Short Sales and Foreclosures, at Christmas?

There is a description by Scrooge in the Muppet Christmas Carol (my favorite Christmas movie :-) that says Christmas is "Harvest time for the money lenders". In truth, most lenders do not want to foreclose in the winter at all, let alone Christmas, and especially not this year (they own enough homes they don't want already!). It's just not good business. Nevertheless, there are those who are hopelessly behind in their payments at this point, and the lenders can't exactly let them live rent free forever either.
This morning we heard a talk by Shawn Morgan, a short sale negotiator with Wells Fargo, who gave us a some interesting tid bits to mull over. First, just as a reminder, a short sale is when the bank agrees to take less than they are owed, usually to avoid having to foreclose on the property. Very often this is without seeking the difference from the borrower, making it an attractive alternative to borrowers who might otherwise let their property be foreclosed upon, and eventually be pursued for a deficiency judgement. Pursuing a short sale is by far the best alternative for many (though not all) homeowners who are underwater and HAVE to move.
Despite their best efforts, the process at Wells Fargo is still pretty much 6-8 weeks (slipping to 10 at times) to get an answer, no matter how good everyone is doing their job. For buyers, this means patience. If you need a house in 30 days, don't even bother. On the other hand, these deals are often going at 85% of the current appraised value, which may very well be off another 20% from the peak of the market here in Colorado Springs.
Other bits and pieces included:
1. Corporations can't do short sales
2. Trusts and LLC's can only do them if the note was originally done in their name (not very often the case), so likely title will have to transfer back to the individual prior to receiving any attention from the short sale negotiator
3. Hounding and threatening that 'the buyer will walk' if they don't answer fast, doesn't get anywhere with these guys, they've got a big enough stack on their desk already to put up with the brain damage.
4. Having realistic expectations for dates and dollars, and a very thorough and complete short sale package usually gets the job done.
The Colorado Springs foreclosure rate is still running at record levels (El Paso County Foreclosure Data), but healthier buyer traffic is holding down the percentage of sales that are distressed (unofficially 22.2% last month), so maybe this problem will be less of an issue over time. We are told that nationally, there is another wave of option ARM loans resetting over the next 18 months. It remains to see how many of those we really have locally, since our market tends to be more heavily influenced by FHA and VA loans that are 30 year fixed rate loans.
It has been a wintry day today, but the sun is back out, and the snow has stopped, even though it is cold and windy. Looking forward to the 40's again by this weekend, enough of this single digit stuff. What global warming?!!!
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784! www.facebook.com/rickvanwieren for more photos, www.twitter.com/rvanwieren for more frequent updates!

Days Like These are What Makes Colorado Springs So Popular

Since our wet Memorial Day weekend, we have had close to perfect weather here in the Springs. Glorious sunny warm days (around 80 again today), cool nights, a thunderstorm here and there in the afternoon, wildflowers blooming, even the snow is still on Pikes Peak!
I've been a little busy to write this week, as we've been getting my wife packed out of her classroom, showing properties, inspections, what have you. Not to mention I'm still moving kind of slow after being sick. While it is still not as busy as in some past years, the pace has quickened a little, especially in light of interest rates starting to go back up. In addition, short sales are making a lot of unproductive work out of this business. I previously wrote about one that finally gave up after 3 months and found another house. Many short sale buyers just give up after the lenders (who we taxpayers just gave hundreds of billions of dollars to) sit on their offers for months. For anyone who wants a house in the normal 30-60 day time frame, short sales are just not an option, and a big waste of time. Foreclosures will continue to be a problem until the banks get their acts together on this issue. In the mean time, it severely constrains the homes you can show for some buyers, and makes them feel cheated when a house comes up that looks great, only to find out they are a short sale. While only 9% of the 5079 homes in our MLS are indicated to be in any kind of distress, the actual percentage in many segments is significantly higher, and overall these are under reported, largely due to agents not wanting to restrict showings on their listings.
Interest rates jumped late this week, all the way to 5.25% That doesn't sound like much, but when you consider it was 4.75%, that is a big jump. While we all hope it will go back down, all this government borrowing isn't helping mortgage rates, and oil prices jumping again isn't going to help consumer confidence much either.
I'm off to show some more homes today. Being such a nice day, I'd guess we might even sell one!
Got questions about living in Colorado Springs? Call me at 719-590-4768 or 888-568-6784!

Colorado Springs foreclosure and distressed properties are not as prevalent as in some areas of the country, but we have our share. Last month the bank owned and distressed properties made up 34.5% of our sales, which is why prices appear to be down so far. When digging behind the numbers, I discovered something interesting (at least to me!). Homes with more than 2500 finished square feet were only 14.5% of the "distressed" sales, and when looking for more than 3000 finished square feet, it was only 9.3% of the mix. What that means to me is that our averages are being drawn down a lot by homes that are both distressed and on the smaller side. Larger homes are not as big a part of either the distressed "pool", or of the kinds of homes being sought by investors or bargain hunters. Homes that have larger areas for living space are much more likely to be a normal sale, and likely to be owner occupied after sale.

The El Paso County Trustee's office does a nice graph of foreclosure trends for Colorado Springs, here is the link to the current report: El Paso County Foreclosure Report

We got a dusting of snow overnight, but it is expected to pick up a bit during the day, with another couple of inches supposedly coming. Given how cold it is (it was 18 degrees this morning), it is very light and more "broom" type than shovel type snow.

Today's photo was taken from Highway 9 south of Hoosier Pass in June. I thought of it as ski season is finally getting underway, with over 30 inches of base at many resorts. I like it closer to 40 myself, as the rocks are still showing some at 30, but with it being all nice and fresh, I am getting the itch to go! Vail reportedly got 24 inches this week, there should be some nice stashes of powder for while now. I love the web cams they have at many resorts, here is Copper Mountain's.