Short Sales in Long Beach are 26.6% of the market

How many short sales are there in Long Beach, CA? According to the MLS that serves the area 26.6% of properties are either attempting a short sale or are about to be one. By the way that is for those who are accurately reporting the situation (this is solely my opinion and more on that later in the post).

How Much Inventory is Available in Long Beach?

The answer may surprise some. There is actually less inventory today then there was just a few months back. The inventory level in Long Beach, for residential properties, is actually decreasing.

• Total Available Properties: 1,683
• Total Properties Facing Short Sale: 448

I define properties facing a short sale as defined as any property that has been identified by the listing agent in the MLS as:

• Short Sale Subject to Lender Approval - The definition of a short sale.
• Notice of Default - This means that the lender has issued a notice that the owner is behind on their mortgage and in danger of losing their home. I am making an educated guess that most people in this situation owe more than the property is worth or they would sell it and get out.
• In Foreclosure Process - another phrase that means the property is still owned by the seller but they are having some financial hardship.

Is everything being reported?

I would say that not everything is being reported. Some homes start off as regular sales and as the market has adjusted they have turned into short sales and not all listings may have been updated. Some agents have said they don't report that their property is a short sale so that they get more showings. This is a violation of MLS rules but they are doing what they think is right for their client.

What does this all mean

It may mean that far more than 26.6% of properties in Long Beach are short sales or may eventually be owned by a bank. Does this mean the market is failing apart? I would say no. Properties are still being sold every day. It does mean that you need to price your property aggressively if you are a seller.

Properties that are in top condition still get multiple offers when priced aggressively.

Related Posts

• Where have all the short sales gone
• Mortgage Relief Act Becomes Law
• 5 Ways to Protect Yourself in a Short Sale

What is a promissory note in a short sale?

Short sales continue to be a fact in today's real estate market. For those who are just learning about the facts of short sales a short sale is win a property is sold for less than is owed on it. In other words the property is short of the amount needed for a full payoff to the bank. This money that is short has to be taken as a loss by someone and in most cases that is the bank. If you search on "Short Sales" on this blog or check out the related posts you will find more information.

On to the question at hand for today which is what is a promissory note in relation to a short sale.

A promissory note is simple a promise to pay. In some cases the bank decides that they don't want to write off the amount owed on the property and they determine that they want the owner of the property to take another unsecured loan and pay them back. They cannot do this in the case of a purchase money loan or a loan where you bought the house with the money but they can do this if the loan that is going to go short was a refinanced loan or equity line of credit. It also depends on what your loan documents said when you signed them.

So what can you do to avoid this? The bank can proceed with legal action against you and while most banks have decided not to do this there are a few who have decided to proceed against home owners. If a bank is deciding that they want you to take a promissory note you should seek legal counsel to see if there is anything that can be done for you. Do your best to negotiate with the bank yourself and see what kind of terms they can give you. There are no set rules for terms of these promissory notes so you may be able to negotiate terms that are favorable to you. The only thing you shouldn't do is ignore it. Even in foreclosure a bank can proceed with the same action so make sure you look at all of your options.


Related Posts

• Where have all the short sales gone
• How many are too many loans in a short sale?

Where have all the short sales gone?

Short sales were the only thing that people could talk about in 2007 and it seemed like that was going to continue in 2008. But truly what has happened to all of the short sales? First there are plenty of short sales available on the market in Long Beach. Some areas of the city have more to choose from than others. It is quite easy to find a short sale in north long beach or in the westside of long beach. If you were looking for an amazing short sale deal in belmont shore you will be pretty much out of luck. So what has changed this year compared to last? Well let's take a look at a few items that have changed.

• Passing of the Mortgage relief act - this allowed consumers to complete a short sale without the tax ramifications that used to exist.


• More short sales - there are more short sales on the market this year compared to last year. While the statistics are difficult to come by a sampling of different areas has shown an increase on a percentage of available properties.


• Some banks have stopped doing short sales - countrywide has recently stopped approving short sales for investment properties. Some banks are deciding that foreclosure for them is a better option.


