Register Real Estate Advisors

Due to the amount of short sales and foreclosures we have endured over the past two years, it has been my prediction that there will be a lot of well incomed homeowners that need housing that cannot get a mortgage due to these losses.  Therefore, owning houses and selling them to consumers through seller financing instead of with regular mortgage loans will be very lucrative in the coming years.  I predict it will be the new trendy way to generate income instead of flipping real estate or holding onto rentals.  That is just my opinion, of course, but that is what I am predicting.  Below is an article from last month’s Realtor Magazine that explains Seller Financing Pros and Cons that I think every potential seller financing buyer or seller should be aware of.

When traditional lending avenues fail, seller financing can help seal the deal.  But watch out for pitfalls.

If you’re working with sellers who have seen offers collapse
because buyers can’t get a mortgage loan, you might want to suggest they
consider offering some variation of seller financing.  If structured carefully, seller financing not
only makes deals possible but also can typically help transactions close
quickly, as less due diligence is required.
After all, who knows the property better than the sellers?

There are other perks, too:
Sellers can often negotiate an interest rate that’s more favorable than
would be available for other sorts of investments.  And they might also get a higher selling
price as compensation for assisting the buyers.
Finally, there can be some tax benefits; if the seller structures the
loan as an installment sale, for example, there can be tax advantages based on
how recognition of the capital gain is timed.

But against these benefits is the big downside of seller
financing:  the potential for buyer
default.  This risk is compounded if the
deal is structured as a wrap-around deed of trust, as many are.  With a wrap-around deed of trust, the seller
issues a promissory note and deed of trust for the dollar gap between the
amount of the first mortgage and the buyer’s down payment.  When structured this way, the seller’s
performance on the underlying first mortgage is linked to the buyer’s
performance.  If the buyer defaults, the
seller will likely default, too.

Here are some ways to help sellers minimize such pitfalls,
no matter how the transaction is structured:

• Request a
  credit report and credit references.
  Sellers can get a credit report from any credit reporting agency, but
  they’ll want to get a signed consent letter from the buyer first.  For credit references, one place to go is the
  buyer’s landlord, if they’re renting.
  Sellers should also ask for independently audited financial statements.
• Consider
  loan assumption.  In many cases, the
  seller’s existing mortgage loan has a due-on-sale clause that requires the
  principal to be paid upon sale of the property.
  Having to settle their own financing makes it hard for many sellers to
  offer financing, especially if they’re buying a house themselves and need their
  sale proceeds to make their own down payment.
  In these cases, it might be better to simply have the buyer assume the
  seller’s existing loan.  The buyer still
  must submit to the lender’s underwriting analysis and get the lender to approve
  a modification, but the process should be less time-consuming than if they were
  applying for new financing.
• Provide
  expanded remedies.  For many sellers,
  the only remedy for buyer default included in their loan documents is
  foreclosure.  But it’s best to include
  lower-level remedies so foreclosure doesn’t have to be the only option.  Suggest that sellers set rules for imposing
  late charges or default interest.  Or
  suggest that sellers hire a property manager to keep track of incoming payments
  and to spearhead collection efforts, because these activities can be
  time-consuming.
• Understand
  the risks to buyers, too.  Although
  it might seem like most risks are on the sellers’ side since they’re putting
  their resources on the line, there are risks to buyers as well—and if you’re
  working with buyers, you’ll want to be aware of them.  First, buyers could pay the loan in full but
  still not receive title if there are encumbrances that were never divulged by
  the seller.  Second, if the transaction
  is structured as a wrap-around deed of trust and the sellers are supposed to be
  making payments on senior debt, the buyers could be at risk if the sellers fail
  to make their loan payments, even if the buyers are scrupulous in holding up
  their end of the deal.  Third, buyers might
  not have the protection of a home inspection, mortgage insurance, or an
  appraisal to ensure they’re not paying too much.

These are challenging times in credit markets, so there’s a
role for seller financing.  But be aware
of risks so you can help protect your clients.

AUSTIN (Austin Business Journal)
– The U.S. Department of Housing and Urban Development and NeighborWorks
America have given Texas more than $135.4 million in federal grants to
help homeowners at risk of foreclosure.

The Emergency Homeowners Loan Program provides funding to help
homeowners who fall behind on their mortgage
payments because of involuntary unemployment or underemployment
caused by the economy or medical conditions.

One in every 1,074 homes in Texas received a foreclosure filing
last month.

