This looks promising!

A new bill was recently introduced in the House of Representatives requiring mortgage servicers to respond within 45 days of receiving a short sale request.

This new legislation was introduced by Representative Tom Rooney and Representative Robert Andrews. Almost immediately, the National Association of Realtors backed the bill saying it would assist homeowners who are unable to avoid foreclosure, though member real estate agents have long complained of extended short sale transactions taking as much as year to complete.

“The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure,” NAR President Ron Phipps said.

The central issue is that so many entities are involved with the short sale decision. Servicers, investors, insurers, buyers, sellers and the lender must all agree to either execute the transaction or deny it. However, according to the bill, the servicer must send notification to the borrower within the deadline whether or not the request is approved, changed or if additional information is needed.

This follows the April 2010 launch by the Treasury Department of the Home Affordable Foreclosure Alternatives program, which provided the first guidelines for short sales in the industry.

Through February 2011, servicers started 10,488 agreements with homeowners and completed 4,488 short sales under HAFA.

“Streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures,” Phipps said. “This benefits sellers, lenders, buyers and the entire community.”

Strategic Default

Homeowners underwater are looking to make the best business decision on this underwater mortgage. Many have detached themselves from any moral conflict they may have had initially and even buy another home then short sale later. Strategic defaults especially in Arizona have increased significantly over the last year.

Walking away without attempting to mitigate or negotiate a loan prior to foreclosure may not be the best plan. If a homeowner that is underwater attempts to do a loan modification or a short sale and mitigate the loss they may have a better opportunity to negotiate a settlement of a second lien through a short sale. The home may also have a larger loss at foreclosure than it may have had in a short sale.

The bottom line is these decisions are not easy to make and you must consult with a proven and effective real estate attorney, tax advisor and well trained real estate broker or agent. Experience matters and doing things correctly the first time is important.

Proper legal and tax advisement is a crucial element. This will allow you do better understand your options. For example if the property loan or loans are not a purchase money primary residence you may have different options.

Home Equity Lines in short sales

An equity line that is considered purchase money and an equity line used for buying a boat are two different types on scenarios and need to be handled differently. Each state also has different laws about how short sales are handled. We have seen the larger banks settle for pennies on the dollar on home equity lines. For example we had about a $100,000 debt settled for $8000.00 recently and other clients have both settled for more or less depending on the situation and the lender. It appears that Credit Unions and smaller banks are more difficult to negotiate with in our experience.

Investor short sales

Investors considering strategic default must also plan well. It may not be a good choice to simply mail in your keys. What if the home is damaged? Will you be liable for the time period prior to the foreclosure date? We advise all homeowners to leave the home in good condition and not strip the home of appliances and light fixtures. Damage to the home, vandalism and back HOA fees can cause you problems later.

How to lower your liability when doing a short sale

We also advise homeowner to stay current on HOA’s fees and to maintain their insurance policy if possible to lower their liability. HOA’s can pursue collection regardless of if you foreclose or do a short sale so perhaps you should just stay current with them to avoid any future problems.

Strategic default is clearly a strategy that requires professional advice and planning. Take the time to pursue the information for you to make the correct decision about your home and speak with qualified real estate and tax professionals.

Hamilton High School, established in 1998 is a four-year (grades 9-12) comprehensive high school located in the southeastern part of the City of Chandler, Arizona. The school follows a district-wide modified year round calendar. The School offers outstanding curriculum, comprehensive fine arts and athletics programs, and a wide variety of extra curricular activities. State of the art technology enhances students’ learning, presentation, and research capabilities.

3700 S Arizona Ave, Chandler, AZ 85248

Phone: (480) 883-5000

Click Here for Homes for sale near Hamilton High School (5 miles radius)

Grades: 9 – 12

School Type: Public

Student Enrollment: 3,328

Students Per Teacher: 31

Grades: 6 – 8

School Type: Public

Student Enrollment: 999

Students Per Teacher: 14

Buying a bigger/expensive home at a lower interest rate is cheaper for you in the long run than buying a less expensive home at a higher interest rate.

For example:

If the loan amount is $175k:

- at 5% interest rate, the payment will be about $940

- at 6% interest rate, the payment will be about $1050

If the loan amount is $150k:

- at 6% interest rate, the payment will be about $900

Currently, the interest rates are pretty low – Click Here to see Interest Rate Chart

You might want to call a lender keeping this in mind to see what interest rate you may qualify for and what the payment will be for home purchase (or) refinance option.