Short Sale or Foreclosure, What Should “I” Do?


TV, newspaper, internet wherever you turn you are hearing about this topic everywhere.  Those facing a short sale or foreclosure know it can be very stressful and often wonder where to turn.  I am here to tell you that “YES” it can be stressful, but once you have spoken with a qualified person that can give you direction, answer your questions and help you to make those first steps, this stressful feeling will subside and you will wonder why you waited so long to ask the question.  What most people don’t know right now, if you were to start asking around, you would be surprised at how many people are in the same situation you are in.  Why are we so afraid to talk with each other about our difficulties…remember when the teacher always said to us, the only stupid question is the one that was not asked?  Shouldn’t that apply in this situation also?

The worst thing you could have to tell your spouse or partner is that you may be on the verge of loosing your home.  Now what, how long will the process take, where do we go from here & most impotantly…where will we live & how long with this affect our credit scores.  These are more than just scary thought.  Depending on the action you have to take; short sale vs. foreclosure both will impact your credit scores but in two very different ways.

Short Sale: May stay on your record for 3-4 years.  How it affects your credit score is based on each situation individually as each of our credit scores are different to begin with.  After the appropriate number of years, you may see this come off your credit report.  If you have a second mortgage, this lender has up to 7 years to come after you for the deficient amount owed on that loan even once the home is sold.

Foreclosure: This will stay on your credit report FOREVER! It may affect the terms of any loan or credit card you try to obtain in the future. 

Neither of these procedures should be taken lightly, however, working with a qualified real estate agent will help guide you through the process and be able to direct you to the correct persons that you may need to speak with in order to make the correct decision for you.  When speaking with a Real Estate agent about how you should proceed, it is important to know that this person can not ethically give you any legal or financial advise on the decision you might need to make.  It is always in your best interest to speak with the appropriate persons for direction in these matters.  Your Real Estate agent should also not pressure you to make any impulse decisions on what you want to do.  Since this decision is going to affect you for many years if not a lifetime, take the time to make the decisions that feel best for you, your spouse and most definitely your family.

The other thing to remember is each situation is different and how the bank works with your agent will be different in each case.  So if you see an agent promoting themselves as an experienced or expert in either of these situations, remember that these designations are self-proclaimed and there is NO government or agency that gives these titles to an agent.

THE SPIRITS TO MOVE are here to assist you in all your real estate needs & questions.  Leave us a question if you have one and we will get back with a private response to you.  We are here to help move you in a professional & confidential manner.

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Are the banks finally owning their responcibility in the housing crash?


 Here is a great article I saw on Reuters written by Joe Rauch about Bank of America agreeing to pay Fannie Mae & Freddie Mac BILLIONS to settle claims that they sold bad home loans.  Will other banks finally own up to their responcibility in this crisis we are in also and will this acknowledgement & payback help any of the people about to loose their homes find any help in this move?  I guess time will tell…

(Reuters) – Bank of America Corp agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle claims that it sold the mortgage finance companies bad home loans, signaling that the bank may be closer to containing its outsized housing losses.

The news sent Bank of America shares up 5.5 percent to $14.08 in midday trading on the New York Stock Exchange. The deal triggered hopes that other banks may soon make similar settlements, and shares of Citigroup Inc and JPMorgan Chase & Co also rose.

Investors have feared for months that Bank of America would have to buy back billions of dollars of home loans it sold to investors at the height of the housing boom.

“I think 2011 will see the issue hopefully behind us,” said Alan Villalon, a senior bank analyst at Chicago-based Nuveen Investments, which owns Bank of America shares.

The agreement with Fannie Mae and Freddie Mac resolves the bulk of Bank of America’s exposure to those government-sponsored enterprises (GSEs), but likely means the bank will post its second straight quarterly loss when it announces fourth-quarter earnings on January 21.

Before the settlement was announced, analysts projected the bank would post a profit of 25 cents per share for the quarter, according to Thomson Reuters I/B/E/S. The settlement had some analysts revising their estimates.

For example, Sandler O’Neill analyst Jeff Harte reduced his fourth-quarter earnings estimate from a profit of 20 cents per share to a loss of 20 cents.

Bank of America said it would set aside $3 billion in the fourth quarter to help cover the Fannie and Freddie claims. It also said it expects to take a $2 billion charge in the quarter to write down goodwill linked to its home loans and insurance business unit, amounting to an admission that the unit is not as profitable as the bank had expected.

Despite the settlement, the bank still faces potential liabilities from mortgages it sold to private investors, as well as big losses from home loans it has made and kept on its books.

“This doesn’t get the bank completely out of trouble. They’re still going to face litigation on repurchases from private-label investors,” said Chris Whalen, senior vice president and managing director of Institutional Risk Analytics.

