Orlando Short Sale Expert | Orlando Short Sales » jerrylarose

Fannie cracks the foreclosure whip, Will it help in Orlando, Fl.

jerrylarose — Fri, 03 Sep 2010 12:29:50 +0000

Fannie Mae says it will begin fining loan servicers who take too long to complete foreclosures once it’s been determined that delinquent borrowers don’t qualify for a loan modification or other alternatives like short sales.

The fines — or “compensatory fees” — will be assessed when loan servicers can’t provide a reasonable explanation for failing to meet timelines for completing routine foreclosures that vary from state to state, Fannie Mae said in a bulletin to servicers.

The time allotted to complete a foreclosure, starting from the referral of a loan file to an attorney or trustee until the date of a foreclosure sale, varies from as little as 60 days in Georgia, Michigan, Missouri, Tennessee, Texas, Virginia and West Virginia, to 300 days or more in Illinois, Maine, New Jersey, New York, Vermont and Wisconsin.

The foreclosure timelines Fannie Mae has established for the four states hit hardest by foreclosure during the downturn fall in between: 120 days in California and Arizona, 150 days in Nevada, and 185 days in Florida.

Fannie Mae said the foreclosure schedules it’s established for each state represent the time “typically required for routine, uncontested foreclosure proceedings, given the legal requirements of the applicable jurisdiction.” The timeline in Florida, for example, was extended by 35 days to allow for a state-mandated mediation process.

Fannie Mae promised it “will not impose compensatory fees for delays beyond the control of the servicer, such as unavoidable mediation or court delays, or sales delays by sheriffs or other selling officers.”

When fines are levied, they will be based on the outstanding principal balance of the mortgage loan, the rate of return paid to investors in mortgage-backed securities backed by the loan, the length of the delay, and any additional costs directly attributable to the delay.

According to mortgage data aggregator Lender Processing Services, an estimated 2.02 million homeowners were in foreclosure in July nationwide. Another 5.02 million homeowners were behind on their mortgages.

On average, borrowers in foreclosure were 469 days behind on their mortgage payments, up from 351 days a year ago and 196 days in January 2009, LPS said.

Properties that are vacant and held off the market, combined with whatever portion of homes with delinquent mortgages that are not currently listed for sale, “represent a shadow inventory putting downward pressure on both home prices and rents,” Fannie Mae warned in the company’s most recent quarterly report to investors.

According to the report, 4.99 percent of the roughly 9 million single-family loans securitized into mortgage-backed securities guaranteed by Fannie Mae were seriously delinquent or in the foreclosure process as of June 30 — about 450,000 loans.

Of those, about 170,000 were in foreclosure. About two-thirds of seriously delinquent loans had been delinquent for more than 180 days.

In the first half of 2010, Fannie Mae’s loan servicers negotiated 276,059 loan workouts — more than three times as many as the same time period the year before.

Fannie Mae’s loan servicers also signed off on 38,841 short sales and deeds-in-lieu of foreclosure during the first half of 2010, a 171 percent increase from the same period a year ago that nearly matched the total for all of 2009.

Fannie Mae nevertheless acquired 130,767 properties through foreclosure in the first half of the year, up from 57,469 during the first half of 2009.

At the end of the foreclosure process, loan servicers schedule properties for auction. If nobody bids for a property, or if the bids that are received fall short of the properties’ estimated worth, Fannie Mae takes possession of the home and handles its resale.

The company was only able to sell 87,612 of the properties it acquired through foreclosure in the first half of 2010, leaving it with an REO inventory of 129,310 homes valued at $13 billion.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your Orlando real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange, Seminole, Polk, Lake or Osceola County Florida and Orlando, East Orlando, St. Cloud, Davenport, Clermont, Longwood, Windermere, Winter Garden, Kissimmee, Winter Park, Altamonte Springs, Maitland, Apopka, Lake Mary, Oviedo or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

Pending home sales rise, including Orlando

jerrylarose — Thu, 02 Sep 2010 20:33:57 +0000

Following a sharp drop in the months immediately after expiration of the homebuyer tax credit, pending home sales have modestly risen, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index (PHSI), a forward-looking indicator, rose 5.2 percent to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June; it’s 19.1 percent below July 2009 when it was 98.1. Pending sales data reflects contracts and not closings, which normally occur with a lag time of one or two months.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” says Lawrence Yun, NAR chief economist. “But the recovery looks to be a long process. Homebuyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”

On the other hand, homes have not been this affordable in recent memory. “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy,” says Yun. “The loan underwriting standards are tighter, but homebuyers can improve their chances of getting a loan by staying well within their budget.”

