Holy Cow! Did you know that 41.7% of Orlando's homeowners are currently upside down on their mortgage? Being in real estate this is a common situation for most of our clients. It's funny how it was not until I saw this slideshow on CNN.com and saw the numbers that it hit me. That's almost 1/2 of Orlando's residents are upside down! This is why if you are looking to sell you shouldn't be embarrassed. If you asked there is probably someone that you know is in exactly the same situation you are.

Now you're probably thinking "I want to sell but I'll loose so much money on my house." While that might appear to be the case really think about it. If your house lost $50, $100, $200k off it's value the home you are possibly looking to buy has probably lost the same amount. It's a wash.

So really, if you're in a hardship situation or just feel the good investment from 2 years ago has turned sour, give us a call. There are so many options out there why not take advantage of the market now?

 

 

CDPE training is a must for Short Sales

The foreclosure problem will get worse before it gets better. It's estimated that one in six homes could be in foreclosure by the end of 2010. Like it or not, skills in this part of the spectrum are a must. Throughout 2009, we've emphasized the importance of the Certified Distressed Property Expert designation. More than 6,000 RE/MAX Associates have completed the training and become certified, helping make the CDPE one of the industry's fastest-growing designations ever. A recent survey of CDPEs reinforced the value of the training.

RE/MAX leaders have worked tirelessly behind the scenes to push for a standardized, streamlined Short Sale process. In the media, we've helped move the discussion front and center -- here's a front page USA Today article from Aug. 5 headlined "Home Sellers Frustrated as Short-Sale Deals Collapse." And in the offices of government officials and key lenders, we've argued for Short Sales as a reasonable option serving the interests of buyers, sellers, lenders and neighborhoods alike. Details of a Treasury Department Short Sale initiative could be announced next month. 

By Stephanie Armour, USA TODAY

The sales of homes for less than the amount owed the bank, known as "short sales," have been widely viewed as an alternative that could help slow the foreclosure epidemic. In theory, delinquent homeowners escape a mortgage they cannot afford, and lenders, although taking a loss, avoid the even costlier process of completing a foreclosure.

Instead, many homeowners are watching potential buyers walk away as months pass while they deal with lenders' lengthy delays, lost documents and unreturned calls, according to the National Association of Realtors (NAR). Not all the snafus are lenders' fault; inexperienced real estate agents who fail to turn in complete paperwork also are causing holdups, as are severely underpricedhomes.

The problems have become such a kink in the market's recovery that banks and the federal government are launching new efforts this month to simplify and speed up the short-sale process.

Just 23% of short-sale offers that homeowners receive from potential buyers actually close, according to a February study of 1,300 real estate agents by Campbell Communications. More than 90% of agents cited a slow response from the lender as the reason short sales were lost.

"The delays are quite extensive and a real problem. It's a serious issue," says Mark Zandi of Moody's Economy.com. "You're seeing a lot of short sales go bust, and it's contributing to the crisis because it's one of the reasons foreclosures continue to mount."

Jorge DeMattos, 45, just completed the short sale on his home in Pembroke Pines, Fla. — a process he and his real estate agent, Edward Goldfarb, say took 17 months and eight separate offers.

DeMattos began pursuing a short sale after he was laid off two years ago and his income plunged from $46,000 to $26,000 a year.

Chase Bank, his mortgage servicer, rejected the first offer, which was $14,000 over what was then fair market value, according to Goldfarb.

On the next seven offers, the bank took months to respond. Each prospective buyer got tired of waiting and canceled the contract. The eighth offer, accepted in May, was $24,000 less than the first one that Chase rejected in February 2008, Goldfarb says.

"Chase made it very difficult. I had to stop paying the mortgage. It was so frustrating," says DeMattos, who now lives with his sister in Kissimmee, Fla. "We would put the paperwork in, and they would never give a definite answer. Buyers waited for months."

DeMattos says he owed $355,000 on his mortgage. The short-sale price was $225,000.

Christine Holevas, a Chase spokeswoman, says earlier offers on the home weren't accepted because they were significantly below the appraised value and the homeowner didn't send in updated financial information.

No longer uncommon

Short sales once were extremely rare. But now, with unemployment climbing and home values down, more homeowners are pursuing short sales when they can't afford their mortgage. About 11% of all sales transactions in June are such short sales, according to the NAR.

Some delays stem from agents who fail to prepare buyers and sellers for the length of time it takes to get a short sale approved or who supply incomplete information to banks.

