Short Sales For Real People Not Just Big Business

I have been saying this for awhile now, “If new bank is built for 200 million and it is now worth 100 million it becomes a bad asset and they will walk away and call it a good business decision, and yes they actually have the money to pay for it.”  This has been going on for years and now that home owners are getting beat up by there upside down mortgage or loss of employment and income they still struggle to hang on.  Sometimes starting over just makes sense emotionally and financially, if big business can strategically do this than why can’t you? Free consultation if keeping your home is no longer an option- Josh Groesbeck 208-353-7131 or josh@homeswithjosh.com

www.homeswithjosh.com and www.idshortsale.com

More and more commercial real-estate companies are doing what many indebted homeowners would like to do: Walk away from mortgages on properties that are now worth a lot less than they paid for them.

Today’s Wall Street Journal highlights three major developers - Macerich,Vornado Realty Trust and Simon Property Group - that have recently decided to default on mortgages.

When companies do this, no one bats an eye–it’s just “smart business.”

When ordinary homeowners think about doing it, meanwhile, the mortgage industry and government begin moaning that a mortgage is more than a business contract. It’s a social contract, in which homeowners have a “moral obligation” to pay.

That’s bunk. An individual mortgage is no different than a corporate mortgage. If corporations are allowed to walk away from mortgage obligations without feeling shame and guilt, then individuals should be able to do so, too.

The contract homeowners sign when they take out a mortgage spells out exactly what happens if the homeowner stops making payments on the loan.  The lender has the right to foreclose on the house, taking the homeowner’s downpayment with it.  In addition, the borrower’s credit rating will usually get destroyed, and, in some states, the lender can come after his or her other assets to recoup the capital the lender has lost.

Those are big penalties.  They provide a major incentive for the borrower to continue making his or payments.  And that’s why the lender, a corporation, put them in the contract.

Importantly, the lender voluntarily entered into the contract–and it did so because it thought doing so was a smart business decision. That it actually turned out to be a lousy business decision is not the homeowner’s fault. It’s the lender’s fault. And the borrower, who is already feeling plenty of pain his or herself, should not have to bear the burden of guilt and shame on top of everything else.

www.homeswithjosh.com

Boise Idaho Approved Short Sale

NO WAITING–FULLY APPROVED SHORT SALE AT ASKING PRICE! Open living area with vaulted ceilings, recessed lighting, large guest bedrooms, an abundance of closet space & neutral paint colors throughout. The kitchen is open & bright containing a plethora of storage. Oversized master suite situated on main level & upstairs bonus/media room with closet could easily be used as a 5th bedroom. Stamped concrete and curbing, auto sprinklers, oversized garage and a North facing back patio—perfect for Summer BBQ’s! Contact Josh Groesbeck to set up your private showing 208-353-7131 or josh@homeswithjosh.com

Mls#98439454 visits www.homeswithjosh.com to view

Idaho Short Sale Agent For You

Our First Response Team Is Here For You. New programs are being implemented Now! Advocate that is specially trained to help you sell your home for short of what is owed. Stop Foreclosure and stay in your home longer at no cost to you.  Hardship comes in many different forms.. Divorce, loss of income, untimely death and oh by the way HOME WORTH LESS THAN OWED. Our goal is to help you find the best solution whether that is a modification, short sale or died in lieu…

Goal:  Avoiding Foreclosure

The following are the steps that you as a homeowner can anticipate in the short sale process.  This is a general outline of how the process occurs, however please note that lien holders can change the order of some of the steps.  Detailed below is the process our team uses to process a short sale.  For a brief overview please see. www.homeswithjosh.com and look under Short Sales or Call 1-800-290-1076 Ext#3000

