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Short sales increasingly accepted by banks, area Realtors say Date published: 4/18/2009
BY BILL FREEHLING
Short sales of homes are becoming increasingly common as sellers and lenders look to move past problem loans, area Realtors say. A short sale occurs when the home is sold for less than what is owed on the mortgage loan, and the seller is relieved of the difference. It's up to the lender to agree to it; area Realtors say lenders have become more likely to do so in the past year, as they avoid the costly and time-consuming foreclosure process. Because of the rapid increase in housing prices in the Fredericksburg area and subsequent declines, many people who purchased in the past few years are "underwater" on their loans. As unemployment has increased and initial low "teaser" rates have adjusted, many are finding it difficult to make their payments. That's led to a foreclosure rate in the Fredericksburg area that's among the highest in the state, though it pales in comparison to some of the worst-hit areas in the U.S. Foreclosures lead to "credit craterization" for individuals losing their home, said Ernie Dill, a Realtor for Coldwell Banker Elite who handles a good number of short sales. They're often unable to get a loan for several years. Their credit ratings can tumble by several hundred points, which can affect employment status, particularly in jobs requiring security clearances. Foreclosures also have a negative effect on housing prices areawide, particularly in neighborhoods with multiple such properties. That's been blamed for the 30 percent to 40 percent drops in median housing prices over the past few years in the area. Because of these effects, Fannie Mae and Freddie Mac have been communicating to lenders that foreclosure prevention is a top priority. The two companies, which own a large percent of U.S. home mortgages, have been increasing cash incentives to banks that work out mortgages. Freddie Mac now offers banks $2,200 for each short sale completed, said spokesman Brad German. Attempts to work out loans typically start with refinancing or modification of payments. Millions of Americans have taken advantage of historically low interest rates and refinanced, but millions more are so far underwater that their loans can't be refinanced. A short sale then becomes a way to get out of the loan before it moves to foreclosure.
Date published: 4/18/2009
the foreclosure pricing of homes is closer to TMV than many sellers delusional prices. home values dont nearly triple in 7 years. doesnt happen without a waking from that dream.
I had that sense of urgency -buy now or don't ever get in, in 2005 at the peak when everything was being taken. I couldn't afford those prices, so I waited, and it eventually fell. Same here too, if you can't get in now, there will always be some point in the future when you can. I bought a shortsale last year, and when they say the process takes months, it took me 4.5 months. A short sale is a heck of a ride.
thus is creating a sense of urgency in my mind...i better buy now or i'll be locked out of the market...we're not building anymore land....prices always go up....this is a buyers market...or this is a sellers market....
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