Joe gives some distressed market numbers and details some of the programs to those of you in a short sale situation.

Transcript

JOE:  Hey, Joe Hafner here with another episode of Inside Distressed Properties.  We’re looking at some statistics today, and in our market of Rutherford County this year in residential real estate, 30% of all homes that sold this year so far were what are classified as distressed property.  That would be short sales, bank owned, that sort of property.  So 1/3 of all sales in our market just about are these type of houses. 

 

So if you are behind on your mortgage or you can’t afford your payment anymore and you’re looking to sell your house, but you owe more than it’s worth, you need to realize that you’re not alone.  There’s a lot of people around town that are in the same situation as you.  So I want to just take a minute to tell you about some of the things that maybe will let you see that there’s hope our there if you’re behind on your mortgage and you owe more than the house is worth.

 

There’s some programs out there that are designed specifically for people in your situation.  If you have an FHA loan on your house, HUD has a program with FHA where if you do a short sale, which a short sale is selling your home for less than what’s owed and the bank allowing the mortgage to be released for that amount that’s less than what’s owed, if you have an FHA loan and you do a short sale, you can receive up to $1,000 in what they call a seller incentive when you close on that house.

 

So even though you’re giving the bank less than what’s owed, you can walk away with money in your pocket.  If you have a conventional loan and you’re living in your primary residence and that’s what you’re selling, there’s a program called HAFA (Home Affordable Foreclosure Alternatives).  With that program, you can get up to $3,000 in your pocket in seller incentives.  And here’s the beauty of both of these programs is that the deficiency, the deficiency is the amount of money that you owe minus what is paid to the bank after all the expenses of the short sale. 

 

So usually if you owe more than the house is worth, you’re going to have a deficiency there.  And in both these programs, that deficiency is forgiven.  Not only do you get to walk away with money in your pocket, you get to walk away knowing that you don’t owe the bank any money on that mortgage.  You have a clean start, a fresh start where you can start over.  And something to keep in mind is if you get foreclosed on, all this stuff goes out the window.

 

You don’t get money in your pocket, and the bank can sue you for the difference on that.  When they sell the house in a foreclosure sale, they’re going to get a lot less for the house than you would if you short saled it yourself.  So if you’re behind, you need to look at your mortgage and see whether or not you qualify for these.  Another thing that I hear about a lot is Bank of America.  They have a very bad reputation in dealing with people who are behind on their mortgages.

 

When we first started getting heavy into doing this kind of deal, short sales and that sort of thing and helping people facing foreclosure, Bank of America was awful.  And here’s the reason why.  Bank of America had a very small department that dealt with a limited number of people who have gone delinquent on their mortgage.  Maybe 3% of their total portfolio of loans was delinquent.  Then in a very short period of time, within a couple of years, not only did they drastically increase the number of mortgages they serviced when they took over Countrywide, but the number of people in default increased drastically.

 

So they had a small group of people that was dealing with a small group of delinquent accounts.  Then all of a sudden, it grew dramatically.  So they’ve been scrambling for several years now trying to get their act together so that they can deal with all of the defaults and all the people behind on their mortgage.  So if you’ve been trying to call Bank of America, you may have noticed that there have been some issues with getting someone to help you.

 

So if you’re behind on your mortgage or you know anyone behind on their mortgage and you are with Bank of America, you need to know that our team is set up where we have a person on our team, Hope Sams, who’s my assistant who is on the phone every day with Bank of America.  We know the ins and outs.  We know who to call.  We know who not to call.  We know the questions to ask where we can do a Bank of America deal as fast as anybody in town.

 

So if you’re behind on your mortgage or you know anybody who’s behind on their mortgage, get educated.  Give us a call.  Get a free consultation so that we can tell you where you’re at, what your options are so that you can make a decision.  Don’t just sit and do nothing.  Doing nothing is making a decision.  If you do nothing, you will eventually be foreclosed.  And the sooner you act, the more options you have.  So give us a call and we will help you out.  Thanks again.  We’ll see you next time.