• Consumers have become frustrated with the process of short sales - consumers and real estate professionals have found it difficult to work with banks on short sales and found it easier on REO (real estate owned) or bank owned properties.

What does this all mean? It means that one needs to know all of the facts prior to going after a short sale. You need to know the experience of the agent helping you, the agent on the other side, how many banks, and to have a high level of patience. Know the facts about the short sale process.

Related Posts:

• Mortgage Forgiveness Debt Relief Act


• 5 Ways to Protect Yourself in a Short Sale

Is your real estate agent lying to you?

Getting the correct information from your real estate agent is of paramount importance as you are entrusting him/her with one of the largest financial decisions you will ever complete. So, how do you know if your real estate agent is actually telling you the truth? Here is an example of a conversation that was over heard and then we can discuss how you can find out what the real truth is:

Client: Is offering on a short sale a good idea?

Agent: Well you know when you make an offer on a short sale, you have to wait a long time and they always counter back at more. Did you really want to wait that long and still not get a great discount?

Client: Oh, I didn't realize that, I guess I won't offer on a short sale.

Unfortunately in this conversation the client was not given enough information to make an informed decision. Is it possible to receive a counter offer back that is more than you offered; yes. Does it always happen? Absolutely not! This agent didn't have enough experience on short sales to tell the client that sometimes the offer is accepted at what you offer!

So, how do you find out the truth in this situation?

Ask the agent additional questions. Ask them how many short sales they have completed so you can find out what basis their information is coming from. Ask them what parameters the bank is making their decision on. Ask them if they have helped both sellers and buyers complete short sales.

Getting as much information as possible, especially when it relates to relatively new procedures is essential to understanding what the pros and cons really are.

3 Options Besides a Short Sale

Often times borrowers who are behind on their payments don't realize there are other options besides a short sale that they can explore. While these options are offered less commonly by banks than a short sale you should always ask your bank or your real estate professional about these options.

1. Deed in Lieu of Foreclosure - this is where the bank agrees to take the title of your home back in exchange for not foreclosing on the property. Banks
2. Loan Modification - This is where the bank modifies your loan without creating a new one or having you re qualify. They may lower your interest rate, fix the interest rate so it doesn't adjust, or waive part of your balance.
3. Repayment Plans - The bank may take the amount that you are behind and spread the payments over a longer period of time so you can catch up on your behind payments. They may stretch the payments over 5,10, or more years depending on the bank.

Make sure you investigate all your options prior to proceeding with a short sale and understand what each can do for you.

What is a Real Estate Hardship Letter?

This is a question that is coming up more and more these days. I thought I would let everyone know what a real estate hardship letter is. A real estate hardship letter or a short sale hardship letter is written by a borrower or borrowers who have fallen behind on payments or are negotiating a short sale with a bank. This letter is written to explain why the home owner fell behind and why they need assistance from the bank with a short sale.

So what should a home owner include in a hardship letter?

• The loan number - funny as it might sound including the loan number is valuable as paperwork often gets lost.
• The reason one fell behind - whether that be the loan adjusted, loss of income, loss of employment, or a combination of factors.
• What the home owner did to try and stay current - if you borrowed or accrued other debt to keep current on your mortgage this is important for the bank to know.
• The truth - funny as it sounds make sure you tell the truth when writing the letter as the bank may choose to look into any and all claims that are made.

A hardship letter is required for most real estate short sales to get approved. We have yet to work with any lender who did not require a short sale hardship letter. Make sure the letter is written promptly and faxed in by your real estate professional or you to the appropriate department.

Related Posts

• 5 Ways to Protect Yourself in a real estate short sale
• 3 Options Besides a short sale

5 Ways to Protect yourself in a Short Sale

Did you ever think that you needed to protect yourself in a short sale? If you didn't we hope you will after this post. A short sale is really just like any other transaction except that you have a bank that needs to approve the price you offered on the home. So in order to make sure things go smoothly you need to make sure a few things happen.

