Diana Olick’s latest column puts “principal writedown” in perspective: “The government is officially giving borrowers back home equity.
Yep, somewhere between $35 and $50 billion worth. Of course we’ve all lost over $5 trillion, but who’s counting? Lenders still aren’t required to do it, but they’re going to get an awful lot of taxpayer-funded incentives to do it€¦Let’s face it, the underwater issue (that is borrowers owing more on their loans than their homes are worth) is now far bigger than the subprime issue and the unemployment issue. Yes, it’s concentrated heavily in five states, but it still manages to plague home prices nationwide. People are walking away in greater numbers than ever before, and people who want to stay are unable to get into modification programs because of their overwhelming negative equity. Yesterday, before the House Oversight Committee, Treasury Secretary Herb Allison said his concern with principal write down was
1) expense,
2) fairness, and
3) moral hazard.
I asked him this morning what had changed overnight? ‘The moral hazard aspects are mitigated by the structure of the programs.’ I’m not entirely sure what that means, although I’m sure many smart people behind closed White House doors came up with that exact phrase. I guess it means that because borrowers and servicers have to earn the write down incentives over three years that it’s fair. Or maybe because it helps keeps borrowers out of foreclosure, thereby stabilizing home prices around them, that it’s fair. Or maybe because the servicers and investors have to bear some cost, that it’s fair. Maybe it’s just that there is simply no other way to get ourselves out from under this mess than to forget all the bad choices some lenders and borrowers made and give them a fresh start. And for those of us who acted responsibly? No pain no gain. As I tell my kids every day, life isn’t fair.”
What do you think? Will this help the economy or only a few people who are under water? What does this do for us as investors?
You asked for it and I ma going to deliver 4 hourse of pure content (no sales) direct from my office to your computer through video streaming. Watch the video below for details.
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Are you looking for an investment opportunity in real estate? In today’s uncertain environment, foreclosures can be a tremendous opportunity for new investors. The profits can be enormous. Foreclosure investing, however, does have risks and one must be fully prepared before beginning.
Paperwork Needed For a Complete Short-Sale Package
There is specific paperwork needed in order for a lender to consider a short sale. Leave out some of these items and you are sure to have your short sale package sent to the bottom of the pile or worst the circular file. Having a complete package is a must if you want your documents processed.
Safeguarding Vacant Properties
Due to how visible these homes are, they are a quick and easy draw to anyone looking for a place to make trouble, engage in criminal activity, vandalize, or reside rent-free. Because the percentage of homes in the country with no residents is so high, many of these vacant homes are standing empty for extended periods of time, making them especially attractive to the criminal element.
Why Your Lender May Rather Go Through the Foreclosure Process
If you have ever tried to get a loan modification and got denied or felt like you are getting the run around from your lender, then one reason could be is that your lender will gain more financially by letting home owners go into foreclosure. At the end of the day your lender will make a determination as to whether or not to modify you loan based on what is more beneficial to them. Loan modifications are voluntary for lenders so it’s entirely up to them whether or not to modify your loan.
Everybody knows there are ENDLESS opportunities to find great deals and make real estate investing profits online.
And everybody also knows that, for example, Craigslist is one of the BIGGEST collections of classified ads for real estate investors to find deals and opportunities.
So while Craigslist is certainly a great resource, EVERYONE is there.
So there’s a lot of competition.
And a lot of repetition.
What if I told you there was a way to get to an UNTAPPED SOURCE of classified
property ads, real estate opportunities and more that few investors know about…
What if I told you this source contained ads and deals you wouldn’t find elsewhere.
And what if I told you it was completely virtual and totally FR-EE to use?
How about a free site called:
http://www.NewsPaperLinks.com!
What’s Newspaperlinks.com?
It’s your single source to get access to EVERY LOCAL NEWSPAPERS ONLINE CLASSIFIED ADS!
What’s so great about it, Mike? Why’s it going to help me make money?
Well, two reasons.
- First off, because these local online classifieds are not as heavily searched as say Craigslist, there is A LOT less competition! This means in many markets you will be one of only a few or possibly the only creative investor going after deals. Plus, there’s less competition when you post your own ads which can also mean a better response.
