besim’s posterous

Number 10

I can’t make my house payments but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?

Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2^nd lien holder) it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.

Number 9

If I pay mortgage insurance and default on my loan, why wouldn't that cover the deficiency amount?

The mortgage insurance is not there for your protection, just the mortgage lender’s.

Number 8

Do I have to have my home ‘Approved’ by the lender prior to offering it for sale as a short sale? / I called them and they wouldn’t talk to me about it.

No. Technically speaking there is no such thing as being ‘Short Sale Approved’. The actual approval only happens with an accepted offer.

Number 7

I just missed a payment and I know I will miss more….how long does the foreclosure process take and is there time to do a short sale?

The foreclosure process takes differing times depending on your state.  In the Midwest a foreclosure can take over a year. In California its taking 6+ months.  Generally speaking a well priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.

Number 6

Will I still have to pay property taxes if I do a short sale?

Property taxes will always have to be paid as part of any accepted short sale. Whether it’s you or the lender depends on their policies and the specific agreement you reach while negotiating the short sale.

Number 5

I owe more than my home is worth and I can’t make the payment, do I have to somehow qualify for a short sale?

The simple answer is NO. If someone can’t make their payment and they are otherwise insolvent they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.

Number 4

Do I have to pay income taxes..I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me..the seller..is this true?

It WAS true, now it’s now. Consult your Tax Attorney or Qualified CPA.  Very recently the tax law was modified and now most people who do a short sale will have no taxes due.

Number 3

How do you, my listing agent get paid..who pays you commission?

The bank will pay the commission along with all the other usual closing costs.

Number 2

Do I have to miss a payment to do a Short Sale?

No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.

Number 1

I want to do a short sale and have a 2nd mortgage, does this make me ineligible?

No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1^st and 2^nd lien holder.

Sales of existing Wasatch Front homes were up for the second consecutive month, rising 4 percent in July, while Utah County sales increased by a whopping 22 percent, according to statistics released by the Utah Association of REALTORS® Aug. 25.

In July, Salt Lake, Utah, Davis, Weber and Tooele County REALTORS® sold 2,352 single-family homes, townhomes and condominiums compared to the 2,261 properties sold in July 2008. In Utah County, REALTORS® sold 566 existing homes compared to the 465 homes sold last year.

The statistics mirrored figures released by the National Association of REALTORS® that said U.S. home sales were up 5 percent in July compared to July 2008. On a monthly basis, U.S. seasonally adjusted home sales increased 7 percent, the first time in five years that sales increased for four months in a row.

Along the Wasatch Front, sales were down 6 percent from June to July; however, the decrease was expected because sales are traditionally slower in July and the Utah statistics are not seasonally adjusted.

The median price of homes in the five-county area in July was $205,000, down 6 percent from last year. In a separate report, the Federal Housing Finance Agency said Utah home prices decreased nearly 12 percent for the second quarter.

 
Besim Kuduzovic "Yours Real Estate Samurai" - loyalty, devotion, integrity & honor to death
Harris Real Estate University Certified Short Sale Expert

Utah real estate is seeing big affordability gains, according to a new report from the National Association of Home Builders and Wells Fargo. Numbers from the analysis show affordability in many Wasatch Front areas is back to levels seen in 2004, a time when Utah real estate was selling well and National City Corp. said Salt Lake had the most undervalued home prices.

The Housing Opportunity Index, which uses incomes, mortgage rates and home prices to determine affordability, is similar to a separate analysis conducted by Salt Lake City-based Wells Fargo economist Kelly Matthews. He says although average home prices are still higher today than in 2004, homes are about as affordable as they were five years ago because mortgage rates are closer to 5 percent rather than the near 6 percent rates in 2004.

Such is the case for the Provo-Orem area, which saw the biggest affordability gains in the state, according to the NAHB/Wells Fargo report. In the second quarter, 71.3 percent of the homes sold were considered affordable, only a tad off the 72.6 percent in 2004 and up significantly from the 48.5 percent last year.

Similarly, in Salt Lake, 70.6 percent of homes sold were considered affordable to those earning the area’s median income, close to the 75.2 percent in second quarter 2004 and up considerably from the 54.6 percent in 2008, according to the NAHB/Wells Fargo report. St. George had the lowest affordability in the state at 57.2 percent (up from 36.8 percent last year), and Ogden-Clearfield had the highest affordability at 81.5 percent (up from 68 percent last year).

“If someone feels secure in their employment and income and needs a larger home, in actuality it’s probably the best time to buy in a generation,” Matthews said.

 Besim Kuduzovic "Yours Real Estate Samurai" - loyalty, devotion, integrity & honor to death
Harris Real Estate University Certified Short Sale Expert

Home buyers who use a Utah Housing Corporation loan can now use the first-time home buyer tax credit to help with their down payment and closing costs through a new monetization program called Equity Now. Under the program, home buyers will take out a first and second mortgage, which can be up to 6 percent of the first mortgage amount. Because the first-time home buyer tax credit funds are not available before a home purchase, the second mortgage will help pay for down payment and closing costs the buyer likely would have paid for with the credit.

