St Louis Mortgage and Lending Experts Have Mixed Opinions On Short Sales Stopping Foreclosures

Our economy, particularly the housing industry, has been deeply badgered by large amounts of job losses, foreclosures and home values being decimated as if by overnight.

The reports coming out of Washington for the last 12 months attest to the brutal facts that an insignificant amount of homeowners facing foreclosure received mortgage assistance.

This has created a whirlwind of lawmakers trying to explore financial alternatives within the Obama administration aimed at helping the remaining 96 percent who may still lose their homes.

Demographics are showing that approximately two million homes and other real estate elements are falling into foreclosure or are bank-owned with more losses coming.

The government overall has been unproductive at saving homes from foreclosure. Sadly, the worse is yet to come according to Citigroup experts. Most financial analysts predict that there will be an increase of 8 million or more foreclosures in 2010 to 2011.

Which brings us to the subject of short sales. There was approximately 500,000 home sales in 2009 that were filed as short sales. The National Association of Realtors said this was close to 10 percent of homes sold for the entire year.

Not surprising is the attitude adjustment from banks who are beginning to go along with short sales in increasing numbers, Bloomberg.com says.

Further data shows that short sales almost tripled to 40,000 in the first six months of 2009, compared to the same months in 2008 as reported by the St. Louis Refinancing Group and the local lending community.

This is later contrasted by the Office of Thrift Supervision and the Office of the Comptroller of the Currency reporting 25 foreclosures started or completed for each filed short sale.

“It’s really finally dawning on banks that they’re better off with a short sale,” said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California in Los Angeles. Mr. Green continues: “I think banks were in denial.”

What the average consumer doesn’t realize is that there are definite benefits in doing a short sale. First they remain in control of the sale and ultimately spare themselves the social stigma of going through a foreclosure.

But what if one wants to purchase another home. Would a short sale derail this future action? If payments were never 30 days late and no pay back was required by the lender, Fannie Mae guidelines may allow you to buy another home immediately or no longer than 3 years.

The worst case scenario involving a short sale is if you were behind on your mortgage payment by 30 days or more, you and your family may indeed qualify to buy a future Fannie Mae backed mortgage possibly within two years.

Of course, if you do a foreclosure, with certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.

And for investors who do not occupy the home as their primary residence would have to wait 7 years for a Fannie Mae insured loan.

The political pressure has been mounting for widespread changes in the housing market. This has driven the Obama administration to be a strong proponent of short sales as a viable alternative to foreclosure.

In addition, the Treasury Department has recently laid out finalized guidelines for carrying out short sales under the Making Homes Affordable program.

The administration has also appealed to participating servicers under the new Home Affordable Foreclosure Alternative (HAFA) program to embrace the short sale as a substitute to foreclosure.

This new program known as HAFA was executed to assist distressed homeowners who were not able to qualify for a temporary or permanent loan modification under the (HAMP) Home Affordable Modification Program.

Learn more about the best St Louis Mortgage loan. Stop by Floyd J. Tapia’s site where you can find out all about a St Louis Mortgage Refinancing and what a new home loan or refinancing can do for you.