1. Make sure you are THE offer that is submitted to the bank - some agents, incorrectly, submit multiple offers to the bank and let the bank decide. Let's be very clear about this. The bank doesn't own the property in a short sale. They may decide the terms and they will certainly determine what price they are willing to take but it is not their decision to decide which buyer to work with. The seller still owns the home. If the listing agent says they are going to submit multiple offers, not open escrow, or submit offers as they come in find a new home to submit an offer on.
2. Use the C.A.R form SSA (Short Sale Addendum) - this is for California short sales. This form provides the buyer protection in that the buying contingencies do not start until after the buyer receives written approval from the bank. It doesn't make sense for a buyer to spend time and money on a property that the bank may not approve the price so wait (patiently) for the bank to perform their process so you can do yours.
3. Make sure the listing agent has done this before - We are all for people getting experience but it is critical to make sure the listing agent has experience in this process as it is a complicated one for the listing agent as there is far more to do than a standard sale for them.
4. Have preliminary title pulled for the property - your buying agent or the listing agent can supply this for you from their title representative. This will show you liens on the property and give you a clear picture of what has occurred (in a title sense) with the property.
5. Make sure the escrow company is familiar with short sales - It is important to have an experienced escrow company that embraces the short sale process and doesn't charge the buyer cancellation fees. Make sure you read all of their documents and interview the escrow officer before you open escrow.

We hope that these 5 Tips make sure that you have a successful short sale and help you protect your time and your money.

How Long Does a Short Sale Take?

In case anyone has missed previous posts a short sale is when a bank works with an owner to take less than a property is worth. In other words they are going to take a loss on the property. Today I wanted to cover how long a short sale takes to get approval from the bank. Now each bank is different but in general most have a very similar process.

Before a bank can even begin their process they must have certain items from the owner and the real estate agent that they are working with. I am going to list just a few that are required by all banks.

Required documents

• Fully executed offer - In order to begin the process you must have an offer from a buyer who is willing to buy your property. Most banks require that the buyer not be a relative.
• Hardship Letter - Why you felt behind. We will write a post on what should be included in a hardship letter.
• Financial form - Each bank tends to have their own form that they want filled out.
• Authorization form - if your agent is calling them, and they should, they need permission to speak with the bank.

The approval process begins once these required items are received by the bank. It can take at least 3 days for a bank to get the items via fax. They can take between 4-8 weeks if the bank is moving quickly on their approval process. At the end of the 4-8 weeks they may or may not need additional information from you or your agent. This process can be sped up by regular checkups with your bank rep once it gets assigned.

At the end of 4-8 weeks the bank will do one of three different things.

• Accept the offer
• Counter the offer with a different price
• Reject the offer completely

Most banks are doing one of the first two items. This process will be repeated if there is a first and a second loan.

Discounts are to be had on Short Sales

There are bargins to be had on purchasing short sales, but they may not be as much as many buyers perceive. Making an offer on a short sale requires patience by the buyer, but you can be rewarded with a discount. It can take anywhere from 30-60 days to be notified that your purchase has been approved. Here are some items to consider that the bank may come back with:

• Property will be sold as-is
• In a condo, the buyer may have to pay for their own HOA documents
• In a home they may not pay for any termite work that is required of Section 1
• Currently the banks are giving up to a 10% discount from the BPO (Brokers Price Opinion) of the property, which is used to determine market value.

It is important to understand that when making an offer on a property that will be a short sale to have an understanding of where your offer will have some success. Making an offer that is 50% of the list value of a property probably won't have success. Have your realtor help you understand what the market value is and offering a discount on that can help you to succeed!

Short Sale vs Foreclosure - Which is best

In this market with the change in interest rates, jobs, and opinions from everyone it is often asked why would I do a short sale or why not just walk away from the home and let the bank take it into foreclosure? Both are very valid questions and while we can't get all the reasons out there we thought it might be good if we go over a few reasons for each and why you may or may not do each one.

Short Sale

1. This is the process where you actively work with the bank and a loss mitigation specialist to sell your home even though you owe more than the home is worth.


