Friday, April 18, 2008

Foreclosures, Short Sales & Credit Scores

"How will a Short Sale affect my credit?"

I am often asked this question by sellers pondering foreclosure or deed-in-lieu of foreclosure versus a Short Sale. It may be easier to look at how foreclosure affects credit in ways that a Short Sale does not. Kenneth R. Harney, of the Washington Post, recently wrote a fascinating article. "Walking Out of a Mortgage And Into Years of Hurt", about ramifications of foreclosure. Some of his investigative highlights:
  1. Fannie Mae will not allow borrowers with a foreclosure to get another Fannie Mae-backed mortgage for 3-5 years, and only with a minimum credit score of 680.

  2. Freddie Mac sees foreclosure as a major negative on credit for seven years.

  3. FICO scores count foreclosures as nearly as bad as bankrupty.

  4. Freddie Mac and Fannie Mae loan applications include questioning the borrower on whether they have ever had a foreclosure or deed-in-lieu of foreclosure. If so, the loan is more critically analyzed, and may not be so easy to obtain.

In summary, Short Sales, where the lender may report the loan as "settled" or "paid" seems a more palatable solution for future credit-worthiness.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Fort Walton Beach, Santa Rosa Beach, Crestview, Niceville, Navarre, Mary Esther, Shalimar, Bluewater Bay, Sandestin, Seaside, Rosemary Beach, Miramar Beach, Dune Allen, Blue Mountain Beach, Alys Beach, Eglin Air Force Base, Hurlburt Field and vicinity.

1-877-487-9639 ext 204

www.ShortSaleForeclosureHelp.com

www.RulnickRealty.com

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Friday, April 11, 2008

Bank That's Never Done a Short Sale

Much of my Emerald Coast market is both resort and military. There are at least three air force bases in the Destin-Fort Walton Beach area, so I do a lot of real estate business with military members. One of my recent Short Sale listings used a local air force credit union for his second mortgage/home equity line. Well, I almost fell off my chair today when I found out I was the "FIRST" request they have ever had for a Short Sale.
I was making my standard call to notify the first and second lienholder that I had placed the seller's property on the market seeking a Short Sale. I caused a stir when I called the second, the military credit union, and asked what their standard Short Sale procedures were. I got a clue when the customer service rep asked me what a Short Sale was. I explained it briefly, then asked to be transferred to their Loss Mitigation department. She didn't know what that was, so I was placed on hold and eventually transferred to the mortgage department. This time I was not placed on hold, but could hear the conversation in the background, "She is NOT authorized on this account! She said she is calling for Loss Mitigation?". I had to admit, I had a big smile on my face. Finally, an authoritative-sounding woman got on the phone and said she was in charge of the real estate department at the bank. I explained what I was doing, and she confessed, "We have never had a Short Sale, maybe we've just been lucky." I would say! She told me she was not sure what to do in this situation, and asked if the first usually loses money, too? I told her always! (Well, almost). Anyway, I offered her my assistance and told her the procedures most of the big banks use, and even emailed her my checklist for sellers and short sale website www.ShortSaleForeclosureHelp.com. I also added I would be happy to assist her if her bank runs into any other situations with Short Sales. I've got to say, this is going to be interesting!

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or 850-650-7883 ext 204
www.RulnickRealty.com

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AmTrust Short Sale Appraisals

I have a Short Sale in process with AmTrust as the first mortgage holder. Their appraiser recently went out, and boy, we have a problem. AmTrust Short Sale appraisal guidelines require the comparables to be within 1 mile of the subject in suburban areas. And, they cannot use foreclosures as comps. The situation is as follows:

Subject: 1400 SF basic house, built 2004, no garage, in neighborhood with many trailers and dirt roads

Offer: $172,000

Real Buyer Comps: Many homes four miles away in new subdivisions, more substantial, 1600-1800 SF, garages, selling in the $180's very recently

Problem: Appraiser cannot use those comps. Only sales in subject's neighborhood are an errant house on pilings that sold for $200,000 six months ago and some other odd-ball sales. Appraiser's forced value is coming in around $200,000

Solution: Appraiser is allowed to get a statement from his "peer" justifying the sale price. He contacted me, as a peer (I am a real estate Broker) and I told him,

"A buyer would not pay $200,000 for the subject property. Foreclosures are reasonable to use as comps in this market, because they are making the market. A typical buyer for the subject, who could afford it, would certainly pay in the $180,000's for a much more substantial home 10 minutes away versus the subject property. In conclusion, using comps that are four miles away is reasonable in the current market, as is using foreclosures."

The appraiser was completely sympathetic and frustrated he was not allowed to use realistic comps. He said I may be asked for a written statement down the road. I will be delighted to provide it.

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or 850-650-7883 ext 204

www.ShortSaleForeclosureHelp.com
www.RulnickRealty.com

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Saturday, April 5, 2008

Destin Florida Executive Office

12889 Emerald Coast Pkwy., #107A, Miramar Plaza, Destin FL 32550 $595 per month

Reserve your office in professional business atmosphere. Each office has hall window and full glass door for open feeling. Share with professional real estate agent, architect. Free internet, electric, water. No cam fees. Shared kitchen, bath, reception. Color copier available for copies, scanning and printing directly from your computer. Some storage. Owner is licensed Florida real estate broker.

Contact Wendy Rulnick, Broker 850-650-7883 ext 204

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in real estate on the Emerald Coast of Florida: Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Dune Allen, Blue Mountain Beach, Freeport, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field.

Call toll-free 1-877-ITS-WNDY (1-877-487-9639)
www.RulnickRealty.com

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Tuesday, April 1, 2008

Chase: Second Lien Holder

Today I received a call from a negotiator from Chase, the second mortgage holder on one of my listings with a short sale offer. The gentleman was refreshingly nice, I must say. Chase is owed $101,000 on the note. The first, AMTrust is owed about $200,000. The offer is for $175,000. This is a very fair market offer. The Chase negotiator said with such a loss he must get an approval from G-d. He was pretty funny. He asked me to email him a price history of the listing, a preliminary HUD and a market write-up. He wanted me to have my sellers call him so he could inquire about them paying a promissory note or doing a cash contribution. He knew that was not likely, but had to follow his checklist. He said if he called them, they might not answer if they have caller id! How true. He said that Chase would combine a BPO price with a computerized value compared to the original appraisal. The value becomes the "Reconciled Market Value" or RMV. He also interestingly noted that there was always an investigation as to whether appraisal fraud may have occurred with the original loan, and that more and more cases were turning up. Compared to the recent experience I had with the ASC negotiator, Mr. "Chase" was courteous and refreshing!

It's Wendy!
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Specializing in SHORT SALES and FORECLOSURES on the Emerald Coast of Florida: Destin, Fort Walton Beach, Mary Esther, Shalimar, Santa Rosa Beach, Niceville, Navarre, Crestview, Sandestin, Seaside, Inlet Beach, Blue Mountain Beach, Freeport, Rosemary Beach, Seacrest, Dune Allen, Miramar Beach, Florida.
1-877-487-9639

www.ShortSales-EmeraldCoast.com
www.RulnickRealty.com

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