I have been very concerned for the last couple of years with the long term effect of Short Sales and Strategic Defaults. Sometimes selling a property as a short sale is the only option but what about strategic defaults?

Each person’s circumstances are different and you should do what makes you feel more comfortable.  I am an advocate to try a loan modification first even though in many cases they are just a way to push forward a financial problem. It may not be the wisest “financial decision” but I think it buys time to work out the problem when the waters have calmed down. Unless there is a reduction of principal the only way to work out the loans is to create a balloon payment; which means at the end of the loan period or upon selling the property a lump sum has to be paid. If someone stays in the property long enough there should be enough equity to pay for it. If it has to be sold anytime in the first years of the loan most likely it will become a short sale but the borrower’s financial situation and the lenders circumstances will be different and you can deal with it then. I am not a financial advisor and I don’t pretend to be one…I know it is a controversial opinion but I think in the long run it will benefit everyone.

I understand trends are important and many people feel that if everyone is doing it, it may be right. I wish I had a crystal ball and be able to see the future as of what will happen in 5-10 years to all the short sales and foreclosures deficiency judgments. For now just make sure you research and  understand what you are getting into. Do your homework, talk to at least 3 attorneys and hear different points of view.

I am sharing an article from Current Matters that refers to this topic…

I recently had an email conversation with a well respected real estate professional about the difference between strategic defaults and short sales. We both agreed that we needed to share our conversation with the readers of this blog. Original Question: I have

via A Conversation on Short Sales vs. Strategic Defaults.

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I don’t mean to be disrespectful but I am always scared of “Trends” when they involve financial decisions. Strategic Mortgage Defaults reminds me too much the times when everyone was an investor expecting to flip a property for a huge profit.

How many people did their due diligence?
How many people could afford the worst case scenario?
How many people did it because “everyone is doing it”?

I understand that a Strategic Default can be a preventive measure expecting to protect other assets a homeowner may have. Let’s say the Mortgage, Taxes and Insurance on a Property add up to $ 2,500.00 a month and the same property can be rented for $ 1,600.00 this means reducing annual expenses by $ 10,800 a year that are probably being taken out from the homeowners savings account. The worst is the uncertainty of when the property will recoup the lost value.

My main concern is the downward spiral it creates. As more properties hit the Market as Short Sales or Foreclosures prices may tend to decrease.

In reality this is one of those situations that are a catch 22…there is no wrong or right answer. The most important thing is to make an informed decision understanding the many consequences it may bring and that probably the unpaid balance will not disappear and the credit score will end taking a hit.

Some related articles:
Fed-Up Homeowners who can pay their mortgage, Don’t - RISMEDIA
Strategic Defaults lessons fromthe great depression – THE NEW YORK TIMES
Walking away from your mortgage has consequences – USA TODAY
What might happen if you walk away from your mortgage – MONEY

The Answer is: Consult an Attorney…

From several conversations with attorneys I have gathered the following information. You particular circumstances may differ so please do your due diligence before making any decision.

Is the Property being sold as a Short Sale or being Foreclosed?

If the Property is being sold as a Short Sale and the Lease is current the new owner must honor the lease term. Very often, by the time the Short Sale is approved, the original lease has expired and the tenant is living in the property with on a month to month lease. Beware of oral agreement since they are harder to enforce than written contracts. In some cases the Tenant lives in the property until the amount given as advanced rent and security deposit is exhausted. It is advised to have a  written agreement with the owner because the owner’s default in paying his mortgage doesn’t give the tenant the right to default in his rental payments. One of the most common complaints from tenants when they keep paying their rent is either the lack of maintenance to the property. Attorneys always advice their clients to keep paying the Association/Condo dues while the Short Sale is being processed.
A good landlord/tenant relationship is key to ensure a smooth transition. Being it to grant access to prospective buyers and be able to commit with a closing date or transferring the lease to the new buyer.

If the Property is Foreclosed the new owner has the right to request the Tenant to vacate the property. Tenant is normally aware that a foreclosure is taking place well in advance.  The new owner can provide the Tenant with a “3 Day Notice” and if the tenant doesn’t leave most likely an eviction will take place. Under some circumstances the new owner offers incentives to ensure the property is left in good conditions and the tenant vacates without the need of being evicted.

If the Property is a Fannie Mae Foreclosure you may get some Help!

Some Qualified renters may be offered month to month Leases and even help to relocate. For additional information:

Fannie Mae Support for Renters

Fannie Mae Renters FQA’s

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Thinking of selling your home? Now might be a good time to put it on the market when the inventory of great properties for sale is low. For a FREE market analysis of your property call me at (954) 588-7260 or contact me.

In an effort to help distressed homeowners the Treasury Department released in November Guidelines to reduce the number of Foreclosures and ease the Short Sale Process. The program should be in effect on April 5th, 2010. Short Sales have been streamlined by Banks as time goes by it’s still a lengthy and painful process. In average a successful Short Sale Transaction had 2 or 3 Buyers during the process. The first one either tired or waiting or not interested in the price the Bank countered at opened the door for second or third Buyers.

