Archive for October, 2009
Oct
31
Short Sales Vs REOs
Posted by: | CommentsGlenn Plantone asked:
As of September 2009, the nation’s supply of REO homes has begun to shrink, even in foreclosure capital Las Vegas, NV. As investors flood back into distressed markets, we are seeing multiple bid situations for most REO or bank-owned foreclosure properties coming back onto the market. With demand exceeding supply, it is becoming harder and harder for investors to purchase REO properties at discount prices. Also, with the Obama administration offering hefty incentives for banks to help homeowners avoid foreclosures, REOs are becoming more scarce. Instead, we are seeing short sales skyrocket in popularity as banks have suddenly become willing to negotiate this option.
Many of my investor clients have asked me to explain the differences between short sales and foreclosures/REOs. First, the definition of each: A short sale occurs when a buyer negotiates with the bank to purchase a home from the seller for less than what the seller owes on the mortgage. In many cases, where the equity in the property has dropped sharply, this means that the second lien holder (if any) receives next to nothing on their note (think $1000 for a $90,000 note as an example) and the first position lender very often must still except less than the amount of the first mortgage. REOs are bank owned properties that have already completed the foreclosures process. The owner of the property, upon failing to make their mortgage payments, has been notified of their delinquency, received a notice of default and then a notice of sale. Subsequently the property has been sent to auction at the trustee sale where, in absence of a successful winning bid, it has reverted back to the bank holding the mortgage. These properties are then re-listed by the banks on the open market as REOs or Real Estate Owned meaning bank owned real estate.
The major differences between the two transactions can be summed up in two categories: Differences to the Buyer and Differences to the Seller.
Differences to the Buyer
Difficulty of Transaction – Short sales are traditionally much more difficult to transact than purchasing an REO. Once a bank has taken possession of a foreclosed property and re-listed it as an REO, that REO property can then have offers placed upon it and the bank will respond to those offers just like any other seller. Short sales must go through a special evaluation and approval process at the bank. This process usually involves not only evaluating the fair market value of the property, but also evaluating the potential of the current owners to continue making their payments. Sometimes, a bank will offer to modify the existing loan if the sellers wish to stay in their property rather than negotiate the short sale. This can result in the property being pulled from the market altogether.
Time Frame for Closing – REOs can often close in a 30 day escrow just like a normal transaction. Short sales can take months to negotiate and then might not be approved at all.
Price – Because the buyer is usually not competing against other offers in a short sale situation, they can often obtain the property for less than what the same property might end up costing as an REO.
Differences to the Seller
Future Home Purchases – Homeowners who go through a foreclosure cannot apply for an FHA loan for 5 years after the date of foreclosure (7 years for investors), but homeowners who complete a short sale can apply for an FHA loan 2 years later. When homeowners apply for a loan through a mortgage company, they must state on the application if they have had a property foreclosed upon or given a deed in lieu of foreclosure within the last 7 years. There are currently no questions on standard mortgage applications asking whether or not a homeowner has ever completed a short sale.
Credit Score – A foreclosure will typically lower a homeowner’s credit score by somewhere between 250-300 points and this decrease will last approximately 3 years. Short sales can often affect an owner’s credit by only 50 points and that decrease may sometimes be remedied in as little as 12-18 months.
As the supply of REO properties continues to be tight across the country, short sales are presenting a good buying opportunity for would-be investors looking to re-enter the market. They can also provide a win-win situation for home owners looking to escape a negative equity position with less of a hit to their future purchasing potential and credit score.
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As of September 2009, the nation’s supply of REO homes has begun to shrink, even in foreclosure capital Las Vegas, NV. As investors flood back into distressed markets, we are seeing multiple bid situations for most REO or bank-owned foreclosure properties coming back onto the market. With demand exceeding supply, it is becoming harder and harder for investors to purchase REO properties at discount prices. Also, with the Obama administration offering hefty incentives for banks to help homeowners avoid foreclosures, REOs are becoming more scarce. Instead, we are seeing short sales skyrocket in popularity as banks have suddenly become willing to negotiate this option.
Many of my investor clients have asked me to explain the differences between short sales and foreclosures/REOs. First, the definition of each: A short sale occurs when a buyer negotiates with the bank to purchase a home from the seller for less than what the seller owes on the mortgage. In many cases, where the equity in the property has dropped sharply, this means that the second lien holder (if any) receives next to nothing on their note (think $1000 for a $90,000 note as an example) and the first position lender very often must still except less than the amount of the first mortgage. REOs are bank owned properties that have already completed the foreclosures process. The owner of the property, upon failing to make their mortgage payments, has been notified of their delinquency, received a notice of default and then a notice of sale. Subsequently the property has been sent to auction at the trustee sale where, in absence of a successful winning bid, it has reverted back to the bank holding the mortgage. These properties are then re-listed by the banks on the open market as REOs or Real Estate Owned meaning bank owned real estate.
The major differences between the two transactions can be summed up in two categories: Differences to the Buyer and Differences to the Seller.
