Duarte/Downey Real Estate Agency, Inc



Posted by Duarte/Downey Real Estate Agency, Inc on 4/14/2014

Trying to navigate your way through a short sale can be tough. Knowing how short sales work and how to make the sale happen is important in surviving the short sale process. Along the way there will be a lot of myths to dispel about short sales.  Here are just a few short sale myths: Sellers think that a short sale is worse for their credit score than a foreclosure. When determining your FICO, the Fair Isaac Corporation treats a short sale and a foreclosure the same. Buyers think a short sale is a deal. In fact, short sales tend to sell for more than foreclosed homes. A short sale is difficult. If you use an experienced agent you should be able to survive a short sale. Most short sales are denied because of a misunderstanding of the process. If the short sale process is not followed correctly, there is a good chance of getting denied. If I short sale my house I won't be able to buy another home. This will depend on your credit, restrictions can vary from 2-3 years.  Some FHA programs allow for a purchase sooner than that, however the guidelines are fairly strict. A house that is already in foreclosure cannot be sold as a short sale. Not true, a foreclosure notice or notice of default does not mean that you do not have time to perform a short sale. Banks will sometimes even postpone a foreclosure for the short sale option. These are just a few of the common myths surrounding short sales. As always, use a professional real estate agent to help you navigate your way through a short sale.





Posted by Duarte/Downey Real Estate Agency, Inc on 8/25/2013

In this market, short sales can sometimes be a good deal for a buyer but they also come with some potential pitfalls. A short sale is when a seller needs to sell their home for less than they owe on their mortgage. In order to get a bargain and not a headache you will need to do your homework. Here are some tips for protecting yourself before buying a short sale.

1. Use experts

It is important that before you buy a short sale you assemble a team of experts. During the initial phase you will need help identifying which homes are being offered as short sales. The nature of short sales are different, you will also need help determining a purchase price and what to include in your offer. A real estate attorney who is knowledgeable in short sales is also key. Navigating the process of a short sale can be tricky so you will need an experienced short sale attorney to help deal with the potential of multiple liens, mechanic’s and condominium liens, or homeowners association liens. Often homes that are in short sale have these issues and without help will be harder to purchase.

2. Prepare emotionally

If you want a good deal on a short sale you will probably have to be in it for the long haul. It is important to stay patient, and remain unemotional during what can sometimes be a lengthy and emotionally difficult process. You may even want to consider a title search upfront. This could weed out properties with multiple liens if you are under a time crunch.

3. Know the market

In order to successfully purchase a short sale you need to know the marketplace. When a lender agrees to a short sale, they are agreeing to losing money on the loan they made to purchase the home. A short sale can be a good deal but it usually not a steal. The lender also knows the fair market value of the home and wants to minimize their losses. If your offer is too low, you chance it being rejected. During the process we will determine a price range that works with your budget and is hopefully one that the lender will accept.

4. Know the Process

The short sale process is different than that of a standard sale. The agreement to sell the home for less than is owed is actually made between the seller and the lender, not the seller and the buyer. The seller must first gain approval from the lender before the sale can be finalized. First, you would make an offer on a home and the sellers must consent to your offer to purchase. Then the sellers must submit the offer to their lender. The seller also sends along documentation to the bank as to why they need to sell the home for less than is owed. The seller should also have an attorney to help them with this process. Lenders typically do not move quickly on this process. It can often take weeks or months to get an answer. This is why is often best to put a competitive offer first. If several lien holders are involved; each can make a counteroffer or just reject your offer.

5. Firm up your financing

Lenders don't just look at the amount you are willing to pay for the home; they will also weigh your ability to close the transaction. If have a strong offer lenders will look more closely at your offer. You will want to make sure you are pre-approved for a mortgage for any consideration. Other factors that could influence the decision in a positive way are: having a large down payment, ability to close at any time, and flexibility. They will often not consider your offer if you have a contingency.





