Foreclosure-Short Sale – Miami City Lifestyle
Category Archives for "Foreclosure-Short Sale"

Floreclosed properties on tenants records, not a problem for landlords

According to the Florida Association of Realtors, in a study (poll) done, in LOS ANGELES – May 6, 2011 – More than three-quarters (82 percent) of independent landlords say they would rent to someone who lost a home in foreclosure, assuming the applicant traditionally had good credit, according to a survey released today by The National Association of Independent Landlords.

“Landlords typically won’t rent to applicants with poor credit – and a foreclosure will absolutely slam someone’s scores. The exception is when they see people who have paid their bills their whole life but lost their job, can’t meet their mortgage and must hand their keys back to the bank,” says Tracey Benson, president of The National Association of Independent Landlords.

Despite recent credit problems, Benson says applicants with a foreclosure can prove good risks, chiefly because they did once own their own home. “These people are used to taking pride in where they live.”

Increasingly, mortgage defaults stem more from lost jobs rather than borrowers who had a toxic mortgage they could not afford. A thorough background check usually indicates whether financial woes are part of a recent spate of bad luck or a life-long trend.

The National Association of Independent Landlords polled 563 members from March 21 through March 25, 2011.

© 2011 Florida Realtors®

We want to thank the Florida Association of Realtors for continually bringing us this information.

Foreclosure Crisis Question and Answer

This article was posted on my Florida Realtor Member site and I felt it was great information to pass on.

Foreclosure procedures undergo reviews:

WASHINGTON – Oct. 18, 2010 – Recent revelations about mortgage lenders filing possibly faulty court papers to foreclose on homes has sparked a public outcry and called into question tens of thousands of foreclosures. Here’s a look at the issue and its impact.

Q: How did this come to light?

A: Lawyers for homeowners fighting foreclosures took depositions from officials who prepare legal documents to get court approval to foreclose. The document signers – who have now been dubbed robo-signers – said they signed thousands of affidavits without reviewing the supporting papers or having the affidavits signed in the presence of a notary. Both are supposed to be done before foreclosure papers are submitted to courts in about 23 states that require judicial approval for all or most foreclosures. Some lawyers allege there were instances of fraud, too, including backdated documents and forged signatures.

Q: What’s happened so far?

A: Some major banks have suspended foreclosures while they review their procedures; others are proceeding while doing their reviews. Bank of America has suspended foreclosures in all 50 states. GMAC Mortgage has suspended evictions and foreclosures in the states that call for a judge’s approval and is reviewing foreclosure practices in the others. PNC Financial Services and Litton Loan Services are reviewing their practices. JPMorgan Chase suspended foreclosures in 56,000 cases in the judicial approval states and is reviewing its practices in a handful of the other states.

Q: Who is investigating this and what could be the outcome?

A: State attorneys general have launched a joint investigation. The Justice Department is reviewing the matter. The Office of the Comptroller of the Currency, which regulates the nation’s largest banks, said Friday that it is examining banks’ foreclosure procedures, and the Federal Housing Administration is conducting a review. The Senate Banking Committee has scheduled a Nov. 16 hearing.

Possible outcomes include civil penalties, criminal prosecutions, the creation of an independent monitor to oversee foreclosure practices and legal settlements under which lenders agree to do more to get struggling borrowers into mortgage workout plans to help them avoid foreclosure.

Q: What about a national moratorium on foreclosures?

A: Some members of Congress have called for one, but the Obama administration has rejected that idea out of concern that a blanket halt to all foreclosures could damage the fragile housing market’s recovery and, with it, the economy.

Q: Why is this controversy important?

A: Lawyers and consumer advocates for homeowners say that if banks are found to have acted illegally, courts could see a wave of challenges in both current and past foreclosure cases. It could lead to title claims in courts, where former homeowners who lost their homes in foreclosure actions assert they still own them, even after the homes have been sold. Banks say that even if procedures were not followed correctly, there’s no mistake that the homeowners are in default and that the banks have the right to foreclose.

