March 2009

Have you ever met someone and then realized that although it started out as a chance meeting, something good was going to materialize? I was out on a routine Listing Appointment, visiting a lady whose current listing had recently expired. I was hoping that she would decide to re-list her home, and that she would choose me to represent her as her Realtor. We conducted our business, and then, as I was walking out the door, we began to speak about what she does for a living….Suzanne wears her passion on her sleeve, and it wasn’t long before she had me convinced that teaming up, we could do some good for Goodwill. Suzanne is the Public Relations Manager for Goodwill Industries, representing the Middle Tennessee area. Listening to her speak about what Goodwill does for the community, how it gives back, how it educates and hires those individuals who might not find work elsewhere, I knew that I wanted to help…and as luck may have it, I am the Chairman for our Culture Committee at Keller Williams, responsible for finding new ways to let our agents give back to the very community that supports us as Realtors.

My fellow committee members and I took a field trip to the distribution center and were amazed at the number of workers it takes to run an organization like this. It was explained to us how the clothes and other household articles are sorted, tagged for resale, and prepared for shipment to Middle Tennessee Goodwill stores. This is a huge effort. All of these employees have a job because of ordinary citizens like you and me who make donations to Goodwill. When people donate and shop at Goodwill, they make an economic investment in their communities.

Donations are down this year and I am asking for your help. Keller Williams Realty is having a donation drive the entire month of April, 2009. This is the perfect time to clean out your closets and get rid of unwanted clothing and small household items….perhaps you are moving and need to get rid of some furniture. Call me…I will make arrangements for Goodwill to pick up any large items that you want to donate. You can drop off bags of clothing at my office in Brentwood or just call me…I will come to you.

This is the time in our Country’s existence when we need to be there for our fellow man. We need to say I have more than I can use…let me share. Please, look through your closets and share….

Until next time….

It seems as though everyone but the responsible homeowner was getting a piece of the government’s money, and American’s were becoming outraged by the country’s spending. Bailout money was being handed out like candy, and corporations and Wall Street were the first in line. We are already seeing that some of these same corporations are back in line, waiting for another hand-out. The housing market is in need of a help. Home prices are dropping…foreclosures are at record highs. We have asked the Government for help. Obama has revealed his new mortgage bailout. Some of the highlights are:

Who qualifies? $75Billion dollars has been allotted to reducing mortgage payments for “at-risk” homeowners. This program is only available to owner-occupied, principal residences with mortgages originated prior to January 1,2009. To qualify, a borrower’s monthly mortgage payment must exceed 31% of their monthly gross income. They must also be able to proof some sort of “financial hardship”, such as loss of income which puts them at risk of default. One key element of this bailout is that YOU DO NOT HAVE TO BE DELINQUENT ON YOUR MORTGAGE TO QUALIFY. One key ingredient of this plan is that your mortgage must be guaranteed by Fannie Mae or Freddie Mac. If it is not guaranteed by either of these government agencies, then you will not qualify for this bailout plan.

What are the benefits of participating in the Plan? If you qualify for the plan, lenders will work with you to reduce your monthly payment by either lowering your current interest rate, thus reducing your monthly payment to be no more than 31% of your gross monthly income, or, in severe cases, increasing the term of your current mortgage to 40 years, reduce your interest, and even reduce your principle balance if you are “upside-down” on your loan. You need to be prepared to “jump through hoops” with all the documentation that the government and lender are going to require.

I don’t qualify. How does this help me? Many Americans are frustrated that those people who made reckless decisions are getting the benefit of the bail-out dollars. But what we must remember is that it is important for all of us to keep our neighbors in their homes since foreclosures can force property values to decrease quickly. Falling property values affect us all.

If your current mortgage is an adjustable rate mortgage, I urge you to try to refinance to a fixed rate, and if you currently have a fixed rate mortgage, it is a great time to refinance to a lower interest rate. Take advantage of today’s historically low rates. If you have VA benefits, it is a great time to use them. With plummeting home values, many American’s have seen a reduction in their equity. Without having 20% equity in your home, you will be forced to pay PMI (Private Mortgage Insurance) which can increase your monthly premium by $100+ dollars every month. With VA, you do not have any PMI, so home equity is not needed to refinance. Contact your Lender to discuss ways to lower your monthly payment. You might end up saving hundreds of dollars each month!!

Until next time….

The phrase “Short-Sale” is getting quite a bit of face time. Just turn on the TV and you can hear reporters talking about the increasing number of short sales throughout the city…or pick up a local newspaper ( if your city is lucky enough to still have a daily newspaper) and read about short-sales and foreclosures. We keep hearing this term “short-sale”, but do we really know what it means?

What is a short sale?

The word itself is quite misleading; some assume that “short” means quick, which implies a quick closing. But what it really means is that the Homeowner is trying to sell his home for less than what he owes the Mortgage Lender. Let’s say that a Homeowner really needs to sell his home and owes $300,000 to his Lender, but that the current market says that his home is only worth $250,000. That is $50,000 less than what he owes…tack on additional monies to cover commissions that must be paid and closing costs, and the Homeowner is really in the red. Because a short sale results in the mortgage lender losing money on a property that is secured by a mortgage, these transactions must be done with full participation of the Lender. So…what does a Homeowner due if faced with a similar situation?

How to Get your Lender to Agree to a Short Sale

• Approach your Lender as soon as you think you might request a short sale. If you are struggling to make your monthly mortgage, immediately list your home with a qualified Realtor. If the Realtor suggests that your home will likely sell for less than what is owed on it, immediately contact your Lenders “short-sale” dept. and request a short-sale package.
• Authorize your Realtor – in writing – to work and to negotiate directly with your Lender.
• When your Realtor receives an offer on your home, make sure the Realtor includes a cover letter explaining the buyer’s qualifications, and amount of down payment. Disclose any other pertinent information to Lender to help them make a decision.
• Your Lender will require a hardship letter from you. Pour your heart out to lender. Present your finances in the worst possible light. If you lost your job, had a death in the family, or have any other circumstances, let the Lender know. Let them know that you are considering bankruptcy. Once you take the first step to bankruptcy, the foreclosure process is stopped and banks would rather resell your home at a loss than go through bankruptcy procedures and then try to sell it.
• Make sure your “short-sale” package is complete when you send it back to Lender. Short sales generally take a considerable amount of time so you want to make sure that you give the Lender ALL the information that they require in order for them to make an informed decision. At a minimum the Lender will want:

1. The offer to purchase your home, including the Buyer’s pre-approval letter
2. Your Hardship Letter
3. A balance sheet showing your monthly income and expenses
4. Copies of your Bank statements
5. A Net Sheet from your Realtor showing all the closing costs that must be paid for your short sale to close
6. Supporting documentation, including 2 months pay stubs
7. Your last 2 years income tax returns.

Having a “short-sale” on your credit report is considered a small blemish compared to a foreclosure, which can keep you from purchasing another home for up to 10 years. If you see that you are having difficulty in making your mortgage payments, take the initiative and contact your Lending institution or a Realtor. Don’t delay!!

Until next time….