The federal government’s Making Home Affordable (MHA) program helps people going through foreclosures. It has two primary programs: the Home Affordable Refinance Program (HARP) considered assisting householders who are current on their mortgage payments however owe a lot more than their homes are worth, and therefore the Home Affordable Modification Program (HAMP), intended to reduce monthly mortgage payments so householders can still keep their homes.

MHA begun in March, and as of Sept. 1, 2009, the loan modification program has helped several Americans who face foreclosures. In fact, the U.S. Department of Housing and Urban Development, that runs this system, has set an objective of getting 500,000 modifications under way by Nov. 1. On Oct. 1, the Treasury Department proudly announced that it has reached a total of 500,000 trial modifications-one month earlier than the primary target. In spite of this achievement, yet, many are still in danger of losing their homes.

In accordance with the October oversight report released by the Congressional Oversight Panel, which is tasked to assess the current state of the markets and regulatory system, foreclosure rates have currently quadrupled. One in eight mortgages faces foreclosure or default. Experts guess that before the housing critical condition is ended, Americans could be dealing with 10 to 12 million foreclosures.

The report, titled, “An Assessment of Foreclosure Mitigation Efforts when Six Months,” talks about the competence of this system and the reasons several are still not ready to lessen their monthly mortgage payments. The panel expresses trepidation over the program’s scope, magnitude, and permanence:

1. Scope

The program’s scope is terribly limited. Not every type of debtors can use it. As an example, the program will be incredibly helpful to subprime borrowers who are paying out a high interest rate. On the other hand, it’s not designed to deal with foreclosures including those attributable to unemployment. Nowadays unemployment rate proceeds to rise and it’s at the present thought-about to be one of the major causes of foreclosures. The program seems to be addressing the housing market because it existed six months ago instead of today.

2. Scale

In August, over 220,000 mortgages entered into foreclosure, however the US government started out preliminary modification on merely 95,000 mortgages. Foreclosures continue to escalate every day, and there is reason for fear whether or not the government can continue. The quantity of foreclosures is larger than the amount of loan modifications-a 2-one ratio. The scale of this system seems not broad enough to address the current foreclosure dilemma.

3. Permanence

The solutions presented under the loan modification program do not appear to help homeowners achieve long-term financial stability. The loan modification can reduce the monthly payments of the many borrowers, but subsequent to 5 years payments will rise. Even if a borrower’s loan can be changed these days, there is still a likelihood that he will cope with the same mortgage downside in the future. Loan modifications also increase a borrower’s negative equity (owing more on the house than it’s worth), that is additionally said to be one in all the causes of the amplified rates in non-payment. If the borrower still experiences foreclosure despite the loan modification, then the loan modification program is just a postponement and will not offer a stable solution.

The mounting unemployment, falling home values, and impending mortgage rate resets can definitely affect the American homeowners. Therefore, the government needs to evaluate the scope, scale, and permanence of the modification program to make sure that a real answer is supplied to property owners.

Another great article by Edmonton Homes

Note: Reading this post will dramatically increase your success ratio!

I wanted to add a note about dealing with homeowners of property that may be in the short sale process.

In the hundreds of deals I’ve done over the past several years, I’ve come to realize a very important thing:

Homeowners in foreclosure are people too! As a matter of fact, they’re people that need guidance, support and encouragement. Can you imagine – I mean, really, take a moment and think of what it would be like, knowing that you’re most likely going to lose your home. Your family is counting on you, and you have failed. This is what they think.

The number one thing you can do, is show that you care. Let me say that again; The NUMBER ONE thing you can do, is show that YOU CARE.

These people are going through one of the most difficult and depressing times in their life. If you can step up to the plate, give them your promise that you’ll do your very best to make a bad situation better, they will trust you. Especially if you walk your talk.

I’ve been able to gain business from homeowners over and over, AFTER they had already talked with other people that offered solutions. Why? Because I was genuine. Because I lent an ear, and listened to their pain, and showed compassion. See, I’ve been through it. I’ve been foreclosed on. I’ve lived in my truck. I KNOW what they feel. Do you have to experience this to be compassionate? No Way!

