• 145 days on market – this is 21 days more than in May 2009
• Sellers received, on average, 80.7% of their list price when the home sold
• There is 11 months of inventory on the market
• 16 homes sold in May 2010 – this is 4 more than in May 2009
• The most popular price range was $250,000-$299,999.   
• The median sold price was $212,500, compared to $103,500 in May 2009
• Financing Terms:  Conventional – 4, FHA – 3, VA – 1, Cash – 8

Orange County

• 104 days on market – this is 50 days less than in May 2009
• Sellers received, on average, 88.54% of their list price when the home sold
• There is 14.21 months of inventory on the market
• 29 homes sold in May 2010 – this is 9 more than May 2009
• The most popular price ranges were $140,000-$159,999.
• The median sold price was $149,900, compared to $164,950 in May 2009 
• Financing Terms:  Conventional – 8, FHA – 13, VA – 2, Other – 2, Cash – 4

Spotsylvania County

• 85 days on market – this is 13 less than May 2009
• Sellers received, on average, 91.8% of their list price when the home sold
• There is 5.88 months inventory on the market
• 160 homes sold in May 2010 – this is 14 less than in May 2009 
• The most popular price range was $200,000-$249,999
• The median sold price was $196,500, compared to $202,500 in May 2009 
• Financing Terms:  Conventional – 31, FHA – 69, VA – 35, Cash – 16, Assumption – 3, Other – 6

Stafford County

• 61 days on market – this is 42 less than May 2009
• Sellers received, on average, 94.6% of their list price when the home sold
• There is 6.57 months inventory on the market
• 136 homes sold in May 2010 - this is 35 less than in May 2009 
• The most popular price range was $200,000-$249,999
• The median sold price was $247,400, compared to $245,000 in May 2009 
• Financing Terms:  Conventional – 21, FHA – 45, VA – 47, Cash – 15, Assumption – 6, Other – 2

Prince William County

• 32 days on market – this is 46 less than May 2009 
• Sellers received, on average, 96.97% of their list price when the home sold
• There is 4.13 months inventory on the market
• 714 homes sold in May 2010 - this is 161 less than in May 2009
• The most popular price range was $200,000-$249,999
• The median sold price was $240,000, compared to $190,000 in May 2009
• Financing Terms:  Conventional – 153, FHA – 317, VA – 117, Assumption – 11, Cash – 114, Other – 2

All data provided by MRIS.

Lina is a short-haired Calico female.  She is looking for a family that enjoys cuddling and petting her.  Some may call her needy, she prefers to be called co-dependent.  Lina is vocally grateful for opening your home to her and will be a member of the family in no time.  She enjoys running and being groomed.  She is good with children.  Lina is 6.5 years old and is ready to settle down in a permanent home.  Lina is up-to-date on her shots and is spayed.  If you think Lina would make your household complete, call the SPCA today and schedule an appointment to meet her! 

Meet Smudge

Smudge is a one-year old Lhasa Apso.  She is energetic and loves to get attention.  She enjoys playing with toys and affection from her family. Contrary to her name, Smudge enjoys being groomed and looking her best.  She is good with kids, other dogs, and cats.  She is up-to-date on her shots and is spayed.  If you are looking for a new best friend, Smudge could be the girl for you.  Please contact the SPCA today to book an appointment to meet Smudge. 

There are currently 81 cats and 26 dogs at the Fredericksburg SPCA that need new homes.  Please open your heart to at least one of them spring and provide them with the safety and security of a permanate residence. 

The Fredericksburg SPCA is located at 10819 Courthouse Road Fredericksburg, VA 22407.  They can be contacted at (540) 898-1500. 

It’s important to remember that banks are NOT in the business to lose money and give away houses.  Banks are in the business  to MAKE money.  How do banks make money?  Banks make money on the interest they charge on their loan products.  The lose money by paying interest to consumers who have deposited money at that bank.  The interest earned on the loan products exceeds the interest paid out to depositors.  The profit the bank makes is the difference between the two.  This difference can make or break a bank.  The more money the bank has going out to consumers, the more money the bank needs coming in from interest payments.  In this market, banks are not getting the interest payments because consumers are not paying their mortgages.  However, banks are still required to pay depositors.  Banks also make money off the fees charged to consumers to make loans, but the big money is still in collecting interest on the actual loan product.  The bank will collapse if their accounting books get too far off balance.  We have become all too familiar with banks collapsing. 

