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Short sales

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Oregon Doug

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Senior Member
Joined
Jan 15, 2002
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General Public
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Oregon
Are you folks beginning to see short sales in your corner of the country yet?

(Short sales are market sales at prices below the mortgage balance. Usually the lender agrees to forgive the difference due rather than face the costs associated with foreclosure. The seller often dosen't realize that the amount of debt forgiven is income in the eyes of the IRS - April 15 surprise!)

I'm beginning to see 'em out here in Oregon and I remember seeing lots of them during the S & L fiasco.

It's da ja vue all over again.....

Oregon Doug
 
Joined
Jan 13, 2002
Professional Status
Retired Appraiser
State
Florida
The so called 'investors clubs' have been teaching their member to call the lenders to offer short sales on pre-foreclosures for a few months now. I think Dee Dee found a tiny article in one of the Denver papers where a large lender was offering them.

We cannot be the only ones in the nation that are aware of what's going on and the implications for the future of it.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Doug,
I haven't heard of any 'short sales' in my area yet, at least not where they're forgiving the debt to the homeowner rather than to foreclose. It would seem that if someone can't afford their mortgage payments they would certainly not be able to pay taxes if the forgiven difference is considered income.

Pam,
The article that I showed you was a for a pilot program being offered by the state to assist victims of predatory lending. I'll see if I can find it again...it's in one of these paper piles :oops: ....and post it.

I'm going to be calling one big name lender soon about a neighboring property (you know which one) that I think is going to start going into foreclosure (again). I think they'll be more than happy to work with me when I fill them in on the problems they'll have selling it off. :wink:
Will let you know how it goes.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Down here they're going into foreclosure. There are some homes that are being assumed from the lender prior to foreclosure. In other instances, short-term waivers are being executed to avoid foreclosure. No "short sales" though.

Roger
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
hmmm. Not a lot of short sales around here (yet)...

However I have been seeing some lately where the lender has foreclosed and the former owner buys back. Not exactly a short sale, in that the home has actually changed hands.

Seems the former (and occasionally tenant) non-owners want the house more than other potential buyers.

Occasionally they are never removed from the premises OR they leave 95% of their personal property in the house (lockbox and all) 8O .

Anybody else seeing these? Is it just the case that the lender got through the actual repossesion process before their right hand knew what the left hand was in process of working out?

Would be interesting to see how many of these are the result of threats of pending preditory lending lawsuits :? 8O ...
 

John Hassler

Senior Member
Joined
Jul 23, 2002
Professional Status
Certified Residential Appraiser
State
California
DeeDee and LeeAnn

See the lead story in this link for a well documented case of lender abuse. I even sent this to a few LOs when it first came out.

http://www.dre.ca.gov/pdf_docs/rebsum01.pdf


Doug

No short sales here ..... yet. I suspect there will be more of these this time around as No and Low down payments were more common. Short sales are just an economic decision by the lender. It really hurts the lenders bottom line having loan loss reserves - better to take the hit fast with a short sale. Loan loss reserves also affects their equity to asset ratio which the Fed monitors and adjusts. When I was chasing foreclosures a decade ago I heard about others who had charts of when the each banks fiscal year was up so they could squeeze them harder near their accounting period!

The local Bay Area paper ran a lead story "Foreclosure rate up 23% over last year". Got quite a few questions from homeowners over that one. Seems Silicon Valley is dragging the whole area down as they have had 3,000+ Notice of Defaults filed. In the county I work it has remaimed stable (87 vs 84 this year) but that will likely change.

John Hassler
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
John,
I can't get that link to open. Anyone else having trouble, or is it just me? :?
 

TEL2002

Elite Member
Joined
Jan 16, 2002
Professional Status
Retired Appraiser
State
Louisiana
Link worked great for me. Nice articles
 

Roger

Junior Member
Joined
Jan 24, 2002
Professional Status
Certified General Appraiser
State
Missouri
I've done two in the past month where the lender has forgiven from $15-20,000 off the principal, if the borrowers will refi elsewhere.

These were both manufactured homes that were originallly financed thru the dealer, at above market rates.

Seems like a good deal for every one invloved. Lender gets a bad loan off the books, borrower gets to keep the home.

These are sub prime loans, but the borrowers get a somewhat better rate because they have at least some equity in the property.
 

Bobby Bucks

Elite Member
Joined
Jan 27, 2002
Professional Status
Real Estate Agent or Broker
State
North Dakota
I've done 2 short sales this month.....one was quite humorous.....they asked me to sign a form stating I wouldn't allow the listing agent to influence my opinion of value.....I loved signing that one....it ended up that Boom Boom Bonnie was the listing and selling agent.....we got into a hostile discussion before I even looked at the property. I refused to look at her comps or the copy of the appraisal on the sale which "her" appraiser did for her friend at her favorite local lender.....she complained to my client which was a feather in my cap.....proof positive of no influence on her part. God I love this job :)
 
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