Bank Of America Halts Foreclosures

WASHINGTON (AP) — A mushrooming crisis over potential flaws in foreclosure documents is threatening to throw the real-estate industry into chaos, as Bank of America today became the first bank to stop taking back tens of thousands of foreclosed homes in all 50 states.

The move, along with another decision on foreclosures by PNC Financial Services Inc., adds to growing concerns that mortgage lenders have been evicting homeowners using flawed court papers.

Charlotte, N.C.-based Bank of America Corp., the nation's largest bank, said today it would no longer complete foreclosures in all 50 states as it reviews documents used to process foreclosures. That applies to homes that the bank takes back itself and those that it transfers to investors such as mortgage giants Fannie Mae and Freddie Mac.

A week earlier, the company had said it would only do so in the 23 states where foreclosures must be approved by a judge.

What Are The Advantages of a Short Sale in Real Estate

A short sale occurs when a property owner sells real estate for less than the property's loan balance. The property owner typically does this when he becomes upside down on the loan, meaning the property value is less than the loan amount. The lender must give permission for the short sale to proceed. In some instances, the lender forgives the unpaid amount, while in other cases the lender issues a deficiency judgment against the borrower after the short sale.


Lender's Advantage
•When a borrower defaults on a loan, one option for the lender is to foreclose on the property. During a foreclosure process, an angry homeowner might damage the property, refuse to leave or leave prematurely without making necessary arrangements for the care and maintenance of the house. With a short sale, the borrower initiates the process, and if the property is a home, he typically agrees to continue residing at the property. While the lender may receive less than the initial loan balance when the property sells in a short sale or after a foreclosure, the lender could issue a deficiency judgment after the short sale in an attempt to recoup the unpaid balance.

Borrower's Advantage
If a homeowner discovers she is upside down on a loan and needs to move and sell the property, one option is a short sale. In some instances, the lender will agree to forgive the unpaid balance after the sale. Other circumstances can prompt a short sale, such as when the property owner has lost her job and is unable to continue making the house payments yet cannot sell the property for enough to cover the loan balance.

Property owners often perceive short sales in a less negative light than a foreclosure. In some instances, the short sale may be less damaging to the borrower's credit, but it depends on how the lender reports the short sale on the borrower's credit history.


Buyer's Advantage
•Both a foreclosure and a short sale can be a bargain. But in a foreclosure, the buyer is purchasing from the lender, while the buyer is purchasing from the borrower in a short sale. When buying from the property owner, the buyer has more opportunity to learn about the property and receive a full disclosure. Lenders usually do not know the intimate details about a house during a foreclosure, such as, for example, a mold infestation the previous year. A property owner who is the seller is obligated to give a full disclosure on the property to the buyer. A homeowner would be less likely to do malicious damage to the property during a short sale, as opposed to a foreclosure, since he is a party to the transaction as the seller.


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By Ann Johnson, eHow Contributor

Foreclosure & Short Sale Scams are Going Strong

The housing market in the United States may not be thriving, but business is booming for foreclosure rescue and loan modification scammers.

The US Government Accountability Office (GAO) released a report in July 2010 entitled “Home Ownership Preservation”. It states that: “The current foreclosure crisis has provided persons who may perpetrate mortgage foreclosure rescue and loan modification schemes with unprecedented opportunities to profit from homeowners desperate to save their homes.

The GAO report says there are two main types of foreclosure rescue and loan modification scams: advance-fee loan modification schemes and sales-leaseback schemes, with advance-fee schemes being the most common.

The Federal Trade Commission (FTC) reports on a new twist on the advance-fee scam that’s showing up this year, a “forensic mortgage loan audit.” The scammer offers to find regulatory violations in your original mortgage that will help you avoid foreclosure or even cancel your loan. There’s no evidence that anyone has ever succeeded in modifying their loan using this approach.

Here are some “red flags” that at-risk homeowners should watch out for when looking for foreclosure help, courtesy of the FTC. You should avoid any business that:

• guarantees to stop the foreclosure process – no matter what your circumstances
• instructs you not to contact your lender, lawyer, or credit or housing counselor
• collects a fee before providing you with any services
• accepts payment only by cashier’s check or wire transfer
• encourages you to lease your home so you can buy it back over time
• tells you to make your mortgage payments directly to it, rather than your lender
• tells you to transfer your property deed or title to it
• offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
• offers to fill out paperwork for you
• pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

courtesy of MilitaryAvenue.com

Whidbey Island Short Sales

Whidbey Island, Wa. is home to Naval Air Station Whidbey Island. Many of our homeowners are active military members and must relocate every 3-4 years. During normal economic times, purchasing a home, living in it for 3 years and selling when needed is not a problem. With a normal 3% - 5% yearly appreciation, selling costs are absorbed and a small profit can be made if the owner needs to sell after 3 years of home ownership. They have experienced the tax benefits, as well as all of the other benefits of owning a home on Whidbey Island during that time.

During today's economic times though, most of our homeowners that purchased a home in the last 3 -4 years are upside down with their mortgage. There is more money owed than the house can sell for thus creating a predicament for the homeowner. One of the solutions is to allow the bank to foreclose on the home, drastically affecting credit ratings, etc. Another possible solution is to work out a compromise with the lender and sell the home for less than what is owed. These are commonly known as a short sales.

On Whidbey Island today, we are experiencing quite a few short sales. It is a large segment of our real estate market at this time. Anyone considering purchasing a home would want to consider short sales. There are some unusual circumstances and time lines required with short sales and they should be entered into only with a knowledgeable agent as your guide.

View a list of Whidbey Island Short Sales and contact a qualified agent today.