This is the fifth and final installment in my Tucson Short Sales series.  I would suggest reading part one (Tucson Short Sales – Part 1 – What are Short Sales?) part two (Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?)  part three (Tucson Short Sales – Part 3 – How to Short Sale My Home) and part four (Tucson Short Sales – Part 4 – The Offer is in to the Bank) before reading this article.

Once your purchase package has been submitted to the bank it will typically pass through several levels before reaching someone who has the actual authority to make a decision on the offer.

Larger lenders have different negotiators at each level who each have a specific task. A bottom level negotiator will typically review a package for completeness and ensure that everything is signed as required. A mid-level negotiator will typically order an appraisal or BPO on the property to find current market value and then attach that to the file and pass it on. And a high level negotiator will take all of the information provided along with the valuation of the home and render a decision.

The same process applies for smaller banks but usually one negotiator handles all of the tasks listed above.

“How much will the bank accept?” is the question I am usually asked by potential clients.

You will usually hear that there is a magic formula that lenders use to decide whether or not a short sale offer is sufficient. And truthfully, there probably are. But there isn’t an industry standard that can be cited in this article that you can use to accurately gauge your chances of obtaining a short sale acceptance.

It is different for every lender and for every situation. I’ve had deals with the same lender (Bank of America) where they were willing to accept different percentage of payoffs for properties just months apart. By the time you read this article the standards will have probably changed again and they will continue to evolve for the next few years as we work our way out of this mess.

If you would like to search the Tucson MLS for Short Sale, Bank-Owned, or Foreclosure homes, search for Tucson Homes for Sale or contact me for a comprehensive list.

If you would like assistance in avoiding foreclosure feel free to contact me for a no-cost consultation.

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1. Tucson Short Sales – Part 4 – The Offer Is In To The Bank This is the fourth installment in my Tucson Short Sales...
2. Tucson Short Sales – Part 1 – What are Short Sales? Since the real estate boom of 2003-2005 the Tucson real...
3. Tucson Short Sales – Part 3 – How to Short Sale My Home This is the third installment in my Tucson Short Sales...

The Tucson Association of Realtors released their January 2009 MLS report and I have to say, I am pleased with the current state of the market. It is apparent that short sales and foreclosures dominated the Tucson market at the end of 2008 and during January of 2009 as evidenced by the median sales price dropping to $163,250 from $203,000 one year ago (a nearly 20% decline).

January 2009 Statistics

January 2009 MLS Statistics

January 2009 Absorption Rate

Current Absorption Rate for the Tucson market stands at 13 months.

“Absorption Rates” means the average number of homes sold per month over a particular period of time. It is a solid indication of market conditions and predicting how long a property may be on the market before being sold.

What constitutes a Buyers Market, a Sellers Market and a Neutral Market?

The amount of inventory determines market sway. A “Neutral Market” is 6 months of inventory. Anything less than that is a “Sellers Market”, and conversely, an inventory of more than 6 months is a “Buyers Market.”

Consequently, it is apparent that Tucson is still in a Buyer’s market and will continue to be as lender-owned and short sales pervade our market. I believe that by the middle of the year we will see these troubled properties receding and market activity and statistics responding accordingly.

There it is folks, Tucson MLS Statistics for January 2009. To view the full report click here.

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1. Tucson Short Sales & Lender Owned Homes Continue to Rise This morning I went back through our MLS data and...
2. Tucson Short Sales – Part 4 – The Offer Is In To The Bank This is the fourth installment in my Tucson Short Sales...
3. Tucson Short Sales – Part 1 – What are Short Sales? Since the real estate boom of 2003-2005 the Tucson real...

This is the fourth installment in my Tucson Short Sales series, I would suggest reading part one (Tucson Short Sales – Part 1 – What are Short Sales?) part two (Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?)  and part three (Tucson Short Sales – Part 3 – How to Short Sale My Home) before reading this article.

After the offer has been submitted to the bank (typically to someone in the Loss Mitigation department), your file will probably be assigned to an intermediary or negotiator. These people have many files just like yours on their desks and their job is to evaluate each offer to see if it warrants further consideration. Many banks have a bottleneck at this stage in the process and simply cannot keep up with the number of short sale packages coming across their desks.

The bank has to know what the actual market value of the home is before it can intelligently evaluate a buyer’s offer. They will usually order an appraisal or Broker Price Opinion (BPO) to determine the market value of the property which will help them decide which course of action to take with an offer (accept, reject, counter).

The next step in the process is usually the one that takes the longest. After a valuation of the property has been completed and the offer has been deemed complete the holder of the note has to decide what to do.

