Tag Archives: banks

Real Estate

The Frustrations of Short Sales in Dealing With Banks

Photo courtesy of Around Hawaii

The California Association of REALTORS® has put full page ads in numerous papers throughout California regarding the frustration of dealing with banks in trying to do short sales with them. A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency

Having had numerous short sales fall through, I fully understand the frustration of buyers and sellers in trying to work with banks in doing short sales.  I don’t know what their problem is. They seem to be extremely great at finding ways to tack on fees for every dealing you do with them, but complete disregard for completing what should be a smooth sale of real estate property of which they have an interest in.

I have two short sales going right now that have been in the works since November of last year. One of the banks, after five months has finally reviewed all the paper work on one of the short sales,  (a simple offer to purchase property) and assigned a negotiator to deal with the purchase contract.  This by no means says that the bank will accept the offer that was made.  I’ve had banks come back after an offer was made and demand $30,000 more than the property was worth. This resulted in the property not being sold in a short sale, foreclosed and the banks losing thousands of dollars because they refused to go along with the short sale.

Here’s a press release from C.A.R. further explaining the frustrations of short sales:

Banks drag feet on short sales, survey finds
The CALIFORNIA ASSOCIATION OF REALTOR® (C.A.R.) published its findings of a survey this week, which show that tedious lender requirements and poor communication hamper short sales.

  • Fewer than three of five short sales close in California, illustrating the complexity and difficulty of navigating lenders’ and servicers’ short sale procedures, according to C.A.R.’s survey, which gauged REALTORS®’ experience in working with short sale transactions – transactions in which the lender or lenders agree to accept less than the mortgage amount owed by the current homeowner.
  • Although not every homeowner or mortgage is eligible for a short sale, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives.
  • Banks are taking much longer to respond to short sale offers than those specified in government guidelines for banks.  Nearly two-thirds of survey respondents said banks took longer than 60 days to respond to short sale offers.  Often, this results in buyers walking away from the transaction.
  • “Increasing the number of successful short sale transactions is one important way we can help California families avoid foreclosure and move our economy closer to recovery,” said C.A.R. President Beth L. Peerce.
  • C.A.R. is asking government agencies, such as the U.S. Dept. of the Treasury, to force banks to complete all short sales following HAFA guidelines and to comply with the program’s time frames.

Read the full story

 

Real Estate

Five Signs That Say Now is the Time to “Buy”


Home buyers sitting on the fence wondering if now is the right time to buy should consider five factors when making this decision: Jobs, recent sales activity, construction, mortgage availability, and anecdotal evidence.  Each of these issues can help consumers make the best choice for their situation and financial circumstance.

  • Jobs: Although many areas of the country were deeply impacted by the recession, some areas were less affected by job loss.  If employment stability is a concern, prospective buyers should review job-growth data from the U.S. Bureau of Labor Statistics at www.bls.gov.  The data provided by the Bureau is approximately one month old and shows the direction of the local economy.
  • Recent Sales Activity: Housing inventory and sales volume should be taken into consideration while house hunting.  A large inventory of homes with few actual transactions can be a negative indicator.  On the other hand, if inventory is falling and transactions are rising, that is a good sign.  In January, the CALIFORNIA ASSOCIATION OF REALTORS®’ Unsold Inventory Index stood at 6.7 months, up from 5 months in December 2010, but down from 5.7 months in January 2010.  The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
  • Construction: Staying up-to-date on the number of building permits issued for local builders is useful for gauging builder sentiment and the future of housing activity.  The California Building Industry Association recently announced that California home builders pulled 2,920 total housing permits in January, registering a 5-percent decline compared with a year ago and a 56-percent decline compared with December.  However, the Construction Industry Research Board is projecting 62,000 total permits will be pulled in 2011, an increase of 38 percent compared with 2010’s total of 44,893 permits.
  • Mortgage Availability: Home buyers hoping to be approved for a mortgage should monitor local lending patterns.  Following the financial crisis, most national banks tightened lending standards; however, some local banks haven’t been impacted as much as large lenders and are more willing to lend, even for higher-priced homes.
  • Anecdotal Evidence: Although buyers can access home listings online, one of the best ways to monitor the local housing market is to work with a REALTOR® and gather intelligence using their expertise and guidance.

Read the full story

For all your real estate needs write or call:

John J. O’Dell
Real Estate Broker
(530) 263-1091
Email John at jodell@nevadacounty.com

Visit my other website www.johnodellrealty.com

DRE# 00669941

Real Estate

Banks Short Sales Equals Very Long Sales

2 Comments

By John O’Dell

I wrote an article last year that the banks were trying to make short sales shorter.  That post was based on news at that time that banks were streamlining their short sale process. Well, I think that was propaganda that was just made to make people think the banks are acting responsibly. Nothing has changed since the banks press release.

You can wait six months and not hear anything from a bank on a short sale. They even put the property in foreclosure in the middle of a short sale! I can give you several recent examples that I had with short sales, none of them good.

A 5,000 square foot house in Nevada County was a short sale. Listed at over $800,000, than dropped to $599,000, than $499,000, than finally to $399,000. One of my clients made a full price offer, but was in a backup position.  The buyers in first position, that is they made the first offer. The bank listed the property at $399,000, but then started negotiating with the buyer. The bank said (verbally)  OK we’ll take $450,000, but once the buyers said OK, the bank changed their mind and said no we want $475,000 and got it!  So much for fair dealing. By the way, 60 percent of the  buyers in second position are the ones that get the home, since the buyer in first position gives up and buys somewhere else.

I have several offers in for my clients in second position and several months later, we have not heard anything. We have an offer in for another client on an REO (bank owned home) in San Jose and we are in the second week of finding out if our offer has been accepted. The response we get from the listing agent is that the bank’s asset manager is over whelmed. I can’t give you the offering price, but you know real estate in San Jose is not cheap, yet the bank is “over whelmed”.

So what has been your experience in dealing with your bank?

John J. O’Dell
Real Estate Broker
Here to help you with your buying or selling of real estate.

Real Estate

Banks Banking Their Foreclosures?

bomb
Are the banks holding off putting some of their foreclosures on the market? It looks like they might be to keep the prices of the real estate market from plunging further. Another reason could be that it helps them appear more solvent then they really are.

According to the San Francisco Chronicle

“Lenders nationwide are sitting on hundreds of thousands of foreclosed homes that they have not resold or listed for sale, according to numerous data sources. And foreclosures, which banks unload at fire-sale prices, are a major factor driving home values down.

“We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market,” said Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures. “California probably represents 80,000 of those homes. It could be disastrous if the banks suddenly flooded the market with those distressed properties. You’d have further depreciation and carnage.”

In a recent study, RealtyTrac compared its database of bank-repossessed homes to MLS listings of for-sale homes in four states, including California. It found a significant disparity – only 30 percent of the foreclosures were listed for sale in the Multiple Listing Service. The remainder is known in the industry as “shadow inventory.”

“There is a real danger that there is much more (foreclosure) inventory than we are measuring,” said Celia Chen, director of housing economics at Moody’s Economy.com in Pennsylvania. “Eventually those homes will have to be dealt with. If they’re all put on the market, that will add more inventory to an already bloated market and drive down home prices even more.”

In November of last year, Fannie Mae and Freddie Mac ordered their loan servicers and attorneys not to evict about 16,000 troubled borrowers or sell their homes until they implement a streamlined loan modification program. This might prevent some foreclosures, but the numbers of homeowners facing foreclosures have increased since then.

Where’s the bottom? As I posted yesterday, there are some signs of increased sales and improvement in the economy, so maybe we’re there and maybe not.