San Jose Short Sale Agent is now a preferred Wachovia Short Sale partner.
An advantages of being a Certified Distressed Property Expert (CDPE) is the connections and networking opportunity this certification and my successful experience affords me. One of those opportunities was the preferred partner opportunity with Wachovia Mortgages. I now have direct access to a local Short Sale Manager who can expedite the process for me.
Wachovia is one of the smarter lenders which understands that, generally, a short sale is a money saving opportunity for them when compared to when the homeowner is forced into foreclosure or bankruptcy. They also understand that one of the biggest reasons why typical short sales only close at 23% rate (Campbell Communications Survey, February 2009) is that the process takes too long and even if there is a good offer in hand, the long delay often causes the buyers to back out or simply lose interest and move on to another property.
Wachovia has committed to reaching out to successful short sale agents in a given area and working with them to expedite the process so good buyers don’t walk away from a deal because of the long delay associated with short sales. Remember, Wachovia isn’t necessarily doing this completely out of sense of compassion, they are doing this because their acturaries have detertmined expedited short sales will net them more money. They are setting the new standard in efficiency: 45 days or less is their goal to close escrow from receiving the offer.
If you have attempted a loan modification with Wachovia but were not successful, or have received a Notice of Default or simply do not have other options or solutions, please feel free to contact me. I can give you a no-obligation consultation as to whether a Wachovia Expedited Short Sale may be an option available to you and your family.
Mortgage Delinquencies Q2 2009
Here are some fantastic data from the CDPE organization which closely tracks national industry numbers.
As of Q2 2009, here are some numbers for you to digest
Type of Mortgage In Foreclosure In Default (30+ Days late) Total
All Mortgages 4.3% 8.86% 13.16%
Sub Prime Mortgages 15.05% 25.35% 40.40%
Prime 3.00% 6.41% 9.41%
It’s not surprising to see that sub-prime loans represents over 40% of distressed properties out there. As of the end of Q2 2009, however, distress in prime mortgages (or the Mercedes of mortgages) represent roughly 1/4 of the volume of sub-primes mortgages. This may surprise some people, as we have been repeatedly told by the media, that sub-prime market is what brought our economy down. However, with National Unemployment at 9.4% (as of July 09 when these stats were released) , it is no longer those who gambled on high risk mortgages, but the regular people who were doing the responsible things, who are being forced into default.
I believe the sector of mortgages to look out for in the coming months is the prime market. I argue they will rise dramatically in numbers, relative to sub-prime mortgages.
Additional statistic I want to point out are marked in red above. 4,760,000 represents the total volume of home sales NAR predicted for 2009. 9,550,000 represents the total distressed properties in the nation as of Q2. This means if these distressed properties have to be sold to get homeowners out of their situation (either as a short sale or foreclosure), it will take over two years to unload the current inventory of distressed properties!
Some food for thought………
Why are junior lien holders playing hard ball?
Blog entry
Here is an interesting perspective from a fellow CDPE and a friend, Sidney Jimenez, as to why it is becoming harder to negotiate with junior lien holders (2nd loans) in a short sale. More and more, the junior lien holders are demanding a lump sum contribution or some sort of promissory note (which they presumably will sell later to a collection agency) rather than simply take what the senior lien holder (first loan) dictates. Naturally, the hardship at hand will ultimately dictate whether the seller will have the wherewithal to make such payments or live up to the promissory note, but there is a trend developing here.
Option ARM – the new Sub-Prime disaster.
This is the ridiculous mortgage that people were offered during the crazy heydays of “anyone can get a mortgage” era of a few years back. Simply put, several payments options were given to the borrower, but the one that was selected most often was the low teaser rate option to pay less than the interest payments and have the deficiency tacked on the end mortgage; hence, the principal actually increases with time, rather than decrease! This was also referred to as the negative equity loan: your equity was actually decreasing rather than increasing. This was the Option Adjustable Rate Mortgage (ARM).
This was a pure gamble! You were gambling that the housing prices would continue to increase and you would be able to re-finance your way out of the negative equity situation some time in the future. Naturally, during 2006 or 2007, everyone was so drunk on the prospect of instant wealth, most of the borrowers who were presented this option took it, so they could buy a little more house than they would otherwise be able to afford. Unfortunately, the gamble did not pay off.
Throw 12% unemployment into the equation in California and see if this will not present itself as a serious crisis coming down the line. As a San Jose Short Sale Agent and every Certified Short Sale Agent worth his/her designation knows that the re-setting of these option ARMs will be the next wave of foreclosures.
Foreclosure is not your only option. There are other alternatives which are less damaging for most homeowners.
What exactly is a Short Sale?
Simply put, it is when you sell a home for less than what is owed on it with the lender’s approval and the lender forgives you for the difference (what is short) between what is owed and for what it ultimately sells. The Federal Government is now pushing for this option for homeowners who are unable to obtain loan modification and offering lenders financial incentives to permit homeowners to choose this route.
Why would the lender agree to do this?
Money. It’s always about the money isn’t it? Typically, it is cheaper for the lenders if the house is sold prior to getting into foreclosure and being sold at auction. There are costly expenses associated with foreclosing on a home (aside from the fact that owners who are going through foreclosure typically destroy the homes before they are evicted); but with short sales, it takes less time (meaning less carrying cost for the lender) and makes more economic sense for lenders if the homeowners have an interest in and participate with the lenders in selling their homes, rather than fighting with them. The lender saves money because they don’t have to pay for eviction, go through an auction only to have to take the property back because the auction did not meet their floor price or no one attempted to bid, make repairs and then pay Realtors to sell it as a bank owned (REO) property which typically gets deeply discounted by buyers anyway, in the meanwhile, still paying for taxes, insurance, association fees, etc… that the seller failed to pay. A home where the seller still resides and maintains will fetch a much higher selling price than an abandoned eye-sore type of property.
Why would it be good for the seller?
It allows them to have control over their economic future and sense of dignity. Let’s face it, if you are contemplating foreclosure, that means your financial situation will not be changing for the better in the immediate future. Don’t let others dictate your financial future; get involved and control and participate in your own financial outcome.
The most important facet to the short sales process is that it permits you to have control over your financial future. If you are forced into a foreclosure situation, your credit score will be devastated as you had no participation with the lender to help address the situation. The net result will be more devastating than bankruptcy from the Fannie Mae Underwriting Guideline point of view and you will not be able to buy a home or apply for a credit card for many years; additionally, now more and more employers are doing credit checks on prospective new hires and a foreclosure on your credit history may put you in jeopardy, especially if the job requires security clearance status, is a government position or involves handling of money. And once you are forced out of your home, you will need to rent a property; with a foreclosure on your credit record, you will learn that finding a rental property will become more difficult and the down payment requirement will dramatically increase compared to people who don’t have foreclosure on their record. If you choose to take control and complete a lender approved short sale, you will be able to salvage your credit by more than halving the seasoning requirments (only 2 years) for Fannie Mae Underwriting Guidelines for re-establishing credit and give yourself the opportunity to be in a situation to buy a home again in a relatively short time. Naturally, individual sitautions will vary in results.
A mis-perception floating around out there is that the short sale Realtor works for the lender. That is absolutely wrong. The listing agreement is a contractual relationship between the seller and the Realtor; the lender is not a party to the contract and has no relationship with the Realtor. WE WORK FOR YOU and have a contractually obligated, fiduciary relationship with you! We look out for your interests.
Who pays for the commission?
Because you are facing financial difficulties, the lender is required to pay for the commission and associated closing costs for completing the short sale. (This is why some people believe the Short Sale Realtor works for the lender).
