What is a short sale? A short sale is an option you have before you reach the point of foreclosure where you are selling your home for less than what is owed. However, the bank has to agree to a short sale as they stand to lose money via either process.  Banks do short sales because of cost.  An average cost to the bank for foreclosure is around $65,000, so they are smart to take the short sale.

You must have an offer in hand for the bank to tell you whether they will do a short sale or not.  They have the say-so whether or not a short sale will be accepted.

The 4 requirements to have a short sale are:

1. The home’s market value has dropped.
2. Mortgage is in or near default status.
3. The seller has fallen on hard times . . . unemployment, divorce, medical emergency, bankruptcy, death
4. The seller has no assets to speak of.

Foreclosure is on your FICO score for 6 years.  Short sales start to repair themselves after 2 years.

Short sales can be a win-win for the lender and the seller.  The lender recovers more of their capital faster than would be possible if they went through foreclosure.  The owner wins by relieving themselves of the financial burdens of the home and taking a smaller hit to their credit than would happen if a foreclosure occurred.

Unfortunately it’s not as simple as it appears.  Every lender and every situation is different.  There are pitfalls to be avoided and terms to be negotiated to reduce or eliminate any further obligations for the borrower after the short sale is concluded.  It is critical to have a team of experts in place to guide you through the process.  A seasoned real estate Broker and a real estate Attorney who specializes in such transactions are the backbone of such a team.

This morning I had the opportunity to hear from one of the passengers who was on USAir Flight 1549 that crash landed in the Hudson River.  He spoke about understanding why he thinks everyone survived and reminded us to think about the important things in life by being better husbands, sons, fathers, brothers and dads.

I look at what I have in my life; my family and my business.  He reminded me to be grateful for what I have and never take it or anyone for granted – not that I ever do.

Stephen Grellet wrote, “Do It Now”:

I expect to pass through this world but once.   Any good thing, therefore ,that I can do or any kindness I can show to any fellow human being let me do it now.  Let me not defer nor neglect it; for I shall not pass this way again.

This weekend I fly to NYC and back.  I wonder if I’ll be thinking about what I heard today? 

Check it out at:

Charlotte Commuting Time Estimator

EFFECTIVE TODAY:  Customers that are purchasing homes with less then 20% down, now must have a 700 credit score and have a debt to income less then or equal to 41%.   Government loans (FHA, VA) are not effected.
If the customers are putting 20% or more down then they can have a credit score less then 700, the DTI still needs to be 41%.
This is coming on the heels that the PMI companies are not wanting to insure loans to customers with lower credit scores. So if you are working with a borrower that has been in contact with their lenders, get them to call and either LOCK their loans or see about changing programs to a government loan.

I want to take a moment and try to explain what PMI does and why we have seen the latest changes.
If a borrower buys a home as many did over the past several years and needs financing for more than 80%  of the purchase price, then the banks can do that only if they can get insurance from the PMI companies for the amount above the 80%. of the purchase price

Example: 150,000
Down payment 10% $15000
Loan to Value 90%
Unprotected amount $15000; therefore covered by PMI

The insurance company will insure the bank for the other difference between 120,000 which  it would be at 80% to avoid PMI and the loan amount of 135,000…the extra $15,000.

Well, as you can imagine if a customer goes into foreclosure or default on their loan, the PMI companies must step in and pay the banks off down to the loan to value of 80%, hence making it then easier for you all to get a short sale complete at a lower than balance owed price.

So  with all the foreclosures, the PMI companies have been hit really hard with having to pay up.  With all the claims that they’ve have had to pay out . . . they have pushed back and said, “No more” . . . they do not want to take any more risks.

The insurance companies have researched and found that it is the folks with lower credit scores and higher DTIs that have defaulted. So little by little, they have been raising the credit scores and lowering the DTIs for loans they are willing to insure.

As a result the banks are having to react as well . . . if we can’t get insured for the dollar amounts we are wanting to loan above 80% then it is a risk to the banks and the banks are pushing back . . . the banks have money to lend, but they are also wanting to be protected.

Thank goodness for small favors – Government loans are not affected by this latest round of changes.

We continue to pour money to bail out AIG, banks, auto industry and the like.  Instead of doing that, why not give every adult over the age of 18 a stimulus in the amount of 1 million dollars? That would be far less than we are pouring in to failing companies with no end in sight.  What would happen if my company fails tomorrow?  Would the government bail me out? 

Look, I love my country.  I’ve raised and educated my children, taught them how to be model citizens and not expect that they are entitled, rather they must earn their way in this world.  We are telling generations to come that it is okay to fail because someone will bail you out if you do.  In fact they will bail you out so much so that they will even pay you when you do fail.  Is that a crazy concept or what?  Don’t worry, if you fail we’ll give you money and prop you up.  

If there is no fear of loss there is no fear of failure!  Am I the only one that feels this way?  I’d like to hear your comments as well.  What happened to the american work ethic?  I know – we’ve sent it overseas!  

One of my past clients has introduced me to his company, The Victory Junction Gang.  The purpose of this organization is to “enrich the lives of children with chronic medical conditions and serious illnesses by providing life changing camping experiences that are exciting, fun and empowering in a safe and medically sound environment.”  It’s in quotes because I didn’t want to miss a word.

I know these are troubled times and sometimes I wonder how or when things are going to turn around.  Then I look toward doing something to help others and try to not have a pity party because my life is so much better and so much fortunate than others.  I feel good knowing that a small contribution has made a difference.

Learn more about The Victory Junction Gang and then volunteer! 

The Home Builders Association of Charlotte is protesting provisions in the $819 billion economic-stimulus bill passed by the U.S. House of Representatives last week.
The organization will deliver more than 1,000 petitions to members of the U.S. Congress outlining its objections.
The group says the bill doesn’t sufficiently help home buyers and the housing sector because it fails to expand the $7,500 tax credit to all home buyers.
The association says the bill should increase the tax credit to at least $10,000, extend the eligibility period from June 30 to Dec. 31 and allow the credit to be used at the time of closing.”

The article went on to say that:

The building industry is one of the hardest hit in the country,” says Michael Hinshaw, president of the association. “If home building continues to be curtailed, Americans will no longer realize the dream of home ownership and hundreds of thousands of men and women involved in our industry will be unemployed.”

Is this more of the same – going down the road of artificially stimulating the housing market by putting folks into homes that under the traditional model wouldn’t qualify, or is this a stimulus that will work with no negative affects?

The snow was falling early this morning

Yes it does snow in Charlotte!  Proof is in the pictures I took this morning as the flakes were falling in Southeast Charlotte, cancelling school and causing many to stay home from work. Many who didn’t grow up in this area like to laugh at Southerners who appear to panic at the first flake and stay home as long as anything white remains on the ground - but their feelings are justified as more often than not, snow in Charlotte comes with ice in Charlotte.  Driving on ice is NOT the same as driving on snow.

Regardless, it’s the perfect combination for all – the snow is pretty, kids get a day off from school, and then within a day or two it’s all gone and we’re back to dry streets and yards.  No slush or dirty roads to deal with.  What more could you ask for?

These pictures were taken this morning from my house.  As of 11am, it is still coming down, although tapering off.  I’m sure that by later today things will calm down and we’ll be back to normal.

So don’t laugh at us – if you can’t beat ‘em, join ‘em!  Take the day off and find a nearby hill and have fun with the kids.  We don’t get too many chances to enjoy this!

Snow was clinging to the trees

Early morning snow in Charlotte