While the new improved FHA policy looks to aim at the hardest hits part of the county, this is definitely an improvement in understanding how to tackle a difficult problem. Over the last 4+ years, 50% of the sales I have been involved in have been Short Sales. There is no shortage (no pun intended) of distressed properties in Southern California. If you have been reading my Simi Valley Market Updates, I point out the back log of homes pending in escrow, with the bulk of those waiting for Short Sale approval. I have also had the opportunity to represent Downey Savings and Loan, Ocwen, Wells Fargo and US Bank Foreclosures during this same time and from personal experience the banks are far better off working out a Short Sale approval over foreclosure 99% of the time. The costs to evict, clean up and maintain properties after foreclosure are tremendous. The Federal Housing Administration is now expanding the number of non performing loans to 10,000 that will be sold at a discount to investors, understanding the complexity and costs of foreclosure.
Under the program, loans are sold competitively at a market-determined price generally below the outstanding principal balance. FHA then processes an insurance claim, removes the FHA insurance and transfers the loan to the investor. Once the note is purchased, foreclosure is delayed for a minimum of six additional months, giving the new servicer time to work through alternatives with the borrower, possibly finding an affordable solution to allow the borrower to remain in their home. Because the loans are generally sold for less than what the borrower currently owes, the purchaser has the ability to reduce or modify the loan terms while still making a return on the initial investment. If no viable alternatives exist, the purchaser may be able to help the borrower sell the property through a short sale and avoid the costs of foreclosure. (from HUD No. 12-116)
The Simi Valley Housing Market and surrounding housing markets are seeing fewer foreclosed properties come on market, mostly due in part to the Short Sale process working to the benefit of both the lender and the home owner. The process is not perfect, but it is working if you have a knowledgeable seasoned Real Estate Agent working for you. If you or some one you know has been unable to get a loan modification or are behind in payments and are facing a possible foreclosure; a Short Sale may be your only option. For more information on Short Sales please visit my articles on Short Sales. Please call if you have any questions (805) 432-7705. I want to be very clear. I understand how difficult is to call to discuss this issue. My client’s information is kept confidential. Most of the Short Sale properties I have represented, I have not put a for sale sign in the front yard and I have successfully markets those properties quickly. My concern is your ability to get through this difficult time with as little disruption to your life as possible and trying not to announce to the world you’re in this position.