Short sold a home in World Golf Village.

Never missed a mortgage payment.

Process took about 30 days.

Seller bought a new, more affordable home just 6 months later.

No tall tale here. This is a true story of how a well-executed short sale can have a happy ending. Della Myers, a Real Estate Agent herself, saw the writing on the wall. Her 2004 purchase of a World Golf Village home was at the height of the market. The lender assured her that she could simply refinance (buoyed by all the equity she would gain from the robust market) before her low monthly “teaser” rate adjusted dramatically higher.

But the market changed. Della tried to get out in front of things. She knew her rate adjustment was coming and she would not be able to afford it. She put her home on the market but to no avail. She lowered the price and re-listed it. Again no bites. She couldn’t refinance because her home’s value was plummeting and would eventually end up appraised for about 50% less than she paid. Della knew a Short Sale, when the lender/bank agrees to take less for the home than the original loan value in order to avoid foreclosure, was her only hope.

“That’s when I called my friend Dottie Lay,” said Della. Dottie Lay, a Davidson Realty Agent, has experience with short sales and is a Certified Distressed Property Expert (CDPE). Says Della, “Even though I’m an Agent myself, it’s very important to have someone else, an experienced pro, advocate for you with the bank.” Della had still not missed a payment on her mortgage. Dottie sprung into action. She found a buyer who was thrilled to get the World Golf Village home at such a great price. Thanks to Davidson Realty’s in-house support, Dottie was able to work quickly, put together a bullet-proof package for the lender and close the deal in less than 30 days. Della never missed a payment on her home. “The relief of having the burden off my shoulders was immense,”explains Della.

Being proactive is the best predictor of a good outcome. Says Dottie, “Della was smart and she faced the problem head-on which helped her avoid serious financial implications.”Della added“The hardest thing is letting go of the disappointment that the property will never make you any money and that it will be a financial loss. Once you come to that realization, you’re better able to detach emotionally and move on quickly.”  Since the FHA removed a previously required one-year wait on any new loans after a short sale, Della was able to qualify for a new FHA loan on a more affordable property just six months later. Today Della is a happy homeowner, again.

Rick Sharga from Realty Trac Inc. talked about three waves of foreclosures. The first wave of foreclosures occurred when employment was strong and the economy was growing. These foreclosures were caused by the sub-prime loans. The second wave of foreclosures was caused by unemployment. They estimate that there is 1 foreclosure for every 6 to 10 jobs lost. The third wave of foreclosures is mainly due to Option Arm loans resetting. Many people will see payments rise by $1,000 to $1,500 per month. The resetting Option Arms will peak in 2011.

Matt Vernon from Bank of America spoke about improvements to the short sale process using a new technology called Equator. Just to give you an idea of their volume of short sales, in March 67,000 short sales were initiated and 64,000 decisions were made. They have made major improvements in the time frame for approvals; however, Matt pointed out that only about 10% of the loans are owned by Bank of America. Most of the approvals have to be made by an investor and some investors respond more timely than others.

Diana Stauffer of Wachovia Bank shared an interesting statistic about average sales prices. The average price for a short sale is $212,400. The average price for a move in ready foreclosure is $191,900. She did point out that they do not see many move in ready foreclosures. A damaged foreclosure average price is $116,200. It is pretty clear that a short sale is a better option for the homeowner and the lender.

There were other great speakers discussing the stress homeowners are experiencing and how different personalities deal with stress and the stages of grief that many homeowners have to work through. Cindy and I both learned a lot, had some great meals, met some terrific people and came back ready to make a difference by helping homeowners make informed choices about their St. Augustine, FL homes.

1. Homeowners who qualify for a HAFA short sale are fully released from future liability for the first mortgage debt.  This means that the mortgage lender cannot come after the homeowner at any future time for repayment of the original loan.
2. A HAFA short sale allows for a $3,000 relocation assistance payment for homeowners. That’s a one-time payment of up to $3,000 to help sellers with moving costs, rent security costs, etc.
3. Most major lenders are already on board with the new HAFA rules, including Citibank, Wells Fargo, Bank of America, Wachovia, Chase, Wamu, and the list continues to grow.
4. With HAFA, the short sale process has been standardized and streamlined so homeowners can expect a quicker outcome.
5. Homeowners can enlist the Realtor of their choice to help them through the HAFA process so they have an advocate.  A Realtor can also help the homeowner determine if they qualify for a HAFA short sale and, if not, what other options are available to them.