Posted by Duarte/Downey Real Estate Agency, Inc on 6/10/2012

When a homeowner first buys their home foreclosure is probably the furthest thing from their mind. Today’s economy has forced millions of homeowners into a potential foreclosure situation. There are many reasons why people go into foreclosure. Some of those reasons include:

  • Job loss
  • Unexpected death, illness or medical emergency
  • Adjustable rate mortgage increase
  • Unexpected home maintenance expense
There are ways to avoid foreclosure. The best way to avoid foreclosure is to prevent the filing of a Notice of Default. If a home owner knows they are unable to pay their mortgage they should immediately call their lender. Lenders do not want to foreclose. They may be willing to work with the home owner but it is important that the home owner doesn’t ignore contact from the lender. The lender may propose several options:
  • Forbearance
    • Lenders may agree to a repayment plan before taking legal action
  • Debt Forgiveness
    • Very rarely the lender might give you a break and waive your obligation.
  • Repayment plan
    • The lender may agree to spread the payments out over a longer loan term.
  • Modification
    • In some cases, the lender may agree to freeze the interest rate of an adjustable rate loan or extend the amortization period.
  • Refinance
    • Adding payments to an existing loan balance may be an option if the homeowner has sufficient equity and meet the lender’s guidelines for refinance.
  • Partial Claim
    • Certain government loans may contain provisions that allow the homeowner to apply for another loan to pay back missed payments.
Preventing the Notice of Default filing is the best way to prevent foreclosure. If none of the above options have worked there are still some options a homeowner can leverage. Once the Notice of Default is filed, the homeowner only has a small time frame to reinstate the loan by bringing the payments current and pay the costs of filing the foreclosure. If you are unable to make up the payments you still have a few options:
  • Sell your home
    • If you have equity in your home a quick sale is probably the best option at this point. Your home will need the best exposure and marketing to achieve the quickest sale possible.  A full marketing plan and the proper price positioning should get your home sold in time to avoid foreclosure.
  • Attempt a short sale
    • If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale is when you sell your home for less than what the amount owed.  A short sale will affect your credit rating but not as bad as a foreclosure. A short sale is negotiated with the lender.
  • Deed in lieu
    • The homeowner deeds the property back to the lender by giving the lender a properly prepared and notarized deed, and the lender forgives the mortgage.
For more information on how to prevent foreclosure visit the U.S. Department of Housing and Urban Development site to Avoiding Foreclosure. http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure  





Posted by Duarte/Downey Real Estate Agency, Inc on 4/29/2012

Do you owe more than your house is worth? You are not alone. Many homeowners are finding themselves in with a house that they owe more than its current market value. So what should you do? Here are some options for homeowners with “underwater” mortgages: Stay and Pay Compare the monthly mortgage payment, plus carrying costs like repairs, homeowner dues and taxes, to the cost of renting. If you decide to stay and pay, you may be able to get financial help to catch up with payments if you run into a financial hardship. For example, the Emergency Homeowners Loan Program (EHLP) provides interest-free loans to homeowners who have fallen behind on their mortgages. Make sure to check with a HUD-approved housing counseling agency in your area to find out which programs may be available to you. Refinance The Home Affordable Refinance Program (HARP) helps homeowners who qualify refinance into a low, fixed-rate loan. The program has been extended through June 2012. For those who qualify, the terms are similar to those of any other conventional loan, but without the steep mortgage insurance that is typically required when there is less than 20% equity in the home. Loan Modification A loan modification means lenders lower the interest rate and payment, either temporarily or permanently. Lenders will also typically extend the term of the loan or to allow borrowers to make up missed payments by tacking them onto the end of the loan or spreading them out over the remainder. The most well-known modification program is the government-initiated Home Affordable Modification Program. The Treasury Department reports that homeowners who were successful in getting permanent modifications on their loans through this program saw a median reduction in their monthly payment of 40 percent—more than $520 each month—amounting to a program-wide savings for homeowners of an estimated $4.5 billion. Short Sale A short sale is when you sell your home for less than you owe. For the homeowner/seller, the goal is to get the lender to approve a short sale and forgive any remaining debt. Lenders do not always accept a short sale. It seems to make sense rather than allowing a home to go into foreclosure, but the red tape involved in a short sale can sometimes be overwhelming. The Home Affordable Foreclosure Alternative program (HAFA) is a government-initiated short sale program. Foreclosure According to RealtyTrac, one in every 605 homes received a foreclosure filing notice in May 2011. Foreclosure can have financial, legal and tax implications. For many homeowners, this is their last alternative. Bankruptcy If you need to stop a pending foreclosure, bankruptcy may halt a foreclosure long enough to get a loan modification considered. Filing Chapter 13 can help you catch up on payments over five years without interest. You may be able to reduce or eliminate other debts, freeing up more money to pay toward the home mortgage so you can get back to positive equity more quickly. This can be a very serious decision so it is imperative that you talk with a bankruptcy attorney before the foreclosure or short sale is completed.