The PHSI in the Northeast rose 6.3 percent to 62.5 in July and is 21.1 percent below a year ago.

In the Midwest the index increased 4.1 percent to 66.7 and is 25.7 percent below July 2009.

Pending home sales in the South rose 1.2 percent to an index of 86.3, and are 15.6 percent lower than a year ago.

In the West, the index jumped 11.6 percent to 95.0 and is 17.6 percent below July 2009.

The national index had fallen 29.9 percent in May and another 2.8 percent in June.

Could we see another buyer tax credit? We could use it here in Orlando.

jerrylarose — Wed, 01 Sep 2010 13:46:03 +0000

Housing and Urban Development Secretary Shaun Donovan said Sunday on CNN’s “State of the Union” that the administration would “do everything we can” to stabilize the U.S. housing market.

“The July numbers were worse than we expected, worse than the general market expected, and we are concerned,” Donovan said. “That’s why we are taking additional steps to move forward.”

Whether HUD will resurrect the first-time homebuyer tax credit is up in the air. “All I can tell you is that we are watching very carefully,” Donovan said on the show. “We’re going to be focused like a laser on where the housing market is moving going forward, and we are going to go everywhere we can to make sure this market stabilizes and recovers.”

Gov. Charlie Crist appeared on the same show and supported a new version of the homebuyer tax credit, saying it would “help enormously,” noting that Florida has the nation’s third highest foreclosure rate.

Donovan also said the Federal Housing Administration will launch an emergency loan program to help unemployed borrowers stay in their homes and a program to help underwater borrowers refinance.

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Number of underwater mortgages in U.S. fell in 2Q, Orlando Foreclosures still on the rise

jerrylarose — Sat, 28 Aug 2010 15:42:40 +0000

Real estate data provider CoreLogic says the number of U.S. homes with mortgages that exceed what the property is worth declined slightly in the second quarter versus the first three months of this year.

The firm said Thursday there were 11 million homes with so-called underwater mortgages at the end of June. That’s down from 11.2 million at the end of March.

The firm attributed the decline primarily to homes being repossessed by lenders.

In all, 23 percent of U.S. homes with mortgages were underwater at the end of June.

Nevada had the highest rate of underwater mortgages of any state at 68 percent, followed by Arizona at 50 percent and Florida at 46 percent.

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New delinquencies could derail foreclosure progress, especially here in Orlando

jerrylarose — Fri, 27 Aug 2010 18:09:27 +0000

A survey of lenders shows the number of homes in the foreclosure process during the second quarter declined for the first time since 2006, but that foreclosure inventory could be driven back up by a surge in borrowers falling one payment behind on their mortgages.

The results of the Mortgage Bankers Association’s latest National Delinquency Survey — which covers 85 percent of first-lien mortgages, or about 44.5 million loans — revealed that even as the foreclosure picture showed signs of improvement, more trouble could lie ahead.

After peaking at 3.77 percent in the first quarter of 2009, the percentage of loans one payment behind had fallen to 3.31 percent by the end of last year. The latest survey showed the 30-day delinquency rate climbing again, to 3.51 percent.

Extrapolating the 30-day delinquency rate to loans not included in the survey suggests that as many as 1.8 million homeowners were one payment behind on their mortgages — a first step on the path to foreclosure.
MBA Chief Economist Jay Brinkmann said there were two likely causes for the increase in 30-day delinquencies — rising first-time claims for unemployment insurance and homeowners who were in loan modifications getting behind again because of their weak credit.
The latest report from the Treasury Department shows that nearly half of the 1.3 million homeowners who have accepted loan modifications under the Home Affordable Modification Program have redefaulted.
“Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers,” Brinkmann said.
“Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak.”

The bad news about rising 30-day delinquencies put a damper on what would otherwise have been encouraging trends in foreclosure starts and the 90-day delinquency rate.

The foreclosure start rate was down 25 basis points from a year ago and 12 basis points from the first quarter, to 1.11 percent. A basis point is one one-hundredth of a percent.

The seriously delinquent rate — loans 90 days past due or in foreclosure — was 9.11 percent, down 43 basis points from the first quarter but up 114 basis points from a year ago.
“The fact that both the 90-day delinquency rate fell and the foreclosure start rate fell means that a significant number of these seriously delinquent loans have been successfully modified and reclassified as performing, current loans,” Brinkmann said.