- Secondly, NOT everybody uses Craigslist. In fact, if you are new to the internet and NOT tech savvy, you are much more likely to place an Online Ad for the first time here because the newspaper that’s been getting dropped on your doorstop for the last 20 years told you to. This means you will find properties and opportunities here you will not find elsewhere. It’s also a great resource as a virtual investor as it lets you really see what’s going on in a certain area – even if you’re looking for something as simple as a handyman or property manager.
One of the keys to being truly successful as in online investor is having access to BETTER information than everybody else AND being able to find it FASTER than the competition can!
Enjoy.
Post a comment if this was helpful to you.
A short sale, by definition, is the sale of a property to a lender for less than the amount of the mortgage owed. This sale is often only permitted under extreme circumstances. The bank or mortgage lender takes into account current economic outlooks, the personal financial situation of the debtor or home-owner, the local real estate market, and the reasonable possibility that the bank will recover some, if not the entirety, of the mortgage loan. The advantages of short selling a property to the debtor are obvious. A short sale is often pursued instead of foreclosure proceedings. Thus, by short selling a property, a debtor can keep a foreclosure off of their personal credit history. Also, the difference between the original mortgage and the short sale offer, also known as the deficiency balance, is partially under the control of the debtor. This means that the debtor is free to pay back the deficiency under their own terms. Sometimes, though rare, this debt is forgiven completely.
The advantages of a short sale are less obvious for the bank or mortgage lender. These institutions are primarily concerned with recouping their financial losses on bad or risky loans. Thus, they may choose to allow a short sale if they believe that this course of action will result in a smaller financial loss than foreclosure proceeding. Whereas a foreclosure can cost the bank or mortgage institution a certain amount of money through legal fees and court proceedings, a short sale is simply an agreement between the debtor and the lending institution and entails much less hidden costs to the lending institution. Oftentimes, a short sale is the best method for the bank to guarantee at least a partial return on a bad or defaulted loan.
A short sale is a fairly common business transaction. However, lenders do not like to view these transactions as financial favors to the debtors. Rather, these institutions view these short sales as sound financial extensions of credit. When retaining an asset makes little business sense or is economically unfeasible, a business will default on their loans. If enough of these loans are defaulted on, a bank or mortgage lender can be put in dire financial straits. Thus, a short sale is utilized to reacquire these economically unfeasible assets and recoup a portion of the extended and defaulted loans. In this manner the financial institution looses only a fraction of the accumulated debt. In these types of business short sales the deficiency balance is almost always forgiven.
There are a number of steps that debtor must take in order to secure a short sale from a bank or other financial institution. Most banks require that a Notice of Default be completed. This alerts the local government of the impending default and stipulates the location, relative value, and financial history of the defaulted property. While conditions vary from bank to bank, several levels of approval are usually required. This is often a long and complicated process for the debtor. Some banks have set limits on short sales, and these restrictions can vary in amount or type. For example, many banks won’t approve a short sale if there are tax liens held against the property. However, if approved, a short sale can be a great way to relieve debt obligation without permanently affecting your credit score.
A short sale, by definition, is the sale of a property to a lender for less than the amount of the mortgage owed. This sale is often only permitted under extreme circumstances. The bank or mortgage lender takes into account current economic outlooks, the personal financial situation of the debtor or home-owner, the local real estate market, and the reasonable possibility that the bank will recover some, if not the entirety, of the mortgage loan. The advantages of short selling a property to the debtor are obvious. A short sale is often pursued instead of foreclosure proceedings. Thus, by short selling a property, a debtor can keep a foreclosure off of their personal credit history. Also, the difference between the original mortgage and the short sale offer, also known as the deficiency balance, is partially under the control of the debtor. This means that the debtor is free to pay back the deficiency under their own terms. Sometimes, though rare, this debt is forgiven completely.
The advantages of a short sale are less obvious for the bank or mortgage lender. These institutions are primarily concerned with recouping their financial losses on bad or risky loans. Thus, they may choose to allow a short sale if they believe that this course of action will result in a smaller financial loss than foreclosure proceeding. Whereas a foreclosure can cost the bank or mortgage institution a certain amount of money through legal fees and court proceedings, a short sale is simply an agreement between the debtor and the lending institution and entails much less hidden costs to the lending institution. Oftentimes, a short sale is the best method for the bank to guarantee at least a partial return on a bad or defaulted loan.