In steps the loan modification alternative.  It is advantageous for banks to grant loan modifications to certain consumers.  Many large banks agreed to pursue loan modifications as a part of the Bail Out Bill passed in 2008.  If the banks are in the business to make money and defaulting borrowers are preventing that from happening, the bank may agree to allow the defaulting borrower to have a trial loan modification period.  This period is usually about 3 months.  If the borrower can make the modified mortgage payments in-full and on time, the bank may make this a permanent loan modification.  Banks are going to look at various factors in determining who gets the permanent modification.  

The #1 factor is risk to the bank.  If you have a history of not making your mortgage payments, is it a good risk to modify your loan terms and give you another chance?  In many cases, the answer is no.  So, banks have found a way around the HAMP requirement.  Banks are using the trial period as a way to get money from defaulting borrowers that they otherwise would not be getting.  Receiving three months of a reduced mortgage payment is better than receiving nothing at all.  After the trial period is over, banks can determine if foreclosure is a better option than a permanate loan modification.  Since risk is the #1 factor in determining permanate loan modification qualification, banks are offering non-defaulting borrowers the opportunity to modify their existing loan.  How does this benefit the bank?  Well, in a time when refinancing a home is so difficult, loan modifications can achieve a similar goal.  The borrower who now has the lower mortgage payment is also very happy with their lender and are likely to express this to their friends, family, and co-workers.  Banks can use all the postive press they can get!  And, banks are fulfilling their duty to pursue loan modifications as outlined by the Bail Out Bill. 

Who can get a loan modification?  Simple, people who are current on their mortages and are good risks for the bank.  What does loan modification mean for the person who is in default?  It gives you time to pursue a short sale.  The short sale is still your best option to get out of an excessive mortgage payment.  It may not be your ideal option, but it is still the most viable option.

1.  When shoveling, be sure to wear loose clothes and take breaks.  Don’t wait until the snow is done falling to start shoveling.  The snow is easier to remove if you shovel it every couple of inches that fall.  There is nothing worse than taking a trip to the hospital with chest pains in this weather.  Well, maybe a few things worse, but let’s not think about those.

2.  Be sure to clear snow away from hose bibs, dryer vents, and air condensers.  You will also want to clear the snow away from gas meters and fire hydrants.  If you haven’t unhooked your garden hoses and flushed the water from the pipes, go ahead and do it before the next storm hits. 

3.  Keep walkways and sidewalks clear.  Remember to sprinkle snow salt or kitty litter on slick spots.  There are more pedestrians during this sort of weather and it is safer for them to walk on cleared sidewalks than in the street.  The postal service will also not deliver to your house if they can not easily access your mailbox. 

4.  Make sure that your house numbers are visible from the road.  In case of an emergency you want to make it as easy as possible for emergency personnel to find your home. 

5.  If you must drive in this weather, clean off the top of your car.  It is extremely dangerous to drive around with 20 pounds of snow precariously balancing on your SUV.  If that snow flies off you could blind another driver with your snow.  So, take the extra few minutes and clean off your entire car!

6.  Make sure your animals have plenty of food and water.  During cold weather animals tend to eat and drink a little more than normal.  Give them access to food, water, and warm lodging. 

7.  If you are using gas powered products make sure that you have functioning carbon monoxide detectors.  Also be sure that you have plenty of extra batteries on hand. 

8.  Never leave a lit candle unattended.  Accidental fires are a major problem during weather like this.  If you leave a room, blow out your candles. 

If you have any other safety tips you would like to share please feel free to leave them in the comments section!

1.  This program assumes that the banks are capable of meeting these timelines with the amount of faulty loans on their books.  That, my friends, is just crazy talk.  Some of the little banks may be able to meet the expectations outlined in this document, but the big boys will never be able to hold up their end of the bargain.  First, these banks are horribly under staffed in their loss mitigation departments.  Why?  Well, who wants to work in a loss mitigation department?  You get yelled at all day and get the joy of working with emotional train wrecks.  Employee turn-over is extremely high in these departments.  So, the banks will have to hire more employees to handle the amount of short sales that will be requested and processed.  Where are the banks going to get the money to not only pay these new employees, but train them adequately to do the job effectively?  Oh, that’s right, bail out money… cause we know the CEOs will not be foregoing their bonuses to make the banks work more smoothly.  Another problem in the this arena is that the banks are being asked to hire more people to facilitate this program and the bank’s benefit is $1000 a transaction.  Ummmm… $1000 a transaction does not offset the cost of an employee.  It seems that from this perspective the banks have very little incentive to participate. 

