Archive for the ‘foreclosure’ Category

With the greater number of property foreclosure incidents occurring across the whole of United States, more and more people are being forced to short sale their homes in order to avoid foreclosure auction, thereby losing home. Short sale is proving to be highly beneficial to all these homeowners by settling their due mortgage at a much lesser rate than what they actually owe to the bank or the lender organization, that is, less than the loan balance. Moreover, since they are under the threats of facing foreclosure and obviously are short of real money, they can hardly avail the traditional means of selling their homes through realtors or to other prospects. The obvious choice for them remains property, thereby avoid foreclosure short sale and it is to this beginning that the real estate industry in the US is gaining on some real momentum. The market is flooding with properties that are priced quite down to earth and this is providing the real investors of the US and overseas with some valuable opportunities to earn some real cash. In fact, the earnings you can expect from investing in short sale property can vary anywhere between $25,000 and $200,000 or beyond, the sum being contingent upon your investment, your investment pattern, the location of investment and so on and so forth. Most of the times, you can expect to get a short sale property at only 60% of the original rate, which you can sell in the open market, after necessary refurbishments, to earn you over 30% of the price value of the property under concern. However, how much profit you make is determined by your vision and certain aspects that you need to keep in mind in order to make a deal worthy of investment. Let yourself be open to several options in investment, although keeping in mind what would fetch you more returns and which would not. Deciding on a particular property for investment is of crucial significance as your choice can make or break a deal in no time at all. Always predicate your choice of property on the ability to make profit out of it – for instance, take into consideration the location of the property and how viable it will be in the open market, when you intend to sell it at a later point in time. Assess the property of your concern very well before you opt to buy it. For example, consider the number and extend of repairs and refurbishments you will need to do in a particular property to make it viable to a general buyer. Remember, every dollar you put in for repair or refurbishment is a part of your investment and it will definitely affect the returns you wish from it. However, if you foresee good profit opportunities, investing after a property will not be a bad deal. For this you need a general understanding of the real estate market and its forces. It is advisable to consult a short sale expert agency for their assistance in this domain. From negotiating with a seller to that with the concerned mortgage authority – the short sale experts – they will best help you address every aspect involved in the closing of a successful real estate deal.

The number of homes listed for sale in several housing markets fell last month to levels last seen at the start of the housing downturn. That’s raising hopes that several of the hardest-hit housing markets may be stabilizing. But the housing cynic may wonder: how much does that have to do with banks holding foreclosed properties off the market to prevent a new glut of properties from hitting the market? >>> Read more

Check out the Foreclosure Investing Boot Camp, where you will learn how to negotiate bank short sales and REOs.

Loan modifications and principal reductions are big news for homeowners, but what about real estate investors who own apartment buildings, strip shopping centers, and small office buildings? Are loan “mods” possible for them? Absolutely, says Jonathan Hornik, executive vice president and general counsel for Kennedy Funding, Inc., a New Jersey-based lender who not only helps investment property owners negotiate debt restructurings with their creditors, but provides the take-out financing to make the deals happen. In fact, according to Hornik, far more loan modifications involving writeoffs of portions of existing mortgage debts are needed in commercial real estate right now. Many income properties carry loans that must be rolled over — refinanced — in 2009, 2010 and 2011. But with declining property values, owners may not be able to come up with the financing needed to pay off what they owe. The solution, said Hornik in an interview with Realty Times, is to negotiate a reduction in the principal balance owed to the lender, and pay that off with new replacement financing. But you might ask: Are banks really willing to do that when borrowers are current on their payments? Hornik says large numbers of them “are more than willing to negotiate to less than the existing balance on a current mortgage. It all depends on the situation the bank is in.” Many lenders are themselves under stress because of the economic downturn. They need to bolster their own capital bases, and may be willing to write off some of the debt an income property owner owes them in exchange for a single lump sum payoff. How much might a bank reduce an investment property loan balance that’s current? Hornik says the reductions his firm helps negotiate can range from 20 to 40 percent. Kennedy Funding’s role, said Hornik, is “to be the catalyst. We call your lender and negotiate the terms” of the writedown, if it’s at all possible. If there’s flexibility on the bank’s end, Kennedy then offers to either buy the existing note at a discount, providing cash to the bank. Or it provides the refinancing takeout cash to retire the debt at a lowered principal amount. None of this comes cheaply, however. Kennedy Funding is a “hard money” lender, so interest rates on the new, smaller loan amount for the investment property owner can range from 9 percent and up, with at least three points. Loan to value ratios tend to be low, generally 65 percent or less. At the end of the process, however, said Hornik, property owners generally owe less on the real estate and pay less per month, even with higher rates.

