New Mortgage After a Short Sale or Foreclosure
Waiting Period For A New Mortgage After Short Sale/Foreclosure Changes:
Fannie Mae announced changes to the policies regarding the amount of time that must elapse after a borrower experiences a preforeclosure event (preforeclosure sale, short sale, and deed-in-lieu of foreclosure). The changes highlighted the importance of borrowers working with their servicers to avoid foreclosure.
Currently, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allows a shorter time period – five years – if certain additional requirements are met (e.g., minimum down payment and credit score, and occupancy requirements). These requirements are being modified to remove the five year option. Unless the foreclosure was the result of documented extenuating circumstances, which only requires a three-year waiting period (with additional requirements), all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.
The following table describes the waiting period policy changes for foreclosures:
The following table summarizes the waiting period requirements for all significant derogatory credit events.
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Please contact us at the Twin Cities Short Sale Realtor if you have any questions.
Twin Cities First Half Sales & Median Price Index
2010 First Half Sales Reported for the Twin Cities
The St. Paul Association of Realtors recently published the home sales data for the Twin Cities of Minneapolis and St. Paul. The following county home sale numbers and median home values can be found for the first half of 2010.
Dakota - Scott - Goodhue Counties
The most interesting fact when taking into account the numbers published in these reports is almost all areas saw an increase in the median home sales price (equal numbers of homes sold above and below the median price). I am a firm believer that these numbers are skewed because of the first time home buyer tax credits that have come to an end (The Military Tax Credit is still good). Recently published housing reports by MSNBC showed a huge dip in home sales starting in May, a month after the tax credit ended. These low home sales numbers most likely would not have closed by the dates the reports published by SPAAR above came out.
It will be interesting to see in mid January the final numbers for 2010. I would say that housing numbers will be lower than 2009, an indication that the Twin Cities Housing Market is still in a decline.
Mortgage Debt Forgiveness Act
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
Although you'll want to double check with your accountant, see http://www.irs.gov/individuals/article/0,,id=179414,00.html for more information or contact us today to learn more.
Tax Credit Closing Date Extended
Federal Tax Credit Closing Date - $8000 Credit:
Congress has passed an extension of the Homebuyer Tax Credit closing deadline, the Homebuyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have ratified contracts in place as of April 30, 2010 that have not yet closed. The legislation is designed to create a seamless extension the new closing deadline for eligible transactions is now September 30, 2010. There is will be no gap between June 30 and the date the President signs the bill into law.
This will help many buyers in the Twin Cities and also nationwide who had an executed contract before April 30, 2010 that could not close by June 30, 2010. Many reasons could cause delay but most noted and probably the cause of most delays, are the short sales.
How Do Sellers Find A Realtor?
Sellers Are Finding Realtors In The Digital Age:
It was recently reported that nearly 25% of people in the market to sell a home find their agent on the Internet. This statistic is published by the St. Paul Association of Realtors. If you are reading this blog, you most likely found us at our Twin Cities Short Sale Realtor website. Many buyers also come here for news and resources on the Short Sale industry in the Twin Cities. We'd enjoy the opportunity to work with you and answer any questions that you have. Please contact us today!
25% of Sellers find their Realtor Online
Fannie Mae Cracks Down On Strategic Defaults
Strategic Defaults - To Walk Away Or Not:
Fannie Mae recently announced that it is attempting to end a strategic default from the homeowner. A strategic default would be the homeowner has the ability to pay for their mortgage, but chooses to walk away because they are upside-down, or have too much negative equity. Fannie Mae is stating that homeowners who strategically default and did not make a "good faith effort" to advert foreclosure will not be eligible for a Fannie Mae backed mortgage for 7 years. Fannie Mae also left the door open to pursue deficiency judgments in an attempt to recoup any outstanding debt.
Why is Fannie Mae considering these actions? It was reported that nearly 1/3 of defaults in March of 2010 were purposeful, or strategic. Fannie Mae is a government backed entity, they don't like to lose money - heck, the government has given too much away to be satisfied that they're losing more.
You might think: "Who cares if I cannot get a Fannie Mae backed loan for 7 years? I'll get a mortgage backed by someone else." Although this is certainly a possibility, almost 75% of the mortgages in the US are backed by Fannie Mae or Freddie Mac. This number is probably poised to go even higher as time goes on.
