Will seller financing sell your home?

Will seller financing sell your home?
By Michele Lerner • Bankrate.com

Can seller financing be the incentive you need to get your house sold?

In seller financing, the seller functions as a direct lender, with the buyer making monthly mortgage payments to the seller instead of a bank.

Buyers who accept seller financing usually cannot qualify for a traditional mortgage loan, often because they have a low credit score.

For sellers, the biggest benefit is to increase the pool of potential buyers to include those who might not qualify for a loan," says Ardina Franssen, RealEstate.com agent for the Atlanta and Lake Lanier region in Georgia.

Because borrowers with this profile are considered riskier, sellers often can charge as much as 8 percent or 9 percent in interest, which is more than many other investments earn.

Who qualifies?

Seller financing is easier to arrange when homeowners own their property without a mortgage. In 2008, about 32 percent of all American homeowners owned their homes free and clear, according to a U.S. Census American Community Survey.

Homeowners with a small mortgage may be able to pay off that mortgage with the down payment from a buyer or other funds in order to offer seller financing.

In most cases, seller financing covers the entire purchase other than the down payment because institutional lenders rarely approve financing for a partial loan, says Brandon Coppock, program director for Owner Finance Buyers in Dallas, a company that assists owners with seller financing.

"Most of the buyers we work with are using seller financing as bridge financing for a few years until they can qualify for a refinance," Coppock says. "In many cases, the buyers have had a short sale or some other singular event that damaged their credit rather than a pattern of not paying bills."

Most sellers prefer a loan of three to five years, though some will agree to a 10-year loan.

At the end of the loan period, it is assumed the buyers will refinance with a traditional lender to cover the balloon payment owed to the seller. The higher interest rate sellers charge is an incentive to the buyer to refinance as soon as possible.

Protecting yourself

While seller financing can be a good option for some sellers, it's important to take steps to mitigate risk.
Sellers who use seller financing continue to hold the title until the loan is paid in full. Buyers must sign a promissory note that includes all the terms of the loan agreement.

Renee Mayhall, RealEstate.com vice president and general manager of its Georgia and Carolinas region, says sellers should reduce risk by working with a Realtor who can provide protections in a written contract and assist the seller by checking the buyer’s credit, income and assets, and by verfiying employment.

"Often the buyers are self-employed or someone who has a single instance that has damaged their credit, or even international buyers who have not built up the right kind of credit in the U.S. to qualify for a traditional loan approval," Mayhall says.

Requiring a bigger down payment also can help protect sellers.

"Sellers usually require a down payment of at least 3 percent to 5 percent, but sometimes they can negotiate a bigger down payment to protect themselves," Mayhall says.

Lance Churchill, an attorney and president of Frontline Real Estate Education Group in Boise, Idaho, says all sellers also should come up with a contingency plan in case the buyers do not make their payments. Review state laws concerning foreclosure that could impact the seller's ability to evict nonpaying buyers, he says.

While not required, both sides can consult with an attorney to make sure they are protected by the contract.

"The seller takes on more risks in seller financing than the buyer, but they have the option of foreclosing on the buyer and taking the property back if necessary," Coppock says. "I always recommend that the sellers keep the down payment money as a cushion in case the buyers pay late or default on the loan."


Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Ally Says GMAC Mortgage Mishandled Affidavits on Foreclosures

Here's an article from Bloomberg Online (Sept. 20th, 2010) about GMAC foreclosures. 



Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states amid allegations of mishandled affidavits, said its filings contained no false claims about home loans.

The “defect” in affidavits used to support evictions was “technical” and was discovered by the company, Gina Proia, an Ally spokeswoman, said in an e-mailed statement. Employees submitted affidavits containing information they didn’t personally know was true and sometimes signed without a notary present, according to the statement. Most cases will be resolved in the next few weeks and those that can’t be fixed will “require court intervention,” Proia said.

“The entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” Proia said. “There was never any intent on the part of GMAC Mortgage to bypass court rules or procedures. Nor do these failures reflect any disrespect for our courts or the judicial processes.”

State officials are investigating allegations of fraudulent foreclosures at the nation’s largest home lenders and loan servicers. Lawyers defending mortgage borrowers have accused GMAC and other lenders of foreclosing on homeowners without verifying that they own the loans. In foreclosure cases, companies commonly file affidavits to start court proceedings.

“All the banks are the same, GMAC is the only one who’s gotten caught,” said Patricia Parker, an attorney at Jacksonville, Florida-based law firm, Parker & DuFresne. “This could be huge.”

No Misstatements

Aside from signing the affidavits without knowledge or a notary, “the sum and substance of the affidavits and all content were factually accurate,” Proia wrote in the e-mail. “Our internal review has revealed no evidence of any factual misstatements or inaccuracies concerning the details typically contained in these affidavits such as the loan balance, its delinquency, and the accuracy of the note and mortgage on the underlying transaction.”

Affidavits are statements written and sworn to in the presence of someone authorized to administer an oath, such as a notary public.