Q: What impact could this have?

A: Foreclosures already take a year or more to complete in some states and could slow further as judges review documents more thoroughly and banks tighten procedures. That could keep some homeowners in their homes longer but might also postpone the sales of homes that have been abandoned or that banks have repossessed, keeping them vacant longer.

Delays could be costly for banks and taxpayers, because banks and government-owned mortgage giants Freddie Mac and Fannie Mae all must continue to pay maintenance and other expenses on foreclosed properties they can’t sell. Freddie and Fannie own or guarantee more than half of all first mortgages.

Q: What could this mean for the housing market?

A: If foreclosures are delayed significantly, economists say the housing market recovery could suffer.

Significant delays in completing foreclosures could mean it will take longer for prices to recover, economists say. About 30 percent of all house sales now are foreclosures or other distressed properties that sell at substantially lower prices than homes whose owners aren’t in financial difficulty. That pulls down market prices overall.

The longer home prices stay depressed, the longer millions of homeowners will be underwater, owing more on their mortgages than their homes are worth. About one in four properties are underwater, making it difficult for the owners to sell their properties or refinance their mortgages.

Q: Should I buy a foreclosed home?

A: Real estate experts say buyers shouldn’t avoid foreclosures. But you may want to buy a title insurance policy to protect against a claim stemming from a previous foreclosure, says Guy Cecala of Inside Mortgage Finance.

Lenders generally require title insurance before they’ll approve a mortgage.

Short sales – where lenders agree to let owners sell houses for less than they owe – should not be affected by the foreclosure controversy, says Rick Sharga of RealtyTrac.

Christopher Immel, a lawyer at Ice Legal, a Florida law firm that represents homeowners challenging foreclosures, says prospective buyers of foreclosed properties should examine court case files for missing documents and incorrect dates.

He recommends hiring an attorney to review the file.

© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Stephanie Armour

Strategic Defaults – To walk or not to walk, that is the question

With foreclosures on the rise; a huge buzz word is “Strategic Default”. A strategic default is when a borrower decides to walk away form a mortgage because the property value is much les than the amount owed on the property (underwater borrower).

This exact question: “Do we walk away or do we continue to pay”, is currently plaguing households across the country.  In many cases the borrower can actually afford to pay, they simply do not feel that to continue to pay is a wise economic decision. Many of these borrowers feel that they will recover their credit faster than the home will recover equity.

The problem is becoming more evident.  It is estimated that roughly 50% of mortgages in South Florida (Miami-Dade, Broward and Palm Beach) are underwater.  Unfortunately, many of these mortgages came underwater because the homes were bought during the recent real estate boom (2004 – 2006) they were also bought with adjustable rate mortgages and with very little to no down payment, this only adds to the problem.

Borrowers that are considering walking away must consider the down falls of such a decision. Some of these pitfalls are losing 200 to 300 points on your credit score, also not being able to get a mortgage in roughly 2 to 3 years, plus bad credit could affect employment and even car insurance rates. In addition, in the state of Florida a lender may persue the borrower for deficiencies personally.  Regardless many borrowers are opting to accept the risk in order to get out from under a mortgage that is simply upside down with equity.

A common complaint we are hearing is that banks are simply not working with borrowers who are underwater.  They are not moving quickly with loan modifications and it is very tough to get around the red tape in these large organizations. In our opinion it may just be that the banks not only want to protect their own interest, but they may not have been ready for such a huge influx of defaults.

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Foreclosure crisis might be seeing relief or might be ending

For the past three years foreclosure filings have been on the rise; well last quarter for the first time in three years this number went into a decline. Although, the recent downturn in the market will echo for years, evident in the declined home prices (markets such as Las Vegas, Miami and Phoenix lost about 50% value), the fact that the foreclosure filings are declining is a major sign of a recovery. The Mortgage Bankers Association indicated in its latest report that Nevada, Arizona and Florida had the sharpest decline in foreclosure filings.  Jay Brinkmann described this decline in foreclosures as “the beginning of the end” when describing the crisis.