Bank of America, is particularly known for its lengthy Short Sale Time line specially with Countrywide Loans. The process will be streamlined through the use of an interactive website easing communication and document uploading. Their goal is to offer pre-approved short sale solicitations and provide approvals within 2 weeks from the time an offer is submitted.

If you are a Bank of America borrower and you are considering a short sale, contact Bank of America Short Sale Team at 1-866-880-1232.

Wells Fargo created Field Short Sale Teams to provide local assistance to homeowners and their Real Estate Agents. Each case is reviewed by a Short Sale Specialist on site. Their goal is to obtain approvals within 7-10 Days and close in 37 days (from start to finish). For a limited time they are offering seller’s incentives to help with moving costs (your local short sale field rep will confirm availability).

If you need a market evaluation of your home to determine if you are facing a Short Sale scenario, please call me at (954) 588-7260 or e-mail me garcia.i@ewm.com

Make sure you list your property with a Real Estate Agent that will treat the Sale of your home with the same care and diligence as a non-distressed sale.

The increase in closed sales can be found all around the West Broward. Interestingly Weston’s increase has not been as abrupt as in other areas. It may be caused by any or the combination of several reasons:

1. Weston’s sales and prices didn’t decrease as dramatically as other areas.

2. The fact that even though Weston was affected by the Real Estate crisis, the number of  foreclosed properties available for sale has been very low. In average we didn’t have more than 9 or 10 Foreclosed Single Family Homes available in the market.

3. The availability of properties in the lowest prices ranges. Weston didn’t have as many Single Family Homes under $200,000.00 or $ 300,000.00, as the other areas.

Thinking of selling your home? Now might be a good time to put it on the market when the inventory of great properties for sale is low. For a FREE market analysis of your property contact me.
To stay updated with what’s going on in Weston and receive my blog posts directly to your inbox subscribe here.

In most cities we can notice a very low number of homes for sale available. When we have less than 6 Months of Inventory it is considered a Seller’s Market. If you have been in the market purchasing in the last few months you have probably experienced

multiple offers scenarios. There is an interesting fact in this situation, many times we are competing against cash offers which are not as sensitive to appraised values and financed transactions on top of being able to close sooner and without the financing contingency.

Davie’s Months of Inventory gives Buyer’s a strong position when negotiating since there are more properties available than Buyers in the market. SW Ranches  is showing a very slow market…

Thinking of selling your home? Now might be a good time to put it on the market when the inventory of great properties for sale is low. For a FREE market analysis of your property contact me.

To stay updated with what’s going on in Weston and receive my blog posts directly to your inbox subscribe here.

Along with already low prices this kind of mortgage rates should keep the Real Estate “momentum” going. In the last few months we have experienced a surprising market; where multiple offers on attractive properties under $ 400,00 were the norm. When I say attractive, I mean either very well priced and/or in good conditions. Foreclosures normally require either some work or  major repairs but are priced accordingly.

Related Articles:
WSJ-Mortgage Rates…
USA Today- Mortgage Applications Rose…

To stay updated with what’s going on in Weston and receive my blog posts directly to your inbox subscribe here.
If you are interested in buying or selling Real Estate in WESTON, please call me at (954) 588-7260 or contact me.

Over the last 4 years we have struggling to get Short Sales Approved. Every transaction becomes a session of gambling. We never know if and/or when it will get approved.

We have seen Short Sales that took over one year to get approved. An standardized and streamlined process will take a lot of the frustrations associated with Short Sales transactions away.

My question is: Do Banks have the man power to approve the short sales before it’s too late? As per the guidelines (see link at the bottom of the article) the approval of the short sale will take place prior of listing the property and the sale must take place in less than 4 months.

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To stay updated with what’s going on in Weston and receive my blog posts directly to your inbox subscribe here.
If you are interested on learning more about short sales, please call me at (954) 588-7260 or contact me.

I often hear about the lengthy letter borrowers are sending lenders to explain their hardship. Once the letter is sent they expect the bank will contact them right away to offer a loan modification; but it doesn’t work that way and borrowers get frustrated. Even though having gone through some financial issues help banks being more empathic; what they really want to know is if you can afford a “modified payment”.

Fannie Mae uploaded a Video in YouTube explaining the documents your lender need to be able to help you. Before you call your Lender gather the following information:

• Mortgage Statement
• Condo/Homeowners Association Statement (if applicable)
• Pay stubs and W-2’s if employed or Profit and Loss Statement if Self Employed
• Income Tax Returns
• Statements on every other debt, balance owed and monthly Payment. Including lines of credit, credit cards, car loan, student loans in other words….document every single penny you owe. Remember that this is not to tell the bank how broke you are but to help them figure out if you qualify for a “new loan”.
• And of course a letter stating the reason why you can’t pay the current mortgage payment.

Be truthful, don’t hide anything!!! and Good Luck