The survey showed that 4.57 percent of all loans were in some stage of foreclosure, down from 4.63 percent a year ago.
Extrapolating those results to loans not included in the survey suggests that about 2.4 million homes were in the foreclosure process. States with the highest foreclosure inventory rates were Florida (14.04 percent), Nevada (10.33 percent) and New Jersey (6.28 percent).

The combined percentage of loans in foreclosure or at least one payment past due was 13.97 percent on a non-seasonally adjusted basis, a four-basis-point decline from 14.01 percent last quarter.

That rate, extrapolated to loans not included in the survey, suggests that 7.3 million of roughly 52.3 million mortgages nationwide are in foreclosure or at least one payment behind.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.
P.S. If you are listing your home as a short sale in Orange, Seminole, Polk, Lake or Osceola County Florida and Orlando, East Orlando, St. Cloud, Davenport, Clermont, Longwood, Windermere, Winter Garden, Kissimmee, Winter Park, Altamonte Springs, Maitland, Apopka, Lake Mary, Oviedo or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

Facing foreclosure? New Fannie Mae website helps consumers find options

jerrylarose — Tue, 17 Aug 2010 12:59:35 +0000

Fannie Mae launched a new website to help consumers understand their options when facing foreclosure and the possible loss of their home. Called KnowYourOptions.com, it outlines the choices available to homeowners struggling to make mortgage payments, and provides guidance on how they can contact and work with their mortgage company to find a back-up plan.

KnowYourOptions.com provides information in both English and Spanish. Features include:

• Interactive Options Finder helps homeowners identify options.

• Calculators help borrowers understand how many of the options would work in their situation, including calculations about refinance, repayment, forbearance, and modification.

• Videos feature real homeowners discussing how they received help; others feature housing counselors giving advice.

• Forms – including a financial checklist and contact log – to help borrowers prepare for a meeting with their mortgage company or housing counselor.

• Information on refinancing, repayment plans, forbearance, modifications and Deed-for-Lease.

• Out-of-the-box alternatives, including short sales and deeds-in-lieu for homeowners who recognize that they can no longer afford their mortgages, but want to avoid a foreclosure on their credit history

More info: www.KnowYourOptions.com.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Orlando Market Pulse

jerrylarose — Fri, 13 Aug 2010 18:21:47 +0000

Orlando Market Pulse 081110

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Top 10 Things You Need to Know About Self-Directed IRAs

jerrylarose — Wed, 11 Aug 2010 12:43:54 +0000

There is a lot of confusion over self-directed IRAs and what is and is not possible. In this article I will discuss some of the most important things you need to know about self-directed IRAs.

1) IRAs Can Purchase Almost Anything. A common misconception about IRAs is that purchasing anything other than CDs, stocks, mutual funds or annuities is illegal in an IRA. This is false. The only prohibitions contained in the Internal Revenue Code for IRAs are investments in life insurance contracts and in “collectibles.” Since there are so few restrictions contained in the law, almost anything else which can be documented can be purchased in your IRA. A “self-directed” IRA allows any investment not expressly prohibited by law. Common investment choices include real estate, both domestic and foreign, options, secured and unsecured notes, including first and second liens against real estate, C corporation stock, limited liability companies, limited partnerships, trusts and a whole lot more.

2) Seven Types of Accounts Can Be Self-Directed, Not Just Roth IRAs. There are seven different types of accounts which can be self-directed. They are the 1) Roth IRA, 2) the Traditional IRA, 3) the SEP IRA, 4) the SIMPLE IRA, 5) the Individual 401(k), including the Roth 401(k), 6) the Coverdell Education Savings Account (ESA, formerly known as the Education IRA), and 7) the Health Savings Account (HSA). Not only can all of these accounts invest in non-traditional investments as indicated above, but they can be combined together to purchase a single investment.

3) Almost Anyone Can Have a Self-Directed Account of Some Type. Although there are income limits for contributing to a Roth IRA, having a retirement plan at work does not affect your ability to contribute to a Roth IRA, and there is no age limit either. With a Traditional IRA, the fact that you or your spouse has a retirement plan at work may affect the deductibility of your contribution, but anyone with earned income who is under age 70 1/2 can contribute to a Traditional IRA. There are no upper income limits for contributing to a Traditional IRA. A Traditional IRA can also receive funds from a prior employer’s 401(k) or other qualified plan.

