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Arizona Short Sales benefit the banks.

You heard me correctly… The short sale process benefits the bank. Now, that’s not to say it doesn’t benefit you as well. In fact, short sales benefit consumers immensely. But make no mistake. Banks are out for themselves.

Arizona short salesIt’s important to note this as more and more consumers find themselves upside down on mortgages or facing job losses and unemployment, you gotta know how to best serve yourself in getting out of that upside down loan!

By focusing their efforts on short sales, the banks skip the arduous foreclosure process — they no longer have to manage, maintain and market a home — and instead make their money right away.

According to MoneyWatch $25 billion in relief for consumers was issued earlier this year:

In February, when 49 state attorneys and the five banks — JP Morgan Chase, Bank of America, Ally/GMAC, Wells Fargo and Citibank — settled their dispute, the banks agreed to stop improper foreclosure practices and provide $25 billion in relief for homeowners in the form of principal reductions, refinances and short sales (where a lender agrees to accept a purchase offer for less than is owed on the mortgage, releasing the homeowner from the loan).

But the question is… where has that money been put to use? In California, for example, of the $12 billion allocated there for consumer assistance only 2.7 percent has gone into vehicles like principle reduction. That’s a paltry $335 million of the total.

Short sales on the other hand… Short sales have (in that same time period) reached a whopping $3.9 billion of relief! That’s more than 10 times the effort going into mortgage reduction.

Why would the banking big boys put so much more into short sales? The answer is really simple actually… It benefits them much more than a mortgage reduction.

Basically, the banks have spent nearly $10.6 billion in just a few months, but largely on relief efforts that further their own interests. By focusing their efforts on short sales, the banks skip the arduous foreclosure process — they no longer have to maintain and advertise an empty house. Plus, they can get their money immediately and redeploy the capital elsewhere.

Numbers will soon be available for Arizona short sales as well. I don’t expect much variance, since the major banks in California are also the major banks in Arizona.

So if you find yourself in a situation where you are considering a short sale here in Arizona, then I encourage you to look into it and do so. Your success rate is much higher simply because you are asking the bank to do something it is already favoring:  an Arizona short sale!

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In recent months the “Short Sales In Arizona” topic has taken a backseat to the question of the economy. People continue to argue back and forth on the economy… It’s improving. It’s not improving. It’s anybody’s guess right?


Fundamentally the US economy is continuing to struggle through the debt crisis and mortgage debacle of the last few years. And, with that the main driver of home prices and affordability, the job market has continued to sputter and stall.

In fact, the U.S. unemployment rate edged up to 8.3 percent in July from 8.2 percent in June, government analysts said last Friday. But, how is this tied to home prices, debt, and the short sale rates we see taking place here in Arizona? It’s simple really… Home prices are directly correlated to the average consumer’s ability to pay his mortgage! That’s really all that matters when near term price projections are considered.

So the basic formula is this: People with no job or who are working for less than they normally do to pay the bills can not finance, or refinance a home or save for a down payment on a home. If they cannot borrow or raise a down payment, they can not buy a house at any price. Lack of demand due to creditworthiness will never drive prices up. It will drive prices down. Prices remaining flat or falling means that the majority of people who bought in the mid 2000′s will remain underwater on their mortgage due to loss of value.

The question then becomes, “Why not short sale your Arizona home?” If you do, you can walk away from a burdensome debt and start over in a couple years by buying a home that will appreciate going forward. That’s much better than waiting and hoping for a miracle on your current underwater situation.

No, short sales are not going anywhere… An Arizona short sale makes a lot of sense! And, with prices heavily tied to the consumer’s ability to pay a mortgage, or save a down payment Arizona short sales will remain the best option to avoid foreclosure and start fresh with the least amount of baggage and stress.

To learn more, read this article on short sales in Arizona.

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Recently, The FHFA (Federal Housing Finance Agency) released new, clearer instructions designed to help mortgage servicers speed up the short sale process. The announcement came on Tuesday in conjunction with an effort to stream line Fannie and Freddie which are basically government sponsored mortgage servicers.

“These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities. The new standard short sale program will also provide relief to those underwater borrowers who need to relocate more than 50 miles for a job.” ~ FHFA acting director Edward J. DeMarco

This whole initiative is aimed at simply speeding up the long and sometimes arduous process of short selling your home. In Arizona it is not uncommon for a short sale to take 90 days or longer! Frustrated home owners and Arizona short sale experts have had enough and are ready for a change.

To that end, the new FHFA rules include:

  1. Special treatment for military personnel with “permanent change of station” orders. Service members who are being relocated will be automatically eligible for short sales even if they are current on their existing mortgages. They also will be under no obligation to contribute funds to cover the difference between the outstanding loan balance and the sale price of the home.
  2. A streamlined short sale approach for the most distressed borrowers. The documentation required to demonstrate need has been reduced or eliminated in order to expedite short sales for borrowers who have missed several mortgage payments, have low credit scores and are in serious financial distress.
  3. Guidance on processing a short sale when a foreclosure sale is pending. The guidelines will clarify when a borrower must submit their application and a sales offer to be considered for a short sale, in the hope that last-minute negotiations and communications are handled fairly.
  4. Consolidation of existing short sale programs into a single program. Loan servicers will have more consistent guidelines, which should make it easier to process short sales.
  5. Second lien holder incentives like: Fannie and Freddie will offer up to $6,000 to second-lien holders to expedite a short sale. Previously, second-lien holders could slow down the short-sale process by negotiating for higher bids.

All of this comes on the heels of a worse than expected jobs report and an economy that continues to struggle. Unless and until the jobs situation turns around there can be no real growth in home prices as income is necessary to support price increases. The government continues to try and “stimulate” the economy which only results in inflation. With higher costs and a sluggish job market, the recipe is set for nearly 7 million new foreclosures nationally!

If you find yourself on the cusp of stay or go via an Arizona short sale… Even if it is for no other reason than a financial one, you owe it to yourself or your family to look into a short sale. It could mean saving yourself years of recovery from a foreclosure.

Contact The Arizona Short Sale team for more information and be sure take advantage of our Free 7 Day Short Sale Course!

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Arizona Short Sales: The Ratio Has Come Down!

April 26, 2012

I stated in previous writings that Arizona short sales would become the new norm in home and real estate transactions… And, they did. So much so that at one point in the market, Arizona short sales accounted for more than … Continue reading

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What If I Have Two Loans?

September 21, 2011
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A great many people in today’s marketplace facing foreclosure or an eminent short sale find themselves in a position of having two loans. It could be 100% financing where the down payment and the loan amount are mortgaged, or it … Continue reading

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