My question as I found out the news is what does a "good faith effort" mean? I believe it means that homeowners need to work with the lender to either do a loan modification, a short sale, or a deed in lieu of foreclosure.....Basically anything that you can do to work with the lender to avoid the "strategic default" or "walk-away" is a very good idea.
What should you do if you have negative equity or cannot afford your home because of your personal financial situations? Feel free to contact us and learn more about the options you have available to you.
Low Home Sales Reported
MSNBC Confirms June 17th Blog Post:
As I wrote on June 17, 2010, I believe home sales are headed even lower than they already are. As I watched the nightly news on NBC with Brian Williams, it was reported that new home sales in May hit a record low. In fact, new homes sales in May 2010 were down 33%. This can be attributed to the lack of potential buyers possibly due to the end of the government tax credit. It could also be due to the fact that the ecomony is poor right now. We have high unemployment and on the flup side, slow job growth.
As the inventory of homes in the Twin Cities remains relatively stable, the demand for homes is down. This will most certainly cause the prices to plumet even more. As more and more people find themselves in a predeicament with mortgage payments and either reductions in pay or job loss all together, short sales and eventually REO/Foreclosure homes will lead the charge of what sales there are.
If you'd like to discuss your options, please don't hesitate to contact us at the Twin Cities Short Sale Realtor.
Extremely Fast Short Sale Approval
Short Sale Submitted, Reviewed & Approved In 2 Weeks!
The Twin Cities Short Sale Realtor recently received an offer, compiled the short sale package, submitted the offer to the lender, and received a full approval within 14 days! The approval required no cash out of the owner's pocket and is a full satisfaction of lien, where no deficiency judgment will be pursued.
This is of course great news for the homeowner (seller) involved. The short sale process is typically much longer and these results are far better than the norm, even for the Twin Cities Short Sale Realtor.
Please contact us if you would like to discuss your current situation.
Are Twin Cities Home Prices Rising?
Twin Cities Home Price Sales:
There have been some recent reports regarding home prices in the Twin Cities and if they are starting to rise, or if they are still falling. I am a firm believer that housing prices are in line with simple economics (supply vs. demand). The supply is relatively unchanged but the demand is certainly still not there. What does this mean? Lower home prices are still coming our way.
The chart to the left (found at the St. Paul Association of Realtors website) shows the fact that inventory has shifted. Single family home inventory is up while townhome and condo inventory is more or less down. As you can see, new construction has taken a back seat to the rest of the market - in a big way.
So why is new construction down? That's a simple answer, it's always the most expensive real estate that you can buy. You really do pay a premium to get exactly what you want. However, with the number of short sales and REO/Foreclosure homes that are available on the market, the current feeding frenzy (if you want to call it that) is on this style which happens to be the lower priced homes. In this economy, the savvy home buyer definitely wants to get the largest bank for the buck. Sellers who are selling on a short sale and lenders who own the REO/Foreclosure homes are selling at the bottom of the market. They just want to sell the home in a short period of time.
Once we can get through all the short sale and foreclosure/REO homes, the rest of the home prices will start to rise. Until then, I wouldn't count on any increases, in fact, I wouldn't at all be surprised to see another 10% drop in home prices before the real estate market levels itself out.
Real Estate $8000 Tax Credit
Real Estate Tax Credit Extended:
The real estate tax credit is about to expire for almost all existing and new homeowners. Home buyers that had an executed purchase agreement before April 30, 2010 that closes before June 30, 2010 are eligible.
The real estate Tax Credit of $8000 for first time home buyers and $6500 for existing homeowners has been extended for military, intelligence and foreign service members who have had at least 90 days of active service outside the country between January 1, 2009 and April 30, 2010.
If you qualify for this extension, you must have an executed contract by April 30, 2011 and close by June 30, 2011. The recapture of this credit is also waived if you are relocated prior to the normal 3 year period.
Interested parties can purchase any type of home they qualify for, including regular home sales, short sales, REO homes and Foreclosure or bank owned homes.
Please contact us today and we can help you navigate the tricky waters of buying a home!