Additionally, you may be able to contribute to a Coverdell ESA for your children or grandchildren, nieces, nephews or even my children, if you are so inclined. If you have the right type of health insurance, called a High Deductible Health Plan, you can contribute to an HSA regardless of your income level. With an HSA, you may deduct your contributions to the account and qualified distributions are tax free forever! All of this is in addition to any retirement plan you have at your job or for your self-employed business, including a SEP IRA, a SIMPLE IRA or a qualified plan such as a 401(k) plan or a 403(b) plan.

4) Even Small Balance Accounts Can Participate in Non-Traditional Investing. There are at least 4 ways you can participate in real estate investment even with a small IRA.

First, you can wholesale property. You simply put the contract in the name of your IRA instead of your name. The earnest money comes from the IRA. When you assign the contract, the assignment fee goes back into your IRA. If using a Roth IRA, a Roth 401(k), an HSA, or a Coverdell ESA, this profit can be tax-free forever as long as you take the money out as a qualified distribution.

Second, you can purchase an option on real estate, which then can be either exercised, assigned to a third party, or canceled for a fee.

Third, you can purchase property in your IRA subject to existing financing or with a non-recourse loan from a bank, a hard money lender, a financial friend or a motivated seller. Profits from debt-financed property in your IRA may incur unrelated business income tax (UBIT), however. Finally, your IRA can be a partner with other IRA or non- IRA investors. For example, one recent hard money loan we funded had 10 different accounts participating. The smallest account to participate was for only $1,827.00!

5) Caution: There Are Restrictions on What You Can Do With Your IRA. Although as noted above in paragraph 1 the Internal Revenue Code lists very few investment restrictions, certain transactions (as opposed to investments) are considered to be prohibited. If your IRA enters into a prohibited transaction, there are severe consequences, so it is important to understand what constitutes a prohibited transaction.

Essentially, the prohibited transaction rules were made to discourage certain persons, called disqualified persons, from dealing with the income and assets of the plan in a self-dealing manner. As a result, disqualified persons are prohibited from directly or indirectly entering into or benefitting from your IRA’s investments. The assets of a plan are to be invested in a manner which benefits the plan itself and not the IRA owner (other than as a beneficiary of the IRA) or any other disqualified person. Investment transactions are supposed to be on an arms-length basis. Disqualified persons to your IRA include, among others, yourself, your spouse, your parents and other lineal ascendants, your kids and other lineal descendants and their spouses, and any corporation, partnership trust or estate which is owned or controlled by any combination of these persons. It is essential when choosing a custodian or administrator that the company you choose is very knowledgeable in this area. Even though no self-directed IRA custodian or administrator will give you tax, legal or investment advice, the education they provide will be critical to your success as a self-directed IRA investor.

6) Some IRA Investments May Cause Your IRA to Owe Taxes – But That May Be Okay. Normally an IRA’s income and profits are exempt from taxation until a distribution is taken (or not at all, if it is a qualifying distribution from a Roth IRA).

However, there are three circumstances when an IRA may owe tax on its profits. First, if the IRA is engaged in an unrelated trade or business, either directly or indirectly through a non-taxable entity such as an LLC or a limited partnership, the IRA will owe tax on its share of Unrelated Business Income (UBI). Second, the IRA will owe taxes if it has rental income from personal property, such as a mobile home not treated as real estate under state law (but rents from real property are exempt from tax if the property is debt free).

Finally, if the IRA owns, either directly or indirectly, property subject to debt, it will owe tax only on the portion of its income derived from the debt, which is sometimes referred to as Unrelated Debt Financed Income (UDFI). This may sound like something you never would want to do, but a more careful analysis may lead you to the conclusion that paying tax now in your IRA may be the way to financial freedom in your retirement.

For example, one client made a net gain of over 1,000% in less than four months after her IRA paid this tax. This is definitely a topic you will want to learn more about, but it is not something you should shut your mind to before investigating whether the after tax returns on your investment would exceed the return you might otherwise be able to achieve in your IRA.

7) An Inherited Roth IRA Can Give You Tax Free Income Now No Matter What Your Age. Many people know that a qualified distribution from a Roth IRA is tax free. To make the distribution qualify as tax free, it must be distributed after the IRA owner has had a Roth IRA for at least 5 tax years and after one of four events occurs:

the IRA owner is over age 59.5,
the IRA owner becomes disabled,
the IRA owner dies and the distribution is to his or her beneficiary, or
the distribution is for a first-time home purchase, either for the IRA owner or certain close family members.

