Did you know that when you complete a short sale, it means that you have sold your house for less than you owed the bank on it, and the bank has agreed to accept that lower amount in satisfaction of your mortgage? That means that the stress of having overpaid for your home, the worry about not being able to make the payments (or just knowing you don’t want to make payments on a loan that exceeds your home’s value), and the concern about the bank hounding you for additional money is all over. A short sale can be a perfect way to alleviate significant financial and emotional stress regarding your home.

So how do you go about a short sale? First, you need a broker to give you a reasonable estimate of your home’s current value. Then, you put your house on the market at that price. You need an offer that you accept before you go to the bank for approval.

Once you have a contract in your hand, your broker takes it to the bank and works with their short sale negotiator to get the deal approved. This is where you want to have a proven negotiator on your side. Banks can drive hard bargains when they are losing their shirts on short sales, and you want to have a representative in your court who can be persuasive and present your case in the best possible light. Keep in mind that a bank does not have to approve a short sale — it can insist that you continue to make payments on the excessively high loan, and then it can foreclose if you fail to do so.

Once your short sale has bank approval, you move ahead to close the transaction. The new buyer gets a loan to pay for the house, you find your new home, and you walk away from the big loan that has been daunting you.

Have you heard stories about people who were forced to agree to pay the bank the difference between the sales price and the old loan amount? You’ll want to hire a good lawyer if this happens to you. A bank cannot enforce such an agreement, and you will want to sort that out before making any payments. The price the bank approves on the short sale is what the bank gets — no more.

There are countless homeowners currently facing the possibility of a short sale, especially in the Bay Area. With the steep rise of home prices over the last ten years and then the precipitous fall, anyone who purchased in the last several years is at risk for owing more than their home is worth. New construction that recently sold is a good example. Windemere in San Ramon, The Grove in Livermore, and other newer developments sold the homes for hundreds of thousands of dollars more than they will sell for today (or for the foreseeable future). Condominium conversions are another example. Valley Terrace in Concord converted in 2005, and units sold for $300,000 and more. Today they are selling in short sales and foreclosure sales at prices closer to $150,000.

The good news for homeowners who are upside down, underwater, or whatever term you prefer for owing more than their home is worth, is that short sales are moving ahead at most banks. There was a time in the early days of the market crash when banks did not have any systems in place to evaluate short sale proposals. Today that is changing. Some banks have even instituted online systems accessible to real estate brokers where we can initiate a short sale, upload all of the relevant information, and communicate with the bank negotiator. Short sales are closing at a much higher rate than in the past.

So do not despair if a short sale may be in your future. Hire an experienced agent, consider adding a good real estate attorney to your team, and plow ahead. You may come out much better off than you expect.

The models at Mission Estates in Fremont will be open this weekend! Serious buyers, call us to take you on a showing! (Note that the models are closed Christmas Eve and Christmas Day.)

Did you know that the City of Fremont offers lots of free services to its residents? For seniors 60 and better, call the Senior Helpline at 510-574-2041 for help with care coordination, paratransit, counseling, health promotion and caregiver support. For families with young children, call 510-468-8699 to schedule a car seat inspection by a Fremont C.A.R.E. volunteer at the police department.

We toured the models at Mission Estates in Fremont today. This is the rare new construction community in Fremont that is in the Mission schools attendance area, including Mission San Jose High School. They are located near 680 and Mission Blvd (the north Mission Blvd exit on 680) behind McDonalds and the Shell gas station.

The homes are beautiful! There are four models ranging from just over 3000 square feet to over 4500 square feet, with 4 to 6 bedrooms and 4 to 5 1/2 baths. Two models have 4 car garages. Kitchens have features like double ovens, double dishwashers (yes — two dishwashers!), center islands with sinks and electrical, and even an optional dumb waiter to send food and drink up to the kids playing upstairs or the family handyman tinkering down in the garage. They’re really quite remarkable.

You can learn more about Mission Estates on the builder’s website.

