Nov 1 Short Sale rule change

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Submitted by sdduuuude on October 9, 2012 - 9:33pm

Fannie/Freddie is changing the rule Nov 1 that will allow homeowners who are current on their mortgage to enter a short sale if they can show some particular hardship.

http://articles.latimes.com/2012/sep/02/...

Thoughts on the effect of this change ? The article seems to suggest it is fairly significant.

I didn't even know that banks typically won't let you short sell a home unless you have stopped making payments.

I could see how this policy change could possibly bring some new, and possibly reasonably-priced inventory to the picture. Maybe there's lots of people out there who want to sell but are upside down and don't want to stop making payments. They either list it high enough to avoid the short sale or don't list at all - which would explain the current market, eh ?

Submitted by sdduuuude on October 9, 2012 - 9:57pm.

Looking at SFRs in Redfin, there are 93 homes for sale in 92130.

63 above $1M with 2 short sales.
30 below $1M with 1 short sale.

Submitted by bearishgurl on October 9, 2012 - 11:07pm.

Full explanation here ... this just in today from First Tuesday ... it appears the prospective "strategic short-sellers" with 1st-TD loans backed by Frannie aren't going to get too much sympathy from FICO ... even after declaring a "hardship"

http://firsttuesdayjournal.com/no-sugar-...

Only the prospective "strategic short-sellers" who don't care about their FICO scores or the fact that they may not be able to get their short-paid lender(s) to report them to the credit repositories as "paid as agreed" after a successful short sale will avail themselves of this new "strategic-defaulter" criteria.

I see a few straggling baby boomers (who got caught up in payng too much in recent years) successfully take advantage of this new plan. After all, their "soon-to-be-legally-accessed-w/o-penalty" retirement accounts "won't count" towards the "20% of assets" used to "make good" the deficiency in exchange for a "paid as agreed" mark on their credit report(s) :=]

These individuals can just turn around and pay cash for their next property so why should they care?

This new plan will enable them shed debt-overhang at the age of 60 and come out smelling like a rose :=D

Submitted by UCGal on October 10, 2012 - 8:58am.

BG-
Interesting theory about folks tapping their retirement funds so credit scores be darned.

However - the reality is that the vast majority of boomers don't have enough saved to fund their retirements, let alone have enough extra to pay cash for a house on top of providing an income stream.

Your scenario would only apply to a small number... and that number is made up of people who were aggressive savers... so likely to be more financially savvy, financially responsible... and therefore less likely to be in the short sale scenario in the first place.

Just my 2 cents.

Submitted by bearishgurl on October 11, 2012 - 2:16pm.

UCGal wrote:
BG-
Interesting theory about folks tapping their retirement funds so credit scores be darned.

However - the reality is that the vast majority of boomers don't have enough saved to fund their retirements, let alone have enough extra to pay cash for a house on top of providing an income stream.

Your scenario would only apply to a small number... and that number is made up of people who were aggressive savers... so likely to be more financially savvy, financially responsible... and therefore less likely to be in the short sale scenario in the first place.

Just my 2 cents.

I think you're probably right about it being a small number, UCGal. I'm acquainted with a couple of persons in this age category who were spurred by (younger) family members into buying during the "boom years," against their better judgment. They're now finding themselves underwater just as they prepare to retire.

Otherwise, in my experience, I have noticed that most boomers have done the best they can in saving for retirement and a large percentage have defined benefit plans and/or military retirement pay for life.

Unfortunately, I don't foresee the same scenario for Gen X and Gen Y but must admit that their (overall) working conditions, pay and quality-of-life benefits far surpass anything ever offered to the boomer generation of workers, who were much more regimented and micro-managed during the business day. Most of those boomers still in the workforce voluntarily micro-manage themselves if there is no one there anymore to do it for them :=0

Submitted by sdduuuude on November 1, 2012 - 9:14am.

OK. Today's the day. Inventory gonna shoot right up now.

Any second.

OK. Here it comes.

No? OK. Then. Wait for it ... NOW.

Huh. Hmm. How 'bout now ?

