to take advantage of home owners.
I wish everyone the best of luck.
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Home Affordable Foreclosure Alternatives Program: HAFA
April 22, 2010 by Ryan Davison · Leave a Comment
HAFA is a program that took affect April 5, 2010. This program provides additional options to avoid foreclosure by offering incentives to homeowners, lenders and investors who utilize a Short Sale or Deed in Lieu (Deed in Lieu is where the homeowner willfully gives the home to the bank instead of the bank taking it) The HAFA program is offered to all HAMP eligible borrowers who do not qualify for a
Trial Period Plan,
Do not successfully complete a Trial Period Plan,
Miss at least 2 consecutive payments during a HAMP modification,
Or request a short sale or deed in lieu.
In a Short Sale the lender agrees to sell the home for less then the property is worth.
When the homeowner makes a strong effort to sell the home but is unsuccessful the lender will also consider a deed in lieu, provided title is free and clear of any mortgages, liens and encumbrances. Before HAFA was put into affect the lender could go after you for the difference between what you owe and what the home sold for. Now you are safe if your home is HAMP eligible.
HAFA simplifies and streamlines the Short Sale and Deed in Lieu process by providing a standard flow, minimum performance time frames and standard documentation.
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Home Affordable Modification Program: HAMP
April 21, 2010 by Ryan Davison · Leave a Comment
The Home Affordable Modification Program is designed to help about 3 to 4 million financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now, and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.
Borrowers eligibility is based on meeting specific criteria including:
1) Borrower is delinquent on their mortgage or faces imminent risk of default
2) Property is occupied as borrower’s primary residence
3) Mortgage was originated on or before Jan. 1, 2009 and unpaid principal balance must be no greater than $729,750 for one-unit properties.After determining a borrower’s eligibility, the lender will take a series of steps to adjust the monthly mortgage payment to 31% of a borrower’s total pretax monthly income:
- First, reduce the interest rate to as low as 2%,
- Next, if necessary, extend the loan term to 40 years,
- Finally, if necessary, defer a portion of the principal until the loan is paid off and waive interest on the deferred amount.
If you have gone through the HAMP process or are HAMP eligible and can’t afford to stay in your home then stay tuned for tomorrows blog, I will go over the Home Affordable Foreclosure Alternatives Program. This program provide additional options to help avoid foreclosure by offering incentives to borrowers, lenders and investors who utilize a Short Sale or Deed in Lieu. Deed in Lieu is where the homeowner willfully gives the home to the bank instead of the bank taking it. This option has almost the same credit consequences as a short sale.
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Is The Real Estate Market Stabilizing?
March 16, 2010 by Ryan Davison · Leave a Comment
So far in 2010 sales are up and prices seem to be stabilizing. But in the last few weeks we are starting to see how fragile the recovery actually is. When the government ends it’s support after the first quarter, and are no longer purchasing mortgage backed securities, the tax credit ends and securing financing is still tricky at certain price points, the recovery could get even worse.
There is more and more evidence that the largest threat to the housing recovery will be foreclosures. The amount of foreclosures is estimated anywhere between 1.7 and 3.2 million properties. It appears that theses properties could be about to hit the market. When they do it will surely wreak havoc on any recovery and devastate pricing.
Double Whammy!
The truth is if you want to get the most money from the sale of your home do it very soon. With the tax credit ending and interest rates soon to rise to get investors back into the market and an estimated 1.7 to 3.2 million foreclosures about to hit the market. Now is the time to get top dollar for your home.
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