Short Sales creating a wake of frustration

Everyday I either have a conversation, answer a blog post or get a phone call from someone that is completely frustrated with short sales. Just a few years ago the housing market had never heard of a short sale. Now just mentioning the term and people, whether a homeowner, buyer or real estate agent just roll their eyes.

Short Sales have grown to be a popular foreclosure alternative for financially strapped homeowners because it does not impact the credit report as deeply as a foreclosure. However, the short sales need to be approved by first adn second lien holders and often times the process is painfully long and frustrating.

The Obama administration is aware of the frustrations. In mid-May, Treasury Secretary Tim Geithner announced plans to streamline the process by offering financial incentives to mortgage servicers and investors that accept short sales, much in the same way they are rewarded for refinancing or modifying troubled mortgages.

Four months later, homeowners, real estate agents and lenders are still waiting for specific details of how the plan would work. A Treasury Department spokeswoman said an update on the program is expected in a few weeks.

In Northwest Florida short sales represent over 88% of all distressed properties on the market. The national average is that 2 in 3 short sales never close. Team Baranowski has a 100% short sales closure rate for our sellers since we  started doing short sales in 2008. The increasing volume of short sales is creating a massive wake of frustration and unnecessary delays from homes being moved off the market. Lenders and service providers such as Bank of America needs immediate and significant changes to how efficiently they process short sales.

To read more about this story CLICK HERE

If you or someone you know is looking at buying or selling distressed property…rely on the experts, The Distressed Property Experts of Team Baranowski! Call 850-259-1788 or email us for a free consultation.
Note: The information provided is for informational purposes. No legal advise is given or implied. Please check with a qualified attorney in your area.

Home in Rosemary Beach 102 West Water Street as Craig’s Top Distressed Property Pick for September 25th, 2009

Rosemary Beach is one of the top Luxury destinations along the Emerald Coast. It is a very hip and chic place to hang out and enjoy our beautiful area with family and friends. This week we look at an amazing distressed luxury home in Rosemary Beach.

Home in Rosemary Beach 102 West Water Street MLS Listing

Homes in Rosemary Beach

Distressed Properties and Homes in Rosemary Beach

This 4,750sf courtyard home has a newly completed private lap pool and spa. The home and carriage house are situated on one of the largest corner parcels in Rosemary Beach. The main house consists of 4BR/4.5BA with a first floor master suite featuring a fireplace, therapeutic tub and large open air shower in the master bath. The second floor includes 2 bedroom and 2 bathrooms, balcony overlooking the courtyard, and gathering area. The third floor bunkroom is perfect for kids to enjoy their own space. The charming self-sufficient carriage house includes a two car garage, bunkroom with 4 bunks, kitchen, separate bedroom, private patio and perfect vista views of the Gulf of Mexico and the rooftops of the Town of Rosemary from the top floor wet-bar balcony. The entire property provides a wide variety of private and gathering space for family and friends.

102 West Water Street in Rosemary Beach is a short sale and is being offered at $1,662,500. This is right at $350/sf.

If you are interested in this luxury distressed home in Rosemary Beach and would like to preview it. Please give Tracy Baranowski a call at 850.259.4270 or Craig Baranowski at 850.259.1788 or email  us info@teambaranowski.com.

Homeowners Worse Off After Mortgage Modifications?

There are several options to foreclosure and the three most popular are short sales, deed in-lieu of foreclosure and mortgage modifications. Under the Obama administration they have created the Making Home Affordable Program which is a $75 billion initiative in addition to the hundreds of billions in bail out money.

Many of my customers first try a mortgage modification and usually get a much less than desirable solution from their mortgage service provider. In almost all cases there is no reduction in principle and most clients do not qualify under the Making Home Affordable Guidelines of your mortgage being more than 125% of it current appraised value. That means, that if you have a $125K mortgage and your home appraises for $99K then you do not qualify under this program.

I just read an article that discusses how tens of thousands of financially strapped homeowners who have asked lenders to lower their mortgage payments are instead winding up with higher monthly payments and larger debts on their homes. This is disturbing news, but not surprising.

Homeowners who were hoping for lower payments are discovering to their dismay that lenders roll late fees, back taxes or other costs into the principal, sometimes turning a difficult payment into an impossible one. That is one reason that many reworked mortgages are sliding back into default.