2.  Yes, I said participate.  This is an OPTIONAL program.  Banks had until the end of December to alert the Treasury Department that they would be participating.  I’m surprised we all didn’t get trampled in the mad rush to sign up.  (sarcasm)  Many of the larger banks are working on streamlining their own short sale process that is advantageous to their bank.  Why on earth would they participate in a program that limited their ability to recuperate funds?  Now, I’m not a business major, but I don’t think banks are in business to lose money.  And at this point in history, they are trying to mitigate their losses.  The $1000 participation bonus just isn’t enough incentive to take bigger losses by not being able to go after the defaulting borrower civilly.  The guidelines state the the lien holders must fully release the borrower from future liability for the debt.  At some point consumers need to held responsible for taking out risky loans.  Houses are one of the few products that people purchase and expect to be able to sell it at a profit.  When we buy a car, we expect to sell it at a loss.  When we buy a tv, we expect to sell it at a loss.  Investments are risky and there are no guarantees.  Again, it just doesn’t make sense.

3.  The banks are all expected to have the same standard process, the same documentation, and the same timeframes.  We might as well all take jobs herding cats.  Banks don’t even understand their own paperwork, much less buearocratic paperwork.  And, what happens to all of the short sales that are currently in the system?  Do we have to start all over? 

4.  One of my favorite guidelines is that REALTORS(R) will be expected to pay the cost of any contractors the banks hire to help facilitate the process.  Well, thank you Treasury Department for telling the banks that they can no longer cut reasonable commissions, but allowing them to charge me to do THEIR job.  Loss mitigation departments are already under staffed so we can safely assume that banks will need to hire contractors to facilitate these deals.  And, Yay!  I get to pay for that.  Well, I’m here to tell you, I WON’T pay for a bank to hire someone else to do the job they should be doing.  I didn’t give out the bad loan, I didn’t default on the mortgage, and I’m not responsible for the economy tanking. 

5.  The guidelines also state that transferring all of the documents through electronic means could be a problem.  They haven’t quite worked this detail out, but I’m sure they will before the program really takes effect in April.  (sarcasm)

6.  One of the biggest problems I have is that banks will be establishing the minimum net they are willing to take on the property BEFORE the property is under contract.  This can cause huge problems.  I recently had a short sale where the bank insisted on a net.  The purchase price had to be $410,000 to meet that net.  The house appraised at $400,000.  The bank demanded the purchaser pay more for the house than what it was worth by bringing $10,000 in cash to the table to make up for the difference.  Isn’t this type of behavior what got us into this mess?  The market bears what the market bears.  I don’t see banks brushing up on market data and conditions for every area that they have loaned in.  They are doing short sales to mitigate loss.  That’s what they will do, regardless of how it effects the consumer. 

7.  One of the funnier guidelines in the document is that properties that can qualify for the HAFA program should have also applied for the HAMP program.  The HAMP program is the loan modification program.  What a successful program.  (sarcasm)  How many loans have been successfully remodified?  How many homes have been saved from loan remodification?  Maybe a handful.  Loan remodification only allows to the banks to adjust their numbers and the borrower to postpone a short sale or foreclosure.  It is not the end all, be all answer to our problems.  It is band-aid. 

These are the points that I see wrong with this document.  I know that NAR and many designation and certifications for REALTORS(R) are touting this document as the glue that will bring the real estate market back together, but I can’t agree with them.  I think this document gives false hope to consumers and REALTORS(R).  I think it is pretty poorly thought out by individuals who aren’t dealing with the consumer side of short sales.  I think the document means well, but all in all, it’s a waste of paper.  I wanted to explain the document so that everyone would start thinking about what changes, if any, this will bring to the real estate market.  Let me know your thoughts.  I’d love to hear them!

Imposed Guidelines on Banks for Approving a Short Sale Transaction

1.  Loan servicers must determine, with their investors, the minimum net proceeds that will be acceptable .  They must determine this before the Short Sale is started.  This amount is what the bank wants to walk away from the deal with. 

2.  The loan servicer and investors must also determine the amount of transaction costs they will allow.  This includes paying for buyer closing costs, paying for HOA documents, and the cost to the seller for closing the transaction. 