Pre-Listing

1.
Please contact Josh’s office for a brief consultation about short sales.  Josh or one of his team members will collect some basic information about your situation.
2.
A tentative appointment will be scheduled to answer questions and/or list the home for sale in the short sale process.
3.
Josh and his team will prepare a short sale packet which will be sent to you either via FEDEX, regular mail or email.  We provide a thorough packet of information in advance of the appointment so you have the opportunity to evaluate our process and have your questions answered in advance.  If what we send you and what we discuss prior to the appointment makes sense and you feel comfortable and confident to go forward with the short sale process, our appointment will be confirmed. The packet will include:
*
Information about the short sale process.
*
Market data on the value of your home in today’s market.
*
Recommended short sale pricing.
*
Listing contract and related forms.
*
Property detail report from the county assessor’s office.
4.
The appointment.  Josh will either come to your house to receive the documents or they can be returned via fax or email. We can do listing appointments via telephone or email if necessary.
5.
Once we receive a signed listing agreement we will begin the short sale process.
6.
An authorization form will be submitted to your lien holder(s) enabling us to speak to them on your behalf.  Unless previously provided, the lien holder(s) will provide their short sale requirements when the authorization is received.

Marketing

1.
Your home will be listed immediately on the Multiple Listing Service.
2.
We will market your home through various affiliated web sites and all other applicable marketing strategies.
3.
During the marketing period we will receive offers and present them to you as they are received.
*
Offers will be presented to you on an offers spread sheet.
*
You will be able to see the net offers as they come in.  We highlight, in yellow, the current highest net offer.
*
You will sign the purchase offer of your choosing.  We will advise you as to what appears to be the strongest offer.  We will encourage you to consider two important factors; price and the willingness of the buyer to wait for the short sale process to complete rather than back out in the middle of the process.
4.
You will select and sign the offer that is most likely to meet the lien holder(s) criteria for a short pay off of your loan.

Short Sale Processing

1.
After you select an offer it will be signed by you and presented to your lien holder(s).  This is the official beginning of the short sale processing phase.
2.
You can track your short sale offer, as it is processed, online at Short Sale Status.
3.
The offer and all documentation required by the lien holder(s) is submitted by our office to the lien holder(s).
4.
Documents go through a processing period and are assigned to a negotiator.  The lien holder(s) assign a negotiator to your file.  The negotiator will ultimately make the final decision about your case.  The negotiator will review your offer and present the offer to any investors into your loan.
5.
A BPO (Broker’s Price Opinion) or appraisal will be ordered by the negotiator.  This BPO is used to determine the value of your home and whether or not the net proceeds of the offer are sufficient to satisfy the investors and thus provide a short pay off of the loan(s).
6.
The negotiator will evaluate your financial situation to determine whether or not you qualify for a short sale.  The offer will be presented to the investors who are invested into your loan.  They will decide if your short sale is approved or not.
7.
The negotiator will report the response of the investors.  There will be one of three options:  Short Sale Approval, Short Sale Approval with Conditions or Denial.  If any other answer then Short Sale Approval is provided we will negotiate further on your behalf.
8.
After all negotiations are complete you will either accept or reject the terms of the short sale.
9.
Written short sale notification is delivered to the buyer’s agent and Escrow begins.

Escrow

1.
Escrows in short sales generally follow the same process as a regular escrow.  One difference is that the short sale approval has a “good through” date by which time the short sale must be finalized and escrow must be closed.
2. When escrow begins you will need to make plans to be moved out of the house by the close of escrow.

Josh Groesbeck

208-353-7131 or josh@homeswithjosh.com

Idaho Help For Home Owners

If you are currently working with an Idaho loan modification plan we hope that everything works out. If your loan modification is not working or perhaps you are upside down in your Idaho home (mortgage) please seek professional help. Josh is a trained Sh0rt Sale negotiator located right here in the Treasure Valley. Please review the HAFA rules and incentives from Making Home Affordable website. For answers and help with your home call Josh 208-353-7131 or josh@homeswithjosh.com