But many short sales are faltering, largely because some lenders may lack the internal staffing, expertise and systems to process such sales in a timely fashion. And short sales can be complex, especially if they involve home-equity lines of credit or other second liens held by different lenders, who also must agree to take less than the amount they're owed from a home's sale.

Several lenders acknowledge that banks have been part of the problem, in part because most have done so few short sales in the past that they've faced a steep learning curve.

"About half of short sales never close. We see it as a big lost opportunity, and we need to improve the rate we close them," says David Sunlin, vice president in charge of short sales at Bank of America.

Uncompleted short sales that go to foreclosure are costlier for lenders and homeowners. For lenders, a short sale may save as much as 30% of the expense incurred by going to foreclosure.

For homeowners, a foreclosure wreaks longer-lasting damage to their credit records. A homeowner who has gone through a short sale typically can get a new home loan in one to three years, according to the NAR. A foreclosure usually means it takes seven.

Borrowers are expected to pay their mortgage during the short-sale process, but not all can afford to. That leads to abandoned properties that may sit vacant and deteriorate for months. In other cases, homeowners unable to make their payments may stay put and pay nothing, in some cases for up to a year, until the lenders' review-and-approval process plays out.

Large numbers of uncompleted short sales are especially troublesome, because other efforts to stem foreclosures have been less effective than expected. The Obama administration's housing rescue plan, which includes getting banks to rework home loans into more affordable mortgages, has made such slow progress that representatives from 25 major mortgage servicers were called to Washington, D.C., last month to discuss improving the efforts.

Short sales are moving into the national spotlight now as:

•Mortgage servicers ramp up their programs. Bank of America has begun trying to slash the turnaround time on short sales from up to 90 days after a buyer submits an application to just a week. In a typical short sale, a buyer makes an offer, then the bank conducts appraisals to determine the price it will accept. Setting that price can take so long that would-be buyers may walk away. To try to avoid such delays, Bank of America has begun doing appraisals and determining a minimum price it will accept before a home goes up for sale.

Meanwhile, Wells Fargo has created a real estate agent education guide that explains the process, has increased staffing and has set up procedures to handle short-sale requests and explain the process to homeowners. The bank says it has cut its average turnaround time from offer to approval from up to 90 days to about 30.

•The U.S. government is getting more involved. The Treasury Department soon will detail a plan to streamline short sales by providing standardized documentation and cash incentives to lenders and a moving allowance to homeowners.

Treasury has said that servicers have opted to pursue foreclosures instead of short sales because of the complexity and time required to complete the discounted home sales.

Borrowers who complete a short sale will be eligible for $1,500 to help with relocation expenses. Second-lien holders will get up to $1,000 to relinquish their claims in such transactions.

Eligible homeowners can be accepted through Dec. 31, 2012, but the short-sale program is for those unable to get mortgage modifications from their banks.

"We realized we couldn't reach everyone with a modification. For us, that wasn't the end of the story," says Michael Barr, Treasury assistant secretary for financial institutions. "The alternative is to significantly speed up short sales."

No authoritative figures on short sales' completion times are available, but some research indicates the problem is worsening.

A survey in March 2008 by Campbell Communications found that the average time for a mortgage servicer to respond to an offer to buy a short-sale property was 4.5 weeks. Campbell's follow-up survey in February found that the average response time had doubled to nine weeks.

A third survey in June found the response time was 9.5 weeks. The surveys were sponsored by Inside MortgageFinance, an industry publication.

"The foot-dragging means it's taking six weeks to six months," says Lawrence Yun, chief economist with the NAR. "There are big delays. The review process is taking way too long."

'We had a learning curve'

Lenders say the approval process takes time because there are so many parties involved. Some bank officials say they've been learning as they go.

"We had a learning curve," says David Knight, senior vice president for Default Retention Operations, Wells Fargo Home Mortgage. "Any stakeholder has a right to disapprove the sale. Realtors out there were used to regular sales. Now, all of a sudden, the servicer and Realtor have had to learn a lot."

Some real estate groups also are trying to improve the process. Re/Max International Chairman David Liniger says his company is aggressively working to train agents on handling short sales and other so-called distressed properties. Instead of eight weeks to close a short sale, trained agents can get them done in two to four weeks, he says.

Within the real estate industry, hopes are rising that short sales will become a shorter process.