Differences to the Buyer
Difficulty of Transaction – Short sales are traditionally much more difficult to transact than purchasing an REO. Once a bank has taken possession of a foreclosed property and re-listed it as an REO, that REO property can then have offers placed upon it and the bank will respond to those offers just like any other seller. Short sales must go through a special evaluation and approval process at the bank. This process usually involves not only evaluating the fair market value of the property, but also evaluating the potential of the current owners to continue making their payments. Sometimes, a bank will offer to modify the existing loan if the sellers wish to stay in their property rather than negotiate the short sale. This can result in the property being pulled from the market altogether.
Time Frame for Closing – REOs can often close in a 30 day escrow just like a normal transaction. Short sales can take months to negotiate and then might not be approved at all.
Price – Because the buyer is usually not competing against other offers in a short sale situation, they can often obtain the property for less than what the same property might end up costing as an REO.
Differences to the Seller
Future Home Purchases – Homeowners who go through a foreclosure cannot apply for an FHA loan for 5 years after the date of foreclosure (7 years for investors), but homeowners who complete a short sale can apply for an FHA loan 2 years later. When homeowners apply for a loan through a mortgage company, they must state on the application if they have had a property foreclosed upon or given a deed in lieu of foreclosure within the last 7 years. There are currently no questions on standard mortgage applications asking whether or not a homeowner has ever completed a short sale.
Credit Score – A foreclosure will typically lower a homeowner’s credit score by somewhere between 250-300 points and this decrease will last approximately 3 years. Short sales can often affect an owner’s credit by only 50 points and that decrease may sometimes be remedied in as little as 12-18 months.
As the supply of REO properties continues to be tight across the country, short sales are presenting a good buying opportunity for would-be investors looking to re-enter the market. They can also provide a win-win situation for home owners looking to escape a negative equity position with less of a hit to their future purchasing potential and credit score.
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Oct
28
Bank Notes
Posted by: | Commentsfahadaman1 asked:
Muhammad Hafeez Born in Lahore.. His hobby is to collect World Bank Notes, Coins, Medals.But his major hobby is to collect Banknotes. He is running a small auto parts business. He has pen friends in almost 100 countries accross the world .He has deep knowledge of all countries for which he has a bank note in his collection. This video is an interview of Hafeez khan taken by a Pakistani TV channel PRIME TV. In this Video Hafeez showed few amazing currency banknotes of countries which are made in plastic material, or in horizontal or vertical shape.His bank notes collection is spread over 215 countries of world which is really amazing..
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Oct
13
One Simple Letter Can Get You Off the Chex Systems List
Posted by: | Comments
Kurt Lehman asked:
Fix Your Report, and Get Back to Banking!
Stuck on Chex Systems list? Can’t get a bank account? You are not alone. There are millions of Americans in the same situation as you. Most people just assume that they are stuck on the list, and can’t do anything to get off the list. Nothing could be further from the truth! With a few minutes of work, you can get off the list (or at least clean your report up so that you can open a new bank account!).
The key to this technique is to rely on some rules in the “Fair Credit Reporting Act” (or “FCRA”) — the U.S. law that governs how credit reporting agencies (like Chex Systems) are supposed to act. The FCRA allows you to dispute all incomplete or inaccurate information in your consumer report. You dispute the report by sending a letter detailing the errors. The FCRA requires that ChexSystems reinvestigate the errors that you point out to them! This is very powerful. In fact, the FCRA requires that credit reporting agencies look into the errors within 30 days (or 45 days if you send additional info during the 30 day period) from receipt of your letter. Here’s the most powerful part of it-if Chex Systems can’t verify the information you are disputing, they must remove it from your record!
First, however, you need to get a copy of your report. You can order it online or by calling (800)428-9623. It will take a few days to get your report. You may want to bookmark this article so you can return once you have your copy.
Once you have your copy, spend some time reviewing it. Your report will include the following sections: your name and “consumer identifier”, one or more items of “Reported Information” (this is the bad stuff that is being reported about your banking history!), one or more “Inquiries Initiated by Consumer Action” (these are things you have allegedly done that caused someone to pull your Consumer Report), one or more “Inquiries Not Initiated By Consumer Action” (these are reports pulled by others about you without your direct permission), one or more “Retail Information” items (from other checkwriting databases such as SCAN), one ore more “History of Checks Ordered”, and then personal information about you, including your Social Security Number, and Drivers License.
Go over each of these items in detail! Look for any errors or inaccuracies. If you find any errors or inaccuracies, think about how you can prove that the items are wrong. You should especially focus on the items in the section called “Reported Information”. If there are reports of debts you owe to banks that you know you have paid, gather your proof (do you have a receipt for paying the debt?, etc.). Collect all this information.
Now, lets get busy and go on the attack! It’s time to get your report corrected. You may need to write two or three letters, but the first letter is the most important. In the first letter, you will write to Chex Systems and point out all of the errors or mistakes in your report, and ask them to reinvestigate those items and correct your report. Remember, the FCRA requires that credit reporting agencies take action within 30 days to reinvestigate the items you point out to them, so make sure to be clear and detailed in your letter.