If you are looking for help selling your home and avoiding foreclosure, the federal government has introduced the
Home Affordable Foreclosure Alternatives (HAFA) Program to help you. As your mortgage servicer, we are
offering you the opportunity to participate in this program by utilizing HAFA’s short sale option.
Home Affordable Foreclosure Alternatives Program – Short Sale
A “short sale” is specifically designed to help borrowers who are unable to afford their first mortgage and want to
sell their home to avoid foreclosure, even if the sale price may not pay off the amount owed on their mortgage. A
short sale requires a number of parties (you, the buyer, your real estate broker, and sometimes mortgage
insurance companies and other lenders) to work together to make this option successful. However, it could be a
good solution for your current situation.
How Does a Short Sale Work?
 Pre‐Sale—We will start by approving a list price for your home or give you the acceptable sale proceeds (the
minimum amount that we must receive after sales costs) from the sale of your home. We will also identify the
sales costs (broker commissions and closing costs) that may be deducted from the final sales price. You then
list your property (like any home sale) with a local real estate broker at the approved price.
 Offer—When you get an offer on your home, you will submit the required documentation and we will approve
the sale if it is in line with what we agreed to.
 Closing—Once the sale closes, we will release you from all responsibilities for repaying your mortgage. Plus,
you will receive $3,000 to help pay some of your moving expenses. (The check will be paid to you by the
settlement agent as part of the closing.) In the event there is any money left over from the sale after paying
the entire amount you owe on the mortgage plus the approved sale costs, you will not be eligible to receive
the $3,000.
To Participate in the Short Sale Program
Please note, there is no guarantee that your home will sell under this program, and you are responsible for
determining whether you want to sell your home for the price and terms described in this letter. The following
pages detail your responsibilities, additional information on the short sale process and the Terms and Conditions.
Additionally, this letter constitutes an agreement between us and you (“Agreement”) so please read it carefully
and completely.

Source:Making Home Affordable

Faster Short Sale Approvals after B of A Insurance Scam

Ever feel like your mortgage servicer or company is just toying with you and your HAMP program- It should be black or white, completely transparent and well let’s admit it– Can I get a loan mod and does it even make any sense if my home is totally upside down (bought at 300k now worth 175k)- Here in Idaho job unemployment rate is still above 9% and not looking to drop drastically anytime soon.  If your loan company is jerking you around please don’t hesitate to call or email Josh with your questions. Idaho’s Best Short Sale Specialist! Read below what the big boys in banking are doing it might make you shake your head–

Bank of America gets caught with their hand in the jar and blames Countrywide.

But doesn’t Bank of America own Countrywide?  Yes!

When Bank of America took over Countrywide in 2008 during the worst housing crash since the Great Depression, according to Bloomberg, BofA absorbed Balboa Insurance.  Essentially, Balboa Insurance…now owned and operated by BofA, is insuring their own bad debt.

What does this mean?  Bank of America’s “Countrywide Loans” that have been defaulted against by homeowners are insured, meaning Bank of America is feeling no pain and actually is gaining from this type of bad debt. Meaning that BofA is in no hurry to sell bad debt.  That’s why there is “Shadow Inventory” and Short Sales are taking so long to approve for sale. There’s no hurry when your making money.

Why Bank of America is gaining on a defaulted loan?  It seems that the Federal Trade Commission (FTC) uncovered ”scamming” on behalf of  “Countrywide” last month.  Remember, Bank of America bought/took over, what ever you want to call it, Countrywide at the Federal Governments request.

What was the scamming?

Countrywide had established Balboa Insurance to cover their home loans gone bad.  In an effort to help defray these losses on bad loans, Balboa Insurance and Countrywide would over charge the now defaulted homeowner for any related services to the default…like mowing the lawns, maintenance of the home, painting, etc…yes, Countrywide in it’s need to make money, charged up to 2 times the amount back to the homeowner for these services.  This is in clear violation to FTC guidelines as it pertains to loan servicing.

So what?

Well, Millions and millions of dollars have been scammed from the clients that they hold a fiduciary responsibility. Kinda like Bernie Madoff screwing his own clients out of their money.   Well, it’s now 2 years later, and Bank of America “Countrywide” division has been caught red handed.  However, no one is being held responsible.  Why?

BofA was helping out the Feds by taking over the Countrywide catastrophe and with that comes immunity.  Above the law stuff…”you do us a favor, no one will suffer.”