Although the neither the original Roth IRA owner nor his or her spouse has to take a distribution (assuming the spouse elects to treat the IRA as their own), non-spouse beneficiaries of a Roth IRA do have to take distributions, normally over their expected lifetimes. However, once the five year test is met, those distributions are tax free, regardless of the age of the IRA beneficiary! Even a $100,000 Roth IRA left to a 6 year old beneficiary may generate as much as $80,496,367 in lifetime tax free distributions if the IRA can sustain a yield of 12%, which is very possible with a self-directed IRA.

2010 Brings an Incredible Gift From Your Government. Most people who understand the benefits of a Roth IRA really want one, but many people have not been able to qualify for this incredible wealth building tool because of income limitations which restrict the eligibility of a person to contribute to a Roth IRA or to convert pre-tax accounts like Traditional IRAs into a Roth IRA. In 2010 the rules for conversions will change so that anyone, regardless of income level, will be eligible to do a Roth conversion. Beginning in 2010 anyone who has a Traditional IRA (including a SEP IRA), a SIMPLE IRA which has been in existence for at least two years, or a former employer retirement plan such as a 401(k) or a 403(b) can convert those into a Roth IRA and can then begin to create tax free wealth for their retirement. Even if you do not currently have an IRA but are eligible to contribute to a Traditional IRA, the contribution can be made and immediately converted into a Roth IRA. This truly is one of the most exciting tax planning opportunities to come along in a very long time!

9) There Are Millions of Dollars Available to Finance Your Real Estate Deals Right Now. We are in a very exciting time for wise real estate investors. There are a lot of super real estate bargains out there right now, but it can be very difficult for investors to get financing – unless they know the secret of private financing. There are billions of dollars of lazy IRA money sitting on the sidelines waiting for the right investment, because many people are very afraid of the stock market. Included among the many things people can invest in with a self-directed IRA are real estate secured loans or even unsecured loans. Shakespeare wrote in his play Hamlet, “Neither a lender nor a borrower be, for a loan oft loses both itself and friend, and borrowing dulls the edge of husbandry.” I believe Shakespeare was wrong, but he might be forgiven since he did not have the advantage of knowing about self-directed IRAs. You can benefit from your knowledge of self-directed IRAs either by having your IRA be a private lender or by borrowing OPI – Other People’s IRAs – for your real estate transactions. Networking is the key to success in the area of private lending or borrowing, but there are things you must know to do it properly.

10) Use Options to Dramatically Boost Your Small IRA. Options are one of the most powerful and under-utilized tools in real estate investing today, and they work beautifully within a self-directed IRA. The consideration for the option and the property being optioned can be almost anything, not just real estate. Once an IRA owns an option, it can 1) let the option lapse (which at times is the right answer), 2) exercise the option and acquire the property, 3) assign the option for a fee (assuming the option agreement allows for assignment) or 4) agree to cancel the option for a fee with the property owner, thereby getting paid not to buy the property! Options are very flexible and can be designed to fit almost any situation. One client paid $5,000 from his Roth IRA for an option which he later canceled for a fee of over $35,000. Then he took that money, bought a property at a foreclosure auction for cash, and later sold the property for $70,000 with $5,000 down and a $65,000 seller-financed note. By using the option he was able to take his $5,000 Roth IRA and turn it into a $70,000 Roth in less than a year! Truthfully there are many more things that you should know about self-directed IRAs.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Improve Your Credit Score

jerrylarose — Tue, 10 Aug 2010 12:12:14 +0000

Healthy credit scores have never been more important. As banks tighten their lending standards, it’s important to have your score as high as possible.

A FICO score is a number, in general from 300 to 850, that is formulated from your payment history, including such things as amounts of money owed, length of your credit history, new credit accounts open, and how you have used your credit. Age, salary, race, education, and religion do not affect your score. You can’t buy a good score; you can only build one over time by demonstrating that you are a responsible borrower.

To improve your credit score, start with these steps.

1. Pay your bills on time. This seems like a simple enough feat, but in hard economic times, more and more borrowers are finding themselves hard-pressed with the decision of what bill to pay. If you find yourself having a hard time paying bills, be sure to talk with the lender or company you owe. They may have programs or suggestions that will help you avoid having your bill sent to collections.

2. Don’t let items go to collections. Once an item is sent to collections, your credit report will suffer. This ding will stay on your report for seven years.