2. This is a valid solution if you want to prevent a foreclosure from showing up on your credit report.


3. You want to limit the number of late hits to your credit report as it can often be accomplished much faster than a foreclosure.


4. You want to face the issue at hand and have a bank that understands that these things do happen.

Foreclosure

1. You bank has indicated to you and your real estate professional that they have no intention of working with you on a short sale. Make sure this is in writing before proceeding.


2. You may or may not have multiple properties that you cannot get short sales negotiated on.


3. You are OK with significant damage to your credit and having to report that you had a foreclosure on future lending applications.

In all both are solutions that will help a homeowner when they are faced with mounting or increasing mortgage payments that cannot be met. Be very wary of individuals who guarantee they can make a short sale work or guarantee that they can prevent foreclosure unless they are personally going to buy your home and can show you proof of that in writing that they don't mind getting notarized. In the end not one single solution is best. What is best is the one that works for you and your family. Make sure that you receive appropriate advice from your real estate professional as well as your tax advisor prior to pursuing any course of action.

5 Tips to Working with Banks on a Short Sale

Now often times real estate professionals and buyers are scared of submitting offers on short sales because of the fact that banks are involved and the time frame that they take. These situations can often be beneficial for the buyer, seller, and the bank. Banks do not want to go to foreclosure. I know we have stated that in previous posts but they do not. It costs them more money, time, and effort to go to foreclosure. As banks work on their process of short sales there are things you can do as a buyer, a seller, and have your real estate professional do that will help improve the process for everyone.

5 Tips to Working with Banks on Short Sales

1. Have a well documented offer - An offer from a buyer must be so complete that there are no questions that can be asked that an answer is not readily available. Make sure that the buyer has taken time to get pre-approved. Ensure that they submit credit scores (with sensitive data deleted), bank statements, and any other information that a lender would want to do. They want to make sure that things go through successfully.
2. Communicate with the bank regularly and kindly - Banks have people who work for them who are people and not robots. Be kind and call at least once a week to see if anything is needed or missing. This is generally done by the seller or the listing agent as they are the ones who generally have signed authorization to speak to the bank.
3. Make sure the sellers packet is complete!!! - Nothing is worse than having the seller forget to give ALL their information to the bank. Ask the selling agent if the sellers packet is complete and ready to submit.
4. Be patient - The banks are assisting many home owners and are working hard at things. Understand that these things take weeks and sometimes longer than promised. If you are the agents regularly communicate
5. Be Understanding - This is for all parties involved. More than likely commissions will be reduced, repairs may not be authorized or approved, and time frames will extend. It is still a situation that helps out all parties and prevents foreclosure.

These tips will help make the short sale experience as pleasant as it can be for all parties involved.

3 Times to Consider a Short Sale

Often times I am asked the question by clients, friends, colleagues "When should someone consider a short sale?" It is important question today and it is important to know that a short sale is an option that may not work for all but should at least be considered. So today we wanted to address situations and time frames on when you should consider a short sale.

• You are currently 30 days or more behind on your mortgage and you can't catch up - Now this is important. There are times when people get behind on their mortgage because they are working on a business, tending to family, or waiting for a disability payment that they are guaranteed will come in. If you are behind in your mortgage and know you will be able to make it up call your lender and explain your situation to see if they can work with you to adjust your payments temporarily. If you can't catch up and know you will not be able to make up the payments calling your lender immediately and asking for short sale information is important.
• You are about to miss your first payment and you know you will not be able to make future payments - If you can see that you won't be able to make future payments because your loan is adjusting upwards then contacting a real estate professional is critical. Often times people have enough equity to sell but not to refinance. It is important to get this information from a specialist. I always recommend speaking to a real estate professional and a lending professional. I do not recommend speaking to 1 person who does both lending and real estate. Have the real estate professional or the lending professional refer you to someone that they have used on their own home. If you don't know anyone or didn't like the last service you received try the bank or credit union you bank at or ask a friend whom you trust.
• You have received a Notice of Default (NOD) from the lender - This means they have filed the legal paperwork recording that you are in default of your mortgage. This notice must be on record for at least 90 days. They cannot set a sale date of your property earlier than 21 days after this 90 days has been completed. If an NOD has been filed and you cannot make up the payments I recommend contacting your bank and a real estate professional trained as a loss mitigation specialist immediately to help you.