Know that BofA has been caught, the new CEO, Brian Moynihan stated earlier this month that they have a “desire” to sell Balboa Insurance.  Desire?  What does that mean?

C’mon…let’s be real.  BofA makes tons of money on bad loans.  That’s why it takes so freakin’ long to get a BofA short sale approved!  That’s why there is “shadow Inventory”!

So what happens next?

As soon as CEO Moynihans “desire” is fulfilled and Bolboa is sold…it should open the flood gates to short sales and release of “shadow inventory”.

It’s good news…however, no one person is held responsible. No one goes to jail.

Do the Feds a “solid” and your protected!

Idaho Short Sale Process

Goal:  Avoiding Foreclosure

The following are the steps that you as a homeowner can anticipate in the short sale process.  This is a general outline of how the process occurs, however please note that lien holders can change the order of some of the steps.  Detailed below is the process our team uses to process a short sale.  For a brief overview please see. www.homeswithjosh.com and look under Short Sales

Pre-Listing

1.
Please contact Josh’s office for a brief consultation about short sales.  Josh or one of his team members will collect some basic information about your situation.
2.
A tentative appointment will be scheduled to answer questions and/or list the home for sale in the short sale process.
3.
Josh and his team will prepare a short sale packet which will be sent to you either via FEDEX, regular mail or email.  We provide a thorough packet of information in advance of the appointment so you have the opportunity to evaluate our process and have your questions answered in advance.  If what we send you and what we discuss prior to the appointment makes sense and you feel comfortable and confident to go forward with the short sale process, our appointment will be confirmed. The packet will include:
*
Information about the short sale process.
*
Market data on the value of your home in today’s market.
*
Recommended short sale pricing.
*
Listing contract and related forms.
*
Property detail report from the county assessor’s office.
4.
The appointment.  Josh will either come to your house to receive the documents or they can be returned via fax or email. We can do listing appointments via telephone or email if necessary.
5.
Once we receive a signed listing agreement we will begin the short sale process.
6.
An authorization form will be submitted to your lien holder(s) enabling us to speak to them on your behalf.  Unless previously provided, the lien holder(s) will provide their short sale requirements when the authorization is received.

Marketing

1.
Your home will be listed immediately on the Multiple Listing Service.
2.
We will market your home through various affiliated web sites and all other applicable marketing strategies.
3.
During the marketing period we will receive offers and present them to you as they are received.
*
Offers will be presented to you on an offers spread sheet.
*
You will be able to see the net offers as they come in.  We highlight, in yellow, the current highest net offer.
*
You will sign the purchase offer of your choosing.  We will advise you as to what appears to be the strongest offer.  We will encourage you to consider two important factors; price and the willingness of the buyer to wait for the short sale process to complete rather than back out in the middle of the process.
4.
You will select and sign the offer that is most likely to meet the lien holder(s) criteria for a short pay off of your loan.

Short Sale Processing

1.
After you select an offer it will be signed by you and presented to your lien holder(s).  This is the official beginning of the short sale processing phase.
2.
You can track your short sale offer, as it is processed, online at Short Sale Status.
3.
The offer and all documentation required by the lien holder(s) is submitted by our office to the lien holder(s).
4.
Documents go through a processing period and are assigned to a negotiator.  The lien holder(s) assign a negotiator to your file.  The negotiator will ultimately make the final decision about your case.  The negotiator will review your offer and present the offer to any investors into your loan.
5.
A BPO (Broker’s Price Opinion) or appraisal will be ordered by the negotiator.  This BPO is used to determine the value of your home and whether or not the net proceeds of the offer are sufficient to satisfy the investors and thus provide a short pay off of the loan(s).
6.
The negotiator will evaluate your financial situation to determine whether or not you qualify for a short sale.  The offer will be presented to the investors who are invested into your loan.  They will decide if your short sale is approved or not.
7.
The negotiator will report the response of the investors.  There will be one of three options:  Short Sale Approval, Short Sale Approval with Conditions or Denial.  If any other answer then Short Sale Approval is provided we will negotiate further on your behalf.
8.
After all negotiations are complete you will either accept or reject the terms of the short sale.
9.
Written short sale notification is delivered to the buyer’s agent and Escrow begins.