It’s too early to know if this pattern will continue under the Obama administration’s $75 billion initiative to get lenders to reduce monthly payments for homeowners struggling to make their mortgages. A total of 360,165 mortgage modifications are now in a three-month trial period under the government’s plan announced in March. But the initiative focuses on reducing interest rates rather than cutting principal, which has been found to be one of the most effective modifications for helping homeowners avoid defaulting a second time (known as a “re-default”).

Of loans modified from Jan. 1, 2008, through March 31, 2009, monthly payments increased on 27 percent and were left unchanged on an additional 27.5 percent, according to a recent report by banking regulators. Many modified mortgages fall delinquent – 25 percent to 40 percent, depending on the type of mortgage – often because of homeowners’ loss of income or additional outstanding debt, according to a report last month by CreditSights, a financial research firm.

“Payments have gone up … (and) the payment relief can last for the first few years and then go up (again),” says Alan White, assistant professor of law at the Valparaiso University School of Law in Valparaiso, Ind. He has studied the subprime mortgage situation for 10 years. “(The lenders) focus on today and not on the future.” Even under the Obama plan, they don’t focus on permanent debt reduction, White says.

The majority of borrowers who’ve gotten mortgage modifications have seen their overall principal balance go up, according to an analysis by CreditSights and ICP of about 660,000 mortgages modified this year. In about 90 percent of the modifications, the principal balance after a modification was larger, CreditSights said.

Hit with a 1-2 punch

That’s the situation facing Samantha and Steve Jensen. When the couple bought their $550,000 home in Scottsdale, Ariz., six years ago, they thought they’d found the perfect place to raise their three children.

But when their adjustable-rate mortgage reset to a higher rate, they could no longer afford the monthly payments that jumped by about $1,000 a month, to $3,300. So they were relieved when their bank in June offered to modify their mortgage by lowering their interest rate.

Under the modification they were to pay $2,600 a month – but then they discovered they also had unpaid property taxes. Once the bank added taxes to their principal, they say, their monthly mortgage payment grew to $3,500. They got a modification in June and are now two months behind on their mortgage payments and facing possible foreclosure.

“The bank could have done more and reduced our principal,” says Samantha, 40, a special education teacher. “You have the anticipation of relief and then you realize it’s not going to make it better. It’s like being punched in the stomach twice.”

How most modifications work

A mortgage modification can take several forms. Lenders may allow borrowers to skip payments and then add the skipped payments to the amount of the loan. They may reduce the interest rate charged, extend the loan term, or reduce the total amount of the loan by forgiving principal.

Many lenders say that reducing principal remains the modification of last resort.

More than 80 percent of loan modifications that Wells Fargo has done in the past three months have led to lower payments for borrowers, but most involve rate reductions, the bank says. Wells Fargo has done more than 240,000 modifications, and more than 30,000 of those have been under the Obama administration program.

At CitiMortgage, about 92 percent of modifications involve reducing rates, lengthening terms of the loan, or both. About 8 percent provide principal reduction.

Providing relief to borrowers is complicated because of the financial interests of the parties on the other side of the loan. Many mortgages are commonly sold to investors, and borrowers’ payments are collected by servicers, which may be the original lender or a different company.

Certain types of loans cannot be modified without the investors’ approval. Lenders and investors may shy away from reducing a mortgage’s principal balance because that requires them to write down the value of the loan. But temporarily reducing interest payments while adding to the mortgage’s principal avoids any loss.

Some research suggests lenders may gain financially if they don’t modify a mortgage at all.

Click here to READ MORE

If you or someone you know is looking at buying or selling distressed property…rely on the experts, The Distressed Property Experts of Team Baranowski! Call 850-259-1788 or email us for a free consultation.
Note: The information provided is for informational purposes. No legal advise is given or implied. Please check with a qualified attorney in your area.

