Credit history is only part of the story
Letter to the Editor
By Inman News, Wednesday, September 30, 2009.Re: 'Short sales, mods give investors grief' (Sept. 25)
Dear Editor:
I am going through a short sale on my personal residence. The biggest concern I have is removing the debt and stopping the financial bleeding. At this point the concerns over future credit rating or FICO scores are trivial.
It's very possible that many lenders and banks will review your credit history with understanding and empathy. The banks and mortgage lenders need to make loans, otherwise they'll be out of business. It is irresponsible to generalize that going through a short sale or loan modification is the wrong thing and will adversely effect future borrowing. At this point, we need to be smart, consolidate, and make informed decisions.
Randal Moos
President
AHG, LLC
Templeton, Calif.
***
What's your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.
All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.
Bookmarking Sites
You must login or register to post a comment.
Submitted by Nick Chucales on October 1, 2009 - 3:29am.
Randall,
I agree with you completely, the banks created this mess and will need to change the way they look at credit reports in the future. After all is it fair that they will scrutinize those that kept them from the same financial disaster that the consumer is facing?
Nick
Submitted by Rob Aubrey on October 1, 2009 - 4:27am.
Here is a little known law that credit reporting agencies MUST do when reporting and selling your personal and very private information.
They must verify with you the consumer that the information is accurate and was reported properly. If they do not verify they must remove it.
Rob Aubrey
801-858-3174
Submitted by Ron Taylor on October 24, 2009 - 11:04am.
Why Are Lenders Making It Hard To Stimulate The Economy?
I don’t know about you, but as a real estate broker and professional auctioneer, I have to wear many hats. One of the hats we have to wear is that of working short sales for a client that is upside down financially, viz., owing more on their home than what it is worth in today’s market.
I don’t recall the exact source, I want to say it was NAR, [National Association of Realtors] but back in May-June etc., almost 30% of the homes sold were purchased by investor’s via short sales or REO. The investor bought the property with the idea of re-selling it for a profit. Now that is stimulating the economy by way of moving money around, providing liquidity, etc.
However, have you tried to work a short sale lately? Many lenders want the current owner of the property to have been on title for 30 to 90 days before they will approve a loan by a new buyer. It is called seasoning. Most investors hold property for a short period of time. They may make improvements on the property, if needed, or may sell it in an “as is” condition.
This whole process of seasoning has slowed down investor’s purchasing and stimulating the economy because they want to keep turning their money over. Having to hold onto a property for 30 to 90 days adds additional cost and cuts into the investor’s profit.
The negotiating process normally takes three to six months to go full cycle. And now the investor is told he or she must hold the property for an additional 30 to 90 days after purchase. I think you are beginning to see the picture. Less homes being purchased means more “toxic assets,” less money if available to the banks to lend out.
In looking at our records, here are some of the related industries who make money off of a successful short sale:
• Foreclosing Lender (they make far more in a short sale then when they foreclose)
• Listing Agents and Buying Agents
• Attorneys and Title Companies
• Mortgage Broker/Direct Lender
• Fannie Mae, Freddie Mac, FHA or whomever buys this loan in the secondary market
• The Appraiser
• The Home Inspector
• Plumbers
• Contractors
• Electricians
• Cities and Towns
• Insurance Company
• The IRS
• Accountants
• Marketing Companies (Direct Mail and Signs)
• Printing Shops
What’s the best way to stimulate the economy? The lender’s can start by making the short sale process a lot easier.
For more information on how we work with homeowners and realtors with short sales and pre-foreclosures, go to our website at http://www.cansellnow.com .
Ron Taylor<><
President/Broker/Auctioneer
The Restorer, Inc.
D/B/A Taylor and Sons Real Estate & Auctioneers
252-257-4822 (Office)
252-257-1302 (Fax)
www.canSellnow.com
Submitted by Kimberly Burnett-Thomas on November 9, 2009 - 8:14am.
I second everything that Mr. Taylor says above. The mortgage banks are self-perpetuating a cycle of negative equity and loss in this country. Given that many of them took TARP funds, they owe it to the citizenry who bailed them out to streamline and systemize the short-sale process to help heal this stagnating economy and to make whole the individuals who are hurting the most in this mess. They also need to back off of the seasoning rules mentioned above to keep the money moving. It's an arbitrary, unnecessary rule. Let's keep it simple -stop doing stuff that keeps us in the same rut. Isn't that the very definition of insanity;continuning to do the same thing while expecting a different result?
Let's do some bold, new things in this country!
Kimberly Thomas, Broker
REalty Executives Brown & Pope
Voorhees, NJ
856-308-5989
www.KimThomasHomes.com
www.NJHomesNearPhilly.com
Submitted by ImmanuelS Ser on November 11, 2009 - 7:59pm.
You should have budget your money ahead of time to avoid debt. When a sudden expense comes along, like a flat tire or being foolish enough to bet on Detroit, it drains your wallet and your mental reserves, and some cash today might do the trick to turn things around. Of course, cash today doesn't mean you can just have someone print money for you. (Well, unless you work for a Wall Street firm and you have buddies at the Federal Reserve. Then it happens!) If need some cash today, there are lenders that can get you money now easily, without the hassle common to banks. You can get cash today with a payday loan – but remember, like any other financial tool you have to use it sparingly, cautiously, and responsibly.
Submitted by Carolyn Warren on November 13, 2009 - 1:51pm.
Lenders look at a short sale more with more leniency than for a foreclosure, especially if there were extenuating circumstances.
The current waiting period to get another mortgage after having a short sale is 0 - 2 years, depending. If you did not have a 60-day mortgage late, you may not have to wait at all.
Some folks are in hardship due to no fault of their own. For example, the hardworking salesman whose company decided to slash commissions by 40% because of the economy. He has worked long and hard to build his book of business, and he still closes as many sales as before, but now he earns significantly less. It's no wonder he's struggling to keep up on his mortgage.
While some people over-bought, over-spent, and made poor decisions, others are victims of the national economy.
For more information on this topic, you can see Chapter 6: "How to Recover from a Foreclosure or Short Sale," in my newly released book, Homebuyers Beware: Who's Ripping You off Now? What You Must Know About the New Rules of Mortgage and Credit. (FT Press, 11/09)