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Charles Bent*Prudential Alliance*400 Old Smizer Mill Road*Fenton, MO 63026*cell(314) 566-2099*office(636) 680-8306
Foreclosures/Short Sales
What is a Short Sale?
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal, Broker Price Opinion (abbreviated BPO), or Broker Opinion of Value (abbreviated BOV).
Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from mortgage failures that in part triggered the financial crisis of 2007–2010, they are now more willing to accept short sales than ever before. For "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling, this presents an opportunity for them to avoid foreclosure as a result.
What is a Foreclosure?
Foreclosure is the legal process by which a mortgagee, or other lien holder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption.[clarification needed] Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue homeowners' association dues or assessments.
The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien". If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment.
When Buying or Selling ask the Certified Short Sale Specialist, Charles Bent @ (314) 566-2099! Charles Bent represents home buyers and sellers, Not the mortgage companies or banks!
St. Louis-area foreclosure filings climb in January-
By TIM LOGAN tlogan@post-dispatch.com
St. Louis Post-Dispatch | Posted: Thursday, February 10, 2011
Filings of foreclosure sales and repossessions in the region
were up 10 percent from December to January, and ran 16
percent ahead of last January, the St. Louis Post-Dispatch reports.
Foreclosure activity hit an all-time high in 2010, despite a slowly
improving economy and a slowdown by banks as they untangled
legal issues at the end of the year.
One in every 57 houses in the 17-county St. Louis region, nearly 22,000 in all, received at least one foreclosure filing during the year, according to new figures out this morning from real estate data firm RealtyTrac. The filings are up nearly 12 percent from last year and slightly above the previous high recorded in 2008. Foreclosure activity here has more than doubled since 2006.
These figures come despite billions of federal dollars poured into mortgage modification programs in the past two years, and despite the relatively stable housing market in St. Louis.
Prices here never soared during the boom, and haven't plunged as far as places like Nevada, where one in 11 houses faced foreclosure this year, according to RealtyTrac.
But the mortgage crisis is proving to be nearly as intractable here as in the so-called "housing belt," said Karen Wallensak, director of the Catholic Charities Housing Resource Center, one of several local foreclosure counseling agencies. The trouble now is that many of the people facing foreclosure have been laid off, or at least seen their incomes fall. Until that changes, solutions are hard to come by.
"By far the majority of the people who turn to us for help are living on unemployment benefits, or have taken jobs that pay substantially less than they earned before," she said. "Many of them simply can't afford their mortgage."
It's a significant shift from the early days of the mortgage mess, which has raged on for three years now.
Back then, Wallensak and other counselors say, many of those facing foreclosures had taken out high-risk mortgages and bet that home values would rise. Modifying those mortgages to more affordable levels cost money, but kept people in their homes.
Now the bigger problem is a simple lack of income, Wallensak said, and there's only one way out of that.
"It all hinges on jobs," she said. "Most everything seems to boil down to job creation."
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