Listing Courtesy of BERKSHIRE HATHAWAY HOMESERVICES GALLO-L
The term "short sale" has been misleading people for decades. Despite the name, it’s a term applied to transactions that often involve a lengthier-than-usual sale process. A Lewes"short sale" is named for the financial aspect of a sale rather than the length of time it requires. It’s anything but a shortcut.
The ‘short’ in ‘short sale’ describes a sale at a price that comes up short—is less than the full amount owed on an Lewes home loan. As you’d guess, whether a bank (or any mortgage holder) accepts such a sale is a decision that is up to the lender.
Why would a bank choose to move ahead with a short sale instead of holding out for the full amount? After all, if a borrower is unable to pay, it’s hardly the bank’s fault. You might think that it is always in the bank’s interest to hold out for full repayment, and to take possession of a mortgaged property whenever that doesn’t happen…but in reality, that’s often not true. In the real world, the bank will lose money on either a short sale or a foreclosure—but the latter is often more expensive, since it requires the bank to do the expensive work of repossessing and selling the property.
To a distressed homeowner, a short sale is an opportunity to close accounts on better terms. Instead of weathering a foreclosure, which would result in a major strike against his or her credit record, if the bank will agree, it becomes a joint resolution between the debtor and bank—and that doesn’t just sound more amicable. But getting the lender’s approval is where the delay issue usually crops up. The steps needed before the mortgagee and the bank agree to sell the home at the lower price vary. They can involve submitting a buyer’s discounted offer, or the borrower convincing the bank that a short sale is warranted—usually after following procedures spelled by the bank. The bank can (and usually will) reject a short sale proposal or offer if it feels more money can be gained by foreclosing. And it can take a while...
It may sound like a happy solution for homeowners with financial problems, but among other drawbacks (for instance, there can be tax issues), the "a while" it takes to close a Lewes short sale can be between five and seven months! Yet for patient (or even better, very patient) buyers and sellers, a successful Lewes short sale can yield the best of a bad situation and an unmatched bargain.
There are endless variations for how any given short sale can proceed, so having an experienced Realtor® in your corner is always a good idea…and calling me is the way to start!
If anyone involved in Sussex County real estate were to try to pick a word to characterize the mortgage industry as a whole, “sentimental” wouldn’t be among them. Especially over the past several years, “frustrated” might be apt, or “hog-tied.” Mortgage issuers been hampered by tough rules developed in reaction to the sub-prime mortgage mess. They certainly wanted to issue more mortgages, if only for their own profitability, but until recently, the lending guidelines made that difficult.
In any case, this is an industry that relies on hard facts and statistics to govern lending decisions. Mortgage industry leaders are therefore not inclined to be overly optimistic, overly pessimistic—nor are they prone to exaggeration in their public pronouncements.
So when the powers-that-be at Fannie Mae come out each quarter with their Mortgage Lender Sentiment Survey, the “sentiment” is not the Cry Me a River or You Are the Sunshine of My Life variety. This “sentiment” describes how real estate lenders (presumably including some Sussex County mortgage companies) feel about mortgage business prospects in the coming months. The actual report has a remarkable record of a lack of sentiment: it’s usually pretty much on target.
So it is that when the 2015 first quarter Survey appeared last month (this is one real estate report whose ‘first quarter’ paper actually appears in the first quarter), it sounded another positive note in the assemblage of springtime real estate projections. The summary talked about “an improving outlook among mortgage lenders” because those surveyed “expect mortgage demand…to grow over the next three months.” The hard number was 71% having that expectation, which wouldn’t be surprising, given our entry into the busy spring selling season. The optimism drew more from the fact that this is a substantial improvement compared with the same quarter 2014 (71% vs. the previous 59%).
If the growth they anticipate holds true for our own market, it wouldn’t just indicate improving activity for Sussex County home buyers and sellers. After what they viewed as an “uneven” 2014, Fannie Mae’s Chief Economist Doug Duncan said the results were “consistent with our view that an improving economy, strengthening employment, and increasing consumer confidence” pointed to the more cheerful outlook.
Also cheerful was the picture mortgage issuers expected for their own well-being. A year ago, lenders who thought their profitability would increase were in the extreme minority: 21%. This year, the size of the optimistic group doubled.
Local mortgage applicants could find good news in one more of the reasons for the expectation for mortgage demand to grow over the next three months. The report talked about how last year’s credit tightening was continuing to “trend down.” And there at the top was the headline which mentioned “Gradual Credit Easing.” For anyone who had found it hard to qualify under last year’s rules, that’s very welcome news.
If you will be buying or selling anytime soon, I hope you’ll give me a call: the sentiment here is also the green light kind!