If you are just having problems making payments or you are out of work temporarily these may not be strong enough reasons to consider a short sale. Short sales are great at helping you avoid foreclosure but they will cause you to have to sell your home. Always seek qualified advice from real estate professionals, tax professionals, and legal guidance as you deem appropriate.

Tax Consequences of a Short Sale

The most common question that arises when seller's are considering a short sale is what are the tax consequences when I sell this home.

Well first the disclaimer: Please see a CPA, your tax professional, or a lawyer prior to making any decision that you feel may or may not have tax consequences associated with it. I am not a tax professional and recommend that all clients and individuals seek the advice of a tax professional in regards to short sales.

So with that out of the way let's go over a few situations that have happened to clients in the past. In addition for more short sale articles on our blog go to Short Sale Information.

Short Sale Issues

1. Will I get a 1099? - The answer to this is more than likely. In order for banks to get the loss off of their books they will issue you a 1099 which may be considered debt relief.
2. Will I owe taxes on this? - First, if you owe taxes it may be at your standard income tax rate.

• You may not owe taxes if it is your primary residence. You may be able to take your home owners exclusion for owning the property for 2 years as your primary residence.
• If it is not your primary residence and you have not refinanced your property your accountant or tax professional may be able to show this as a loss and that you did not make money on this property.

Foreclosure Issues

1. Will there be tax consequences on a foreclosure - More than likely yes. A foreclosure and a short sale are both considered debt relief. It is out belief that a foreclosure provides a far greater possibility of a great amount owed for debt relief.

Prior to making any decision ask your real estate professional to refer a tax advisor to you or seek out your own tax advisor. The only thing you should not do is wait.

Related Posts

• What is a hardship letter
• What is a short sale
• Life of a short sale

Short Sale Purchases come at a Price

The deals on properties are out there, and now that short sales are becoming a consistent part of the Long Beach real estate market, we thought it would be helpful to provide some insight on what to expect when purchasing a short sale or a quick sale*.

Purchasing a short sale or a quick sale can present some challenges. Since a short sale is not a foreclosure there can be some challenges that are a bit different than your traditional Long Beach home or condo purchase.

1. Time Frame - Understand that even with the best Long Beach realtors invovled, completing a short sale will take substantially longer than a traditional escrow period. Time periods to complete a short sale can often take 90+ days.
2. Understanding Bank Approval - The bank that holds the first and second trust deeds on the property (and they can be different banks) must "approve" of the sale. They must take into consideration the purchase price and terms and the penalties (amounts owed by seller) and determine if accepting the offer on hand is better than going to foreclosure. This period can take 3 or more weeks.
3. Repairs and Credits - Many banks are allowing very few (if any) credits for buyers to purchase properties. This is the case with short sales, but not the case in foreclosures at this time. Be aware that if you are purchasing a short sale you may get a break on the price, but may have to pay most (or all) of your own closing costs. Also remember that most of the time these are "as-is" sales meaning the seller will not make any repairs to the property.
4. Escrow Updates - Your Long Beach realtor may often not have any information to update you on the status of your offer. Some banks allow the listing agent to check-in regarding the status of the approval, while others do not. It has been our experience, that GMAC, does not let realtors call for updates, while loss mitigation departments at WAMU do allow more frequent checking of the status.

If you want to purchase a short sale it can certainly be an opportunity to pick up a great property at a great price. Realize that you may need to submit a few offers out there on different properties so you can obtain one and just be prepared to pay some closing costs.

*Quick Sale is a term being used by Countrywide that means the same as a short sale

4 Ways to Prevent Foreclosure Now

Right now foreclosure, the thought of foreclosure, or information pertaining to how to buy foreclosure properties is everywhere. We thought we would tell you a great way to avoid foreclosure starting with things you can do today if you feel you might be near that point where you might start missing mortgage payments.

