With President Obama’s new program, HAFA, those in foreclosure may have a better alternative through government subsidized short selling.  Home Affordable Foreclosure Alternatives (HAFA) allows those facing foreclosure to take the better alternative of a short sale.  Because a foreclosure will affect your credit in a very negative way, seeking a short sale offers the homeowner a way out of some of the problems associated with a foreclosure.  In the HAFA program, HAFA pays banks $1,500 and owners $3,000 if they will let a homebuyer purchase the house below the mortgage value; the owner will then walk away from the transaction debt-free.

For more information about short sales click here, or contact the experienced and friendly Kristan Cole Team today.  If you or someone you know may be facing a foreclosure in Mat-Su Valley AK, get the facts about short sales now, and be well on your way to understanding your options.

image credit: sxc.hu

Take a look at how you as the homeowner may be affected when it comes to deficiency judgement and future loans:

Deficiency Judgement. Except in a few states where there is no deficiency, in one hundred percent of foreclosures the bank will have the right to pursue a deficiency judgement.  A successful short sale, on the other hand, may make it possible to persuade a lender to give up the right to pursue a deficiency judgement.

Deficiency Judgement (amount). In the case of a foreclosure, the home will need to go through a REO process if it does not first sell at auction.  Consequently, the home will have a lower sales price and typically spend more time in a declining market before the sale; the result of this being a higher possible deficiency judgement.  If a short sale is properly managed, the home would be sold at a price very close to its market value and this is almost always better than a REO sale which will result in a lower deficiency.

Future Fannie Mae Loan—Primary Residence. If a homeowner loses a home to Foreclosure they are ineligible for a Fannie Mae backed mortgage for a period of 5 years, while a short sale successfully negotiated will only make that time 2 years.

Future Fannie Mae Loan—Non Primary Residence. Just as in a primary residence situation, the investor who allows a property to go into foreclosure will be ineligible for a Fannie Mae backed investment mortgage for 7 years.  In a successful short sale, an investor would be eligible for a Fanny Mae backed investment mortgage after 2 years.

Future Loan with Any Mortgage Company. A foreclosure will affect your future rates; this is because on any future 1003 application, you will have to answer ‘yes’ to the question: “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?”  However, with a short sale there is no question or similar declaration that will affect the outcome of your future rates.

For more information on foreclosures vs. short sales in Wasilla AK contact The Kristan Cole Team today.

image credit: sxc.hu

If you are wondering whether you should opt for a short sale or foreclosure, take a look at the differences in how each will affect you as the homeowner with the following issues:

Security Clearances. A successful short sale does not challenge most security clearances.  A foreclosure, however, is the most challenging issue against a security clearance besides that of a conviction of a serious misdemeanor or felony.  If the homeowner is a police officer, in the CIA, military or other positions where having a security clearance is required, in just about every case it will be revoked and their job will be terminated.

Current and Future Employment. As employers have the legal right to continuously check the credit of all employees in sensitive positions on a regular basis, in many cases a foreclosure will be grounds for reassignment or termination; because future employers will also have the right to check your credit history this may also make it difficult to change jobs.  A short sale, on the other hand, will not be a challenge to your employment—current or future—as it is not reported on a credit report.

Credit Score and Credit History. A foreclosure will remain on public record for 10 years or more on an individual’s credit history, unlike a successful short sale which is not recorded on credit history.  In addition, your credit score after a foreclosure may be lowered, typically from 250 to over 300 points and affect your score for over 3 years; a short sale may only lower your score as little as 50 points, with only late payments on your mortgage showing up.  A short sales effect may be as short-lived as 12 to 18 months.

For more information on foreclosures vs. short sales in Wasilla AK contact The Kristan Cole Team today.

REO property is often a bargain for the real estate investor

What is REO property?  REO (real estate owned) is property which has been taken back  by the lender.  REO properties typically sell for less than comparable real estate listings as the lender usually wants to recoup the value of the loan which is traditionally less than the value of the property.  The differences between REO property and foreclosure or short sale property are:

• REO has already been acquired by the lender typically after a failed foreclosure sale or foreclosure auction.
• The REO is owned by the bank (or lending institution) and is listed as an asset on their balance sheet.
• The original home owner is no longer in the picture and the property is for sale.

The downside of REO property is that an REO property is typically not well-maintained by the financial institution that owns it.  The positive side of an REO is that a real estate investor or buyer can often purchase the property at a distinctively lower price.

For more information on REO property click here.

If you have any questions about Wasilla AK REO property or other Wasilla AK real estate questions don’t forget to think of The Kristan Cole Team.

There is so much misinformation out there these days about Short Sales and the Wasilla Area is no different. 

While this transaction may be a somewhat complicated process, here are the three very uncomplicated things Wasilla lenders are looking for to see if you qualify:

1. Financial Hardship: This is defined as a verifiable reason that has or will cause you to miss a payment, such as a mortgage payment adjustment, a job loss, too much debt or a business failure.
2. Monthly Shortfall: Lenders want to see that you cannot afford to pay your mortgage. You will be required to provide your agent a financial worksheet that demonstrates this. The shortfall equation is simple: Total Monthly Income – Total Monthly Expense = Monthly Shortfall.
3. Insolvency: You must be able to prove to the lender that you owe more than you have in cash. Insolvency can be proven in many cases, even though you may still have some money for living expenses.