A short sale is a fairly common business transaction. However, lenders do not like to view these transactions as financial favors to the debtors. Rather, these institutions view these short sales as sound financial extensions of credit. When retaining an asset makes little business sense or is economically unfeasible, a business will default on their loans. If enough of these loans are defaulted on, a bank or mortgage lender can be put in dire financial straits. Thus, a short sale is utilized to reacquire these economically unfeasible assets and recoup a portion of the extended and defaulted loans. In this manner the financial institution looses only a fraction of the accumulated debt. In these types of business short sales the deficiency balance is almost always forgiven.
There are a number of steps that debtor must take in order to secure a short sale from a bank or other financial institution. Most banks require that a Notice of Default be completed. This alerts the local government of the impending default and stipulates the location, relative value, and financial history of the defaulted property. While conditions vary from bank to bank, several levels of approval are usually required. This is often a long and complicated process for the debtor. Some banks have set limits on short sales, and these restrictions can vary in amount or type. For example, many banks won’t approve a short sale if there are tax liens held against the property. However, if approved, a short sale can be a great way to relieve debt obligation without permanently affecting your credit score.
I love to ski and snowboard and I consider myself to be a pretty good skier. I consider myself to be an expert real estate investor. It was not always that way. I had to start somewhere and fell down a lot. Watch this video and you will see what I mean. To help beginners and experts alike in real estate I put together 12 of the Nations best experts on all aspects of real estate investing. Check it out at http://www.misuniversity.com/swat
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During the heavy economic news week of September 17, the 10-year Treasury yield jumped seventeen basis points, ending the week at 4.63%.
MondayNew York manufacturing missed estimates. 10TSY close: 4.47%
TuesdayThe FOMC lowered the Fed Funds Target Rate by 50 basis points. Energy prices pulled producer prices down significantly; core prices rose. 10TSY close: 4.48%
WednesdayAs with producer prices, consumer prices slid overall, but core prices rose. Housing Starts slipped. 10TSY close: 4.52%
ThursdayJobless Claims dropped slightly. Leading Indicators declined unexpectedly, but Philadelphia manufacturing soared. 10TSY close: 4.67%
FridayNo economic data was released. 10TSY close: 4.63%
Tuesday
Consumer Confidence and Existing Home Slaes are due at 10:00 Eastern.
Wednesday
Durable Goods Orders are due out at 8:30 Eastern.
Thursday
Weekly Jobless Claims are due out at their usual 8:30 Eastern time, along with final revisions to second quarter GDP. New Home Sales follow at 10:00.
Friday
Personal Income and Spending is due out at 8:30 Eastern. At the same time, monthly Core PCE figures should be released, followed by the Chicago PMI at 9:45. Construction Spending and Consumer Sentiment finish the data week at 10:00.
Durable Goods Orders Fall
Wednesday’s report on Durable Goods Orders was expected to show a decline of about 3.5% in August, but the results were even lower – a 4.9% drop in durable goods orders overall. Without transportation equipment, which tend to sway the results widely, orders fell 1.8%. The report is a popular gauge of business sentiment, the thinking being that businesses will invest in durable goods only when their outlook is positive. Wednesday’s report reflected the largest decline in orders in seven months.
Yields Slip
The soft economic news, combined with strong interest in the 2-year Treasury auction, pushed MBS and Treasury prices up on Wednesday, lowering yields. After opening higher, the 10-year Treasury yield was down to 4.62% by the end of the day – even with the previous day’s close.
The next releases will be Weekly Jobless Claims and the final revision to second-quarter GDP at 8:30 Eastern on Thursday.
Jobless Claims Down, Economy Picks Up – Housing Drags Yields
Jobless Claims Drop
First-time Jobless Claims fell last week, contrary to what most analysts had expected. It was the lowest reading for initial claims in four months. The four-week moving average fell 9,750 to 311,500, easing some concerns about the job market.
Economy Perks Up
The final second quarter GDP results showed a rather quick 3.8% annual growth rate for the economy. Though less than the previous estimate of 4%, the revision represents a significant upside indicator for economic conditions. Changes to imports were primarily responsible for the downward revision to GDP.