1. Know what kind of home loan you have - I don't like saying that you shouldn't trust what people say but you definitely should know exactly what your mortgage is on your home or condo. Do not take for face value what the person who did your loan said make sure you have read all the paperwork and understand it. Even if it was a really good friend it may be an unintentional mistake that was made so understand what kind of loan you have. If you are missing copies of your loan paperwork then call your lender and get copies of it.
2. Create a budget & stick to it! - many times foreclosure happens because people do not understand where all of their money is going. Know where you spend all of your money and stick to a savings plan.
3. Save every month - We all know it is hard to do in this day and age but we also all enjoy Starbucks and itunes so save a little every month in case you loose overtime or a job so you can cover your mortgage payment while you are looking for new work.
4. Refinance your loan if you don't have a fixed rate - The federal reserve dropped the rate at which banks borrow money last week. They are now lending money cheaper than they were even 3 weeks ago. If you have a loan that is adjusting right now or is about to adjust and you want to stay in your home this is a great time to refinance. Make sure you know all the fees and know what is going to happen with your loan. Even if you don't plan on staying in your home for more than the next couple of years you may want to keep your property and rent it plus getting a long term loan right now is cheaper than a short term one.

We hope these 4 Ways to Prevent Foreclosure help people keep their home. Make sure to pass on this list and help those who are having trouble.

What is a Pre Foreclosure?

These days there are many different words being used to describe properties that are in distress. You hear everything from short sale, to pre forelcosure, to quick sale, to well you name it. Today I thought I would cover what is a short sale and what is happening so everyone has a better idea. This will not be the last post on pre floclosure properties. We have really just begun to see what is going to happen.

Let's start at the beginning.

1. Defaulting on your mortgage - now to be clear almost all home loans state that you are in default if you are 1 day past when the payment is due. So are all of us in default when we pay late? Well the bank doesn't want to go through the kind of paperwork to say you are in default. In general most banks penalize you if you are past 15 days late on your payment with a late fee.
2. 30,60,90 day notices - this is when you haven't paid your mortgage for 30 days after it has been due. For example if your mortgage was due on August 1st of 2007 and you hadn't paid it by September 1st you will more than likely receive a 30 day notice on your credit and from your bank in the mail. Trust me they will be calling you and sending you letters as well.
3. It is homes that are past the 30 days that have a potential to be pre foreclosure homes. Now let's get this straight everyone has problems now and then so some people can bring their homes current (pay all past due fees) and some have experienced problems that they cannot and will not be able to bring them current.

So pre-foreclosure means a home owner is at least past the 30 day mark and maybe even after the 90 day late notice point. They have received notices but their home has not been sold to the bank, taken to sale, or sold to an investor. Home owners who are in this situation can consider a short sale. Check out the post earlier in the month on "Avoid Foreclosure - Ask for a Short Sale" for more information on that process.

So we hope that this clears up what a pre-foreclosure is. Feel free to share with your friends. This is a changing market and many home owners need help right now so make sure they know all of their options.

Don't sign over your Deed to your home!

During the changing times of real estate at the moment there are a variety of people who come out of the wood work in order not help but take advantage of home owners when they are behind on their payments. I thought it would be good to go over a few tricks that these people use and some of their pitches so home owners that are considering a short sale or are facing foreclosure can be aware of.

Now these individuals or companies come with a variety of pitches to make it sound like you are a winner on the deal and that you will avoid foreclosure or not have to go through a short sale if you just sign the deed over to them. Below are some of the best pitches that I have heard and please we caution people not to listen to these people and contact a real estate professional or a lawyer prior to signing anything that releases your rights to your property.