For more information about the Short sale process go to Homebuying.com. And please think of the Kristan Cole Team when you’re looking for Wasilla AK Homes

• Financial Hardship:  This is defined as a verifiable reason that has or will cause you to miss a payment. Examples that qualify are mortgage payment adjustment, a job loss, too much debt or a business failure.
• Monthly Shortfall: Lenders want to see that you cannot afford to pay your mortgage. You will be required to provide your agent a financial worksheet that demonstrates this. The shortfall equation is simple. Total Monthly Income - Total Monthly Expense = Monthly Shortfall.
• Insolvency: You must be able to prove to the lender that you owe more than you have in cash. Insolvency can be proven in many cases, even though you may still have some money for living expenses.

• Time: There never seems to be enough of it when conducting a short sale. Your agent needs to understand the local foreclosure laws so that you have an estimated timeline. Also, be sure that your agent can communicate effectively with your lender so you can stall a foreclosure by getting more time to negotiate a short sale. Always provide your agent with accurate information as to how many payments you may have missed and any correspondence you have from your lender.
• You must submit the deal properly: Following the directions that you receive for submission is imperative. If you are asked to fax your file, then fax the file and send a hard copy in the mail. If they ask for two copies, send two, and so on. If you have a contract and have gathered all of your information, the last thing you want is for no one to see it and the deal falls apart.
• The buyer’s offer is too low: A short sale is not a fire sale! A lender still will only approve a deal that is more attractive to them than a foreclosure. Make sure you present only the most properly negotiated offers.
• The buyer’s contract is not strong enough: You may find yourself with offers from unqualified buyers. Don’t forget to ask for verification from a buyer that they have been pre approved for financing.

When a seller stops making their house payment, the note holder (typically a mortgage company) files a notice of foreclosure. Typically this foreclosure process takes a minimum of 90 days and usually takes longer. Once the foreclosure is complete, it becomes an asset owned by the note holder who then typically lists the house with a Realtor. The home is typically referred to as a Foreclosure, REO or Bank Owned property. If, prior to a foreclosure being completed, the seller sells the house and the sales price nets the note holder less than the amount owed; that is referred to as a short sale. Short sales are becoming more common as banks and mortgage companies work to avoid getting more homes back through foreclosure which always costs them more money.

As a wave of real estate bad news scatters across the country, foreclosures and short sales were bound to catch up with us here in Palmer, Wasilla, and Anchorage or anywhere in Alaska really. We haven’t seen foreclosures and short sales to this degree for over 20 years. I am amazed at the amount of short sales, distressed properties and foreclosures that are now showing up in our neighborhoods.

In order to keep ahead of this ever-changing market, I have recently obtained my designation as a CDPE, Certified Distressed Property Expert©. If you know of someone who needs help with any of the above… please pass this along and have contact me because foreclosure is not their only option.

These issues are appearing in all price ranges… from $100,000 to $1 million… with Sellers and Buyers in every neighborhood. An important thing I learned is to “stay out of judgment”…”sometimes bad things do happen to good people”.

Kristan Cole, CDPE

If you are one of the 93% of Americans making their house payments on time, you may not think the foreclosures of the other 7% will affect you.  Unfortunately foreclosures affect everyone.  When comparing January 2008 to January 2009, foreclosures were up by 57%.  That’s a large number and foreclosures are becoming a large problem. 

• When a bank or other entity forecloses on a home and then sells it for below market values just to get rid of it, that affects all homeowners in the area.  It is not uncommon for a bank to lose $60,000 on a $200,000 foreclosure when you add up all of their costs. 
• It is difficult for banks to absorb all of these losses so they become even more conservative with all of their lending, not just home loans. 
• This also creates challenges for the Mat Su Borough because real estate taxes are not being paid, or not being paid on time.  This makes it a challenge for the borough to continue to fund fireman, policeman, schools and basic services like snow removal. 
• There have been several studies that link an increase in crime to neighborhoods where there are more foreclosures and vacant homes.

No one wins through foreclosure.  Families are stressed through the process, local governments struggle to keep up with services and other home owners values are affected.  The more we can do to help folks avoid foreclosure the better.  If you know of someone that is behind on their payments and doesn’t know what to do, have them contact me or review this information on line to see options they may not know about.  All my best, Kristan Cole

Perhaps you know someone who is having trouble here in Alaska making ends meet and especially making their mortgage payment.  I just returned from taking an intensive class focused on helping folks who may be facing foreclosure.  I earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance and short sales which will allow me to help homeowners in distress. 

Short sales allow the cash-strapped seller with a legitimate hardship to repay the mortgage at the price that the home sells for (less closing costs), even though it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.  But keep in mind a seller must have a legitimate hardship.  For more information hardships, short sales and avoiding forecloser.

Think about the United Airlines landing in the Hudson last month.   An experienced pilot mattered.  If you or someone you know are behind on your payments and need help with a short sale to save your credit, do you think experience matters? Do you think it would be valuable to have an expert helping you?  I am one of only 1,500 CDPE’s in country right now.  Distressed homeowners need an advocate that will act in their best interest and help them find the best solutions to the financial crisis they are facing.

With the CPDE certification, I will also be developing a new website to help distressed homeowners find information about options that can help them avoid foreclosure and its negative consequences.  Site visitors will find information about the consequences of foreclosures and learn how to pre-qualify for a short sale. The short sale option is proving to be an excellent way to prevent foreclosure on a home and eliminating some of the damages it creates on a homeowner’s credit.

Alex Charfen, founder of the Distressed Property Institute in Boca Raton, Fla., said that Realtors such as Cole with the CDPE designation have valuable training in short sales that can offer the homeowner much better alternatives to foreclosure, which virtually destroys the credit rating. These experts also may better understand market conditions and can help sellers through the emotional experience, he said.

He suggested owners in foreclosure or pre-foreclosure, should seek out the services of a Distressed Property Expert. For more information about short sales, contact Kristan Cole at (907) 373-3575, or visit her website at www.KristanCole.com or www.WasillaShortSales.com.