More information about HAFA and a complete list of eligibility requirements is available on the  Treasury Department’s website: http://www.makinghomeaffordable.gov/hafa.html.  Some of the primary qualifiers for HAFA, include:
•  Must be the principal residence
• The home loan originated on or before January 1, 2009
• The homeowner is behind on their payments or soon will be
• The unpaid principal balance on the loan is no more than $729,750 for a single-family property
• The total monthly payment on the mortgage is more than 31% of the gross income of the borrower

Davidson Realty is committed to helping homeowners facing tough economic times. Twenty-eight (28) Davidson Realty agents hold the Certified Distressed Property Expert (CDPE) designation.  A Certified Distressed Property Expert® (CDPE) is a real estate professional with specific understanding of the complex issues confronting the real estate industry. CDPE real estate professionals have trained extensively to understand the options, solutions, and effective methods for dealing with homeowners facing hardships, including foreclosure.

A task force was formed to address the crises and they identified lack of communication between the parties as the most significant issue. The Florida Supreme Court addressed this issue by requiring mediation in all foreclosure cases involving homestead property unless the parties agree otherwise or have already participated in mediation.

The mediation will be handled by a Florida Supreme Court certified mediator appointed by the Court. The costs of the mediation will be paid by the lender and the total cost may not exceed $750. The plaintiff (lender) must have a representative who has full authority to settle at the mediation but they may appear by telephone or other electronic method.

The homeowner must provide financial information to the mediator and meet with an approved foreclosure counselor prior to mediation. They may also request certain information from the Company suing them before going to mediation.

The mediation manager must schedule mediation no earlier than 60 days and no later than 120 days after the foreclosure is filed.

The program is being implemented in each Circuit Court and right now the Seventh Circuit and the Fourth Circuit (Duval, Clay and Nassau Counties) have not implemented the managed mediation program. The Supreme Court just authorized the program on December 28, 2009.

Now back to the question if the program will help foreclosures in St. Augustine. I would hope that if a lender has options to foreclosure such as a loan modification, they would see the benefit of modifying the loan rather than incur the cost of mediation and the cost of foreclosure. I would also hope that short sales would become another viable option and lenders would be more cooperative in approving and closing a short sale rather than face mediation and foreclosure.

As you can see, I don’t have the answer yet. I will keep you updated as the program gets implemented in our area and we see the results.

Don’t miss the encore presentation of our free, educational webinar series titled “Avoiding Foreclosure” in December. The online webinar series offers the following presentations for homeowners in distressed situations:

Dec. 1, 2009 at 10 a.m. EST: “Why You Should Avoid Foreclosure”
Register at https://www1.gotomeeting.com/register/859811800
Sherry Davidson, President of Davidson Realty, Inc., will lead a discussion with Mirtha Barzaga, an agent with Davidson Realty and Kevin Koscinski, a mortgage loan officer with Bank of America. Barzaga will share information about how she has helped northeast Florida homeowners to avoid foreclosure, as well as how she educates them on the impact a foreclosure would have on their jobs or security clearance. Koscinski will share his experience about impacts to credit score.

Dec. 10, 2009 at 10 a.m. EST: “How to Avoid Foreclosure”
Register at: https://www1.gotomeeting.com/register/584635016
Sherry Davidson, President of Davidson Realty, Inc., Suzy Evans, an agent with Davidson Realty, Inc. and Damien Blumstein of Dolphin Mortgage will discuss nine options to foreclosure including mortgage modifications, refinancing and short sales.

Dec. 17, 2009 at 10 a.m. EST: “More Information about the Short Sale Option”

Register at: https://www1.gotomeeting.com/register/274814288
Sherry Davidson, President of Davidson Realty, Inc., Dottie Lay, an agent with Davidson Realty, Inc. and Cindy Vaughn, Davidson Development’s Accounting Manager will discuss what a short sale is, why short sales are normally the best answer to avoiding foreclosure, requirements for short sale approval, and the biggest concerns of homeowners in short sales.

The following November webinar sessions may be viewed online anytime at:
* “How to Avoid Foreclosure”
* “More Information About the Short Sale Option”

“Strong participation in our first webinar series proved that many homeowners need this information. With 25 Certified Distressed Property Experts® (CDPE) on staff, Davidson Realty, Inc. is in a unique position to inform and advise homeowners on the options available to them when they are facing foreclosure or anticipating tough financial times,” said Davidson Realty, Inc. President Sherry Davidson, CDPE. The web-based seminars last 20 to 40 minutes followed by a question and answer session.