Well, let’s talk about what is due to expire and what, if anything, will be extended into 2013.
First and foremost are, Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac’s HAFA Short Sale Program for a borrower is due to expire this month, December 31, 2012. The current deadline is December 14, 2012 for all Short Sale Agreements to be issued out to the borrower. Now it’s just my opinion, but that alone will cause a huge uproar with homeowners and real estate agents. I predict fraudulent letters will be issued, and they won’t be coming from the banks.
Fannie Mae and Freddie Mac are putting a disclaimer to the deadline saying the borrower(s) MAY still be accepted for a HAFA Short Sale if the fully- executed Short Sale Agreement is uploaded into the Equator system on or before December 31, 2012. After December 31, 2012, there will only be two programs, Cooperative Short Sale Program and Traditional Short Sale. Once again, these programs MAY offer relocation assistance to the homeowners. I do not foresee Fannie Mae or Freddie Mac extending this program in the near future.
So the question still remains…Short Sale or REO in 2013? I like to look at the numbers on this one. The mortgage default filings hit their lowest point since the first quarter of 2007. Los Angeles County was down 30%; Riverside was down 27.3%; and San Bernardino was down 21.7% from 2011. Short sales were overtaking foreclosures in 2012 — but will that be the case in 2013 with the Mortgage Debt Relief Act expiring this month?
To me, this is the most important law for my business. …The Mortgage Debt Relief Act is due to expire December 31, 2012. As of today, we still do not know for certain if the Act will be extending into 2013, so let’s look at this as a whole. Back in August 2012, the Senate Finance Committee approved the bipartisan bill that would extend the Act through 2013. The committee managed to pull enough votes to pass the extension and move it to the full Senate. The Senate was supposed to take action last month and the word on the street is there will be smaller tax extensions, as this Act will be lost in the dust storms. They most likely will oppose the debt relief extension because they see it as another costly bailout funded by taxpayers. The estimated cost for a two-year extension is $2.7 billion. This is a scary one — they are stupid not to extend this Act, but when you look at how much it will cost us, we are in enough debt as it is.
I like to end on a high note…a friendly reminder that the California Homeowner Bill of Rights will go into effect starting January 1, 2013. This law prohibits unfair bank practices and restricts dual-track foreclosures. The bottom line is these new rules make the foreclosure process more transparent so the loan servicers cannot promise one thing while doing the exact opposite!
My feeling is still the same as we approach 2013: Short sales are the way of the future for getting a great deal but you need to have a great team who knows how to do short sales. You also should be somewhat educated on what options the sellers have in today’s market as well so you can help the seller while benefiting yourself as the investor. It’s a win- win situation. If you have questions or want to drop a line, feel free to check out www.wheredoyougofromhere.com or www.capropertysolvers.com, or visit us on Facebook.
Connect with California Property Solvers