WASHINGTON, D.C. (Realtor.org)
– Fannie Mae has implemented new measures that will require mortgage
servicers to act more quickly and consistently in helping troubled homeowners
avoid foreclosure.

“We want homeowners to be able to understand their options when facing
foreclosure, and we want servicers to reach homeowners early in the process,
communicate frequently and clearly, and help homeowners avoid
foreclosure,” said Jeff Hayward, senior vice president of Fannie Mae’s
national servicing organization.

Among the changes, mortgage servicers will be required to:

• contact
  homeowners verbally and in writing within 120 days after a loan first
  becomes delinquent;
• complete
  a loan modification or other option that keeps the borrower in their home
  or helps the borrower avoid the foreclosure process;
• follow
  a clear timeline if foreclosure is unavoidable and begin the
  foreclosure process once a loan has been delinquent for more than 120
  days; and
• make
  it clear when a property in the foreclosure process will be sold.

I believe every homeowner deserves the best information and education to avoid losing a home to foreclosure and damaging credit for years to come. Many homeowners today are facing uncertainty. They do not know what to do next for themselves and their families. Despite all attempts to hold on, foreclosure has become a reality that if not addressed and handled correctly, it can have a devastating outcome. Here are a few examples of how a foreclosure will affect your life.

Foreclosure is the most challenging issues against a security clearance outside of a conviction of a serious misdemeanor or felony. If a person has a foreclosure and is a police officer, in the military, security, or any other position that requires a security clearance; the clearance could be revoked and the person will not be able to perform the duties required for the job. On its own, a short sale does not challenge most security clearances due to the fact that short sales are not explicitly reported on a credit report.

Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. In many cases, a foreclosure is ground for immediate reassignment and sometimes termination. Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and will challenge employment in most cases. Again, since a short sale is not reported on a credit report; therefore not a challenge to employment.

Now more than ever, you need to prepare yourself to navigate the mistakes that are most commonly made. As a Certified Distressed Property Expert (CDPE), I have been specifically trained to assist homeowners in difficult situations. If you would like more information or assistance, please contact Krista at 832-585-3035.

On November 10th a Broker from San Francisco, CA named Tara-Nicholle Nelson posted this article as a blog on Trulia. Thinking it’s wonderful, I am re-posting on my blog for my readers…

Four years into the housing crisis, myths about foreclosure still litter the minds of even the smartest of real estate consumers. When it comes to matters as high stakes as your home, confusion can cost you thousands – or even your home. Whether you’re a buyer looking at foreclosures, a homeowner struggling to keep your home or a seller concerned making sure your home can compete with the foreclosed homes on your block, these foreclosure myths are prime for the busting, with no further ado.

Myth #1: Foreclosure happens fast. With unemployment and underemployment still affecting nearly 1 in every 4 Americans, no one is immune from fears that a pink slip might quickly turn into a foreclosure notice. According to NeighborWorks America, nearly 60 percent of families seeking foreclosure counseling cited a lost job or cut wages as the reason they were facing foreclosure.

While the Obama Administration’s Home Affordable Programs haven’t been nearly as effective as predicted in actually preventing foreclosures, they have had the effect of extending the foreclosure process for many families. Even though the legal process of foreclosure can happen in as few as 6 months in most states, it is currently taking much longer for the average foreclosure to get to completion. Recently, JP Morgan Chase revealed that their average borrower who loses a home to foreclosure has not made any payments in 14 months nationwide; 22 months in FLorida and 26 months in New York.

To be sure, some see this as a good, others view it as unnecessarily dragging out the overall market’s recovery. Many insiders will point out that these delays in foreclosure may be calculated to save the banks the costs of owning and maintaining foreclosed homes, not to help homeowners. In any event, the fact that foreclosure does not happen nearly as fast, in many cases, as expected does give families who are temporarily down on their luck some extra time to try to get back on their feet and save their homes.

(more…)

Qualifications for an FHA/Hud foreclosure are very similar to the requirements for a short sale, but there are some differences.
Eligibility requirements include:

• Property must me owner occupied (you must still live in the home unless you provide a verifiable reason why you have already vacated (ie job loss, job transfer, divorce).
• The property must be your primary residence (no investment properties)
• The homeowner must be 31 days or more delinquent on their mortgage at the time of closing.

If you find yourself in a hardship situation that requires a short sale or Pre-foreclosure sale, and need help I can you get through the process as a Certified Distressed Property Expert I have the the tools and knowledge to help get the deal closed.