A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure according to the Associate Press. This presents some tremendous opportunities to buy foreclosure properties if you have the cash or know how to leverage through owner financing or partners. Short sales are the name of the game these days, and learning the tricks of the trade will help you beat out your competition in the market. Learn more at the upcoming Foreclosure Investing Boot Camp.

With HUD properties, title seasoning, FHA loans, and short sales, investors have had some confusion regarding the rules.  This article will clarify all of these issues for you.

HUD is the United States Department of Housing and Urban Development, a government agency whose goal is to increase homeownership, support community development .  The Federal Housing Administration (FHA), which is part of HUD, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States.

HUD and FHA come into play in three different scenarios in the investor/foreclosure arena.

HUD Foreclosed Properties

When a person gets an FHA loan, it is funded through a private lender and the loan is insured or backed by the Federal Housing Administration.  When the loan is in default, FHA pays out the lender and take an assignment of the loan.  When the property is foreclosed, it is owned by HUD.  HUD then offers these properties for sale to both owner-occupants and investors.  The properties are offered on the local MLS computer database, but you have to submit an offer through a HUD-approved real estate broker.  The offer is made under a bid process, under which the HUD will either accept or reject your offer depending on what other offers are submitted.  An investor can buy, hold, or flip these properties if their offer is accepted.

FHA Loans and Title Seasoning

Then second place HUD comes into play is the FHA loan.  If a buyer of your property gets an FHA loan, there is a title seasoning requirement of 90 days.  In other words, if you are selling the property to an FHA buyer, you must have title recorded in your name for 90 days before the closing and funding of the FHA loan.  This precludes you from doing a double-closing or a short term (less then 90 days) flip.

Keep in mind that the 90 day seasoning rule has nothing to do with HUD-owned properties as described above. In other words, you can buy a HUD property and flip it 3 minutes later so long as your end-buyer is not using FHA financing.

FHA Loans in Short Sale

The third place HUD comes into play is if you are working on a foreclosure short sale on a property that has an FHA loan.  In this case the Federal Housing Administration is insuring the loan and must approve the short sale.  You can buy a property with an FHA loan on it, then flip it without a title seasoning issue, unless your end-buyer is getting an new FHA loan.

In summary, don’t confuse the FHA new loan 90-day title seasoning requirement with the two other scenarios, HUD-owned properties and and existing FHA-insured properties.  For more information on HUD properties and FHA loans, visit www.hud.gov.

LEARN MORE ABOUT FORECLOSURE INVESTING AT THE FORECLOSURE INVESTING BOOT CAMP

As part of the “economic stimulus” package, Congress has passed a bill that will temporarily raise the conforming loan limit to allow Fannie and Freddie to purchase or guarantee many jumbo mortgages originated between July 1, 2007, and Dec. 31, 2008. The increase, to as much as $729,750 in high-cost areas, will also apply to Federal Housing Administration loan guarantee programs. Because the increase will be capped at 125 percent of the median home price for an area, the conforming loan limit will remain at $417,000 in markets where the median home price is $333,600 or less. http://www.inman.com/inmanstories.aspx?ID=66047

Hilary wants to place a 90 day moratorium on mortgage foreclosures.  How would she and the other candidates fix the subprime problem?  Read more in this Forbes article: http://tinyurl.com/2y7fdd

Pres Bush signed into effect H.R. 3648, the “Mortgage Forgiveness Debt Relief Act of 2007″ http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html This law would eliminate a taxable gain on borrowers who received a forgiveness of debt from a lender in a short sale.  Normally, if a lender forgives the debt, to this extent the homeowner would have a taxable gain.  HR 3648 would eliminate this “phantom income” on a borrower’s principal residence.  The law applies to all ACQUISITION (not refi) debt forgiven from Jan 1, 2007 and on.  This is an EXTREMELY SMART move on the part of the government, FOR ONCE!  To make up some of this income, the law also amends the capital gains rules principle residences by denying an exclusion of the gain that is allocable to a nonqualified use of such residence (i.e., use other than as a principal residence).

The Bush Administration has worked out a deal with lenders to freeze rates on adjustable loans for up to 5 years.  This would apply to loans originated at the beginning of 2005 through July 2007.  http://news.yahoo.com/s/ap/20071205/ap_on_go_pr_wh/mortgage_crisis Is this a smart move?  Time will tell, and certainly this is the first real move the government has made to directly help homeowners.  Certainly the people who got loans before 2005 will feel left out, but this will undoubtedly reduce the foreclosure rate.  The bottom line of whether this improves the housing market will be dependent on whether it makes investor on Wall Street feel warm and fuzzy enough to start buying up pools of mortgage backed securities so lenders can start softening up on their loan guideliness.