Info and Tips about Ky Master Commissioner Sales

Foreclosures up 5.5% in N. Ky.

From “Foreclosures in Greater Cincinnati and Northern Kentucky hit 15,200 in 2009, a 5.5 percent increase from the 14,410 homes foreclosed in 2008, according to Ohio and Kentucky court records.

While still on the rise, local foreclosures grew by the slowest rate in the last five years. In 2006, for example, the region saw a more than 20 percent increase in foreclosures and in 2008 the caseload had increased by 10 percent.

Foreclosures in Kentucky picked up steam in 2009 – including in Northern Kentucky – with cases increasing 9.4 percent statewide and rising 15.1 percent in Northern Kentucky, Kentucky state court records show.”

It begs the question, what will happen in 2010.  Will the foreclosure rate flatten out, or rise?  Either way, with unemployment rates projected to continue to remain at 10% or so, the foreclosure rate will definitely not decrease.

Twitter Weekly Updates for 2010-02-21

  • I spoke with several solo attorneys who agree that you have to hustle just to survive, much less get ahead right now #
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Short Week

There wasn’t much happening this week.  I’ll leave this thread open for comments if anyone has noticed something in their neck of the woods going on with foreclosure sales . . .

Short Sale Guidelines Being Simplified


HAFA: The Government Response
Hoping to positively influence the nation’s housing market by shortening and simplifying the short-sale process, the Treasury Department released new guidelines for servicers late last year.

Under those directives, HAFA (Home Affordable Foreclosure Alternatives) offers servicers and borrowers incentives for utilizing a short sale or a deed-in-lieu to avoid foreclosure on any loan that is eligible under the HAMP (Home Affordable Modification Program) program thereby reducing the need for a potentially lengthy and expensive foreclosure process.

Key features of the program include:

–Sellers/borrowers can receive up to $1,500 for relocation expenses

–Lenders will receive $1,000 for each completed short sale

–Up to $1,000 for investors who allow up to $3,000 in short sale proceeds to be distributed to subordinate lien holders. Borrowers can receive pre-approved short sale terms prior to the property listing

–Borrowers are fully released from future liability for the debt

This last point is key, since that is a big obstacle for many debtors.  Now you just have to be able talk the bank into accepting it.

FHA Guidelines Changing

From “Starting in early summer, the Federal Housing Administration is tightening lending standards in an effort to bolster its dwindling reserves. The new lending standards will make it tougher for some prospective buyers to purchase a home by requiring a higher down payment than the typical 3.5 percent for some borrowers, higher insurance premiums and reduced seller concessions.

. . . .

Better Credit Scores New borrowers will have to have a minimum credit score of 580 to qualify for a 3.5 percent down payment. Previously, there was no minimum score. Those with lower scores will have to make at least a 10 percent down payment. The average credit score of FHA-insured borrowers is 693.

Higher Insurance PremiumsBuyers who get an FHA-insured loan will soon have to pay a higher initial insurance premium. The new premium will be 2.25 percent of the value of the total loan amount, up from 1.75 percent now. A $100,000 mortgage would require a payment of $2,250, or $500 more. But buyers can roll the added cost into the loan amount.

Reduction in Seller Concessions Starting this summer, sellers will not be able to offer as much help to buyers to pay their closing costs. The maximum amount of assistance will drop to 3 percent of the value of the property, from the current 6 percent.

Anti-flipping rule removed

Effective Feb. 1, the federal government will waive for one year an FHA anti-flipping rule that prohibits insuring a mortgage on a home owned by the seller for less than 90 days.

The new rule lets investors buy today and re-sell as quickly as possible.

HAFA Guidelines

From, more information about HAFA.

“On November 30, 2009, the Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of the Home Affordable Modification Program (HAMP). HAFA provides incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA.

. . . .

HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure. HAFA:

  • Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home.
  • Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
  • Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
  • Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).
  • Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
  • Uses standard processes, documents, and timeframes/deadlines.
  • Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).
  • Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on December 31, 2012.”

Read the full directive from the Federal Government here.

Economic Recovery Looks to Take Awhile highlights the root of the problem why it will be a long road to recovery, much less growth.

“There were varying views on growth, but economic experts at the 21st annual Economic Outlook Conference on Tuesday agreed it will be a slow recovery from the recession for the nation and Kentucky.

Ken Troske, director of the Center for Business and Economics Research at the University of Kentucky’s Gatton College of Business and Economics, predicted that the nation will see 2 percent to 2.5 percent growth this year, but that Kentucky will see just half of that.

. . . .

“Due to rising foreclosures, fairly flat prices and continued low building, that’s going to put a drag on the economy,” he said.

And he said Kentucky’s housing market has been fairly stable — “we didn’t see the run-up in prices” — but the state’s economy is so reliant on consumer spending nationally that the nation’s problems will “limit the ability of Kentucky to grow.”

Troske said that because of the state’s high base of manufacturing jobs, he expects unemployment will “remain fairly persistently high.” He said businesses have avenues to increase production, including hiring temporary workers or elevating part-timers to full-timers, that will let them expand but not necessarily reduce the unemployment rate.”

Foreclosures and Short Sales

From Business Lexington: “Right here in Kentucky, nearly 10,000 homes were foreclosed in 2009. That’s a 34 percent increase from 2008 and a 90 percent increase from 2007. In Fayette County alone, there were 150 new foreclosure filings in December 2009.

. . . .

The Wall Street Journal reported on December 1, 2009, that the government has now established “final guidelines (that) should make it easier for some financially troubled borrowers to sell their homes. The guidelines are designed to encourage the use of short sales, transactions in which the borrower with lender approval sells the home for less than what is owed on the loan.

. . . .

So what is a “short sale?” It is a petition to the lender to accept less than, or “short,” the value of the full mortgage balance due on the loan. This allows the homeowner to avoid foreclosure and, often, to be relieved of the deficiency debt (what they still owe the lender after the short sale). And it allows the lender to clear their books of the bad loan without acquiring the property (and all the costs associated with such an acquisition).”

Don’t be fooled though, short sales take a lot of work and if you are willing to put in that time, you can get some really good deals on some excellent properties.  If you are interested in learning more about short sales and how they work, leave a comment.

5/3 Sees Anti-Foreclosure Efforts Paying Off

“Fifth Third Bancorp said Thursday it’s given more than a third of eligible struggling homeowners permanent loan modifications under a federal government anti-foreclosure program.

Almost 35 percent of trial plans started have been converted to permanent loan modifications – compared to a national average of 7.4 percent for all lenders and servicers under the federal Home Affordable Modification Program.”

5/3 is well ahead of the national average for trying to work out loan-modifications.  But they are still seeing 2/3 of their loans continuing on in default and eventually foreclosure.

Given the national rate for this program is an abysmal 7.4%, whatever 5/3 is doing to work with their loans that are in default, should possibly take some lessons from 5/3.  If the bank wants to make the anti-foreclosure program work, they can.

Read the rest of the article.

MC Sale

I attended a master commissioner sale today and was reminded that an investor who goes on a weekly basis and knows what they are bidding on, can and will eventually get some great bargains.

One investor ended up with a piece of property that appraised for $170,000.00.  The winning bid?  Only $113,500.00.  A little fixing here, touch up there and he could easily hold on to the house and rent it out, or flip it at some point and make a cool $10,000 – 25,000.00 on it easily.

So get out there and start attending sales.

PS: I’ll be attending a master commissioner sale next week.  If anyone wants one-on-one coaching, let me know, as I will be happy to meet you there and go over everything with you.