Short sale investing, or performing duties as a real estate agent doing short sales require just this one simple, real method to absolutely dominate your market (after you’ve conquered the marketing beast, of course). If you have leads coming in, this is the true way to convert those leads into short sale business.

Show that you care, and you will be rewarded with two things; the trust and business of your client, and the feeling of knowing you truly did your best to help someone in need.

You’re welcome to download a free short sale ebook with more information.

If you like this blog post, please subscribe here to receive new ones!

Sincerely,

David Corbaley

What is “Shadow Inventory” and how does it affect Short Sale Investing?

Shadow inventory is actually a combination of several different things, which I’ll cover here. It’s actually going to have a very big impact on the short sale market. I explain that too.

First, experts are not in agreement about the shadow inventory, or if it even exists. I say YES,it does.

Shadow inventory is comprised of 3 main components.

1. Millions…Yes, I said “millions” of would be homeowners that would otherwise put their property on the market for sale are now hesitant. An example is say, the Jones family, who are fine with their payments. They live in Virginia, but wish to move further south to enjoy the weather of that region. There is one thing stopping them; The under-priced housing market! See, Mr. and Mrs. Jones don’t HAVE to move, they just WANT to. They’ve decided to wait, because they believe the market will turn around, and they’ll be able to sell their home for tens of thousand MORE within just a few years…if they wait. Remember when I said millions? Millions of homeowners are in this exact situation all across the nation.

End result: What happens if all of these homeowners decide to list their homes on the market, because the media says “the housing market is great, and now is the time to sell!”?

I’ll tell you. A FLOOD of homes hitting the market, driving prices back down! it’s all about supply and demand, right? A lot of available homes, too much supply, the prices WILL drop.

2. Lenders that have foreclosed on homes are HOLDING them. Why? The same reason the homeowners above are, they’re WAITING for the market to turn around! You may not know, but a lender who forecloses on a property OWNS that property. They can hold it until they’re good and ready to put it on the market!

How many? It’s estimated that lenders are currently holding around 600,000 houses in REO inventory, just waiting for the right time to list them. That is a LOT!

3. The upcoming wave of foreclosures. the wave that hit in 2008 and 2009 is just the beginning. Unemployment is over 11% across the U.S. There is an estimated 7 million homes facing default. Are you kidding? The impact that will have on the housing market is unimaginable.

The solution? Short Sales. Short sale investing and real estate agents working short sales are going to be paramount in correcting this situation.

How many of these 7 million homes will avoid foreclosure if short sale investors and agents work on getting these homes bought and sold before the foreclosure? They’ll certainly have an enourmous impact.

The Jones’s are just going to have to wait, because there is NO way they’ll compete pricewise with short sales. Home buyers are savvy now, and they know that there are deals to be had if they look for short sale houses. Agents, you should certainly be in the short sale markets, and understand how to deal with short sale transactions of you plan to stay in business. If you list the Jones’s house, you’ll watch houses all over the area sell, via short sale transaction, before (if) yours does.

I believe ther IS a shadow inventory and I believe it’s going to have a huge impact on the market. If you’re doing short sale investing, great. If you’re an agent doing short sales, great. You’re in the right spot.

Learn more about foreclosure training programs so you can be well ahead of the competition!

Sincerely,

David Corbaley

The regional markets that had received the highest historical appreciation rates during 2003 to 2006 also had some of the largest price adjustments over the past 24 months.

States that had these incredible high real estate returns, like California and Florida, have also seen the highest incidents of foreclosures. Everywhere you turn news reports share the dismal news on highest foreclosure rates in over a decade and an apparent bubble bursting effect.

Real estate, like any form of investment, has cyclical patterns that are dependent upon supply and demand. Good real estate market cycles attract developers and speculative buyers. Optimism kicks in and both buyers and developers exuberance results in over building and buying, resulting in excess “for sale” inventory.

