Foreclosure Laws in Florida

There was an article in the Florida Realtor today about the new legislation on foreclosures. This specific legislation was about the banks efforts to speed up proceedings for the foreclosure process. In Florida the foreclosure process is handled by the courts and in today's world that means that the process could take 12-24 months. The banks want to speed up the process by taking it out of the courts and in to a proceeding that could get people out of their homes in 90 days.

Obviously this is a tough issue because no lawmaker thinks it makes sense to get half a million defaulted homeowners out of their homes faster when a lot of them want to work something out. Homeowner and condo associations are missing out because dues are not paid and neighbors are upset about the foreclosed homes that are abandoned and not kept up.

It is an issue that won't be resolved anytime soon. It is disconcerting that nothing has been done to help the homeowners situation. I have seen and met with many homeowners who would rather settle and the banks won't even answer a simple call about what could be done. It costs banks more money to go through the court proceedings than just settling or short selling homes so it doesn't make sense that they don't move. The first thing that crosses my mind is that they don't care since most have been bailed out anyway but a short sale would seem to be a better option. I have personally seen auctioned homes go for 40 to 50 percent less than a bank would have gotten through a short sale and they don't have to hire a lawyer to go through the process.

Most likely no significant bill will go through to help present situation. They will pass something after the fact and it will prevent this from happening in the future. Only time will tell.

Update on Mortgage Lending

This is a good article focusing on what could happen if the government pulls back some of their investing in the home market. This is the test that the Fed is worried about. They could stop buying the mortgage backed securities in March as planned leaving open a market to investor money that still does not have faith in the market. The biggest worry is inflation.

This also will show how much the market can hold up on its own. I always question when the government gets involved because if the market does not stay afloat, and that is if the governemnt pulls out fully, then it shows that the housing growth of the past year was fake. If it holds up then the investment the government made in mortgages worked to boost the private sector's confidence in these securities.

Only time will tell and it is most likely the government will not fully stop the money because they are scared the market is not ready.

Esisting-Home Sales

Well it seems as though existing home sales went down in December as reported by the Wall Street Journal. The reason is because a lot of the Federal Money in the form of tax credits helped the spike to begin with and December is a slow month as it is for real estate sales. The tax credit should help to keep homes sales steady until it expires in April so there will be some better numbers for the next few months. The tax credit is a good thing for people but it will be interesting to see what happens after they expire and if sales go down dramatically then we will know what the impact is.

According to the National Association of Realtors the price of homes did rise year over year for the first time for two years. That is good news. It is important to remember that the market is still struggling and here in Southwest Florida the homes will stay at the current level because inventory is still high compared to what the rest of the country is showing. Overall the inventory levels for the nation have shrank which indicates that homes are selling.

First time buyers should jump on this opportunity to purchase an affordable home.

Here are some stats from the local MLS about our area.

Members of the Association closed 1,340 single family home sales in December, bringing the total for 2009 to 16,789; this is a 91.4% increase vs. 2008 when 8,768 homes were sold. Of the December sales, 48.3% were bank-owned, 18.2% were short sales and the remaining traditional sales made up 33.4% . The median price was $89,929, which is 8.0% lower than the prior December; however, the median price continues to be influenced by the number of bank-owned and short sales, which continues to drive down the overall median price. During Quarter 4, the median price for traditional sales was $135,000 (a 3.5% decrease from the prior quarter), for bank-owned sales it was $69,900 (up 2.7%) and the median price for short sales was $94,950 (up 6.6% from last quarter).

Foreclosure Numbers

I don't think that it is too surprising to see the number of foreclosures reported in this article but it is important to note that this means plenty of opportunity for people in Southwest Florida. It is not the best situation for those neighborhoods that lose their property value because of a few foreclosed homes but the opportunity for buyers has never been better. It will take some time for the number of inventory to be sold but people seem to forget the hype of a few years ago and almost no one I talked to then thought the rising values would ever end. People just need to be patient and things will turn around.

Terry Manos

Short Sale Help

This is an article that covers something new the government will be doing in April. This will help to speed up the response time from the bank when they get an offer from a short sale. Presently I have seen banks taking between 30 - 90 days to respond to an offer. This will not cover Fannie and Freddie loans for now but it is a start. It doesn't make sense why banks wouldn't have responded fast to begin with since it is cheaper for them to go through a short sale than a foreclosure. Hopefully it will work out as planned.
Terry Manos

Good Faith Estimate (GFE)

There are some things that the Government is doing to help buyers at the closing table. The intent is to lower some of the fees that a buyer would see at closing. This article covers some of those fees. It is important to note that the government involvement in this matter does not always lower the fees as much as they claim.

It is crucial for buyers to be aware of what the fees would be and the Good Faith Estimate (GFE) covers most of them but often fees are added in the end which could be a burden for the buyer. These extra fees are what the governemnt is trying to stop and will succeed to minimize them a little. It is helpful for the realtor to direct buyers to do their due diligence on the subject. Some of the forms are even difficult to understand for Lawyers so it is important to take the proper time to understand what issues could arise at the closing.

It will be a tough recovery

Overal it will be a tough recovery for the real estate market. This article covers some issues to for in 2010. Government programs have helped the small progress we have so far but that will change as many of these end soon. The $8,000 tax credit for 1st time buyers will end in April, March will see the end to a program that has been buying mortgage debt which could lead to rising rates, and only 31,000 of 728,000 borrowers have recieved modifications on their loans. The result will be a slow recovery for 2010 overall.