Home in WaterSound 265 Salt Box Lane as Craig’s Top Distressed Property Pick for September 18th, 2009

WaterSound Beach Short Sale! Back on the Market for $650,000!! December 10th, 2009

WaterSound Beach is truly one of my favorite places in Scenic 30A. The coastal cottage architecture of WaterSound reminds me of Martha’s Vinyard and is my personal favorite architure of anything you will find in Northwest Florida. As with most areas WaterSound has seen the highs and lows of the market. At the height of the market residential lots were selling just under $1mil for non-gulf front lots! Today we see those same lots selling in the $300K range. Homes were selling in the $900 per square foot range and now we have seen homes in the mid $300 to $450 per square foot range.

One of my all time favorite homes in WaterSound Beach recently sold as a short sale for $2.4 million. 52 South Founders Lane in WaterSound Beach. This 5,000sf home was originally listed for $6.9 million in 2007. This home defined WaterSound and was one of the most sensational homes along Scenic 30A. The buyer paid cash, and all I can say is they are one smart buyer. WaterSound Beach is an incredible gem along the Emerald Coast and in 5 years this community will be the most prominent and highly sought after development along the gulf coast.

HOME IN WATERSOUND BEACH 265 SALT BOX LANE

Homes  in WaterSound Beach

Condos in WaterSound Beach

This week I picked another short sale in WaterSound Beach as my top distressed property pick. 265 Salt Box Lane in an incredible 3 Bedroom 4 Bath home in the situated in the picturesque neighborhood of Crescent Keel, with its winding foot paths and lush, natural landscapes. This home takes advantage of the outdoors with relaxing porches and screened-in patios. This home lives much larger than the 1800 square feet it is. With its soaring 20 foot ceilings in the great room with a custom gas fireplace, to its stylish and maintenance-free, stained concrete floors, this home is the perfect beach retreat. The kitchen is a chefs delight with Stainless Steel GE Monogram appliances, all designed in a setting perfect for entertaining. Directly off the kitchen is a functional home-office space with custom millwork and granite tops. This home features three impeccably designed bedrooms, each with its own private bath, as well as a fourth, separate, full-bath for those extra guests. Two of the bedrooms are on the first floor and the master is located on the second level allowing for greater privacy. In addition, this home has a third floor tower with views of the Gulf of Mexico. Use this fantastic bonus space as a media room, bunk room or gathering area. One of only a few homes in Crescent Keel with its own detached garage located in the rear of the home.

265 Salt Box Lane Home in WaterSound Beach is a short sale and is being offered at $750,000. $650,000! You will not find many more homes in WaterSound for under $800,000.

If you are interested in this home in WaterSound Beach or would like to preview other homes in WaterSound. Please give us a call at 850.25.1788 or 850.259.4270 or email  us info@teambaranowski.com.

FHA Loans are a Boost to Home Affordability

FHA loans are insured by The Federal Housing Administration, which is a part of the U.S. Department of Housing and Urban Development (HUD). Ginnie Mae is to FHA loans as Fannie Mae and Freddie Mac are to conventional loans.

FHA loan programs provide help to creditworthy, low-to-moderate income families that do not meet the requirements for other conventional financing alternatives. They are typically easier to obtain than conventional loans for those with spotted credit.

The government-backed insurance lowers the risk and cost of lending, typically resulting in lower interest rates for consumers than they would receive with other types of financing.

The minimum down payment for FHA loans is only 3.5%. This makes FHA loans an attractive option for aspiring homeowners lacking large sums of cash especially since tightened lending conditions have brought back the 20% down payment standard.

There are several FHA loan programs that cover an assortment of needs.

FHA-Insured Mortgage Programs:

1. 203(b) – Buyers with low down payment and little credit history
2. 203(h) – Disaster victims
3. 255 – Reverse mortgages
4. 203(k) – Rehabilitation mortgages
5. EEM – Energy-efficient mortgage program
6. 248 – Native American reservations
7. Title I – Home improvements

For more information on FHA loans, check out http://www.hud.gov/offices/hsg/sfh/fharesourcectr.cfm or give us a call at 850-259-1788 or 850-259-4270 and we will be more than happy to get you in contact with some of our preferred lenders that have expertise in FHA Loans.

If you or someone you know is looking at buying or selling property…rely on the experts, Team Baranowski! Call 850-259-1788 or 850-259-4270 or email us for a free consultation.

Credit Scores Decoded

I get a lot of questions on how are credit scored determined?