3. Don’t open other new credit lines when applying for a home loan. You may want the new car or living room set, but the home buying process is not the time to open multiple new accounts. This is a sure-fire way to temporarily reduce your credit score. If you do this before finalizing your mortgage, you many find yourself stuck with a higher interest rate.

4. Monitor your report on a regular basis for errors and cases of identity theft. Errors do happen. To get them corrected quickly, be sure to contact both the organization that provided the erroneous information, as well as the credit bureau. Identity theft happens. And it is your responsibility to identify it and address it!

5. Pay down credit cards. Carrying high balances on credit cards can severely affect your credit score. Think of it this way. If you have a grand total of $10,000 worth of credit limits available, but you owe $5,000 on all of your cards put together, you are using half of your available credit!

The best loans and mortgages are available to borrowers with FICO scores 700 and above. Experian, one of the major credit reporting agencies, reports that the average credit score is 693.

For a look at your credit report, visit the government sponsored site, myannualcreditreport.com. You may access your report three times a year free of charge.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Foreclosure vs. short sale: pros and cons

jerrylarose — Sun, 01 Aug 2010 17:21:51 +0000

With today’s reduced property values and increased unemployment, it’s tempting for some homeowners to just throw their hands up in defeat, allow the bank to take their home in foreclosure and rid themselves of the monthly mortgage burden.

Even suffering through the paperwork and stress of a short sale may seem too much for an overwhelmed borrower to handle.

But Florida homeowners should be aware of unique rules in the state that make the benefits of a short sale typically outweigh the ease of walking away in a foreclosure.

The biggest difference between Florida and many other states when it comes to losing a home is the deficiency judgment.

While some states ban lenders from collecting the remainder owed on a loan after a foreclosure or short sale is completed, Florida law allows banks to go after borrowers for up to 20 years. That can lead to a garnishment of wages long after the home is gone.

In a short sale, where the bank agrees to take a lesser amount for the home than what is owed on a loan, lenders sometimes are willing to write off the deficiency on the front end.

In a majority of the cases I’ve handled, the bank has waived its right to seek a deficiency. However, we are seeing this year that the lenders are more reluctant to do so.

That was the case with Kissimmee resident Scott & Teresa, who in 2010 found themselves in a home the couldn’t afford.

Following a loss of employment, and with two children, Scott & Teresa bought a $235,000 home that they lived in comfortably for a 4 years. But then one of them lost their job.

Teresa remembers the day the bank served the notice of foreclosure.

“I cried my eyes out,” Teresa said. “That’s when I panicked because I really didn’t want it to happen.”

Scott & Teresa got advice from Jerry LaRose on doing a short sale.

Their bank, CitiMortgage, waived its right to seek a deficiency even though it ended up taking $150,000 less than what was owed on the loan.

Also, if a bank refuses to waive the deficiency in a short sale, it still would have to go back to court to seek a judgment.

In a foreclosure, at the end of the proceeding, a deficiency judgment is automatically awarded by the courts and the bank is free to seek a claim.

“In the past, people just wanted to move from the property and get on with their lives and didn’t understand what the lenders’ rights were in terms of pursuing a deficiency claim, I think people are more aware now about what can happen after the fact and that their nightmare can continue.”

Another consideration is the effect of a foreclosure or short sale on credit.

According to the Fair Isaac Corp., which developed the widely used measurement of credit risk called a FICO score, the negative effect of a foreclosure is marginally worse than a short sale.

But in Florida, a deficiency judgment from a foreclosure is likely to have a much larger impact that will prohibit your ability to buy another home for many years. Currently, Fannie Mae states that you may purchase another home after only years after completing a short sale. Whereas a Foreclosure they say you would have to wait 5 Years.

There are a few situations where some experts believe it is better for someone to go to foreclosure rather than do a short sale. I always suggest to consult an attorney at that point.

To do a short sale, a borrower must give all of his or her financial information to the bank before it will decide whether to allow the short sale. The idea is that if a person can afford to pay the mortgage, the short sale may be denied.

“Now the lender knows everything about your finances and they can better decide whether they will go after you or not.
If a lender doesn’t know your finances, it reduces the chances it will go after you following a foreclosure.

You might fly under the radar, With the millions of people going through this, they are probably going to go after the low-hanging fruit.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden, Kissimmee, St. Cloud, East Orlando, Longwood, Altamonte Springs, Maitland, Winter Park, Oviedo, Apopka, Lake Mary, Clermont, Ocoee Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit http://OrlandoShortSaleExpert.com or www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.