3.  The servicer must provide the borrower with a Short Sale Agreement.  The Short Sale Agreement outlines the roles of everyone in the transaction and key marketing terms.  Some terms of the Short Sale Agreement include:

• Price
• Proceeds
• Duration of Listing – not to be less than 120 days
• Listing Agent must be regularly doing business in the community the property is located in
• Either the bank approved list price or the acceptable amount the bank is willing to net from the sale
• Closing Cost amount that will be allowed by the bank
• Commission to be paid to REALTORS(R) - not to exceed 6%.  The REALTOR(R) may have to pay the bank contractor hired to facilitate the transaction for the bank out of their commission. 
• Any cancellation or contingency clauses
• That the transaction must be arm’s-length.  The property can also not be resold within 90 days
• The borrower is released from all liability of repayment of the 1st mortgage lien
• Borrower is entitled to a relocation incentive of $1500 – this is deducted from the gross sales proceeds
• Whether a portion of the gross sales proceeds are to be paid to subordinate lien holders in exchange for a release and full satisfaction on those liens
• Any income, tax, and credit consequences of the Short Sale
• Monthly mortgage payments during the short sale process will not exceed 31% of borrower’s gross monthly income
• Clause that if the borrower participates in the program, the bank will not foreclose during the duration of the program
• Any terms of termination

4.  The borrower must submit a request for Short Sale approval within 3 days of ratifying a contract.  The request must include:  contract/ addenda, purchaser’s financial documentation, and status of subordinate liens and or negotiations with subordinate lien holders.

5.  The loan servicer must indicate approval or disapproval of Short Sale within 10 business days.

6.  The loan servicer can not require closing earlier than 45 days from date of sales contract without borrower consent.

If the Short Sale is successful the following financial incentives are granted:

• Borrower – $1500 relocation incentive
• Loan Servicer – $1000 short sale incentive
• Subordinate Lien Holder – up to $1000 for approving to take up to $3000 as payment in full and satisfaction of debt

In Part 3 of this series, I will point out the flaws of this document and it’s implementation, as I see it. 

Whose wish will you be granting this Christmas?

Please remember to donate to your favorite charity. 

First, short sales are successful when honesty and competence exist.  A short sale seller needs to know exactly where they stand with their bank.  It is very difficult to sell a short sale listing when it is days away from the foreclosure auction block.  The most desirable short sale candidate will be less than 2 months delinquent.  A short sale seller needs to be honest with themselves and with their REALTOR(R) when discussing their situation.  Digging your head in the sand won’t do anyone any good.  The more honest the seller is, the more accurate the information will be that they will be giving the REALTOR(R).  This process can be embarrassing for a seller.  It is important to remember that your REALTOR(R) is here to help you, not judge you.  REALTORS(R) work with so many numbers they will forget all about yours once the transaction is over; sellers need to be candid about their financial situation.  The seller and the REALTOR(R) have the same goal: a successful closing.  Your REALTOR(R) needs to be honest with you when helping price the home.  Pricing too high can be detrimental and can send a property to the auction block.  Under pricing the home may require that the bank negotiate the terms of the contracts they receive.  Some sellers are not good candidates for short sales.  That’s the truth.  More REALTORS(R) need to be honest with sellers when analyzing the seller’s short sale candidacy.  I can’t say it enough, competency is key to a successful short sale.  The competence rests on your REALTORS(R) ability to find a suitable buyer and navigate through the banks rules and regulations.  Real estate agents need to be trained in short sales and constantly be updated on the short sale process.  If your real estate agent isn’t up-to-date on short sale information, the harder it will be to have a successful transaction.  Your REALTOR(R) needs to have an understanding of Virginia law when it comes to foreclosures.  They also need to be able to direct you to good real estate attorneys and tax advisers.  There are consequences for short selling a home.  The REALTOR(R) needs to be competent enough to explain these consequences and help you find out the specifics for your situation.  

The keys that the banks are looking for are pretty simple.  Banks want to mitigate their losses.  They can only mitigate losses if the short sale contracts they are presented with allow the bank to lose less money than taking the property into foreclosure.  Fannie Mae reports that 3 out of 4 short sale transactions do not close.  So, 3 out of 4 contracts that are presented to banks don’t make economic sense to the banks.  Who is responsible for getting the banks acceptable contracts?  Well, the seller and the listing agent.  Sellers and listing agents need to list short sale properties at market value.  Sellers and listing agents should not be ratifying ridiculously low offers.  Ridiculously high offers are dangerous too.  The home must meet bank criteria for loss mitigation and they must appraise for the buyer to receive a loan.  This is difficult water to tread. 

What it all boils down to is that there is no one way to conduct a short sale.  There are no laws on how banks and consumers have to handle this type of transaction.  We have to apply laws for traditional transactions to this very nontraditional transaction.  Bank employees are also not trained on the real estate laws for each state.  In a time where even our foreclosures are being outsourced, you can not rely on the bank employees to really know what they are talking about.  They have scripts and a short leash that may or may not allow them to help you.  We are relying on inadequately trained employees to make huge financial and economic decisions.  The current way that short sales are being negotiated isn’t working.  However, it’s all we have right now.  Being aware of the basics of short sale approval is a great way to map out your short sale transaction.