After closing, qualified buyers will file an amended 2008 tax return to receive the tax credit. For buyers who put the full tax credit amount toward their second mortgage (up to six months after closing), Utah Housing Corporation will credit $100 to the second mortgage. For many borrowers, the tax credit will provide near-instant equity by substantially lowering or even eliminating the second mortgage balance.

To learn more about the program and eligibility requirements, visit www.UtahHousingCorp.org or talk to a UHC participating lender.

 Besim Kuduzovic "Yours Real Estate Samurai" - loyalty, devotion, integrity & honor to death
Harris Real Estate University Certified Short Sale Expert
cell: (801) 898-4964

The Home Run program that provided grants to buyers of newly constructed, never-occupied homes has been reinstated, Gov. Gary Herbert announced on Friday. The reinstated program will provide $4,000 grants to approximately 1,950 buyers. The grants will be awarded on a first-come, first-served basis to buyers who apply for the funds through their Utah Housing Corporation-approved lender by Nov. 30.

Unlike the original program that was only available for homes that were ready for occupancy upon closing, Home Run 2 allows buyers to receive grants for homes that will be constructed, are currently under construction or are move-in-ready but have never been occupied.

Buyers can apply for the funds through a Utah Housing Corporation-approved lender. Once the application is complete, Utah Housing will issue a grant commitment. For purchases of move-in ready homes, the commitment will expire after 10 days. For homes under construction, the commitment will be in effect until June 30, 2010, giving the builder plenty of time to complete the home.

Although the program is not limited to first-time home buyers, there are income restrictions. For singles, incomes cannot exceed $75,000, and married couples cannot have incomes greater than $150,000. For more information about the program and to find a UHC-approved lender, visit www.UtahHousingCorp.org and look for the Home Run 2 link.

 
Besim Kuduzovic "Yours Real Estate Samurai" - loyalty, devotion, integrity & honor to death
Harris Real Estate University Certified Short Sale Expert

In case you missed this today…..Meredith Whitney has a dire prediction for housing…..from CNBC:

Home prices in the US could fall by another 25 percent because of high unemployment and another leg down will come for stocks, banking analyst Meredith Whitney told CNBC Thursday.

“No bank underwrote a loan with 10 percent unemployment on the horizon,” Whitney said. “I think there is no doubt that home prices will go down dramatically from here, it’s just a question of when.”

Local governments and states are chronically under-funded and “most states are under water,” adding to the problem of low private consumption, she said.

“If you look at the drivers for unemployment I don’t see that reversing very soon,” Whitney said.

If consumers were to decide to spend, “that would be a game-changer,” but it would be an unnatural thing to do in a recession, she said.

“A lot of themes are constant, which is the US consumer and the small business doesn’t have any credit, credit is still contracting,” Whitney said.

Consumer debt and consumer credit have dropped according to the latest figures which also show that people have been spending more from their debit cards than from their credit cards.

“Obviously that doesn’t bode well for spending,” Whitney said.

Who do we listen to when it comes to predicting what’s-next for the housing markets?….well, this guy.

He would know. He is the CEO of Fannie Mae. Meet Michael Williams…

Source: Bloomberg.

The U.S. housing market still has a “long road ahead” to recovery and investors and borrowers should remain cautious as the economy regains its footing, Fannie Mae Chief Executive Officer Michael Williams said.

Williams, in his first public address since he took the helm of the government-controlled mortgage-finance company in April, said the market has had a “very, very tough year.”

“Anyone looking objectively at the economy and the housing market sees hope,” Williams said in prepared remarks being delivered today at the Exchequer Club in Washington. “The patient is out of intensive care, but still has a very long road ahead to a clean bill of health.”

The mortgage market is still dependent on government- affiliated programs, with private banks providing just 10 percent of loan liquidity, down from about 60 percent in 2006, Williams said. Fannie Mae and Freddie Mac are responsible for about 70 percent of all new mortgages, while the Federal Housing Administration accounts for about 20 percent, Williams said.

Foreclosures will continue to climb this year, Williams said, putting pressure on home prices as mortgage companies work through a backlog of property seizures that had been suspended earlier this year as part of efforts to provide struggling homeowners with relief. While homes are selling faster, the inventory of foreclosed properties and unsold homes remain at “exceptionally high levels,” he said.

“There is no precedent for what borrowers are going through today,” Williams said.

Ineligible Borrowers

One in every 10 mortgage borrowers is behind on their payments and one in every 25 homes is in foreclosure, he said. Homeowners have lost 40 percent of their equity, making it difficult for many to refinance, he said.

Translated: if the home owners needs to sell…and they want to avoid a foreclosure…..they will have to sell their home via a short sale!

Some borrowers, as a result, are ineligible for government programs to refinance into lower rates. More than 1 million delinquent loans are ineligible for President Barack Obama’s loan modification program because the debt was used to finance second homes or exceeds the program’s loan limits of $729,750.