Mortgage investors say the home loans should never have been sold to them in the first place because they did not meet investors’ underwriting requirements.

Bank of America said it made a $1.28 billion cash payment to Freddie Mac as part of an agreement to end all claims, including future claims, related to mortgages sold through 2008 by Countrywide, a mortgage company bought by the bank that same year.

The bank paid Fannie Mae $1.34 billion in cash and applied certain credits to reach an agreed $1.52 billion settlement on 12,045 Countrywide loans from 2004-2008. Fannie Mae has reserved the right to bring future claims against the bank.

BofA Chief Financial Officer Charles Noski said on a conference call with analysts that the bank does not expect to add significantly to the reserve for additional repurchase requests from Fannie or Freddie in the future, though the agreement only covers loans originated by Countrywide.

The bank estimates it will have $2.7 billion in outstanding repurchase requests from Fannie and Freddie not covered by the settlement. Noski said this includes $832 million of requests due to incomplete documentation that can be resolved without large losses to the bank.

 In October, Bank of America said it was two-thirds of the way through its GSE-owned mortgage repurchases and had bought back $11.4 billion in mortgages from Fannie Mae and Freddie Mac.

SETTING PRECEDENTS

The agreement is similar to but much larger than a recent $462 million settlement between Ally Financial Inc and Fannie Mae.

The regulator for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, suggested other banks may be forced to follow suit.

“While these agreements are an important step, the Enterprises (Fannie Mae and Freddie Mac) have other outstanding claims across a range of counterparties and they are being pursued,” said Edward DeMarco, acting director of the FHFA.

As the largest mortgage servicer in the United States, Bank of America has been at the center of the multi-year foreclosure crisis. The agreement with Fannie and Freddie is not the end of the problem.

Bank of America said during its third-quarter earnings presentation that it had received $8.7 billion in repurchase requests from outside investors and monoline insurers, on $910 billion in mortgage-backed securities sold to those two groups during the housing boom.

Nuveen’s Villalon said the agreement with Fannie Mae and Freddie Mac could set a precedent in the bank’s negotiations with private investors, since the GSEs had stricter underwriting standards.

The bank started negotiating with a group of mortgage investors — including the Federal Reserve Bank of New York and PIMCO — last month in an apparent shift in its stance toward such claims.

In October, Bank of America Chief Executive Brian Moynihan said the bank would fight back against investors whose attitude was: “I bought a Chevy Vega but I want it to be a Mercedes.”

(Reporting by Elinor Comlay in New York and Joe Rauch in Charlotte; additional reporting by Maria Aspan in New York; Editing by John Wallace) 

By Joe Rauch

Would be, Won’t be…which are you?


 

Having the RIGHT agent does help.

Many people are still saying, I can’t afford to buy a home.  Is this you?  If so, you have not found the right person to work with, or your SPIRITS TO MOVE is not strong enough.

When you work with someone or a team of people that are intersted in seeing you achieve your goals, they will give you direction, suggestions and stay by your side until your goal is accompolished.  How can this happen you ask…here is how:

Lenders: Do you realize that when you work with someone you truly trust, they can do more than fill out paperwork for you? They should be abe to  pull your credit report work through it with you and give you suggestions that will help to improve your credit score.  Some will also work with you in ways to get the old items removed that may just need a letter written to the correct person.  They can also lay out a plan in which outstanding items should be paid to increase your score at a faster rate.

Agents: Most agents in todays market will not begin to show you homes until you have a qualification letter from your lender.  If you hear this from an agent, don’t get upset with them; they are doing this for your best interests even though you may not understand it.  They are protecting you from being your own worst enemy by thinking you qualify for more than you do. You don’t want to start to look at homes in the higher price range only to find out you aren’t qualified for that dollar amount, but a lesser amount.  Tradition shows that in most cases you will not be as happy with the homes in the lower range and get discouraged when looking at these homes.  So trust the agent you decide to work with.  Most do have your best interest at heart when they are working with you.

YOU: Can you believe it…YOU play the most important role in this whole transaction! From the moment you feel THE SPIRITS TO MOVE is when your job becomes the most important one.  Once you start talking to people you may work with, treat it as an interview for the person.  You will be telling them some of the most confidential things in your personal life, spending LOTS of time with some and spending tons of time on the phone, in homes and tring to reach the same goal.  Once you have been approved for how much you can afford, there are only 3 people that need to know that amount; YOU, the lender & your agent.  You do not want everyone to know what you have been approved for as this is your secrect card when it comes to negotating the home you want.  When you do find the home you love, NEVER put the qualification amount on the letter you will send to the other agent…KEEP THIS INFORMATION CONFIDENTIAL.  Remember, the lender & agent are working for YOU!

Keep your dreams with in reach by keeping your credit report in check, your spending under control & your goals within reach.  THE SPIRITS TO MOVE can be within your reach!