Escrow

1.
Escrows in short sales generally follow the same process as a regular escrow.  One difference is that the short sale approval has a “good through” date by which time the short sale must be finalized and escrow must be closed.
2. When escrow begins you will need to make plans to be moved out of the house by the close of escrow.

Josh Groesbeck

208-353-7131 or josh@homeswithjosh.com

Home Owners Leaving Government Hamp Program

Facts for the Idaho homeowners who are working towards a loan modification. Best case scenario is getting your payment lowered to no more than 31% of your gross income. IF your loan modification is not getting worked out do the next best thing and call Josh Groesbeck and you can stay in your home until it is sold while charging you nothing. Specially trained in the art of a Short Sale I can help you qualify for money back from the bank to you for your relocation. With the economic hardships and homes that are entirely upside down (worth less than is owed) it’s no surprise that well over 50% of american homeowners are choosing to Short Sale their homes and start fresh. More great information at WWW.HOMESWITHJOSH.COM or WWW.IDSHORTSALE.COM

Joshua Groesbeck      208-353-7131  or josh@homeswithjosh.com

About 91,000 borrowers dropped out of the program in June, putting the total number of dropouts at 530,000.

At the same time, about 49,000 borrowers received a permanent modification in June, bringing the number of total active permanent modifications to 389,000.

That means more than 40 percent of the roughly 1.3 million borrowers who have started in the program since its March 2009 inception have since dropped out, while just over 30 percent have received permanent new terms for their loan.

Idaho Housing Market Recovery

Here are 6 reasons why the Idaho’s housing market has yet to recover from it’s epic fall… Idaho’s housing market will recover and with interest rates extremely low (lowest ever) this is a great time to buy and a poor time to sell. When the market recovers we can expect annual appreciation to be slow at best- Over all Idaho real estate can and always will be a super investment.  Buy a home and enjoy the heck out of it and in time you will have paid down your mortgage leaving you the great escape- get your money and retire living the good life.

Joshua Groesbeck  208-353-7131

josh@homeswithjosh.com or www.homeswithjosh.com and www.idshortsale.com

1. Labor market: The labor market holds the key to a recovery in housing. “We need more job growth in this country for a housing recovery to take hold,” Dwyer says. That’s because a steady income stream is the first step to home ownership. And with the national unemployment rate sitting at an uncomfortably high 9.5 percent, a great deal of potential buyers are either out of work or worried about losing their jobs. And until jobs and confidence return, the market won’t have enough demand to support a sustainable recovery, says Mike Larson of Weiss Research. “This is truly a jobless recovery to end all jobless recoveries,” Larson says. “And that’s why I think the housing market is still struggling.”

2. Household formation: The weak labor market is undercutting a housing recovery in another way as well. As jobs become scarce, unemployed workers tend to move in with friends or family members, says Patrick Newport, a US economist for IHS Global Insight. This development works to constrict the creation of new households, which typically serve as a key driver of real estate demand. Only 398,000 new households were formed between March of 2008 and March of 2009, compared to roughly 1.2 million in a normal year, according to Newport. “That was the second smallest increase since 1947,” he says. Although figures for the most recent year have not yet been released, Newport expects they will show another period of sluggish household formation. “That is the key reason why the housing market is still down…and the reason that household formation is down is because the economy is so weak,” Newport says. “Job growth is what will get people moving back out on their own.” Newport expects the economy to add jobs going forward, but only at a modest pace. He forecasts roughly 800,000 additional jobs added this year, 2.7 million in 2011, and 3.5 million in 2012.

