Tuesday, May 18, 2010
MAPS OF FAMOUS HOMES
We just added a rather frivolous link in the upper right hand corner, which is listed "Maps of Famous Homes", which contains overhead pictures and maps of the homes of famous people. It's a nice toy to play with when you have some time to kill.
THE LUNACY OF SHORT SALES
The way that banks handle short sales provide great explanation why so many of them are failing. It’s almost as if they are taking action to maximize their losses. Thank goodness that they know that they have Congress to bail them out no matter how incompetent they are.
By definition the bank is losing money when it is involved in a short sale. The principal of the mortgage exceeds the market value of the property in a declining real estate market and typically, the owner is in arrears. The best policy for a bank in handling this kind of situation, which is extremely common, is to make a quick decision. Indeed, as each day passes the bank loses more money. Thus, the longer they delay, the more money they lose. Unfortunately, I liken a short sale to a pregnancy; it is going to take about 9 months before you get a result.
What makes this even more confounding is that the bank has to review the same few criteria in each case, as follows: The current market value of the property through a BPO (Broker’s Price Opinion) and the current financial position of the borrower, does he have sufficient income or assets to pay off the loan? This should not take nearly a year to decide, especially when the bank is losing money each day that a decision is delayed. A month is probably too long.
However, I find many times that you wait a few months only to receive an email that you have a very limited time frame to provide them certain information or documentation, much of which they may already have. Their threat if you don’t comply is that they will close your file and you must start the whole process again. However, exactly who does this tough demand hurt more, the bank or the homeowner?
While their delay in making a decision is maddening, so is their reaction time after approval. I had two files last week which presented the same scenario: The bank had approved one figure for the short sale, but due to certain of the seller’s expenses listed on the HUD not applying, the bank was going to be given more money than they were approved. In both cases, a closing was already set up and we just needed to convince the bank to take more money. Unfortunately, this isn’t as easy as you would think. Each bank made us go through certain hoops that delayed the closing and their receipt of additional money. You really have to see it to believe it because it sounds absolutely fictional.
By definition the bank is losing money when it is involved in a short sale. The principal of the mortgage exceeds the market value of the property in a declining real estate market and typically, the owner is in arrears. The best policy for a bank in handling this kind of situation, which is extremely common, is to make a quick decision. Indeed, as each day passes the bank loses more money. Thus, the longer they delay, the more money they lose. Unfortunately, I liken a short sale to a pregnancy; it is going to take about 9 months before you get a result.
What makes this even more confounding is that the bank has to review the same few criteria in each case, as follows: The current market value of the property through a BPO (Broker’s Price Opinion) and the current financial position of the borrower, does he have sufficient income or assets to pay off the loan? This should not take nearly a year to decide, especially when the bank is losing money each day that a decision is delayed. A month is probably too long.
However, I find many times that you wait a few months only to receive an email that you have a very limited time frame to provide them certain information or documentation, much of which they may already have. Their threat if you don’t comply is that they will close your file and you must start the whole process again. However, exactly who does this tough demand hurt more, the bank or the homeowner?
While their delay in making a decision is maddening, so is their reaction time after approval. I had two files last week which presented the same scenario: The bank had approved one figure for the short sale, but due to certain of the seller’s expenses listed on the HUD not applying, the bank was going to be given more money than they were approved. In both cases, a closing was already set up and we just needed to convince the bank to take more money. Unfortunately, this isn’t as easy as you would think. Each bank made us go through certain hoops that delayed the closing and their receipt of additional money. You really have to see it to believe it because it sounds absolutely fictional.
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