Register Real Estate Advisors

When you are having trouble paying your mortgage, you have several options.  You can use the property as a rental and buy a second cheaper home to live in, do a short sale, go into foreclosure, or do a bank walk away.  There are pros and cons to each option and each impacts your credit differently.

I have seen families rent out their homes and purchase or rent a cheaper house until they catch up financially.  This is a viable option as long as you find a good tenant that pays on time every month and does a good job maintaining the property.  A con is that if the home needs a lot of repairs over the next year it could be costly.  In this situation, your credit has no negative impact unless you slow pay on your mortgage due to slow paying tenants.  Remember that if you cannot find tenants, you still have to continue to pay your mortgage, HOA fees, taxes, and insurance.  If you purchase a smaller home, now you owe two of everything!

If you sell your house for more than you owe on it and you aren’t paying the difference, you are doing a short sale.  This shows slow pay on your credit, but at least you can buy another house in a few years which is a better outcome than having a foreclosure on your credit.

The only good thing about a bank walk away is that you no longer owe on a mortgage.  As for your credit, it’s just like a bankruptcy.  As far as your credit rating is concerned, a deed in lieu and a bank walk away damage your credit equally according to FICO.  Bad credit can damage any security clearance you have.

These are some things to think about when you cannot afford your mortgage.  You should always consult with as many professionals as you can to determine which route is better for you.  If you would like to talk with a Realtor who can help you through a short sale, give RREA a call today to speak to one of our Realtors.

Did you know that over the past year, according to the Houston MLS, we have more people renting than in years past. If you want to invest in real estate, it’s better to put a renter in the house than flip it. Many of the short sale and foreclosures on the market currently require that you own the property for a certain amount of time before you can flip it, so it’s better to go ahead and rent it out. The rental payments can pay down your loan and the property can be used as leverage to purchase more investment properties. Call us today at RREA if you want to learn more about investing in real estate to supplement your future income. Our agents would love to help you become an investor and take advantage of the rising rental market we live in today.

Happy Monday! This week’s edition of White Board Monday is about how to make a “graceful exit” of your home if you are facing financial trouble. Proactive action at the first signs of trouble will minimize the impact on your financial future.

We have distressed property experts standing by to help you if you or someone you know finds themselves in that situation. Call or email today to get started. 281.288.3500 or info@rrea.com

In today’s market there are a lot of short sales and foreclosures.  If you are one of the unlucky home owners that had to go through this process then you will have a waiting period before you can get qualified for another home loan.  Depending on the type of loan you want or need for purchasing your next home, you will have different requirements.  If you had to file a Chapter 7 or Chapter 13 there are also requirements before you can get a home loan.  Please see below:

Conventional Loans Require:

• Chapter 7 BK – 4 year waiting period from the discharge/dismissal date
• Chapter 13 BK – 2 year waiting period from the discharge date or 4 years from the dismissal date
• Multiple Bankruptcies – If there are multiple bankruptcies within a 7 year period, the waiting period is 5 years from the most recent discharge/dismissal date
• Foreclosure – 7 year waiting period from the completion date
• Deed-in-Lieu/Pre-Foreclosure Sale (Short Sale) – Minimum 2 year waiting period

FHA/VA Loans Require:

• Chapter 7 BK – 2 year waiting period from the discharge/dismissal date
• Chapter 13 BK – 1 year of the payout must have elapsed and the borrower’s performance must have been paid as agreed.  Document that the borrower’s current situation is not likely to recur.  The court must grant permission to the borrower to enter into a mortgage transaction.
• Foreclosure/Pre-Foreclosure/Short Sale – 3 year waiting period
• VA Loans ONLY – 2 year waiting period for Foreclosures

Are you in need of a short sale, but have a second lien holder on your home? Having a second lien does make it more difficult to do a short sale. The first lien holder will decide how much money the second lienholder will get paid off if the short sale is accepted. So what if the second lienholder won’t take that amount from the first lienholder? It can be a mess!

So you had your Realtor do a short sale. She found a buyer after advertising for months. You and your Realtor and the first lienholder negotiated the contract. Everyone is happy except the second lienholder. You see, if the second lienholder won’t take the payoff from the first lienholder, then clear title cannot be transferred to the buyer, which means the short sale cannot be done. So, the home goes into foreclosure or the sellers have to file bankruptsy. The short sale is over.

In the past I had a seller who was in this situation. The seller, their first lienholder of thier mortgage, and the buyer were all in agreement on the short sale. The first lien holder, the bank, was going to give $3K to payoff the second lienholder. But the second would not take the $3K. They wanted their full amount due (which if the sellers could pay they would not be doing a short sale!) So the home was not able to sale. Everyone loses. The Realtor loses commission even though they found a buyer. The seller loses their home to foreclosure. The bank has to pay additional fees for the foreclosure. The buyer lost the house they wanted and could afford to buy. The second lienholder walks away with nothing. It’s such a shame when this happens.