“And not every borrower is taking advantage of the program,” he said. Only 29 percent of the people who have received solicitation letters have responded, according to Williams. He said borrowers who aren’t participating are skeptical of the program, have only just learned about it, have lost their jobs or have already abandoned their homes.

Fannie Mae’s Future

Regulators seized Fannie Mae and smaller rival Freddie Mac one year ago amid concern that their capital wasn’t sufficient to withstand a surge in mortgage delinquencies. The companies, surviving off a $400 billion lifeline from the U.S. Treasury Department, have since been thrust into a leading role in Obama’s homeowner rescue plans, which include offering low-cost mortgage refinancings and waiving some loan standards.

The companies, responsible for $5.2 trillion in U.S. residential mortgage debt, have booked a combined $165.3 billion in quarterly net losses in the past two years and have received or requested $95.6 billion in taxpayer aid since November.

Williams, when questioned after the speech, declined to discuss the future of Washington-based Fannie Mae, the potential status of shareholders or the company’s past consideration of a reverse stock split. The government owns 80 percent of Fannie Mae and Freddie Mac and has said it would consider options early next year for potentially restructuring the company.

“In dealing with the stock and the common shareholders, the administration will take that into the solution that ends up being developed in terms of what to do with the companies and the enterprises long term,” Williams told the audience after his speech. “I think that’s the time when that issue will be wrestled to the ground.”

Loan Resets

Williams also said that he is concerned about a second wave of resets for some adjustable-interest rate mortgages as well as rising delinquencies for loans on apartment buildings.

“We’ve seen challenges in terms of the rental capabilities of certain properties as well as the ability and fragility of lenders to sustain their investments,” Williams said after his speech.

Prices on homes financed by Fannie Mae and Freddie Mac were up last quarter, attributable to borrowers taking advantage of an $8,000 first-time homebuyer tax credit that expires in November and more affordable home values, Williams said.

I just want to share with you this intersting post from John Mulkey.

If the economy is improving, do we really have millions more foreclosures coming? According to the U.S. Treasury, the answer is yes. In written testimony to Congress, Assistant Secretary for Financial Institutions, Michael Barr said that, regardless of the success of mortgage modification efforts, we should still expect millions more foreclosures.

Mr. Barr’s testimony is certainly not welcome news for those anticipating a significant recovery in the housing market. In fact, it is an indication that significant recovery is still years away.

And there are other factors that confirm the fragile state of both the economy and the housing market. Recent reports have indicated that there are almost 3 million active, interest-only loans with a total value of almost $1 trillion, with loans of about $500 billion set to reset within the next 30 months. Then we have a large group of Option Arm mortgages set to recast during the next 2 years. These loans have a combined value of more than $125 billion.

The rising number of bankruptcies, up 36% in the second quarter over last year, with wealthy families filing at double that rate, creates a “perfect storm” of disastrous consequences for the housing market. With the likely prospect of millions more foreclosures coming, home prices and home sales will remain depressed until the market can achieve stabilization. And achieving stabilization will be a slow and painful process.

Sandy city has created a new program that will provide low- and moderate-income home buyers with a $5,000 incentive for buying a new home in the city. The funds, which can be applied to down payment and closing costs, are in the form of an interest-free loan that becomes a grant after the home buyer has lived in the property three years. 

Sandy plans to provide 10 loans to buyers of existing, never-occupied homes, and another 10 to buyers of to-be-constructed homes. The properties must be within Sandy city limits, must be "single-family dwellings," including townhomes and condos, and must not have purchase prices exceeding $305,000. Household incomes must be below certain limits to qualify, but the program is open to both first-time and repeat buyers.

Funding for the program comes from a portion of the tax revenue collected from the commercial buildings around City Hall, said city spokeswoman Trina Duerksen. If successful, the program may receive additional funds after the original 20 loans are awarded, she said. So far, all 20 loans are still available.

To learn more about the program qualifications and to access the application, click here.

Take $12,000 + Off the Total Cost of Your Brand New Home!

September 4th, 2009

$4,000 UTAH STATE HOME RUN GRANT
Highlights of the $4,000 Home Run Grant Include:

1. For newly constructed homes only.
2. You can use the $4,000 for a down payment.
3. Income limits are $75,000 per year for a single and $150,000 per year for a married couple.
4. This can be used in addition to the Federal Tax Credit of $8,000 for first time home buyers - and now buyers can also use the $8,000 for a down payment!
5. For a limited time only, you must act now.

$8,000 FEDERAL TAX CREDIT
Highlights of the $8,000 Tax Credit Include:
1. Available only to first-time home buyers
2. Available only between Jan 1, 2009 - Dec 1, 2009
3. Does not require repayment
4. Is claimed on a tax return and reduces your tax liability. If your credit is more than your tax liability, your unused credit will be issued as a check to you

Who is Eligible
The law defines a first-time home buyer as a buyer who has not owned a home during the past three years. All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits
Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000. For married couples filing a joint return, the income limit doubles to $150,000.

Effective Dates for the Tax Credit
First-time home buyers would receive a $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

What is the definition of a first-time home buyer?
The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.