In a market restricted by tightened lending standards, a solid credit score has played a much larger role in mortgage qualification than in recent years past.

Here is a breakdown of what components determine your FICO score:

1. Payment History
2. Amounts Owed
3. Length of Credit History
4. New Credit
5. Types of Credit

Breakdown of the importance of the credit components for a typical consumer. Percentages may vary based upon credit profiles.

Important information to be aware of about credit scores:

1. Don’t be afraid to shop around for the best rate. Multiple inquiries about the same type of loan only count as one request if done within a short amount of time.
2. During the process of qualifying for and obtaining a mortgage, play it safe and wait until after your contract has closed and the mortgage is secured to open new credit.
3. Checking your own credit score will not harm your score if you order reports directly through the credit-reporting companies.
4. If you don’t have a long history of credit, don’t open too many cards too quickly. This can lower the average “account age.”
5. Don’t open or close credit as a short-term strategy for improving credit. Open what you need, when you need it. Pay your bills on time.

For more, check out: http://www.myfico.com/CreditEducation/ImproveYourScore.aspx

Would you like $8,000 back on your taxes this year?

I have been getting a lot of questions about the new tax credit. Who qualifies? How does it work? How long will it last? Below is an in-depth look at the $8,000 tax credit for first time home buyers. CLICK HERE TO DOWN LOAD A FREE EBOOK ON THE 2009 TAX CREDIT.

According to the new legislation, a first time home buyer is defined as someone who has not owned a principle residence in the past three years. Those three years are counted up to the date you take possession of the house you buy in 2009. This means that even if you’ve owned a home in the past, you can still take advantage of the tax credit as long as you haven’t purchased a primary residence since 2006.

The same goes for married tax payers – they must both be first time home buyers. For non-married joint buyers, only one of them needs to be a first time home buyer, or someone who hasn’t owned a primary residence in the past three years.

Qualifying homes include:

*New homes

*Homes that are being re-sold

*Condos

*Town homes

The main restriction is that the credit is only for those who buy a home as their primary residence. So if you are an investor looking to buy a rental property you would not qualify for the credit. However owning a vacation home or a rental property already does not neccessarily disqualify you from taking advantage of the credit (as long as you haven’t owned a primary residence in the past three years).

A Look at the Numbers

The tax credit is equal to 10% of the purchase price of the home, up to $8,000. The amount of the credit you can qualify for is related to how much money you earn. Here’s how the credit is scaled:

*Single home buyers earning 95K or less qualify. If you make 75K or less, you qualify for 100% of the $8000. If you make halfway, 85K, you qualify for 50% or $4000. The credit phases out gradually between 75K and 95K of income. For example, if you make halfway between the income limits, 85K, you qualify for up to half of the credit.

*The same rate applies for married couples and joint buyers whose incomes limits are doubled to $150,000 to $170,000. Married couples or joint buyers whose incomes are less would receive the full $8000 credit. At an income level of $160,000, halfway between 150 and 170, the buyers would receive half the credit – or $4,000. And the credit phases out altogether at $170,000.

This credit represent a significant amount of money. One of the biggest points of difference for the new credit from the one congress passed in July of 2008, is that the new credit does not have to be paid back.

In addition, it’s refundable, which means that if you’ve paid all your taxes as you go with an automatic payroll deduction, you would receive an $8,000 check from the IRS.

If you’re committed to buying a house in 2009 and want to use the $8000 tax credit for a downpayment, consult with your certified public accountant.

In Summary

Qualifying home buyers will need to make their home purchase between January 1, 2009 and December 1, 2009. The home has to remain their principal residence for the following three years.

The great news is that the new tax credit coupled with historically low mortgage rates and rising affordability, offers you a great opportunity if you act fast.

If you’re interested in learning more about the new tax credit give  us a call at 850-259-1788 or 850-259-4270 or email us at info@teambaranowski.com.

Home in WaterColor 306 Red Cedar Way as Craig’s Top Distressed Property Pick for September 11th, 2009

This week I picked a bank  owned home in WaterColor for this week’s Top Distressed Property Pick. This is an approved price by the lender so you can close immediately.