You see, many times a mortgage has been resold by your mortgage company to an investor or group of investors (whether individually or in a “bundle” or other mortgages). When this is the case (the bank doesn’t hold the mortgage note), the investor(s) has to evaluate the offer and choose either to accept, reject, or make a counter-offer.

This step can be even further complicated when there are multiple lenders (80/20 or 80/10/10 loans, for example).

The short sale process typically takes no less than 30 days. There are some lenders, smaller ones usually, who can respond more quickly to an offer. I have seen short sales take seven months from contract submission to close of escrow, and I have seen countless short sales that have gone to foreclosure because the bank did not respond soon enough. This is definitely the most stressful and frustrating part of the short sale process because it involves waiting. And more waiting. And then, more waiting. Sometimes you’ll get lucky and have a responsive lender but nine ten out of times you won’t.

For the next step in the Short Sale process (End Game Short Sales) stayed tuned!

• Tucson Short Sales – Part 1 – What are Short Sales?
• Tucson Short Sales – Part 2 – I’m Ready to Short Sale My Home.. What Are The Repercussions?
• Tucson Short Sales – Part 3 – How to Short Sale My Home
• Tucson Short Sales – Part 4 – The Offer Is In To The Bank
• Tucson Short Sales – Part 5 – End Game Short Sales

If you would like to search the Tucson MLS for Short Sale, Bank-Owned, or Foreclosure homes, search for Tucson Homes for Sale or contact me for a comprehensive list.

If you would like assistance in avoiding foreclosure feel free to contact me for a no-cost consultation.

1  1

Related posts:

1. Tucson Short Sales – Part 1 – What are Short Sales? Since the real estate boom of 2003-2005 the Tucson real...
2. Tucson Short Sales – Part 3 – How to Short Sale My Home This is the third installment in my Tucson Short Sales...
3. Tucson Short Sales – Part 2 – I Am Ready to Short Sale My Home.. What Are The Repercussions? This is part two of my Tucson Short Sales series....

This topic has been on my mind the past several months. When the housing market exploded a few years ago and homebuyers squeezed into homes with [tag]Adjustable Rate Mortgages[/tag] ([tag]ARMs[/tag]) with seductive initial interest rates, I said to myself, “In 2 or 3 years when those ARMs come due, there are going to be a lot of unhappy people.”

The recent follies in the [tag]sub-prime mortgage[/tag] market were an omen of trouble on the horizon and in a few more months that trouble will burst onto the mortgage scene with reckless abandon. According to this latest article from CNN.com more than 600,000 homeowners will be affected by the resetting mortgage rates.

“Delinquency rates will probably peak by the end of the year,” said Doug Duncan, chief economist for the Mortgage Bankers Association (MBA), “and foreclosures in 2008.”

Lenders approved many borrowers who had little chance of being able to afford the payments two and three years out. They approved applications without any proof of income or assets (“liar loans”) and others that barely could make the low teaser-rate payments. Some borrowers chose interest-only ARMs, which left the principal of the loan untouched.

The epitome of the “[tag]liar loan[/tag]” fiasco is probably best displayed by [tag]Casey Serin[/tag] of IAmFacingForeclosure.com, a self-proclaimed real estate entrepreneur who acquired 8 properties and $2.2 million in debt in a whirlwind of bad decisions fueled by “liar loans.” His story and on-going road to recovery (albeit laced with self-promotion) is an interesting read.

The most troubling part of the article is when Mark Zandi, chief economist and co-founder of Moody’s Economy.com, says that 75% of sub-prime ARMS loans were made in California, Nevada, Arizona, Florida and Massachusetts.

In the Tucson market housing inventory has risen to almost ten thousand active listings, three times as many as there were two years ago. I’ve seen listings where I’ve walked in and wondered how the sellers think they can get away with asking as much as they were. After a bit of homework, I find they either refinanced their home recently, pulling out all of their equity, or bought at the height of the market. Now they can’t fetch the same prices that were existent a few years ago and may very likely fall into a short-sale situation.

For those homeowners who currently have an Adjustable Rate Mortgage and/or those of you looking to refinance, there is a great post over at BlownMortage.com entitled “Blown Mortgage’s 8 Step Program Will Save You $2,500 on Your Mortgage Refinance.” Stop by and take a look if you get a chance.

The big question is how large of an impact these ARMs will have not only on the housing market, but on the US economy in general. With some housing markets already depressed, an influx of homes on the market will send prices even further downward.

Has anyone seen a rise of [tag]short-sales[/tag] in their housing market?

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