To help you out, we have prepared several letters for you to use. The first one, linked below, is a template you can use. Make sure to download the template (you can open it in Microsoft Word or as “text file”), and replace all of the words in brackets “[" or "]” and italics with your own information and details. Also, remove the heading and note at the bottom of the page. Then, print the letter, sign it, and send it by fax or certified mail (return receipt requested!) to Chex Systems. Make sure to keep a copy for your records!
Chex Systems Dispute Letter
Once you have mailed the letter, you may get contacted by Chex Systems for more information. Make sure to remember when you sent the letter, and put a note on your calendar to follow up with them if you don’t hear back from them in 30 days or so. Check back at our Chex Systems resources website in a few weeks, and we will post some further sample letters that you can use to follow up with Chex Systems. In 30 days or so, you may be off the Chex Systems list, or at least have a cleaned up report that will allow you to open a new bank account!
The second letter shown below is an example of how a final letter might look. This might help give you some ideas on how your letter should look.
ChexSystems Dispute Letter Example
So, if you are stuck in Chex Systems limbo and can’t open a bank account, it is worth it for you to dispute any errors. It doesn’t cost you anything, and if you succeed, you may end up with a completely clean record. Remember, it only takes a few minutes for you to do this. The benefits can be huge-imagine getting your name completely off the Chex Systems list!
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Fix Your Report, and Get Back to Banking!
Stuck on Chex Systems list? Can’t get a bank account? You are not alone. There are millions of Americans in the same situation as you. Most people just assume that they are stuck on the list, and can’t do anything to get off the list. Nothing could be further from the truth! With a few minutes of work, you can get off the list (or at least clean your report up so that you can open a new bank account!).
The key to this technique is to rely on some rules in the “Fair Credit Reporting Act” (or “FCRA”) — the U.S. law that governs how credit reporting agencies (like Chex Systems) are supposed to act. The FCRA allows you to dispute all incomplete or inaccurate information in your consumer report. You dispute the report by sending a letter detailing the errors. The FCRA requires that ChexSystems reinvestigate the errors that you point out to them! This is very powerful. In fact, the FCRA requires that credit reporting agencies look into the errors within 30 days (or 45 days if you send additional info during the 30 day period) from receipt of your letter. Here’s the most powerful part of it-if Chex Systems can’t verify the information you are disputing, they must remove it from your record!
First, however, you need to get a copy of your report. You can order it online or by calling (800)428-9623. It will take a few days to get your report. You may want to bookmark this article so you can return once you have your copy.
Once you have your copy, spend some time reviewing it. Your report will include the following sections: your name and “consumer identifier”, one or more items of “Reported Information” (this is the bad stuff that is being reported about your banking history!), one or more “Inquiries Initiated by Consumer Action” (these are things you have allegedly done that caused someone to pull your Consumer Report), one or more “Inquiries Not Initiated By Consumer Action” (these are reports pulled by others about you without your direct permission), one or more “Retail Information” items (from other checkwriting databases such as SCAN), one ore more “History of Checks Ordered”, and then personal information about you, including your Social Security Number, and Drivers License.
Go over each of these items in detail! Look for any errors or inaccuracies. If you find any errors or inaccuracies, think about how you can prove that the items are wrong. You should especially focus on the items in the section called “Reported Information”. If there are reports of debts you owe to banks that you know you have paid, gather your proof (do you have a receipt for paying the debt?, etc.). Collect all this information.
Now, lets get busy and go on the attack! It’s time to get your report corrected. You may need to write two or three letters, but the first letter is the most important. In the first letter, you will write to Chex Systems and point out all of the errors or mistakes in your report, and ask them to reinvestigate those items and correct your report. Remember, the FCRA requires that credit reporting agencies take action within 30 days to reinvestigate the items you point out to them, so make sure to be clear and detailed in your letter.
To help you out, we have prepared several letters for you to use. The first one, linked below, is a template you can use. Make sure to download the template (you can open it in Microsoft Word or as “text file”), and replace all of the words in brackets “[" or "]” and italics with your own information and details. Also, remove the heading and note at the bottom of the page. Then, print the letter, sign it, and send it by fax or certified mail (return receipt requested!) to Chex Systems. Make sure to keep a copy for your records!
Chex Systems Dispute Letter
Once you have mailed the letter, you may get contacted by Chex Systems for more information. Make sure to remember when you sent the letter, and put a note on your calendar to follow up with them if you don’t hear back from them in 30 days or so. Check back at our Chex Systems resources website in a few weeks, and we will post some further sample letters that you can use to follow up with Chex Systems. In 30 days or so, you may be off the Chex Systems list, or at least have a cleaned up report that will allow you to open a new bank account!
The second letter shown below is an example of how a final letter might look. This might help give you some ideas on how your letter should look.
ChexSystems Dispute Letter Example
So, if you are stuck in Chex Systems limbo and can’t open a bank account, it is worth it for you to dispute any errors. It doesn’t cost you anything, and if you succeed, you may end up with a completely clean record. Remember, it only takes a few minutes for you to do this. The benefits can be huge-imagine getting your name completely off the Chex Systems list!
Website content