Home in WaterColor 306 Red Cedar Way

Homes in WaterColor

Condos in WaterColor

306 Red Cedar way is located in Phase II of the Prestigious Community of Watercolor. This is a  John Willis Custom Home and has never been occupied. There are five porches with one having a Fireplace to spend a quiet evening with your family and friends. With Hardwood Floors throughout, this four bedroom two story home has every detail covered for the discerning buyer in WaterColor. The entrance is illuminated by Belo Gas Lanterns and a screened in porch. Three french doors open into a large seating area, fabulous kitchen, and dining area. On the second level there are four beautiful bedrooms and one that includes four built in bunk beds. WaterColor homes have been top sellers all year and this home will not last long. Offered at $875,000 | 2,368sf | 4 Bedrooms 3.5 Baths

If you are interested in this distressed home in WaterColor or would like to preview other homes in WaterColor. Please give Tracy Baranowski 850.259.4270 or Craig Baranowski  a call at 850.259.1788 or email  us info@teambaranowski.com.

Keller Williams Emerald Coast Announces a Distressed Seller’s Solutions Seminar September 12th from 10am to Noon

Destin, FL – September 12, 2009  – Keller Williams Emerald Coast Distressed Property Short Sale Division is hosting a limited seating seminar for distressed sellers to be held on Saturday September 12 from 10AM to Noon at their office located at 151 Regions Way Suite 4A in Destin (across from Bass Pro on 98). The primary objective of this seminar is to afford homeowners and investors who find they can no longer make payments on their properties dignified alternatives to Foreclosure that benefits the property owner and the bank as well.  Keller Williams Emerald Coast has always been a frontrunner in the community when comes to their concern for the welfare of others.

Pat Perrotta, who holds the Certified Short-Sale Professional (CSP) designation heads up that division and along with Joe Baranowski and Craig Baranowski who both hold the Certified Distressed Property designations  (CDPE, CFS) has organized this event which will include a panel of experts consisting of an attorney, an accountant, a lender and experienced Real Estate Professionals to answer all the myriad of questions distressed sellers may have.  Some of the topics to be discussed will be “What are a person’s options to foreclosure? What is a short sale and how can someone qualify? What kinds of programs are in place to help distressed owners?  Myths and Facts about alternatives” and much more.  In today’s difficult economic climate and increasingly competitive real estate market, trained agents set themselves apart by helping homeowners navigate through the process of selling their property before it goes into foreclosure.

Unlike normal real estate transactions a short sale requires particular care and additional work to be completed smoothly and, if done improperly, may cause the homeowner to go into foreclosure.  Armed with the specialized experience and an increased awareness of the principles of short sales and pre-foreclosures, this panel of professionals are immediately able to better serve their current and prospective home sellers that may need to sell their home.  This knowledge sets these individuals apart from their peers, because they have the tools to assess a homeowner’s situation and properly guide them and the buyer of the property through all the necessary approval processes required to sell a distressed property.  These professionals are able to pre-qualify a property owner with their particular lender, and then help them prepare the required documentation.   They navigate through the mortgage framework on the property owner’s behalf and keep them from being foreclosed upon.  If you or someone you know are facing the possibility of foreclosure, or just struggling to make mortgage payments, please get help before the process starts and be at this FREE informative seminar.  There are many myths and horror stores about pre-foreclosure situations, so ask the experienced professionals at Keller Williams Emerald Coast Distressed Seller’s Solutions seminar for their advice before you make a decision in buying or selling a distressed property. For more information, to secure your seat or to send advance questions for our panel, please call Pat at 850-830-5541 or e-mail to soldbypat@topproducer.com or Craig at 850-259-1788 or email to craig@teambaranowski.com.

Home in Windswept Estates and Lot on San Juan Avenue as Craig’s Top Distressed Property Pick for September 4th, 2009

This week I picked two distressed properties for this week’s Top Distressed Property Pick. Both of these properties are approved short sales by the lender and have recently had the buyers back out. They are ready to close and are some excellent deals.

Homes in Windswept Estates

Lots on Scenic 30A

LOT 15 SAN JUAN AVE, SANTA ROSA BEACH, FLORIDA 32459

50×135 Lot with view of the Gulf of Mexico from the street. Within 1/4 mile of the beach. Deeded and public beach access. APPROVED for $200,000