GMAC told brokers and agents to halt evictions tied to foreclosures on homeowners in 23 states including Florida, Connecticut and New York and said it may have to take “corrective action” on other foreclosures, according to a Sept. 17 memo. Foreclosures won’t be suspended and will continue with “no interruption,” Proia said in a statement yesterday.

10,000 a Week

In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed “a round number of 10,000” affidavits and other foreclosure documents a month without verifying their accuracy. The employee said he relied on law firms sending him the affidavits to verify their accuracy instead of checking them with GMAC’s records as required. The affidavits were then used to complete the process of repossessing homes and evicting residents.

Florida Attorney General William McCollum is investigating three law firms that represent loan servicers in foreclosures, and are alleged to have submitted fraudulent documents to the courts, according to an Aug. 10 statement. The firms handled about 80 percent of foreclosure cases in the state, according to a letter from Representative Alan Grayson, a Florida Democrat.

“It appears that the actions we have taken and the attention we’ve paid to this issue could have had some impact on the actions that GMAC took today, but we can’t take full credit,” Ryan Wiggins, a spokeswoman for McCollum, said yesterday in a telephone interview.

‘Committed Fraud’

In August, Florida Circuit Court Judge Jean Johnson blocked a Jacksonville foreclosure brought by Washington Mutual Bank N.A. and JPMorgan Chase Bank, which had purchased the failed bank’s assets, and Shapiro & Fishman, the companies’ law firm. Documents eventually showed that the mortgage on the house was in fact owned by Washington-based Fannie Mae.

WaMu and the law firm “committed fraud on this court,” Johnson wrote. JPMorgan had presented a document prepared by Shapiro showing the mortgage was sold directly to WaMu in April 2008.

Tom Ice, founding partner of Ice Legal PA in Royal Palm Beach, Florida, said a fourth law firm representing GMAC in recent weeks has begun withdrawing affidavits signed by the GMAC employee.

“The banks are sitting up and taking notice that they can’t use falsified documents in the courtroom,” Ice said. “There may be others doing the same thing. They’re going to come back and say, ‘We’d better withdraw these,’” Ice said in a telephone interview.




Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

H.R. 6133 – New Law Forces Lenders To Speed Up Short Sales | Realtor Short Sale Designation

NAR Hails Bill to Hasten Lender Response to Short Sale Requests

Here's the link to the actual bill. 

Washington, September 16, 2010

Homeowners who are underwater with their mortgage may find that relief is on the way from a bill strongly supported by the National Association of Realtors® that would impose a deadline on lenders to respond to short-sale requests.

The legislation, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010,” was offered yesterday in Congress by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). The bill would require lenders to respond to consumer short sale requests within 45 days.

“The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times.”

“As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” said Golder.

The number of potential short sale properties is rising across the country. According to NAR data, in the second quarter of 2010, Nevada, California, Florida and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent and 24 percent, respectively.

“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time. Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.

She commended Reps. Andrews and Rooney for their efforts on the bill and urged Congress to pass the bill quickly.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.



Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

One West Bank (IndyMac) Short Sales

Here's something I found on the One West Bank (formerly Indymac) website.

Short Sales: What, Why and How

July 7, 2010 – 01:17 PM PST

Want to sell your home, but property values have decreased to less than what you owe?

Denied for a loan modification and want to try something else to avoid foreclosure?

Have a buyer for your home, but for a price lower than what you owe?

If any of these sound familiar, we’re here to help inform you about the process and potential benefits of a short sale. Not quite sure how a short sale works? No worries. Keep reading and take advantage of our informative short sale video, and we’ll do our best to answer your questions along the way.

What’s a short sale?

A short sale is just that—the sale of your home for a price that falls short of the amount you owe on your mortgage. What’s the benefit to you? You get to settle your mortgage debt and avoid foreclosure, even if property values have declined in your area.

So, how does it work?

A short sale isn’t as complicated as you may think. We’ve provided a streamlined checklist in our short sale application packet that explains everything you’ll need to apply. In short, here’s the step-by-step process of how it works:

1. Secure a buyer for your home. (The buyer will sign a purchase contract and provide proof of financing, such as a pre-approval letter for a new home loan.)

2. Submit your completed short sale application to IndyMac Mortgage Services. This includes:

• All pages included in the short sale application
• Recent bank statements
• Proof of income: paystubs, tax return, etc.
• Listing history
• Executed purchase contract
• Purchaser eligibility certification
• Proof of buyer financing
• Estimated settlement statement

(The above items are explained in detail in the application for your convenience.)

3. IndyMac Mortgage Services will contact you to estimate the value of your home’s sale price.

Why is a short sale better than foreclosure?

Now that you know the basics of applying for a short sale, you might be asking… how is this option better than foreclosure?

When foreclosure occurs, a homeowner is forced to vacate the property and may encounter legal issues and costly fees involved with the foreclosure process. This is undesirable for both the homeowner and the lender.