Simple economics indicate that supply must be equal to or less than consumer demand otherwise prices will fall to attract more buyers. Qualified buyers hear local news reports indicating that prices are falling and many wait to see a bottom before executing a purchase, therefore exacerbating the situation further.

Market Bottom

A market turnaround can only occur when the excess inventory is consumed by: 1.Institutions (banks, lenders) that can weather a market correction. 2. Property is bought by financially qualified buyers. 3. Current property owners are financially capable of holding property for a longer period of time.

There is a silver lining to our current real estate cycle. 2008 will mark the bottom of the real estate cycle in the vast majority of all U.S. regional markets. One of the best indicators to demonstrate a bottoming is the recent news reports of high foreclosures by lending institutions. A foreclosure is always the last result for any property owner.

Foreclosures are a sure sign that property owners have hit bottom, so much so that they find it necessary to give up the property. This is not to say that a new booming market cycle begins. But it is an excellent indication that it cannot get any worse, thus a bottoming.

Locating Market Bottoms

New markets are already starting to emerge that produce optimal results for investors and homeowners alike. However, not every region moves at the same pace. This is when it is important for any property buyer to investigate their regional buying are to find out whether it has already bottomed.

The only way to accomplish this is through understanding the regional real estate forecast in your area. Experienced investors know the importance of measuring market trends and are rarely caught with undesirable properties during a market decline. Unfortunately most average investors and homeowners are completely unaware of how to do this.

There really is no reason for this to happen since many resources now exist to help you measure market trends. It is far simpler and less expensive to know a regional market trend since the advent of computers and the internet.

Managing Real Estate Trends

Investors realize faster returns under any market condition so long as they can learn to manage and calculate the timelines that produce equity and cash flow gains.

The rewards from sound real estate investing are tremendous. Real property has been and will continue to be the single most significant source for creating individual wealth in the United States. Perhaps one of the most important reasons for these results is that most people make their real estate wealth while sleeping.

Property holders see incremental returns in value over time with little or no effort. This is what is referred to as appreciation in your asset. Almost every investor knows that this is the most compelling reason to invest in purchasing real property.

What is amazing is that the majority of homeowners fail to calculate their expected returns from appreciation before executing a contract to buy a specific property. Instead, time and time again, buyers purchase with an expectation of both short term and long term appreciation without any sound technical or economical guidance.

This in itself is not catastrophic since we all know that given enough of time the property almost always appreciates over the long run. But during an economical real estate slow down many regions may receive years of negligible appreciation and possibly even declines in values.

Would it not be wonderful to take the extra time to project how much time the appreciation will take and the amount of money you plan to make on every property?

Even when putting a bet on a table in Las Vegas we all have expectations of how much return we are expecting if we win. Or even a better example is any state lotto. Each store posts how much the current “pot” of earnings which is expected to be distributed to the winner. Sure there is no guarantee that you will be the winner, but at least you know what to expect to win.

Now lets apply this to purchasing a property. Many of you have already bought your first property. Did you have an exact number for appreciation over the first five years of ownership? Estimating your appreciable real estate returns over the short and long-term does not need to be a cumbersome or difficult task. In fact once you are armed with a few tools it can be as simple as calculating your lotto returns.

Taking the time to understand the dynamics of current economic conditions and applying the results before making an offer to purchase a property can and will yield you greater financial returns. All forms of financial investing (stocks, bonds, time-deposits) include a component of estimating the expected gain over time.

Measuring your expected returns can and should be a fundamental part for anyone interested in real estate. There is no reason for anyone to be caught with unwanted property during a market slow down.

In our business, we have the best of all worlds, since our risk is minimized by the type of transactions we do. The main thing to remember, is pricing the houses competitively will increase your chances of success.

If you’re serious about success with short sales, grab a copy of our awesome free e-book and get the RIGHT kind of foreclosure training

With the current state of the real estate and financial markets, it seems everyone thinks there is a great opportunity in the foreclosure market. Let me set this straight – There IS, IF you do it correctly!