3. Foreclosures: Despite a sharp pullback in new home construction, the housing market remains significantly oversupplied. The market had an 8.3-month supply of unsold existing homes in May; that’s above the 6-month supply associated with a balanced market. At the same time, a mountain of distressed properties will ensure that additional inventory continues hitting the market in the form of foreclosures. Foreclosure filings were reported on nearly 1.7 million homes in the first six months of the year, an increase of eight percent over the same period a year earlier, according to RealtyTrac. “The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions,” James Saccacio, the chief executive officer of RealtyTrac, said in a statement. And with large numbers of Americans still struggling to pay their mortgage bills, even more foreclosures are on the way. Ten percent of all mortgage loans were delinquent at the end of the first quarter, according to the Mortgage BankersAssociation. It could take two years or longer for the market to work through this excess inventory, experts say. And it will be difficult for home prices to rise appreciably until balance is restored.

4. Tight credit: Rates on 30-year fixed mortgages fell to 4.57 percent for the week ending July 15–that’s the lowest level since the 1950s. Not everyone, however, will be able to take advantage of these attractive terms. That’s because banks–who incurred huge losses on bad loans made during the housing boom–have increased their lending standards significantly. “If you don’t have good credit it’s going to be difficult [to get a mortgage],” says John Bancroft, the executive editor of Inside Mortgage Finance. “If you don’t have money for a down payment and you are in a market that is still considered deteriorating, it’s going to be difficult [to get a mortgage].” To get the best rates, today’s borrowers will need a FICO score of 720 or higher, a down payment of around 10 percent, and fully documented income and assets, says Keith Gumbinger of HSH.com. Buyers that can’t meet these requirements could still be eligible for government-backed loans through the Federal Housing Administration. Attractive rates are also available on larger, so-called Jumbo home loans, but the credit bar will be even higher. Today’s Jumbo borrowers generally need a FICO score of at least 740 and should expect to put down anywhere from 20 to 40 percent, Gumbinger says.

5. Falling home prices: With home prices having fallen so dramatically from their 2006 peaks, the real estate market’s weakness has become an obstacle to recovery in and of itself. Although home prices have stabilized recently, they are expected to decline in coming months. Meanwhile, the years-long period of home price deflation has blinded many Americans to the potential benefits of buying a home, Gumbinger says. “The message which has been repeated over and over again in anything from 40-point headlines on down is: ‘People are getting screwed by homeownership.’” As a result, many would-be home buyers are still scared off by concerns that their investment may lose value after they’ve gone to closing. “No one wants to catch the hot falling potato,” Gumbinger says.

6. Selling your other home: While today’s housing market has created some serious deals, not all buyers are in position to take advantage of them. For example, any current homeowner interested changing addresses will first need to sell their home. And with roughly one in four homeowners in negative equity–meaning they owe more on the mortgage than their property is worth–that can be tricky. Homeowners with negative equity may take a loss on their investment if they sell their property. “That’s something that [homeowners] don’t do readily,” says Brad Hunter, the chief economist at Metrostudy. As a result, the 11 million homeowners who have negative equity are less likely help advance a real estate recovery.

Outlook: When considering the trajectory of the real estate recovery, it’s important to bear in mind the magnitude of the boom and bust, Larson says. “We had the biggest housing bubble the country has ever seen,” Larson says. “The reality is that when you get these types of situations that carry so far to the upside, the recovery period takes quite some time.” Newport expects median existing home prices to fall another 8 percent or so before bottoming out in the first quarter of next year. From there, he expects prices to begin a slow and fitful climb.

By Luke Mullins U.S. News and World Reports

Meridian Idaho Approved Short Sale

820 Loggers Pass in the wonderful Glacier Springs community is another Idaho short sale that we have been approved to sell. Neighborhood is located in prime meridian, Idaho location that provides easy access to interstate 84. Meridian, Idaho is right in the heart of the treasure valley, quickly becoming one Idaho’s most popular places to settle down. Live the country life and be within minutes of downtown what more could you ask for?

