Do Not Let Your House Go To Foreclosure Without Taking Every Step To Prevent It.

If you owe more than your property is worth, you have as a Distressed Property. Until recently, working with Distressed Properties was fraught with peril for agents, and owners were often told to “let it go”, ie.- stop making payments and let the lender foreclose. We’ll spare you the horrific Short Sale experiences as well as our speculation as to why the lending industry was so slow to adapt to the need to cooperate with home owners and their agents. Times have changed and Short Sales are now viable and should be given serious consideration.

Unknown to most of us until about 18 months ago, Short Sales are now very common, and it is very important to understand their benefit to the homeowner. Consider some of the following differences between the effects of a Foreclosure versus a Short Sale:

Credit Score: A Foreclosure will lower your credit score 250 to over 300 points for over 3 years. A Short Sale will show late payments, but the score will be lowered as little as 50 points, and the affect can be as brief as 12-18 months.

Credit History: Foreclosure will remain on credit history for 10 years or more. Short Sale is not reported on a credit history as there is no specific reporting item for “Short Sale”. Foreclosure remains on public record forever as it is recorded.

Employment: Employers often actively check credit of employees in sensitive positions – especially security clearances (Military, Police, Public Communication, Public Utilities, etc). Foreclosure can result in immediate reassignment or termination if employed, or can prevent you from being hired if you are looking for work. A Short Sale is not reported on credit report … is not a challenge to employment.

Deficiency Judgment: In a Foreclosure the bank has the right to a deficiency judgment. Some successful Short Sales provide for the lender to give up the right to a deficiency judgment. If a deficiency judgment is pursued the Short Sale’s higher yield from the sale results in a lower potential judgment amount.

Future Fannie Mae Loan: After Foreclosure you’ll be ineligible for a Fannie Mae backed loan for 5 years. Short Sale - 2 years.

Future Loans: For 7 years you will be asked on your application if you have had a foreclosure, but there is no similar declaration regarding a Short Sale.

Our Advice: There is now a designation known as Certified Distressed Property Expert that has been earned by local real estate agents to help Sellers and Buyers of Distressed properties. If you have cash flow or moving issues, we suggest you get professional help to assess your situation, determine alternative options, and make an action plan. The world of Short Sales and Foreclosures has changed from the frustrating mass confusion that it was to today’s smoother processes with positive results. Though there is still frustration and emotion, help is available to you that can help you establish and achieve your goals through the confusing maze.

Whether getting the financial elephant off your back, moving to put the family together, or other bona fide reason for selling … if you have a Distressed Property get with a Certified Distressed Property Expert and take control of your future. Foreclosure is the last option…do what you can to avoid it.

When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com

Can We Buy A Bank-Owned Property In Disrepair With A New Loan?

Many homes for sale these days are owned by a “bank”, properties that were taken back by the lender for non-payment. With their “floors of attorneys” it is natural that the banks are to be protected when they sell their assets. As such, when you buy a bank-owned property it is As-Is … no disclosure, no repairs, no liability for condition of the home. That is understandable as they have no knowledge of the specific property, but the very nature of their situation and ownership has worked against them.

When a bank takes over a property they immediately turn off the utilities and “winterize” the home. In the summer this “winterizing” process leads to the demise of the landscaping … no water and the plants can’t grow. As the prior owners weren’t making their payments it is often the case that they couldn’t afford to keep up the property maintenance. Paint, carpet, windows and more are often required with such properties. This type of property is really price right these days so how do you buy one with a minimum down if it needs substantial repairs in addition to the acquisition cost?

The FHA 203k Streamline is, perhaps, your means to owning such a property and enjoying it in a rehabilitated state. With this loan program you can have up to $35,000 set aside for repairs as a part of your loan. Acceptable repairs can include remodeling kitchen and bathrooms, new exterior work like stucco, replacing plumbing fixtures, new flooring and roofing, and major landscaping improvements. If you can demonstrate the ability you can “self-help”, government talk for doing it yourself. If you are hiring a contractor it is a good idea to get him on the job before you venture to get his ideas on what can be done and at what cost.

The loan can be used to refinance and rehabilitate as well as for a purchase. It is only for owner-occupied properties, though it can be used for up to a four-plex provided the owner lives in one unit. Manufactured homes in accordance with HUD guidelines qualify, and you can even move a home from one lot to another. Safety code violations must be corrected and energy conservation standards met while no luxury improvements as defined by HUD are allowed.

Our Advice: The FHA 203K or the FHA 203K Streamline could be the means for letting you buy a home and making it your dream home with the needed repairs and alterations. The criteria differs between them. Talk to a Lending Professional about these programs and how you can get preapproved to go shopping in the bank-owned arena of properties. Your lender will detail the specifics of the loan and the mechanics for implementing it for you. The down payment is minimal and the rewards many.

Don’t be lamenting from the sidelines in this market. The FHA 203K program can help you buy a diamond in the rough and shine it up all at a great price with one loan. It’s worth a phone call to see how it could work for you. Don’t experiment with lenders … if you don’t know one ask your real estate agent for the names of reputable lenders that can help you. Get your Agent, Contractor and Lender working together and you will undoubtedly have a winning combination with you being the Victor! When it comes to choosing professionals to assist you with your real estate needs… Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472. carsonvalleyland@hotmail.com, www.carsonvalleyland.com