Submitted by sdduuuude on November 1, 2012 - 9:20am.

92130 SFR Inventory per redfin today:

22 below $1M. 3 of those short.
58 above $1M. Only 1 short.

While I'm not really convinced this will have a major effect on inventory, I am curious about it and very surprised at how little attention it is getting. It should be worth some attention.

Submitted by flu on November 1, 2012 - 9:21am.

sdduuuude wrote:
OK. Today's the day. Inventory gonna shoot right up now.

Any second.

OK. Here it comes.

No? OK. Then. Wait for it ... NOW.

Huh. Hmm. How 'bout now ?

Lol......
We can all hope....

Submitted by bearishgurl on November 1, 2012 - 9:27am.

sdduuuude, would it be worth it to add on to your present (Clairemont) home to get the space you need? In other words, do your area values support the expense of an addition?

Or would your lot be too small to do this without adding a second story?

It just seems like this is a better idea than attempting to pay 3-4 times as much for a home (w/poss HOA/MR) than you already did years ago. Especially if you still have young kids to support. JMHO.

Submitted by Blogstar on November 1, 2012 - 9:38am.

bearishgurl wrote:
sdduuuude, would it be worth it to add on to your present (Clairemont) home to get the space you need? In other words, do your area values support the expense of an addition?

Or would your lot be too small to do this without adding a second story?

It just seems like this is a better idea than attempting to pay 3-4 times as much for a home (w/poss HOA/MR) than you already did years ago. Especially if you still have young kids to support. JMHO.

That's a good suggestion, BG. I have thought about buying a good candidate there and adding on/remodeling many times.Clairemont is very well situated to become more important over time going forward...if any thing does, Clairemont will.

I am not sure sdddude's particular house is a good candidate but there are some there still. I'd rather do that than move to CV to get a bigger box.

Submitted by sdduuuude on November 1, 2012 - 9:52am.

It's a long story, but that is not in the cards for us.

Submitted by sdduuuude on November 27, 2012 - 2:11pm.

Really, nothing happening here as of Nov 27.

Under $1M: 20. 3 of them short.
Above $1M: 61. 2 of them short.

Submitted by sdduuuude on February 1, 2013 - 1:58pm.

An update for you. Wanted to get this done before the MASSIVE onrush of inventory that is coming to CV after the Super Bowl !!!!

62 homes for sale in 92130. 2 of them short.
< $1M. 16 for sale. 2 short.
> $1M. 46 for sale. No short sales.

Grrr. Down from 81 in late Nov.

I'm going to change my stats from 92130 to Carmel Valley Middle School. Redfin boundary isn't quit right, but it'll have to do. This cuts out a bunch of $2-million+ homes just south of San Dieguito road and an awkward section of 92130 that is in the Poway District.

44 homes for sale in CVMS area. 2 of those are short.
< $1M. 16 for sale. 2 short.
> $1M. 28 for sale. No short sales.

Submitted by sdduuuude on March 11, 2013 - 9:32am.

Mar 11 CVMS: 45 total for sale
14 under $1M
31 over $1M

Submitted by sdduuuude on May 7, 2013 - 8:42pm.

May 7 CVMS: 65 for sale

14 under $1M
51 over $1M

Submitted by zk on May 9, 2013 - 9:47am.

sdduuuude wrote:
May 7 CVMS: 65 for sale

14 under $1M
51 over $1M

I'd noticed a few more signs and even a couple open houses. It will be interesting to see what happens henceforth. Thanks for the stats; keep them coming.

Submitted by sdduuuude on September 24, 2013 - 1:15pm.

85 SFR for sale in Redfin CVMS area.

Submitted by UCGal on September 25, 2013 - 7:49am.

But CV is still pretty hot - friends listed their house on a Friday and had two offers by Tuesday. 5 days on the market before it went into escrow.

Submitted by FlyerInHi on September 25, 2013 - 11:37am.

Ocean Air and Torrey Pines were the 2 elementary schools in SD to win the blue ribbon award. That will add to the desirability la jolla and Carmel valley for young professional families. I can see real estate agent promoting that as we speak.

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