Fridays Foto for Short Sales but not real estate

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Well not exactly a short sale, but a short sales person maybe… I passed Connie Snook’s little car and couldn’t resist a Friday Foto.

She may drive a short car, she might even be short, but I bet she’s not short on customer service.

I wonder how small she can make your insurance premiums??? Give Connie Snook a call at 301-695-7896. Or you can stop by her website at conniesnook.org and request a quote. She is located at 1 Mt Olivet Blvd, Frederick MD 21701.

This is not an endorsement only a photo op for her car. ; )

Have a great weekend.

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May 9, 2008 · Filed Under Frederick Business, Frederick MD Real Estate, Friday, Fun

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What happens to my Credit Scores with a Foreclosure and Short sale

There is more to foreclosures and short sales after the gavel falls. The solutions are quick in the scheme of things but have a long lasting affect on the sellers (former homeowners) credit. Plenty of people are willing to accept the long term due to the fact there is no real monetary loss. What? Think about it…there were plenty of homes sold in the last few years with 100% financing. In other words, the buyer never had to save any money to buy their home…just sign your name. You can argue the case that there is money loss, but my question is to who? The Short Sale is a smaller debt forgiveness that the bank basically eats. The government used to tax a piece of the pseudo income to the former homeowner, but the homeowner never really had it to lose. (pseudo is tongue and cheek, some homeowners cashed out their home equity lines of credit for vacations and cars) This might even be you, that’s the risk you took. Things happen and we don’t have too much control over it. If we had a crystal ball, we would all be millionaires. But either way, the home was worth less than the market was willing to pay.

Back to my point there is no real monetary loss to the homeowner. This was not the case when lenders actually required a down payment or some kind of assets to secure the loan. I guess they shot themselves in the foot thinking that this housing boom would last. They are starting to require it now… gee, I wonder why?

Well then, what happens for the long haul? Outside of shattered dreams of owning your dream home, the credit scores will take a hit. But how bad? I came across an article in Broker Agent News but I have heard different stories on the impact on credit scores.

Foreclosure or Deed-in-Lieu of Foreclosure
Both of these solutions affect credit the same. Sellers will take a hit of 200 to 300 points, depending on overall condition of credit. This means if a seller’s FICO score before foreclosure was 680, it could dip as low as 380.

Short Sale
The effect of a short sale on a seller’s credit report is identical to that of a foreclosure. The ding on credit will show up as a pre-foreclosure in redemption status. Which will result in a loss of 200 to 300 points. This means a short sale with a previous FICO of 720 will see it fall from 520 to 420.

They claim that they have the same impact. The length of time that they impact are different. foreclosures will last much longer than a short sale. Below is an excerpt from Debtkid, someone that has lived through a short sale and has had first hand experience.

- Expect to suffer some credit score damage, but nowhere near as much. Loss of FICO points will be around 75-125 and your report will show it listed as a ‘pre-foreclosure in redemption’ which is far less negative. You will most probably be able to secure a new home loan in about a year and a half.

This has been more inline with what I have heard from others in the financial field. But don’t take this as the be all know all information about your credit scores. Seek professional advice from your tax planner and financial planner. Either way, foreclosures and short sales have long term effects on your credit.

There is information about the length of time for that one can purchase after the deficiency on About.

Foreclosure or Deed-in-Lieu of Foreclosure
Steep says a seller who wants to buy another home after foreclosure will end up waiting about 36 months before a lender will offer any kind of interest rate that makes sense.Coy says, “A notation on a consumer’s credit profile of ’settled for less than owed’ (short sale) precludes the consumer from obtaining an institutional loan for 24 to 48 months, depending on the lender / program and regardless of FICO score.”

For more information, see the Fannie Mae Selling Guide online. Click on the PDF link in the yellow box and see page 75.

Short Sale
Some agents say the good news for short sale sellers is the wait is much shorter before buying another home, but that belief is a falsehood.Can a seller buy again under two years? Not true, says Coy, “It’s an utter myth that a consumer can ‘can buy again in about 18 months at a good interest rate.’ Fannie Mae guidelines require 24 months’ seasoning, and there’s no way to get around this.”

I have also found a great discussion on the topic with real life situations in the comment thread over on Active Rain. But something that really stuck with me was mentioned by David Mordue.

Do what is best for your family in terms of relieving financial stress and giving you the best quality of life.

Your credit score is not the most important thing here. Your family is.

The creditors that gave you credit did nothing more than use a computer program (FICO) to determine whether or not you were a safe bet. They set up their pools of credit accounts with the full understanding that some people will not be able to pay back. It’s all part of their business model. Don’t feel that because you are unable to pay a credit card that someone that you’re personally letting someone down.

First and foremost, you need to educate yourself on options. Again, I can’t stress it anymore, but you have to do something…ignoring Foreclosesure will not make it go away.

If you have questions, please call…I’ll be glad to help.

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May 7, 2008 · Filed Under Frederick MD Real Estate

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“Suffering in Silence” - Foreclosure outreach

I attended the Frederick Foreclosure Forum last night. The turn out was not as expected. There were only a small handful of consumers looking for answers and guidance. The other 85% were local professionals, city and county personal looking for more resource to help those in need. I kind of expected a low turn out for the consumer side. As part of Thomas Perez’s, the Department of Labor, Licensing and Regulations Secretary, opening speech…This is a humiliating and an embarrassing problem…homeowners are suffering in silence. This problem occurred out of the absence of sufficient regulations in the real estate industry (lending portion.) He could not of said it more bluntly. I couldn’t imagine folks that really need this help, showing up amongst a crowd. I applaud the few that did.

