short sale, foreclosure and credit effects

You can see that the late payments do a lot of damage to people with good credit scores. 
I suggest you find ways to set up your file, so you can position to rebuild your credit as fast as possible after the short sale or foreclosure

How foreclosure impacts your credit score - Apr. 22, 2010

Recently, Fair Isaac, which developed FICO scores, pulled back the curtain a bit, revealing some estimates of point-score declines following mortgage delinquency problems.

Here are the average hit your credit will take:

30 days late: 40 - 110 points

90 days late: 70 - 135 points

Foreclosure, short sale or deed-in-lieu: 85 - 160

Bankruptcy: 130 - 240

To come to these figures, Fair Isaac created two hypothetical consumers, one who starts out with a fair-to-middling score of 680 and the other with a very good one of 780. (FICO scores range from 300 to 850.)

San Diego's real estate market is slowing down

I was looking for a stat to confirm what is going on in our real estate practice.  The banks are sending out agents to do BPOs.  The agents are looking at comps from the spring and then asking us to counter the buyers offers.  The buyers are then walking away from the deals. 

I wonder how the lenders can be so poorly run and regulated? 
How did they get so big in the first place?
Why can't any of these people understand that to make money you have to get ahead of the curve not behind it? 

News Room - Trulia.com - Press Releases

Western U.S. Leads with Price Reduction Increases

In the first half of 2010, cities in the Western U.S. were experiencing a decrease in reductions. This month, the same cities experienced some of the largest surges in price reductions compared to the previous month. Oakland increased 38 percent month-over-month and San Diego saw reductions increase by 25 percent.

San Diego short sales

Foreclosure Sales Account for 31 Percent of All Residential Sales in First Quarter According to New Report From RealtyTrac

foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, and that the average sales price of properties that sold while in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process.

A total of 232,959 U.S. properties in some stage of foreclosure — default, scheduled for auction or bank-owned (REO) — sold to third parties in the first quarter, a decrease of 14 percent from the previous quarter and down 33 percent from the peak during the first quarter of 2009, when sales of foreclosure homes accounted for 37 percent of all residential sales.

When a Default becomes Strategic

A Strategic Default may not be very Strategic if you have not created what we call an upside down analysis. 

Now that Fannie Mae and other lenders are pursuing deficiency judgments it may be time to consider that Strategy is part of Strategic Default .

Checklist of Strategic Default considerations:

1.  To get released from the deficiency or loan balance. 

     a. some loans may state they are non recourse loans in writing.   

     b.  see if you are protected from the deficiency by operation of state law.  CA has two major anti deficiency statutes.  Most people are aware of CCP 580b and the one action rule.  However there are other judicially supported doctrines which may help the defaulting homeowner.  

           

2.  Does your lender consider workout options which are useful?

     a.  will they release the deficiency in writing as part of a short sale?

     b. will they release the deficiency in writing as part of a deed in lieu?  (most banks do release the deficiency as part of a deed in lieu… the tough part is getting the lender to accept the offer of deed in lieu on terms you find acceptable.

    c.  is there a short pay  or short refiannce option? 

Note… our commercial real estate group has closed commercial refinance’s .  If you have the funing commercial refi’s are met iwth few obejections. 

   d. There are other options to consider.

3. Is your default part of Bankruptcy planning?  Please note Bankruptcy is not nearly as useful as it once was for most people with average or better jobs or other assets

4. Has your default consider credit rebuilding and repair consequences

5. Assets or Salary Preservation.  If you have recourse loans you might decide it is too risky to give your lender a current road map to your assets or salary.   

6. Choice of Creditors. With some lenders it is sometime beneficial to deal with their likely collection arms.  With other lenders it is much better to deal with the servicing arm of the lender. 

 

Fannie Mae has said that they are going to seek a judgment against strategic defaulters.  This is why we have always advised people to do an upside down analysis prior to going into default or accepting a foreclosure. 

Short Sale near Carlsbad in San Marcos, community of San Elijo

San Elijo Real Estate, san marcos short sale near carlsbad

Short Sale update, Bank of America releases deficiencies - sometimes

Bank of America seems to have changed or at least added a new short sale template for their approval letters.

for more on san diego short sales

They may now agree to release the deficiency even on recourse loans.

For a video on short sale and deficiencies.

It may be too early to tell but this could be great news for underwater home owners.

Do you need a CA Real Estate license to negotiate short sales in CA