However, it is not all good news. Still 15 percent of homeowners have missed at least one mortgage payment and nearly half of all delinquent borrowers are at least three months behind. Both of these statistics constitute record highs.

A “bright side” statistic is that only 3.6% of borrowers missed a payment in the last quarter of 2009 that number is down from 3.8 percent the previous quarter according to the Mortgage Banker Association.  This may not seem like such a sharp decline; however, we have to take into account that this would normally be the time of the year when we would naturally see an increase in new delinquencies.

We have seen other signs of a stabilizing real estate market.  We have seen inventory decline, we have seen the pending home sales index rise significantly and now we are seeing foreclosure filings drop; could this be the formula for a recovery?

South Florida Brokers & Associates, Inc.

Foreclosure Legislature

I read this story in passed on to us in the business by the Florida Association of Realtors and felt it was worth re-posting on our blog.

Fla. Legislature: Foreclosure fight develops TALLAHASSEE, Fla. – Feb. 10, 2010 –

The Main Street versus Wall Street fight that has consumed national politics for much of the last year has made its way to Florida with two lawmakers pushing a proposed “Foreclosure Bill of Rights” while bankers are shopping a bill to do away with legal proceedings in foreclosures altogether.

The battle is playing out on the watch of Senate President Jeff Atwater, a banker by trade, who suggested that any pro-bank legislation that puts people out of homes more quickly would likely be a long shot.

Sen. Dave Aronberg, D-Greenacres, and Rep. Darren Soto, D-Orlando, announced Tuesday their “homeowners’ defense legislation” (SB 1778), which they say would pre-empt the possible eviction of tens of thousands of Floridians from their homes by requiring mediation, and for home loans to be renegotiated at current values. They said they filed the measure in response to an initiative, backed by the Florida Bankers Association, which would create a non-judicial foreclosure system that speeds up foreclosures to 90 days.

“It is fundamental to our economic recovery that we resolve the foreclosure crisis in the state of Florida and there are two vastly different visions out there,” Soto said during a news conference at the Capitol. “While the banks seek to avoid judicial process altogether, allow 90 days and show our Floridians the door with no incentive to settle, we’re here to say, ‘no.’ We will not allow a half million Floridians to be kicked out on the street. We will not allow bailout, spend-happy banks to dictate our agenda here in Tallahassee, and we will not allow the trampling of the rights of Floridians for mere convenience.”

Aronberg, who is running for attorney general, agreed, saying that removing judges from foreclosure proceedings would hurt vulnerable populations in Florida, particularly seniors and residents who don’t speak English.

“It’s something that’s very dangerous, especially with the language barrier,” Aronberg said during the news conference. “You could get a letter and not understand the letter, or you could be a senior citizen and have someone as your caretaker, and you would never even have been notified of that letter. And within 90 days, your home is gone.”

He said that the right to go to court is “something that is engrained, not in our culture here in Florida, but in our constitution,” and added that the bill would help the record number of residents who faced foreclosure last year in the state.

“This will help homeowners who have deflated home values and inflated mortgages, (those) who are at the mercy of these large institutions who helped create the economic crisis through their own reckless behaviors,” Aronberg said.

Separate analyses found recently that foreclosure court filings across the state rose last year by just more than 30,000 and overall foreclosures in Florida leaped 34 percent in 2009. The state posted the third highest rate in the nation for the year.

Numbers such as those are why Florida Bankers Association Director of Government Affairs Anthony DiMarco said the organization was proposing a move to a non-judicial foreclosure process, which he said is used in 37 states.