If you are currently looking to buy or sell real estate please don’t hesitate to call or email for proven customer service and the ability to get the job done. Also if you are one of the many families struggling to keep up with your house payment or are already in foreclosure we can help. Full-time Realtors with staff to handle all cases. Joshua Groesbeck 208-353-7131 or josh@homeswithjosh.com or www.homeswithjosh.com and www.idshortsale.com

LOADED WITH AMENITIES! Gracefully designed floor plan containing a plethora of granite, tile & hardwood throughout. Enormous bonus room, jack and jill bathroom, 9’ ceilings, tons of storage & a luxurious kitchen overlooking the main level living area w/fireplace. Stunning master suite highlighted with gas fireplace, his and her closets, dual vanities, jetted tub & a tiled walk-in shower w/3 heads. Oversized covered back patio (plumbed for gas), professional landscaping, oversized garage & 2×6 construction. Mls#98434697

Source: Intermountain Mulitple Listing Service and Trust Realty

Idaho Short Sale Help

Strategic Walk Away!!  Is your home worth less than what is owed? Making less money? Divorce? Hospital Bills?   Hardship is everywhere in today’s economy but think towards the future–  If you are in trouble of losing your home to foreclosure or have already tried to modify your loan with no success and are now in need of help– Call Josh 208-353-7131 or josh@homeswithjosh.com We can solve your problem today and let you start preparing for the future, the next home you buy will be at the right price not some super inflated unrealistic price. You have heard it all before and it will always be true Real Estate is the best investment if you buy right!

www.idshortsale.com or www.homeswithjosh.com

Read this below and it will explain what Fannie Mae is doing to crack down on the Walk Away

If you choose to walk away  from your mortgage rather than work something out with your servicer, Fannie Mae will block you from getting another mortgage for seven years from the date of the final foreclosure on the house. That’s according to new rules that go into effect immediately.

But, if you do work with your servicer to come to some agreement — whether a loan modification, deed-in-lieu of foreclosure, pre-foreclosure sale or short sale — your wait time to buy a new house will be much shorter. In fact to encourage people to work with their lenders rather than just walking away, Fannie Mae is shortening the time you’ll be eligible for another Fannie Mae mortgage.

“Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting,” Terence Edwards, Fannie Mae’s executive vice president for credit portfolio management, said in making the announcement.

“On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer, will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

Here’s the breakdown for eligibility depending on how you got out of your last mortgage:

* Deed-in-Lieu of Foreclosure> — reduced from four years to two years if you can put down 20 percent on your house, four years if you can only put down 10 percent.
* Preforeclosure Sale — remains at two years if you can put down 20 percent, four years if you can only put down 10%.
* Short Sale — will be the same as pre-foreclosure sale. Currently there are no set rules for short sale.
* Strategic Default (Walk Away) — seven years.

All these waiting periods start on the day after the completion of a preforeclosure event or foreclosure event. If you can prove there were extenuating circumstances, such as the loss of a job, the waiting period for deed-in-lieu, a preforeclosure sale or short sale will be reduced to two years with a 10 percent down.

In all cases eligibility will be dependent on other factors, such as credit history and credit score. The eligibility matrix is complex and varies greatly depending on your economic situation. Take a close look at the matrix to figure out what you need to put down based on your credit score.

Fannie Mae is taking action now because statistics show that more and more people are willing to walk away from their home because there doesn’t appear to be any negative effect. In a study from the University of Chicago the researchers found that 31 percent of foreclosures were strategic defaults. The researchers defined strategic defaulters as “homeowners willing to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage.”

In addition to increasing the wait time until one can buy another home, Fannie Mae also will encourage servicers in states that permit them to go after a short fall, to begin chasing strategic defaulters for the money. This shortfall happens when the bank sells the foreclosed home for less than the mortgage. The bank can then go to court in many states and ask for a deficiency judgment. Not all states allow lenders to chase borrowers for the money. If you are planning to walk away from your home that is underwater, be sure to talk with an attorney to find out whether your lender can chase you for any shortfall.

You can avoid a deficiency judgment if you come to some agreement with your lender, but be sure you have a good attorney checking the agreement to be sure the lender can’t chase you. In most walk-away cases you can protect yourself from a deficiency judgment with a deed-in-lieu of foreclosure or a preforeclosure or short sale.

Clearly the banks are taking note that if they don’t act aggressively to collect any shortfall more people will strategically default. Now the game becomes much more serious, especially if you live in a state that allows the lender to go after you for any shortfall.

Source: Lita Epstein

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