Monday, January 29, 2018 / by Sean Zanganeh
Check out this article from the North County Times released on Monday to explain to homeowners that the government Will be assisting with homeowners falling into foreclosure status.. GREAT NEWS!!!
For more than three years, the housing market has been groping its way toward a solution for the mortgage crisis that dragged the nation into the Great Recession.
Now it may have one: It's called a short sale.
In recent months, short sales, in which homeowners sell for less than they owe in mortgages, have gained popularity.
But they've been fraught with delays, frustration and even fraud.
On Monday, the Federal Housing Administration will launch the Home Affordable Foreclosure Alternatives program to streamline the process, and give struggling homeowners a new cause for hope ---- the chance to escape overwhelming mortgage debt.
Since housing prices peaked in 2006, widespread mortgage defaults led to a collapse in home values: Median house prices in San Diego and Riverside counties fell as much as 50 percent from the peak, according to MDA DataQuick.
By the end of 2009, 33 percent of San Diego County homeowners owed more on their homes than the property was worth, and 55 percent of homeowners in Riverside and San Bernardino counties had the same problem.
Meanwhile, the February unemployment rate hit 10.6 percent in San Diego County, and 14.9 percent in Riverside County.
The combination led to record foreclosures in 2009, according to MDA DataQuick. But as the crisis became less of an emergency and more of a state of mind, lenders began to realize that the most efficient way to get people out of homes they couldn't afford was not the costly foreclosure process, but instead to let the borrowers sell the property for as much as they could and write off the loss, also known as a short sale.
Nationally, between November and February, 17 percent of all home sales were short sales, up from 12 percent in the preceding six months.
For the first time since the crisis began, the percentage of short sales exceeded the percentage of foreclosed-property sales, according to a survey from market researcher Campbell/Insider Mortgage Financial.
But slow response times and hard bargaining from lenders and agents have been a drag on this growing segment of the market.
HAFA represents an attempt by the federal government to cure these ills, but industry experts are skeptical ---- the government's previous program to modify home loans was judged a failure.
Nonetheless, HAFA offers a significant portion of homeowners an opportunity to escape crushing home debt relatively unscathed.
Short sale versus foreclosure
HAFA is technically a subsection of the FHA's loan modification program, called the Home Affordable Modification Program. To be eligible, borrowers must have loans worth no more than $739,000, and be behind or in danger of falling behind on their mortgage.
HAFA also assumes that borrowers have attempted to modify the loan and failed, or can show that they wouldn't qualify for a modification under HAMP.
Borrowers considering HAFA are still faced with the decision of whether a short sale makes sense, or whether they should just allow a foreclosure to happen.
The case for short sales usually revolves around societal good: Ownership of the home is transferred directly from one person to another, with no period of abandonment; lenders lose less money on a short sale than on a foreclosure; and homes aren't damaged from neglect, angry defaulters, or vandals (the Campbell survey said 50 percent of bank-owned homes are damaged).
Little help so far
Until HAFA kicks in Monday, there are minimal benefits for borrowers.
If they are already behind on payments, the short sale hammers their credit scores much like a foreclosure would.
If they are defaulting on the loan used to buy the home, called "purchase money," they give up certain legal protection afforded by a foreclosure.
In a short sale, borrowers give up their homes, but they may still owe lenders whatever is left on the loan; lenders can send collection agents after the borrower up to four years later.
Plus, borrowers have to sell the house, which means keeping it tidy and putting up with a parade of prospective buyers.
And it's not like they get paid when the house sells ---- all the money goes to the lenders.
Under a foreclosure, borrowers can stop paying on the loans and then live in the house for free until they are foreclosed and evicted, a process that can take years. The foreclosure process is well understood by professionals and offers little opportunity for scam artists. And some borrowers have turned it into a profit opportunity, renting out the home after they decamp.
For borrowers, foreclosure has offered a lot of upside.
How HAFA changes things ...
If lenders choose to participate in HAFA, they give up their right to collect on the debt after the sale.
Once the house is sold short, the debt is gone forever.
No other government program offers such a relatively clean slate, and foreclosure leaves a worse hangover.
The program is also intended to speed the process.
Lenders must determine in advance how much money they'll accept for a property before a borrower can enter the program.
Such groundwork helps loan servicers ---- often, big institutions that handle the billing and administration of loans for lenders ---- meet the HAFA requirement to respond to bids within 10 business days.
Realtors often complain that lenders and servicers typically take months to respond.
Also, HAFA pays: The borrower gets $3,000 in relocation expenses, the loan servicer gets $1,500, and the primary lender gets up to $2,000 if there is a second mortgage.
See whole article here By: Eric Wolff
San Diego Homeowners, This is great news! There are a great deal of specific details that need to be looked at including second mortgages, taxes, and your lovely credit scores and can all be discussed in further detail by calling me or visiting www.pusdshortsales.com. There's ALL of the information you need as well as a section to weigh your personal decisions and their effects available. If you think for even a moment you might qualify for this type of issue, please do yourself a HUGE favor and reach out to get answers. Starting this process early can make the difference of your financial future.
Have a Great Day & Stay Dry!
Windermere Exclusive Properties
Realtor Associate & Estate Marketing Specialist
Short Sale & Foreclosure Resource Specialist