January 10, 2011
30 Year Fixed:
15 Year Fixed:
Courtesty of Fairway Independant Mortage
In This Issue:
Red Door Real Estate:
I am finally writing the most overdue blog post EVER, the long winded answer to the question I probably get asked most often: What is a short sale? Quite simply, a short sale is when the owner of a property owes more than the house is worth and they ask the bank to accept an offer less than this amount in lieu of going to foreclosure. For example, a seller has a houses listed for $100,000 and they owe $125,000 on the mortgage. They receive an offer from a prospective buyer for $90,000 and ask the bank to take a loss of $35,000 instead of taking the home to foreclosure, re-listing it, and selling it themselves. Sometimes it works and sometimes it does not.
Now, the gory details. If you are the buyer or potential buyer of a short sale you MUST know what you are getting into or you are setting yourself up for a very frustrating experience. I usually tell people, depending on any number of variables it can take anywhere from 2 â€“ 10 months to close on a short sale from the time you make your original offer. Why so long and why such a huge difference? Every deal, bank, and asset manager is annoyingly unique and each has their own idiosyncrasies that can greatly affect the amount of time it takes to close a deal. Here are just a few variables that can affect the time frame of the short sale:
- Is there one mortgage or are there two?
The list goes on and on and on. As you see, the amount of variables that affect the short sale process are mind boggling. One of the most frustrating parts of dealing with the short sale is the absolute uncertainty and lack of answers. Once you submit your offer, it could take weeks or even months for the bank to respond to you. All the while you have no idea what is happening or even if they will consider your offer. Assuming you get through this process and agree upon a price, the next process of getting from contract to the closing table can be and usually is excruciatingly s-l-o-w with little or no updates along the way. Eventually you can close on the short sale, but you must know what you are getting yourself into and be very flexible with your timeline in order to make a short sale purchase a success.
The importance of having an agent on your side that has experience with and understands how to best navigate through this sea of red tape cannot be underestimated. We at Red Door, unfortunately:), work with tons of buyers and sellers in short sale situations and can help you through the process. Contact us at 317-733-3667 or submit or contact form to discuss short sales in Indianapolis further.
The time has come to take a look at the year of 2009 and see how the Indianapolis real estate market performed.Â Over the next few days, I will be posting the year end reports for most of the Indianapolis market.Â Today, we start with Indianapolis itself.
Indianapolis has typically not performed as well as the suburbs and has been plagued with more foreclosures than the suburbs as well.Â However, despite this Indianapolis has actually posted some great numbers for 2009 indicating a recovery may already be well underway.Â
Let â€™s take a look at the month of December in detail:
Now letâ€™s look at the entire yearâ€™s numbers:
The number of homes sold is still down quite significantly, but the average sales price is actually up 11% in the Indianapolis real estate market!Â This is huge.Â Take a look at the average sales price for every month: every single month has posted a positive gain this year.Â To me, this is a very good indicator that we may have turned the corner and now the only thing needed to mount a full scale recovery is a little more demand.Â
Who knows what 2011 will hold for the Indianapolis real estate market, but prices do appear to on the rise.Â The current projection is for Indianapolis to continue to suffer from a large percentage of foreclosures.Â If prices continue to increase, the impact of foreclosures could be lessened in 2011 as less and less people are underwater.Â Stay tuned for updated market reports as 2011 progresses.
Predictions for Housing in 2011
The bulls say: Affordability is at its highest level. Billionaire Warren Buffet is among those who believe this is a sign the slump is about to end. Buffet writes: "Prices will remain far below 'bubble' levels, of course, but for every seller (or lender) hurt by this there will be a buyer who benefits."
The bears say: Itâ€™s not over yet. Housing is still overpriced and inventories are enormous, says Daryl Jones, an analyst at investment research firm Hedgeye. Jones warns that home prices could fall another 15 percent to 30 percent because no one is buying.
Source: Fortune.com, Nin-Hai Tseng (12/27/2010)
Loan servicers will have 30 days to send a borrower a short-sale agreement that includes the list price or acceptable sales proceeds under recent changes made to the Home Affordable Foreclosure Alternatives Program, aimed at distressed borrowers who don't qualify for other government loan modification programs.
Once a sales contract has been initiated, loan servicers then have 30 days to approve or reject the transaction.
The stricter timelines are believed to help speed up the short sale process, which has faced numerous complaints for how long it takes lenders to review and approve short sales often causing buyers to walk away.
The stricter timelines were apart of several revisions the Treasury Department recently announced to its HAFA program â€” the second major revision to the program since its launch in 2009.
Another big change: Loan servicers will no longer be restricted on paying second-lien holders, allowing them more freedom particularly when dealing with second-lien holders when borrowers owe less than $100,000. Loan servicers used to be restricted to paying second-lien holders no more than 6 percent of outstanding loan balance (with an overall limit of $6,000) in exchange for releasing subordinate liens. Second-lien holders have been another big obstacle to completing short sale transactions.
HAFAâ€™s new directives also now forbid loan servicers from deducting vendor expenses from commissions paid to real estate brokers.
The rules are effective Feb. 1. It does not apply to mortgages owned or guaranteed by Fannie Mae or Freddie Mac, or insured or guaranteed by a federal agency such as the Federal Housing Administration (FHA).