“Foreclosures are taking way to long,” DiMarco said in a telephone interview. “Courts are taking some 12 months to 24 months to get a foreclosure done. In the meantime, the houses may be sitting there becoming eyesores, and neighbors don’t like that (and) the condo associations and homeowners associations don’t like that because they’re not getting paid. Courts are backlogged because there are so many foreclosure cases sitting on the books.”

DiMarco said the association has not found a sponsor for its bill yet. He added that bankers are feeling the brunt of the foreclosure crisis from all sides, citing pressure from consumer advocates to ease up on evictions.

“We’re getting squeezed because people say we shouldn’t foreclose too fast and people like the condo associations and local governments say we’re taking too long because they don’t want to take care of property,” he said.

But Senate President Atwater, who is running for chief financial officer in part on his experience as a banker, indicated Tuesday that the foreclosure fight might be premature. Atwater said in an interview with the News Service that he’s wary of any idea that doesn’t give homeowners a chance to keep their house, though he didn’t rule out a system that tries to find ways to speed the process up.

“One of the first things any banker is taught is, you never want to take back the collateral. … You’re in the business to work with someone,” said Atwater, R-North Palm Beach. He rejected the idea that because of his profession the bankers may get more consideration.

If anything is done, “it will not be done in the spirit of benefiting the bankers,” the president said. “We’re not going to try to accelerate someone losing their home” without “some measure of fairness” to the homeowner.

However, Atwater also noted that condominium and homeowners associations have concerns, and they’re pelting lawmakers with complaints about delinquent or foreclosed units that no longer pay association dues, overburdening everyone else in the community.

Source: News Service of Florida, Keith Laing.

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Reports of Short Sale Fraud

It is no big secret that in  the recent post real estate boom market there have been great deals for investors and end-use buyers in the foreclosure and short sale arena.  Many buyers know exactly what a foreclosure is but many are not familiar with short sales. Well, a “short sale” is a sale in which a lender agrees to allow a property to be sold in a sale which will produce proceeds insufficient to clear the actual loan amount / balance, in laymen terms the lender will take a loss on the loan.  This type of sale although considered cumbersome by most real estate practitioners are an essential part of a recovering market.  Therefore, as real estate brokers and agents we should do our best to help buyers find the best deal on the market; and if the best deal is a short sale we should certainly educate the buyer on short sales and work the deal and on the other side if we have the short sale listing we should educate the seller and work closely with the lender involved on the short sale to ensure a successful transaction.  However; buyer, seller and real estate practitioners BEWARE!!!!

I read a recent CNBC report which was a bit disturbing. This report depicted fraud when it came to these short sales.  Although, as a brokerage we have not experienced or witnessed this type of activity, the report did place me on guard and as a broker I have passed on the information to the associates working with us.

The allegations go something like this: There is a short sale listing which goes under contract. There are two mortgages on the property. The primary lender or first lien position accepts the contract and negotiates with the secondary or second lien holder a reduced amount, usually a small fraction of what they are actaully owed.  The buyer and seller all sign.  This is all perfectly legal and good until the secondary lender does one extra step. That extra step is that the secondary lender contacts either one of the real estate agents (seller or buyer agent) or the seller or buyer directly and states that they want additional funds paid outside of closing (POC) or wants fund paid which will not be depicted on the closing statement (HUD).  This is a violation of RESPA (Real Estate Settlement Procedures Act), which clearly states that all monetary transactions must be depicted on the HUD.  However, secondary lenders are allegedly ignoring this fact and asking for funds outside of closing disregarding the law; and going to the extent as to threaten to block or kill the short sale and allow the property to go into foreclosure.  The irony of all of this is that although it may harm the seller and buyer and the real estate licensee it still doesn’t help the secondary lender as the fact is that if the property goes to foreclosure the second loan will subordinate to the first lien position anyway.

In conclusion, our advice to sellers buyers and all of our counterparts is to not participate in this type of activity.  No commission or deal is worth a license being revoked or to be accused of aiding in fraudulent activity.

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South Florida Brokers & Associates, Inc.