It is difficult for a lot of people but things will come back eventually and so far it is proven that the government intervention only helps for the short term. The market will have to work itself out and may be people will learn from the mistakes of the past.

Terry Manos
239-560-4043

Cape Coral and the media

Yes, it has been a rough two years for Cape Coral in the press. I remember a few years back when they were raving about how beautiful it was down here and the great opportunities there were. Most of the articles are negative, yes, but there is opportunity even with the market like it is. Homes have never been this affordable and many people are benefitting from the prices. It will take some time but people from up north still want to be in the heat through winter and the weather won't change so there is still a market down here.

Short Sale FAQs

 

            

 

As a result of the many questions that have been asked by my clients in regards to short sales I have put together a question and answer document. This should answer a lot of the questions you may have. If you need more answers feel free to give me a call.

 

Due to the current economic climate, many current listings are disclosed as short sales. A short sale is a transaction where the net proceeds from the sale of a property are not enough to cover the seller's mortgage obligations and closing costs, such as property taxes, transfer taxes and the real estate practitioner's commission. Short sales bring about a large number of additional considerations not found in a traditional transaction. Following are some of the most commonly asked questions in short sale transactions.

 

Does the lender have to approve of the short sale price prior to offers?

 

Yes. The seller's agent and the bank agree before the listing as to what the lender will accept for the price of the home. This is not set in stone. There is a lengthy short sale package the agent puts together for the seller and the lender. The process has gotten better and is easier to understand but each situation is different.

 

Is there actually a contract between the buyer and the seller?

 

Yes. Unless otherwise agreed there is a contract between the buyer and the seller. It is contingent upon the lender's (and other lien holder) approval, but is a contract.

 

How does a short sale differ from a regular real estate transaction?

 

A short sale offer is submitted to the seller like a normal transaction. The difference is that the sale of the property is contingent on the lender, the third party, accepting the contract. This, on average, takes between 30 – 120 days because the lender typically waits to see what other offers come in.

 

How are offers handled by the seller's agent?

 

Each transaction is different. The listing broker should present the offer to the seller for review. The seller can then decide to accept the offer and present it to the third party lender. It is still the seller's decision whether to hold an offer or not. The lender generally wants the highest possible price but once an offer is signed that is the one sent to the lender. There is a gray area here because each agreement between a seller and lender is different and the lender may want to see all offers and in this case some on the low end would miss out. There is legislation to stop this to make the process smooth and close in less time but so far the process is progressive in nature so be prepared for it.

 

May I withdraw from the agreement after the expiration of the time period allotted for the lender to approve the short sale? Can the buyer walk away?

 

In most cases the buyer can walk away and there would be an agreement between the bank and buyer as to when that time period would be. In some cases the buyer's deposit could be in jeopardy. If more time is needed than originally agreed upon in the contract, the parties should execute an extension to reflect a new time period for approval.

 

How do I know the property I want is in a short sale situation?

 

Based on new MLS rules the properties listed will say if the property is a short sale or not. By law the property also has to have an active/contingent warning if there is a contract that has been submitted to the bank. An offer could then be submitted but it would be held in a back position in case the property fails to close. It is best to submit offers that are active and have been on the market for a short time.

 

What could I do as a buyer to help the process?

 

FINANCES! Make sure that you have your financial information together. Banks won't even care about an offer unless you have proof of how you will pay. Most of the short sales in the Cape Coral/Fort Myers are cash deals. Have proof of the cash with actual statements. If you will mortgage the property there needs to be solid proof from the banks that you are qualified for the loan. It is 10x more stringent with these banks than a normal real estate deal so the more prepared the easier the deal will go through.

 

 

 

 

Terry Manos

239-560-4043

manost33@hotmail.com

 

Financial Crisis

I think this is pretty accurate but am convinced that this started years ago and would take more than this timeline to get down to where it starts. I have gone back as far as the 70s but it could really go back to when Fannie Mae was started in 1938. It is a complicated system that involves about dozens of people and everyone from politicians and bankers, which provide the market, to the realtors and brokers, to the consumers buying the homes. Lee County has been hit harder than most in this crisis and it is wise that we learn from these mistakes and take responsibility for what has happened by acting responsibly. It is sad that the people hurt by this were the very ones buying the homes and not being able to hold on to them. The banks and the politicians will be fine. I would like to see them accept some of the responsibility.

Terry Manos

News Press Article on Lee County

Lee County is in trouble when it comes to bringing business in to the region. I recently did a paper on bringing in a quality Business and Technology Park to utilize the University and hopefully bring jobs in. This kind of development has been shot down in the past but should be looked at if we are going to grow. Snowbirds are still here between October and May but the area has learned that only brings short term growth. Growth in the summer months is an important part of building this economy and bringing jobs. This article is a good one that sums up the general outlook of the area and will give insight on what the future holds. There are some things that I have suggested to these very leaders and hope they will get aggressive in building the area up for more than just tourism and snowbirds which is an important part but there are a lot of people left over from the boom that need and want to stay in the area all year around.

Terry Manos

Buyers Still Need Good Credit

This is an article about buyers and their need to still have a good credit score to buy a home. There are a lot of programs out there for 1st time buyers but it still requires them to have a great credit score as well as 20% down. Bad news is that it hurts some buyers who want a home but don't have the down payment. Good news is that banks will no longer be giving loans to anyone and in the long run it will help the overall market and there should be plenty of money for those that watch their credit.

Terry Manos