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Torellirealty's Blog

By Torellirealty | Broker in Costa Mesa, CA
  • Impacts on Homeowners Explained – Demystifying Foreclosures and Short Sales

    Posted Under: Foreclosure in Costa Mesa  |  March 22, 2010 6:11 PM  |  1,462 views  |  1 comment

    The real estate market is flooded with foreclosures and short sales here in Costa Mesa and Orange County.  From January 2009-January 2010 we saw the number of short sales in Orange County jump by 34%.  Foreclosures and short sales have very different consequences for homeowners when they go to sell their home.  When faced with the notion of a bank foreclosing on your home, homeowners may want to consider being approved for a short sale if eligible.  Why?  Here’s a brief explanation of some of the differences.

    Real Estate photo

    1. Homeowners who are facing foreclosure will not be eligible for a mortgage backed by Fannie Mae (one of the primary lending sources for mortgages) for 5 years after the foreclosure is completed.  However, homeowners who successfully negotiate a short sale will be eligible after 2 years.

    2. For any homeowner who allows an investment home to fall to foreclosure, that homeowner will not be able to get a Fannie Mae backed mortgage for 7 years.  If the property sells as a short sale, the investor may try for a Fannie Mae backed mortgage after 2 years.

    3. Homeowners who want to try to get a mortgage through any other mortgage company will need to reply YES to Question C in Section VIII of a 1003 application.  (The question asks “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?”)  Answering yes to this question will affect future mortgage rates for homeowners or foreclosed property.  In the case of short sales, some lenders may allow buyers to buy sooner than the 2-year waiting period.  This is not always true though and it would be wise to do your due diligence in searching for a lender.

    4. For homeowners whose property is foreclosed upon, it is estimated that their credit score drops by 250+ points and this will affect their credit score for about 3 years.  With a short sale, the credit score will only report late mortgage payments.  After the short sale goes through, the report should say that the mortgage was paid or negotiated, which should result in a credit score dropping by about 50 points assuming all other payments are paid on time.  While a foreclosure can affect a credit score for 3 years or more, a short sale can have a shorter affect. Some can have an effect that is as short as 12-18 months.

    5. One of the biggest things to consider is credit history.  A foreclosure goes on public record and stays on a person’s credit history for 10 years or more.  On the other hand, a short sale does not go on one’s credit history.


    For more info on Costa Mesa real estate please contact:

    Torelli Realty

    (714) 540-7355

    www.torellirealty.com

    info@torellirealty.com

    Become a Facebook Fan: Torelli Realty

    Follow us on Twitter: @torellirealty

  • Are Short Sales Really Long Sales?

    Posted Under: Foreclosure in Costa Mesa  |  February 11, 2010 12:49 PM  |  376 views  |  No comments

    The joke about short sales is that they’re far from short – everyone has heard a horror story about how long and drawn out the process can be.  The good news, as Realty Times reported, is that at the end of 2009 the US Treasury Department stepped in with the Home Affordable Foreclosure Alternatives (HAFA) to standardize the short sale process.  Prior to this program, all parties were not playing by the same rules, which led to lengthy transactions and uncommon procedures.

    Picture of bank owned signCourtesy of Big Stock Photo

    HAFA works with lenders and servicers who are part of the government’sHome Affordable Modification Program (HAMP).   HAMP basically givesqualified distressed homeowners a chance to adjust their mortgage payment in hopes of preventing foreclosure.  But what if a homeowner doesn’t qualify?  HAFA is the program that may be able to help these people as well as those who still can’t pay HAMP’s modified payments.  Loans up to the amount of $729,750 are covered, however Freddie Mac and Fannie Mae loans do not qualify.

    If a homeowner is approved for a HAFA short sale, a minimum price is determined for the home and a Short Sale Agreement (SSA) is recorded.  The SSA is in effect for at least 120 days and during this time no foreclosure may occur and the property must be actively listed and marketed by a licensed real estate professional.

    We’ve had great success in marketing short sales because of the active role we take in promoting ALL of our properties.  Short sale or not our goal is to service our clients.  The HAFA program will certainly add to the efficiency of the short process so that all the agents, lenders, and short sales servicers are on the same page.   It’s time for the short sale to live up to its name.



    For more info on real estate in Costa Mesa please contact:

    Torelli Realty

    (714) 540-7355

    info@torellirealty.com

    Become a Facebook Fan: Torelli Realty

    Follow us on Twitter: @torellirealty

 
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