Is a short sale the right option now?

As we move toward the third quarter of the year, we have seen market activity decrease after the tax incentives expired.

This (temporary?) reduction in buyer activity puts more pressure on sellers who want to sell their home now.  With fewer buyers active in the market, only the best valued properties are getting the attention needed to get under contract.

This puts further pressure on sellers in pricing and in some cases, the final selling price may be close to outstanding debt on the property.  Often times, the final price isnt enough to satisfy all the obligations.  As most everyone knows by now, the industry has termed this condition a short sale. 

While the process takes some patience and needs a skilled real estate broker to achieve success, the conditions surrounding short sales are improving and, properly done, a short sale can be accomplished with reduced damage to sellers credit scores.  In some cases, sellers have found they can proceed with a short sale and still qualify for another home in a surprisingly short period of time (hint:  you cant miss mortgage payments, there needs to be valid reasons for the short sale; loss of employment, transfer, medical issues, etc, and you need to have the income to support the new purchase).

It is important to understand that a short sale may not be the right option for all sellers.  Sellers need to know the facts and get quality advice from an attorney or CPA to know if a short sale, mortgage modification or even bankruptcy is the right option as each individual case varies.

When money is tight, it can be difficult to part with any money for this advice.  But there is free help in getting started.  Fannie Mae launched a new consumer Web site, "KnowYourOptions.com", to educate homeowners about their options to avoid foreclosure and how to get help. One can go to Fannie Mae Click Here. Fannie also issued a release notification for new EarlyCheck access options that will be implemented 9/25 in support of the Loan Quality Initiative (LQI). "EarlyCheck was created in response to customer feedback about the need for assistance in identifying and correcting potential eligibility and/or data issues as early in their processes as possible." Fannie Mae Quick Link.

If you know someone who is faced with homeownership challenges, feel free to share this information with them.  They are welcome to contact us for additional help!

I attended a housing workshop in Roseburg, Oregon yesterday and it was fantastic. There is a lot of help out there.
Umpqua CDC is hosting classes to help families who are dealing with foreclosure prevention and counseling. If you do not have an auction date GO HERE  to find out how to recieve help getting a mortgage loan modification free.

UCDC also has a number of programs available to help those that really need the help. Check it out.

Earlier this week, the U.S. Senate unanimously passed an extension and expansion of the homebuyer tax credit. This morning, the House of Representatives approved the agreement reached in the Senate by a vote of 403-12. The bill has now passed both chambers and is awaiting the Presidents signature, which could be as early as tomorrow!

Below is a summary of the new modifications in the extension and expansion of the tax credit:

1)  The $8,000 tax credit will be extended and available for first-time purchases before May 1, 2010.

2)  A new $6,500 tax credit will be available for repeat buyers who purchase between December 1, 2009, and May 1, 2010. To qualify for this provision, buyers must have used the home sold or being sold as a principal residence consecutively for 5 of the previous 8 years.

3)  Prospective purchasers with binding contracts in place as of April 30, 2010, will be allowed an additional 60 days to complete the transaction.

4)  Income limits are expanded to $125,000 on a single return and $225,000 on a joint return.

Following enactment of the American Recovery&Reinvestment Act, the Internal Revenue Service already has posted – at www.irs.gov - a revised Form 5405, First-Time Homebuyer Credit to incorporate Act’s provisions permitting qualifying taxpayers who buy a home this year before December 1 can claim up to $8,000, or $4,000 for married individuals filing separately, on either their 2008 or 2009 tax returns.

The U.S. Department of Treasury expects to post full details of the Homeowner Affordability and Sustainability Plan President Obama unveiled last week to help 7 to 9 million homeowners restructure or refinance their mortgages to avoid foreclosure at its Web site – http://www.ustreas.gov/ - on Wednesday, March 4th.