There was a question about the appraisers being held accountable for not predicting this back in 2006. A gentleman from the Emerald Farm area, not in trouble now, but sees the potential when it is time for him to sale in the near future. He feels the appraiser falsely gave value to his home. He believes his home and others on his street are $100,000 less than back in 2006. I know that the Appraisal process is under scrutiny and will have new laws in effect come January 2009. Not sure about $100,000 but we have been experiencing about 1-1.5% depreciation in some neighborhoods. Emerald Farms price drops have been a result of the increase in short sales ranging in price $300-349,000. The home that sold for $349,000 was originally purchased for $360,000 in 2004. One home currently on the market for $300,000 sold back in 2006 for $450,000. A non Arms length transactions should not impact future appraisals but the do impact sellers pricing strategy.

Fernando Herboso, a local real estate agent, wanted to know what the state was doing to help the Hispanic community who are also falling victim to bad loans. He said down in the trenches they are afraid to speak out for fear of being deported and separated from their children. He also went on to explain these are hardworking families that are helping build a community and doing jobs that others will not. They have no place to turn. He spoke of a tragic situation about a woman beaten by her husband with black eyes that was also afraid to speak out. This problem is not only housing related but domestic too. He said they fear of speaking to the police in their community. Perez was appalled by the beaten and said people should not be afraid to speak out against crimes. He then went on speaking about the programs in general that the state offers.

A couple items I took away from this; The Emergency Foreclosure Bill and also the state has a team that investigates the mortgage fraud and mortgage scams. (yes, I did ask the question about the carpetbaggers) Thomas Perez just loves ripping out the signs of these scam-artist that scrape equity off of homes. They also dupe homeowners out of their homes by having them sign a quitclaim deed and “renting” the home back to them until they can get back on their feet. This never happens.

Numbers you need if you or someone you know is facing foreclosure.

1-877-462-7555 or www.mdhope.org

If you think you have been a victim of mortgage fraud or a mortgage foreclosure rescue scam…

1-888-784-0136

Locally Frederick County residents can get free counseling by contacting the Frederick Community Action Agency. You can talk to Joe Baldi or Brad Peterson. They will help you talk to your mortgage company and possibly negotiate a better situation for you. Frederick doesn’t want empty houses in the community either.

One last take away from this meeting was about the rights of tenants. Mary Beth Johnson of the county housing rental assistance, has been seeing a rise in landlords going into foreclosure and the tenants are left on the curb without notice. Scott Borison of Legg Law,LLC, states the tenants have rights and the lease supercedes the foreclosure. But this is only true if they stay in the property. Once they vacate, they have lost their right of possession. (Side note, Scott was instrumental in the drafting of the Emergency Foreclosure Bill for the state)

I am sorry to see the low consumer turn out, but glad I went. The resources that I took away from this forum will help me guide troubled homeowner in the right direction.

Back to my Foreclosure mantra….You have choices, but you have to do something…you can’t ignore it.

Please spread the word…homeowners need to act fast in order to help alleviate some of the problems.

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May 6, 2008 · Filed Under Frederick Events, Frederick Foreclosure, Frederick MD Real Estate, Frederick Misc

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Monday Foreclosure watch - The city has a plan- I think

They released a press release about tonight’s Community Foreclosure Forum. I am going to see what they have in store to help befuddled home owners. I really want to know if they have anything place to address the carpet baggers that have moved in to take advantage of the desperate homeowners.

The event starts at 6:00 PM at the Weinberg Center for the Arts and is open to the public. If you are in need of answers, I recommend that you go. The key thing is that you have to do something, ignoring the problem will not make it go away.

Here’s the whole press release…

CONTACT: Susan Harding, Public Information Officer, 301-600-1385

FOR IMMEDIATE RELEASE: Thursday, April 24, 2008

CITY TO HOST

COMMUNITY FORECLOSURE FORUM

_______________________________________________________________________

Frederick, MD — The City of Frederick is hosting a Community Foreclosure Forum for Frederick and Washington County homeowners. Foreclosure is not only a personal problem but a community problem as well. If you or someone you know is facing a possible foreclosure, this forum will offer individual and community strategies to help navigate the foreclosure process. The Community Foreclosure Forum will be held on Monday, May 5, 2008 from 6:00 - 8:00 PM at the Weinberg Center for the Arts located at 20 West Patrick Street. Admission is free and open to the public.

Attendees will have the opportunity to:

Speak one-on-one with professional counselors who can help you work through the foreclosure process

Learn what protections you have, and what you can do to help your community stem the tide of foreclosures.

Find out what the federal, state and local government is doing to help.

Meet with nonprofit representatives and find out what programs are locally available.

The City of Frederick Mayor William J. Holtzinger and Board of County Commissioners President Jan Gardner will provide opening remarks. Department of Labor, Licensing and Regulations Secretary Tom Perez will discuss the Governor’s new legislation regarding State solutions. Department of Housing and Community Development Secretary Ray Skinner will discuss the programs that are available. The Frederick Community Action Agency (FCAA) and the Washington County Community Action Council will have representatives on hand to discuss local programs available.

For additional information, please contact Rhonda Wardlaw, Department of Labor Licensing and Regulation Director, at 410.230.6071 or email rwardlaw@dllr.state.md.us.