"It's horrible the amount of time it's taking to do these sales," says Valerie Torelli, who owns Torelli Realty in Costa Mesa, Calif. "It happens all the time that short sales fail and then go to foreclosure. A seller doesn't make payments for a year and then just walks away. It's unbelievable."

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WOULD A SHORT SALE BE RIGHT FOR ME?

By Stephanie Armour, USA TODAY Key points about short sales:  Homeowners who owe more than their homes are worth don't automatically qualify for a short sale. Borrowers have to show financial hardship to get their lender to agree to a short sale. Typically, they must write a hardship letter outlining why they are unable to make their payments. A homeowner does not need to be in default first. Lenders may suggest borrowers consider a short sale if they don't qualify for a mortgage modification. One such circumstance might be if their monthly debt obligations are higher than their income.  A homeowner must owe more than the home is worth. That means that if the home is sold on the open market, the borrower will not get enough money to pay back what he or she owes their bank.  The lender must agree to accept less than the balance on the loan. Homeowners work with a real estate agent to sell the home, but the lender must agree to the final sales price. Pricing is often determined by a broker's price opinion and multiple appraisals. Lenders may also need approval from other parties, such as second lien-holders or special assessment lien-holders.  A short sale results in a blemish on a credit record that is less severe than a foreclosure. For more information on short sales, go to www.realtor.org. For more information on the Treasury Department's plan to streamline the short-sale process, go tohttp://www.treas.gov/press/releases/docs/ 05142009FactSheet-MakingHomesAffordable.pdf

The Distressed Property Institute, the premier organization educating real estate professionals on how to help homeowners avoid foreclosure, announced its support of the U.S. Treasury Department's recent development of Foreclosure Alternatives and Home Price Decline Protection Incentives within the Making Home Affordable program.

'Due to the inherent challenges of mortgage modifications, and the sheer number of people who need solutions, we are thrilled that the U.S. Treasury has recognized the value of short sales as an important step to solving the foreclosure crisis,' said Alex Charfen, co-founder and chief executive officer of the Institute.

The Institute has trained more than 7,500 real estate professionals nationwide in the process and proper methods for effectively helping homeowners in distress, with a particular emphasis on short sales. A short sale occurs when the lender accepts the selling price of the home, even if that is less than the mortgage balance. Graduates of the Institute's courses carry the Certified Distressed Property Expert (CDPE) Designation.

Additionally, the Institute has teamed with industry-leader RE/MAX International to offer its associates greater access to the CDPE training.

'Within twelve months we expect more than 10,000 of our associates to have earned the CDPE Designation,' said Mike Ryan, senior vice president at RE/MAX. 'This has become a part of our company's strategy for success in today's market, and we feel the administration has made a smart and practical move to focus on short sales.'

In the United States, nearly eight million homeowners are facing foreclosure or behind on their mortgage payments, and according to statistics released by the U.S. Treasury, each foreclosed home reduces nearby property values by as much as 9 percent. CDPEs have been trained to accurately assess a distressed homeowner's situation, help determine the best course of action, and effectively execute that strategy.

'When homeowners truly can't afford the homes they currently live in, short sales are the best option for the individual, the community, and the lien holder,' Charfen said. 'When facilitated by our extensive network of CDPEs across the country, homeowners, lenders and servicers will realize the benefits of the Treasury's new program components.'

About the Distressed Property Institute, LLC
The Distressed Property Institute trains real estate professionals to engage with and assist homeowners facing hardships. The Institute has developed a curriculum to provide the tools and knowledge to handle distressed properties, including short sales, deeds-in-lieu, mortgage modifications, forbearance, refinances, and reinstatements, as well as how to counsel homeowners through the foreclosure process. After completing a comprehensive on-site or online course, graduates are awarded the Certified Distressed Property Expert (CDPE) Designation.

About the CDPE Designation
The CDPE training provides real estate industry professionals with detailed information on how to engage with and assist homeowners in distress. With more than 7,500 professionals trained across the United States, the CDPE is one of the fastest growing designations in real estate industry history. The CDPE designation has been endorsed by RE/MAX International and other major U.S. brokerages and industry icons, including: Dave Liniger, chairman and co-founder of RE/MAX; Howard Brinton, founder of STAR POWER Systems; Bob Corcoran, founder of Corcoran Coaching and Consulting; Brian Buffini, founder of Buffini and Company; and David Knox, founder of Knox Productions.

For more information about The Distressed Property Institute and the CDPE Designation, please visit www.cdpe.com.