Does Your Lender Prefer a ‘SHORT SALE’
So They Can AVOID Another FORECLOSURE?

The national average dollar recovery for a lender who forecloses on a past due loan is 59% of the original loan. For example, if their loan on a property is $300,000 and the lender acquires a property by foreclosure, they recover $177,000 by the time they have resold the property, subtracted all their costs and losses and are able to close the file. They lose an average of 41% or $123,000 on a $300,000 loan.
FHA has a printed guideline that instructs them to accept as low as 82% of the market value of a property if they can secure a short sale buyer and avoid a foreclosure. Fed VA will go as low as 88% on their short sales. Conventional lenders that use FANNY Mae or FREDDIE Mac will go somewhere in between 82% and 88% in their discount for a short sale. At first glance, that seems like a big discount, especially in today’s market where property values are already down as much as 25%. But, when you look at the alternative for the lender, realistically, the short sale saves them over 20%. On our $300,000 loan example that’s a savings of over $60,000. Short sales are not good for the lender but they are a lot better than a foreclosure.
In addition, when a lender has a non performing asset, as loan that is not having any payments coming in, FDIC requires them to book an additional amount of money in their reserves to counter balance that ‘bad loan’. They earn almost no interest on these reserves. This means for every loan that has delinquent payments, they are losing money on interest, are exposed to additional costs and legal fees and they have less money to loan out since they have to increase their reserves. Bad loans are a ‘lose-lose’ for the lender. So, the faster a lender can get a bad loan is paid off, the less they lose and the better off they are in the long run.
There two main causes for concern for the borrower faced with this dilemma. The first concern is the negative impact on the borrower’s credit. But the negative impact from a short sale is only 2 to 3 years compared to 7 to 9 years negative impact if you let your property go to foreclosure. So, a short sale is better for the borrower. The second concern is the possible taxable event for the borrower on the amount of ‘Short’ they have at closing. There is a new law called the Mortgage Relief Act that basically forgives the ‘Short’ as taxable for the borrower if they used the loan to buy the property and/or improve the property. If you took cash out on a refinance and spent it on something other than home improvements, you may have to pay tax on the amount you were ‘Short’ at closing. The information in this report, although thought to be accurate, is not guaranteed. We encourage you to seek professional advice before making any decisions. This information compliments Curtis Irving 03-2009 ©

RE Market Trend Report By Curtis Irving Feb. 15th, 2009

As we move towards the end of the first quarter of 2009 and Lane County continues to experience a challenging real estate market for sellers with fewer closed sales in Jan. 09 than we have had since the 80’s. The number of new pending sales went up to 493 compared to Dec. 2008 at 238. This may be our first sign that the market is starting to shift. Since loan rates still are low at 5.5% and house prices are low, buyers are becoming more active. And, with Pres. Obama’s newest bill, first time buyers or buyers who have not owned for at least three years are getting an $8000 tax credit when they buy a house. And this time the money does not have to be repaid. For these reasons, I am telling my investor clients who looking for ‘really good deals’ to get out there now and buy something. The lower end houses are starting to sell again!

Negative, negative negative! I am tired of it. Go back to 1984 with me for a minute. Remember? Interest rates were 18 to 20% and we had an average of 104 closed sales a month. That’s for the whole year, not just one month. With Jan. 2009 having 493 pending sales, we are back in business selling houses. The RG said we have a 20 months supply of listings on the market. That’s true if you look at the dismal closings we had in Jan 2009. But if you look at the total number of listings on the market, compared to years past, we are just fine. In a few areas we are having trouble finding the right house for some buyers.

We are proud to say that we, The Prudential Real Estate Professionals (PREP) closed 25% of the closed sales in Jan 2009. More sellers are turning to us for counsel in this unusual market. In fact, the PREP listing count has increased more than 15% compared to the average in RMLS being up a mere 2%. In the ‘Fine Homes’ market ($395,000 & up) we remain solidly in the#1 spot having participated in 30% of the ‘Fine Homes’ sales in 2008 compared to only 7% for the remainder of RMLS.

Sellers need to recognize that they are in a market with steep competition for the Buyer’s attention. Regardless of what your home might have sold for in 2006, today the current market value of your home is down. Position yourself for success with solid, honest counsel, an objective price analysis and strong company marketing. And remember, your property may be worth more today than it will be worth in the short term future. And, even though you will sell for less, since the market is down, you will be able to buy for less, too.

Buyers have choices in this market. Not every price point or geographic area will provide you the same opportunity. Seek the counsel of a PREP broker for an educated and realistic assessment for the market segment you are considering. This is not the friendliest market you have ever seen, so your actions must be well thought out and deliberate. By doing your homework with one of our brokers, you will know a good buy when you see it. Then, you just have to: 1) have the confidence to act, 2) optimize your timing, 3) take advantage of your opportunity and 4) buy something.

What do you think is going to happen in our market?

Thank you for your continued confidence. Curtis Irving, Broker cell #554-5914

from Curtis 02-09-2009 Invester Good News
Fannie Mae has issued Announcement 09-02, "Updates to Multiple Mortgages to the Same Borrower Policy, Reserve Requirements, Reserves Definition, and Form 3170." In what is good news for "professional borrowers" with multiple investment properties, Fannie Mae is changing their current limit of four financed properties per borrower when the mortgage being delivered to Fannie Mae is secured by an investment property or second home. They will allow "five to ten financed properties per borrower, with certain eligibility and underwriting requirements, including a 720 minimum credit score and 70-75% maximum LTV/CLTV/HCLTV (depending on the transaction and property type). The requirements apply to any investment property or second home loan being delivered to Fannie Mae, regardless of whether Fannie Mae is the investor on the borrower's other mortgages.
Second home and investment property loans to borrowers with five to ten financed properties will be accepted for whole loan purchase or delivery into MBS with purchase dates on or after March 1, 2009, and new Special Feature Code 150 will be required at delivery." Brokers everywhere await Wells, Citi, Chase, etc. to follow.