In a short sale, a homeowner enters into a mutual agreement with the lender to end the mortgage. This is reflected on your credit report as “negotiated settlement of debt,” which may be less damaging to your credit than foreclosure.

For more information on the credit or tax implications of pursing a short sale to avoid foreclosure, we suggest you consult with your broker, accountant or other professional adviser.

I want to apply for a short sale. How do I start?

First things first. It’s important to keep in mind that when you apply is very important.

Once you’ve decided that you want to pursue a short sale, apply as soon as possible. If foreclosure proceedings have already begun on your home, please note that your short sale must be APPROVED at least 15 days prior to the foreclosure sale date!

If you’re ready to apply, click here to download our short sale application packet.  

Once you have a buyer lined up, have completed the application, and made sure all parties have provided all of the required signatures, fax the entire packet to us at 1.626.583.1370 so we can begin processing your application right away.

What else should I know?

After you’ve submitted your application, you’ll hear from us within 30 to 90 days regarding the status of your application and if any additional documents are needed. For your convenience, you’ll be assigned an IndyMac Mortgage Services Workout Analyst, who will help you every step of the way.

Still have questions? Don’t hesitate to give us a call at 1.877.908.HELP to learn more about this and other alternatives to foreclosure.

Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

U.S. Homes Lost to Foreclosure Up 25 Percent

U.S. Homes Lost to Foreclosure Up 25 Percent

Published September 16, 2010

| Associated Press

LOS ANGELES -- Lenders took back more homes in August than in any month since the start of the U.S. mortgage crisis.

The increase in home repossessions came even as the number of properties entering the foreclosure process slowed for the seventh month in a row, foreclosure listing firm RealtyTrac Inc. said Thursday.

In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.

August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.

Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can't afford to simply dump the properties on the market.

That's one reason fewer than one-third of homes repossessed by lenders are on the market, said Rick Sharga, a senior vice president at RealtyTrac.Concerns are growing that the housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April.

"These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer's market with too much distressed inventory for fear of what it would do for house prices," he said.

As a result, lenders are putting off initiating the foreclosure process on homeowners who have missed payments, letting borrowers stay in their homes longer.

The number of properties receiving an initial default notice -- the first step in the foreclosure process -- slipped 1 percent last month from July, but was down 30 percent versus August last year, RealtyTrac said.

Initial defaults have fallen on an annual basis the past seven months. They peaked in April 2009.

Still, the number of homes scheduled to be sold at auction for the first time increased 9 percent from July and rose 2 percent from August last year. If they don't sell at auction, these homes typically end up going back to the lender.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 338,836 properties received a foreclosure-related warning in August, up 4 percent from July, but down 5 percent from the same month last year, RealtyTrac said. That translates to one in 381 U.S. homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions -- warnings that can lead up to a home eventually being lost to foreclosure.

Among states, Nevada posted the highest foreclosure rate last month, with one in every 84 households receiving a foreclosure notice. That's 4.5 times the national average.

Rounding out the top 10 states with the highest foreclosure rate in August were: Florida, Arizona, California, Idaho, Utah, Georgia, Michigan, Illinois and Hawaii.

Economic woes, such as unemployment or reduced income, are now the main catalysts forforeclosures.

Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

The program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners since March 2009.

Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Sell Your Boise Idaho Home or Investment Real Estate Without Having Equity

Sell Your Boise Idaho Home or Investment Real Estate Without Having Equity

On average a traditional sale can take between three and four months to complete. That’s including seller motivation, experienced marketing, and frequent open houses. All-in-all it’s a big commitment. Patience is a virtue but sometimes it’s also a luxury we can’t afford. There are safe alternatives. When you want to sell your home now—and avoid the hassles of more traditional channels—our professionals can help you today.

A real estate short sale enables home owners who are behind in their payments to sell their home and can save their credit when compared with a foreclosure. A short sale occurs when a lender agrees to accept less than the loan balance owed on your home as payment in full. You may be wondering why they would do this.

In truth, banks aren’t looking to own homes. Banks are in the business of lending money, NOT owning real estate. Should you not complete a short sale, the banks would be in the “real estate” business and they don’t want that.

Should you fall behind on payments and the lender is required to pursue foreclosure, there are many steps that must be completed. Among other tasks, your lender would be responsible for selling your home at auction to the highest bidder. But, if they don’t receive an offer, the home becomes property of the bank—otherwise known as real estate owned property. And until the home sells, the bank is losing more money. It’s a hassle for everyone! A short sale is a quick and secure way to avoid foreclosure and sell your home fast.

Our job is to connect you with reliable buyers as quickly as possible. Then, with money in hand, you can pay off your defaulted mortgage, stop the bank calls and harassing letters. In general, a short sale takes considerably less time than a traditional listing because we can market your home more aggressively.

We invite you to call or email us for a free consultation. Call us today at 208 939 9033.

Regards,
Michael Hon
CEO, The Iron Eagle Realty Team
Associate Broker, Market Pro
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com