New Home Sales Fall
Thursday’s report on New Home Sales reflected an 8.3% drop in purchases to an annual rate of 795,000 homes It is the largest decline since 1970 and the lowest level in seven years. While much of the economy looks healthy, housing remains a drag, and analysts do not expect to see recovery soon.
Five-Year Auction Draws Strong Demand – Yields Slip
Thursday’s five-year Treasury auction drew solid demand, lifting prices and lowering yields. Some had been concerned that worldwide demand for US debt had softened. The auction results, combined with overall soft sentiment about the economy, pushed MBS and Treasury prices higher, taking yields down. By the end of trading, the 10-year Treasury yield was down to 4.57%.
The next release will be Personal Income and Spending and Core PCE at 8:30 Eastern on Friday.
More info…
During the heavy economic news week of September 17, the 10-year Treasury yield jumped seventeen basis points, ending the week at 4.63%.
MondayNew York manufacturing missed estimates. 10TSY close: 4.47%
TuesdayThe FOMC lowered the Fed Funds Target Rate by 50 basis points. Energy prices pulled producer prices down significantly; core prices rose. 10TSY close: 4.48%
WednesdayAs with producer prices, consumer prices slid overall, but core prices rose. Housing Starts slipped. 10TSY close: 4.52%
ThursdayJobless Claims dropped slightly. Leading Indicators declined unexpectedly, but Philadelphia manufacturing soared. 10TSY close: 4.67%
FridayNo economic data was released. 10TSY close: 4.63%
Tuesday
Consumer Confidence and Existing Home Slaes are due at 10:00 Eastern.
Wednesday
Durable Goods Orders are due out at 8:30 Eastern.
Thursday
Weekly Jobless Claims are due out at their usual 8:30 Eastern time, along with final revisions to second quarter GDP. New Home Sales follow at 10:00.
Friday
Personal Income and Spending is due out at 8:30 Eastern. At the same time, monthly Core PCE figures should be released, followed by the Chicago PMI at 9:45. Construction Spending and Consumer Sentiment finish the data week at 10:00.
A letter of hardship is a statement written by a debtor that main goal is to convince a bank or mortgage institution to agree to a short sale of an asset or property. A short sale is the sale of an asset or property for less than the value of mortgage or loan. This sale is a settlement between the debtor and the financial institution that allows the bank to recoup some financial losses associated with bad or defaulted loans. A short sale also allows the debtor to avoid imminent foreclosure. In order to apply for these short sales, the debtor must convince the banking institution of his or her inability to repay the loan or debt. This statement is often made in a letter of hardship.
When writing a letter of hardship, it is important to remember that the primary point of the letter is to convince the financial institution that the debtor, due to certain issues, is not likely to repay the outstanding loan. If the banking institution is properly convinced that the debtor will default on the outstanding loan or mortgage, then they may decide to agree to a short sale of the property or asset. A letter of hardship should be detailed and personal. It should describe the debtor’s current financial situation, listing current income, other loan obligations, and any potential collateral available. The letter should also attempt to explain why the debtor will likely not be able to repay the loan obligation. Remember that the individuals who will decide whether or not to issue a short sale are human. They will be more likely to issue a short sale if the debtor has incurred unforeseen debt or expenses. This unforeseen debt could be related to a death in the family, personal health problems, or any other reason that has led to the unexpected financial stress. The debtor should be honest in a letter of hardship and stress the exact reasons why he or she has fallen behind on their mortgage or loan payments.
It is estimated that loan officers receive forty to fifty applications for a short sale per a day. Less than one short sale is approved for every ten applied for. Oftentimes, a letter of hardship is what separates an approved short sale application from those applications that are denied. The letter should be truthful and personal. There are many real estate companies that offer to write a letter of hardship as part of a short sale package. While these packages are often very professional and the experience of qualified real estate agents is helpful and reassuring, a letter of hardship should only be written by the debtor. This letter should be short, usually under one page. However, there are no set rules. A compelling letter of hardship can often run two or even three pages. The debtor should try to resist the urge to list a set of excuses for his or her current financial situation. Instead, the debtor should focus on concrete reasons for why they have fallen behind on their mortgage or loan payments. Acceptable reasons for falling behind may include the death of a wage earner, unexpected health costs, or the loss of a job. Try to avoid any mention of any unexpected legal fees associated with a criminal defense or personal lawsuit as a reason for the failure to repay a loan or mortgage.
