Tricks & Traps of Foreclosures - Buyer Beware!

 Considering buying a foreclosure? Here are some tips that may help. When dealing with a bank for an REO (Real Estate Owned) property expect tricks & traps at every junction. Here are just a few that you'll want be aware of.

- "AS IS WHERE IS" - Banks sell properties in a strictly as is condition. If you look at a foreclosure and it needs substantial work to make it livable, don't expect that the bank will make these repairs prior to closing. Anything short of an environmental or health hazard will ultimately be the buyers responsibility. Make sure your inspections are thorough even if it costs a bit more initially.

- "Real Estate Disclosures" - There aren't any! The bank has never seen or lived in the property and has zero knowledge of the history, prior or existing defects, or the surrounding areas. typically a Sellers Disclosure is obtained by a buyer prior to submitting an offer. Don't expect any from a bank.

- "Contract Terms" will change - Your initial offer may be accepted verbally however, soon thereafter you will receive a whole new set of documents & addendum's to review and sign ASAP if you expect the contract to move forward. You'll find that many of the terms, times and conditions are very different than what you thought was accepted. The only thing that is accepted is "price". All other conditions will be incorporated in the bank or investors contract. Take it or leave it.

- "Escrow Deposit"- You will likely be required to work with the banks chosen escrow and Title Insurance company. They will rush you for your deposits and afterward take their time on processing the required signatures and meeting deadlines. Typically they are slow and unorganized "Foreclosure Mills".



Have realistic expectations. Work with a Broker who is familiar with the process and potential complications. Call 561-306-6736 or email directly with any questions about buying a foreclosure.

Homemade Mortgage Modification

An amazing phenomenon is occurring in households all across the nation. Growing numbers of people today are providing themselves with there very own homemade mortgage modifications. This type of financial remedy doesn't beg a lender for permission. With lenders and loan servicers either unwilling or simply not capable of helping with loan modifications, borrowers are just not paying and offering ultimatums. Lenders are being told either help me stay or force me out.

According to statistics published by LPS Applied Analytics, a company that provides services to many of the nations largest banks and financial institutions, the average borrower currently in foreclosure is delinquent some 438 days before being evicted. More than 650,000 households have not paid anything in 18 months and of those the lender hadn't even begun to take any action against nearly 20%. The numbers are staggering. The NY Times reports that 1.7 million foreclosure procedures have been initiated as many borrowers are choosing not to pay for something that isn't worth even half of what they owe on it. Any moral qualms are quickly dismissed by the belief that the banks created the situation and maybe now it's payback time.

Call it self preservation, selective foreclosure, or whatever term suits the situation. The fact remains that people are beginning to take charge of their own lives while lenders continue looking for ways to minimize losses. In some states lenders can pursue foreclosure outside the courts which can be a speedier process. In states like Florida, New York and others, judicial foreclosure is required. This slows the process considerably. Lenders seem to be more willing to allow time for some sort of alternative like a short sale in these states and generally, given the numbers on the horizon, may be reluctant to take many properties back at all.

For more info on foreclosures,short sales, buying or selling a property in SE Florida call me directly at 561-306-6736 or email ges.rellc@ymail.com
www.ges-realty.com

Streamlining the Short Sale Process

Hoping to positively influence the nations housing market by shortening and simplifying the short-sale process, the Treasury Department released new guidelines for borrowers, lenders and loan servicers. Adding another acronym to its list of government-sponsored programs, (this one is called HAFA) Home Affordability Foreclosure Alternatives.

The new guidelines offer incentives to borrowers and loan servicers for utilizing a short sale in order to avoid foreclosure. Some of the key features of HAFA include:
- Seller / Borrower can recieve up to $1500. for relocation expenses
- Borrowers are fully released from any future liability for the debt.
- Treasury Dept. will share the cost of clearing junior liens from 2nd mortgage holders in order to help release any claim that may interfere with the short sale process.


According to the Treasury Department publication,
"The program will publish streamlined and standardized documentation, including a Short Sale Agreement and an Offer Acceptance Letter. Creating one standard set of documents that the industry can use is expected to minimize the complexity of these transactions and significantly increase use of the short sale option."

The property must be listed with a licensed real estate broker and no foreclosure action can take place during the marketing period as long as the seller/borrower is acting in good faith. There is a maximum marketing period of 1 year to ensure that everyone is moving as quickly as possible in order to accomplish the short sale. Currently expiration of the program is scheduled for Dec. 31 2012.

For a complete text of the Treasury Departments guidelines please call me directly at 561-306-6736 or email rebuygeorge@yahoo.com. You can also go to my website at http://www.ges-realty.com/

Higher Mortgage Loan Limits

Higher Fannie Mae, Freddie Mac & FHA mortgage loan limits were set temporarily higher as part of the economic stimulus and recovery initiative. These currently higher limits are due to expire and revert back to the previous lower limits at the end of this year (2009). This week Congress approved a resolution extending the higher loan limits through 2010.



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The resolution, which needs the presidents signature, extends the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.

For local median home sale prices in Southeast Florida call me at 561-306-6736 or email rebuygeorge@yahoo.com