Buying foreclosed homes can be an incredible way to “buy low, sell high(er)), but there are also several pitfalls that you can fall in to  if you’re not very careful.

Buying at the foreclosure sale isn’t necessarily the best way to go. There may be major problems with the property that you don’t know about, since most people who buy at auction never see the inside of the property, especially if it’s occupied.

Additionally, there is cash required typically, or at least within a few days of the winning bid. This can be difficult for most would be investors, AND you’re also risking that capital on something that could potentially be very risky.

There is a better way. The Short Sale.

When you buy directly from the homeowner via a short sale, there are several huge benefits; You get to see the property, and even inspect it professionally if you choose. You can insert specific clauses into your pruchase contract that give you an “out” if you decide not to move forward. Sometimes you may not get an approval letter from the foreclosing lender in the amount that you wish, or at all.

You can also work on lining up a buyer for the house while you or your negotiation company is negotiating the short sale. You can then do what’s called a “Simultaneous Close”, where you buy and resell the same day, virtually eliminating any risk, while capturing a profit.

To learn more about short sales and investing in foreclosures, you can visit our page and get a free ebook on the subject that actually covers more than most paid for courses. Learn the Secrets to Buying Foreclosed Homes.

Sincerely,

David Corbaley

This is great news for us!

One of our Diamond members shared this with me and I wanted to pass it along right away.

The Treasury is supposed to announce a new plan very soon that will address lenders and short sales.

Supposedly, they will be adding an initiative that improves our chances of
1. Getting a short sale done
2. Speeding up the process

One of the best things I see here is the government allowing the 2nd mortgage to receive an extra $1000 to get the deal done. This may be excellent!
I remember the days, just a short time ago when the norm for the 1st to allow the 2nd was only $1000! Now you can usually expect that number to be $3000.
With this addition, we may be able to possibly offer them $4000 which should definitely improve the closing ratio and time frame involved to get negotiation done.
Now, are there times when we need to structure a deal so the 2nd can receive more than this? Of course, but the above is pretty typical.

The plan is supposed to allocate 10 billion dollars that will be used to help facilitate this. The idea is for lenders to get a little “bonus” for speeding up the short sale process.

All in all, I think this may be great news!

You should go read the full article. Read the article HERE

I’ll keep you updated on this as I get news.

Talk soon!

David Corbaley
TopForeclosureTraining.com

As usual, great questions! I answered 3 of them. Enjoy!

Have a GREAT weekend!

David

Hey everyone!

Here is your answer (well, answer(s), I couldn’t help it). Have a great weekend!

Enjoy!

David Corbaley

Thank you for all of the GREAT questions!

I cheated and had to answer more than one… You guys rock!

Watch the video answer below:

Have an AWESOME weekend!

David Corbaley

Oh, please leave your comments!

In this post I’m going to discuss some laws that may apply to you regarding foreclosure investing in your state.  My home state as well as at least 11 others are implementing new legislation this coming week will effect everybody from homeowners to investors to real estate agents and brokers. I’m sure that many people out there (not you of course!) will remain ignorant to the new laws, thereby putting themselves in a dangerous position by continuing to do business in the same way that they always have, which may now be against the law. I’m writing this post simply as a reminder that whether you are a real estate agent, a real estate investor, or in any business dealing with real estate and home owners, you should be very well aware of your current local laws, and you should make it a point to be in contact with someone that can always keep you updated on any new laws. This will not only help ensure the longevity of your business, it can also keep you from getting into a lot of trouble.

You should always have a good real estate attorney as a member of your business team. Someone that you can go to on a regular basis, and know that they are providing you with current, accurate information. Our attorneys are currently in the process of modifying all of our documentation and disclosures to ensure that we comply with this new legislation. I’m very confident with this, because I know that our team of attorneys are very good at what they do.

That was the main point of this post; always get competent legal advice before implementing any new paperwork or strategies in your real estate business. Never, never rely on some paper work that you’ve gotten from a course before having it reviewed by a professional in your area. Also make sure that you understand your local laws and are also abreast of any new legislation.

Happy investing,

David Corbaley