If you are interested in doing a short sale, please contact your Realtor early on in the process. Once a foreclosure date has been set, it is hard to get the bank to extend it out to allow time to market the property. If you have a second lienholder, tell your Realtor in the beginning so they can start the negotiations between the second and first lienholders. It can be done. I have seen many second lienholders take the settlement from the first lienholder. It usually works out, but unfortunately, sometimes it does not. Make sure you use a Certified Distressed Property Expert if you need to do a short sale. There are so many things that can cause a short sale to foreclose. Make sure you have a Realtor that can get it closed for you! At RREA, we have many Realtors with the CDPE designation that have closed many short sales. Please call today if you or someone you know is having a mortgage crisis. We can help!

I have found that some consumers want to choose their own title company when they are purchasing a home. It is their right, of course, to choose. However, on what basis is a consumer choosing a title company? It has been my experience that when you allow your Realtor to choose the title company, you have a much smoother closing. This is because title companies work for Realtor business, not consumer business. So title companies want to make Realtors happy so they will repeatedly use their services. So when I use a title company of my choice for my clients, I know they will get great service and I have no fear of the title company going under with their earnest money. I also know I will get all my documents in a timely fashion and if there is a problem, I have someone I can directly contact and trust to resolve it. However, when consumers purchase Foreclosure properties, they usually do not get a choice on their title company. The seller decides or they make the buyer pay for the title insurance.

On a recent transaction I had a buyer that was purchasing a foreclosed home. The title company was chosen by the seller and it took them weeks to get the documents that the lender was requesting. Since the title company was out of town, they did a remote closing at my office. That means the title company sent a notary to get all of the documents signed. Unfortunately in this case, the title company did not send all the docs with the notary. So the next day when we were waiting for funding and my clients were waiting to get the keys to their new house, my clients and I found out they had to come back and sign more documents. Imagine my outrage! Then after the closing the title company did not send copies of the closing documents to my buyers. We had to both request copies several times before they were emailed to them. There are so many things that can hold up funding on a loan. You don’t want your title company to be the reason you don’t get into the home of your dreams. What if we’d had to wait to get docs signed and the lock on the loan expired? We could have lost the entire deal. You want to work with a title company that has a good reputation with your Realtor. One that your Realtor trusts to take care of all necessary details. Trust your Realtor, because is they are worth your real estate business, they know which title company will take good care of you!

WASHINGTON (Federal Housing Finance Agency) – The Federal Housing Finance Agency (FHFA) has set new objectives for the conservatorships of Fannie Mae and Freddie Mac. The three strategic goals for the government-sponsored enterprises include building new infrastructure for the secondary mortgage market, simplifying and shrinking their marketplace presence, and continuing foreclosure prevention activities as well as mortgage credit availability.
Fannie Mae and Freddie Mac have received more than $180 billion in taxpayer support since being placed in conservatorship in September 2008.
According to the Appraisal Institute, the FHFA is doubtful the money will be repaid in full.

Hey guys! It’s White Board Monday again. This week is the 10 reasons why your short sale was not improved. Hope you find it informative.

8-Day Window to Submit Backup Offer

Based on agent feedback and to reduce overall cycle times, changes are bring made to the short sale process. If it becomes necessary to submit a backup offer during a short sale, you now have a reduced window for making the submission. Instead of 14 days, backup offers must now be submitted within eight calendar days after the initial offer becomes invalid.

When a backup offer becomes necessary:

• Contact your short sale specialist immediately.
• Let the specialist know if you have a backup offer to submit.

Within eight calendar days, resubmit the listing data, submit the short sale offer, and upload the offer documents and supporting documents.  Any backup offer will require analysis and investor approval, regardless how similar it may be to the previous offer.

If no backup offer is available:

• The short sale will be closed in Equator by your short sale specialist.
• You should return to marketing the property.

You may initiate a new short sale in Equator when you receive a new offer on the property.

This information is primarily for Bank of America, but could be applied to other short sale situations.

PLANO (HousingWire.com) – Many jobless homeowners unable to make their monthly mortgage payments will soon get a little help from Fannie Mae and Freddie Mac.

The government-sponsored housing finance companies have announced plans to allow such borrowers to defer part or all of their mortgage payments for up to 12 months while they are out of work.

Fannie Mae will require mortgage servicers to install a new program providing forbearance relief to unemployed borrowers beginning March 1.

Servicers will be able to provide up to six months of relief without getting approval from the government-sponsored enterprise. Special consideration can be given to borrowers who require up to 12 months of forbearance.

Freddie Mac will begin offering 12-month forbearance plans on Feb. 1.

Delinquent borrowers and others on the verge of default are eligible for the program. Second homes and investment properties will not be considered.

Servicers must determine that a borrower has less than 12 months worth of mortgage payments in reserves and has monthly housing expenses above 31 percent of their income before extending a forbearance plan.