Following is some excellent information and Q&As provided by HUD:
Question 1: When submitting a PFS Variance for approval, what items need to be attached to a PFS Variance?
Answer: Depending on the type of Variance, the Mortgagee may need to submit the HUD-1 Settlement Sheet, the first three (3) pages of the FHA “As Is” Appraisal, and/or Hardship Letter.

Question 2: Previous HUD-1 Settlement Sheets have been submitted to NSC, only for NSC to deny the Variance due to buyer or seller receiving cash at the PFS closing. Please provide guidance.
Answer: The HUD-1 Settlement Sheet is to be “completely” filled out, providing both the buyer’s and seller’s costs and fees. Neither the buyer nor seller is to walk away from the PFS closing with “cash.” The seller, if applicable, may be eligible for the Seller Incentive, but even the Incentive is “not” to be reflected as a payment of cash on the HUD-1.
(more…)

1. Protect your credit score.

2. Beware of offers that sound too good to be true – they probably are.

3. Become an educated consumer. Talk to your Texas REALTOR® about predatory lending practices – what they mean and how to keep from being a victim.

4. Don’t buy more house than you can afford right now.

5. Think twice about non-traditional loans, such as interest-only and adjustable-rate mortgages (ARMs). Fixed-rate mortgages are just that – fixed.

6. When purchasing a new home, look beyond the monthly mortgage. Other costs to consider include property taxes, homeowner’s insurance, utilities, maintenance, and, depending on the neighborhood, homeowners’ association fees.

7. Don’t sign a blank document or anything you don’t understand.

8. Know and understand the terms of your mortgage.

9. Don’t let anyone persuade you to “pad” your income to qualify for a loan.

10. If you’re having trouble making your monthly mortgage payment, don’t hide from your lender. Work with your mortgage lender to find out what your options are.

11. Work with your Texas REALTOR®, Krista Wright 832-585-3035, to find a reputable lender and a loan product that works for you.

Source: www.TexasRealEstate.com

WASHINGTON, D.C. (Fannie Mae) – Fannie Mae has announced new incentives on Fannie Mae-owned properties listed on the company’s REO website, www.HomePath.com.
Qualified homebuyers who will be owner-occupants can receive up to 3.5 percent of the final sales price that can be used toward closing cost assistance, including a home warranty, if desired and available.
In addition, selling agents representing owner-occupants will receive a $1,500 bonus. Eligible offers must be submitted on or after Sept. 23, 2010, and must close by Dec. 31, 2010. The sale must close within 60 days of the offer being accepted.
HomePath properties are owned by Fannie Mae and include a wide selection of homes, including single-family homes, condominiums and town houses. HomePath properties may also be eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing.

Homeowners who have defaulted or are at risk of defaulting on their mortgage may believe that the only solution to their mortgage problems is foreclosure. However, that is not the case. There are options available and those options are listed below:

Refinance

Homeowners who are current on their mortgage payments may find that refinancing is the answer. They can take advantage of today’s low mortgage rates, reduce their monthly payments, and most importantly, keep their home. In early 2009, the Obama administration launched the Making Home Affordable programs in an effort to help stabilize the housing market. For more information about these programs, visit www.MakingHomeAffordable.gov.

Lender Workout

Mortgage lenders will often work with homeowners who are in default or at risk of defaulting to help them keep their homes with a number of their own options. These workout options can include forbearance, a repayment plan, reinstatement, and loan modifications. Homeowners who are seeking this option are encouraged to look into the Making Home Affordable programs. A link to the website is provided in the paragraph above.
(more…)

This video, produced by the Houston Association of Realtors, helps consumers to understand what a short sale is and how the process works. A distressed property is one that is in the short sale process or is currently under foreclosure. Currently, Shannon Register is a designated Certified Distressed Property Expert and Certified to do Short Sales and Foreclosures. When a foreclosure does not sell on the courthouse steps, it returns to the Bank Owner in what Realtors refer to as an REO (Real Estate Owned Property.) If you know someone having dificulty paying their mortgage, the best advice you can give them is to contact our team as soon as possible for help. The short sale process takes time, so the sooner you get the property listed, the sooner it will sell and the less likely the bank is to foreclose on the owners. It can be humiliating to be behind on your mortgage, but our team knows the sensitivity of this ordeal and we understand that there are many situations that can lead to slow mortgage payments that cannot be caught up. Please contact us first for help! We are trained and work with banks regularly to help consumers in the Houston area. Our expertise could save your home from Foreclosure and save your credit so you can purchase a home again in two years – and there’s usually no cost to you!