1. "Sign your deed over to me so I can negotiate with the bank and you won't have to worry about anything" - once you sign over the deed you no longer control what happens with your property. You are still on the hook for the loan you just can't do anything with your home.
2. "The deed won't be worth anything if you go to foreclosure it is just a piece of paper." - It is a piece of paper that says you own the home and the bank has lent you money based on that home. Once you sign it over the person can even evict you from your own home.
3. "Sign it over to me and I will let you pay half the amount you are paying now so you can stay in your home." - You have literally no guarantee that they will do this. They have no obligation and can say whatever they want. If someone states this ask them to put the funds for the next 6 months in an escrow account with an escrow company you choose and have a contract written up to state where the money will be sent. If the don't like this they probably aren't telling the truth.

Please remember that if someone makes you an offer that sounds to good to be true it probably is. The best thing you can do if you are facing foreclosure or want to consider a short sale is contact a real estate professional or a lawyer in regards to these issues.

Avoid Foreclosure - Ask for a Short Sale

There are many home owners at the moment that are facing foreclosure of their homes. The entire process of foreclosure and missing payments on it can be terrifying, embarrassing, and stressful. In order to make prevent a foreclosure the best possible thing that a home owner can do is ask the bank to work with them on a short sale. A short sale occurs when you owe more than the market value of the property and the property cannot be sold with the bank being paid off in full.

Banks such as Bank of America, Countrywide, and Washington Mutual have Loss Mitigation departments set-up in order to help home owners in this market. They are people too and they want to help their borrowers in their situation. The first step is to speak with the bank and ask for Loss Mitigation department. You want to see if they can help you lower the payments first if you want to keep your home. Banks can lower the interest rate if you are behind in payments and your credit and job worthiness indicate that this is only temporary. The only way to get this is to make sure you speak with the bank.

The vast majority of banks these days have short sale packets that you can ask for. These packets will ask you to outline in detail what you owe not only on your home but also all your assets.

Don't Fear Your Lender - Government Urges Them to Help

Times are changing and the federal government has given some guidance to lenders to urge them to help borrowers out. So how does this affect all of us in the Long Beach Real Estate Market? Well it will help our home owners who are in trouble and nearing real estate foreclosure. When the federal government talks banks, lenders, brokers, and everyone tends to listen.

Detailed information can be found at Fed Urges Companies to help borrowers. So why would lenders voluntarily comply with recommendations from the government? Well because it is better to comply when you are asked nicely to then when you are told to with a mandate. Again how does this help home owners who are trying to avoid foreclosure in Long Beach? The guidance given to lenders covers options that will help owners in Long Beach and all over the country. Those options are as follows:

1. Loan Modification - This is where the lender modifies your existing loan to help you afford it. This may include fixing your adjustable rate rate mortgage to a fixed rate.
2. Deferring Payments - Allowing you to defer payments on your loan for a short amount of time to help you get back on your feet.
3. Extending the loan - stretching out the term of the loan so that it lowers your monthly payment.

Rest assured when the government makes recommendations to lenders they will listen. So if you are having problems right now with making your loan payments call your lender and ask to speak to the loss mitigation department or someone who can help you. Sometimes it just takes getting to the right people.

Top 4 Reasons to Ask for A Short Sale

When things get tough, as they are now, in the long beach real estate market some home owners find themselves getting behind in payments. Often through no fault of their own home owners have lost jobs, health reasons, helping family, and rising rates make it difficult to pay the mortgage on their piece of long beach real estate. So what is a short sale and why should you ask your bank for one if you get behind? Well let's get into this.

1. The bank doesn't want to foreclose - Truly banks like to lend money. They have no desire to actually be property owners.
2. It is bad for business - It costs the bank a tremendous amount of time and effort to foreclose on a piece of property and long beach real estate is no different. The average cost of a foreclosure is over $42,356!
3. The number one reason for foreclosure is the bank can't speak with the home owner - That's right lack of communication is the reason behind the majority of foreclosures. So speaking with the bank and asking them to work with you is highly in your benefit.
4. It is better for your credit - Getting a short sale where the bank works with you to sell a property is better for your credit than a foreclosure. The bank has more options on how to report it to the credit agencies.

Remember a short sale is when you are selling a property for less than it is owed. In future posts we will talk about how this can affect you. For now if you are behind on payments, can't refinance, and just need out consider a short sale instead of letting the property foreclosure.