If you’re interested in purchasing in Mission Estates, you might consider taking a real estate broker with you to tour the models. Having a broker represent you when buying a home costs nothing, as sellers pay the broker’s fees, but you benefit by having someone devoted to looking out for your interests as you prepare to make the largest purchase you will probably ever make. If you’re serious about buying a home, let us know and we’d be happy to take you to the models.

The U.S. Dept. of the Treasury recently announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides instructions for lenders and servicers participating in the Making Home Affordable Program and Home Affordable Modification Program (HAMP). The purpose of HAFA is to create an alternative to foreclosures for homeowners unable to successfully modify their troubled mortgage under HAMP, and to streamline the short-sale process.

MAKING SENSE OF THE STORY FOR CONSUMERS

A short sale is when the lender agrees to accept less than the amount owed on the mortgage instead of foreclosing. Many homeowners and REALTORS® have expressed their frustrations in the short-sale process, criticizing lenders for the amount of time it takes to process and approve a short sale. The CALIFORNIA ASSOCIATION OF REALTORS® listened to members’ concerns, worked with other industry groups, and responded by helping to create provisions to streamline the short-sale process.

The HAFA program simplifies and encourages short sales and deeds in lieu of foreclosure. It will permit pre-approved short sale terms before a property is listed; release borrowers from future liability for the debt; provide financial incentives to borrowers, servicers, and investors; and prevent servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval.

Under terms of the program, the borrower and/or listing broker have three business days to submit an executed purchase offer and related documents to the servicer on a short sale, and the servicer has 10 business days to respond to an executed purchase offer.

The servicer also will determine the minimum net proceeds for a short sale. If an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it.

The program currently is available only for non-Fannie Mae- or Freddie Mac-owned loans up to $729,750 and is scheduled to take effect April 5, 2010. However, C.A.R. expects that many lenders will choose to implement it before the deadline.

From December 17, 2009 Market Matters Weekely

Reprinted with permission of the California Association of Realtors

Check out the Environmental Working Group’s website to learn about your city’s water supply. Just enter your zip code.

Check out the November 2009 housing statistics for the Bay Area, city by city.

The U.S. Dept. of the Treasury last week announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu (DIL).

The HAFA program simplifies and encourages short sale and DIL options by:

Allowing pre-approved short sale terms before a property is listed;
Preventing servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval; and
Releasing borrowers from future liability for the debt.

Borrowers not eligible for the Home Affordable Mortgage Program must be considered for HAFA within 30 calendar days of the date the borrower does not qualify for a HAMP Trial Period Plan; does not successfully complete a HAMP Trial Period Plan; is delinquent on a HAMP modification by missing at least two consecutive payments; or requests a short sale or DIL.

From December 9, 2009 C.A.R. Newsline

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®

Merry Christmas season from everyone here at the Mission Valley Real Estate Company. This is a wonderful time of year for families, and we hope that all of our past, current and future clients are finding the time to spend with their loved ones. The economy and general insanity of the last year are bound to be impacting many of you, but we hope that everyone is able to focus on the most important people in their lives right now, and to enjoy the holiday festivities that abound. As for us, we are having a great time seeing Christmas through the eyes of a 2 1/2 year old girl who has just discovered the season. Christmas lights, Christmas music, parades and Santa, all look shiny new and exciting when seen through her eyes.

So to all of our readers out there, Merry Christmas!

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding in the third quarter, up 40 basis points from the second quarter, and up 265 basis points from one year ago, according to the recently released Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate, which set a new record in the third quarter, includes loans that are at least one payment past due, but does not include loans that are in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago.

“Once again the states of Florida, California, Arizona, and Nevada have a disproportionate share of the mortgage problems,” said Jay Brinkmann, MBA’s chief economist. “They had 43 percent of all foreclosures started in the third quarter, down only slightly from 44 percent both last quarter and the third quarter last year. They had 37 percent of the nation’s prime fixed-rate loan foreclosure starts and 67 percent of the prime ARM foreclosure starts.”

From December 2, 2009 C.A.R. Newsline

Reprinted with permission of the CALIFORNIA ASSOCIATION OF REALTORS®