A great article in the Herald Tribune caught my eye today: “Will 2012 be the year of the short sale?”
It’s a great read and I highly recommend it; the article interviews several top-notch Realtors in the Sarasota area and real estate professionals, but I’ll sum it up for you and pull some quips out that might be useful to you.
The article states that “experts predict that 2012 will be the year of the short sale”, and in case you didn’t know, that’s mostly because foreclosure filings in Florida dropped off to almost nil in the last 4 to 6 months of 2011.
The foreclosure filings didn’t stop because people could magically afford their mortgage again, but because one of the primary attorneys inTampa who was filing the foreclosure paperwork on behalf of the lenders was caught up in a “robo-signing” scandal.
Jack McCabe, a Deerfield Beach real estate consultant explains that once the foreclosure process was studied by auditors and attorneys representing the homeowners, it was found that a large percentage of the foreclosure paperwork had been approved and signed in an “improper and sometimes fraudulent” way. The lenders realized that this was going to create a stir, so they halted foreclosure filings completely and took time to sort everything out. According to McCabe, “they had to fire their old attorneys and hire new ones who had to review all their files.” Only after that could they start again.
So, as you can imagine, there’s quite a bottleneck of foreclosure proceedings coming down the pipe. If you haven’t been making your mortgage payment and are thinking that maybe they forgot about you, you can probably expect some bad news soon unfortunately.
The good news is that there is a way out. As the article points out, even in its title, “experts predict that 2012 will be the year of the short sale.” That’s because as these foreclosure notices get sent out, homeowners will be down to the wire on making some decisions.
“I think a lot of people who were in denial – like deer in the headlights – are waking up to the reality that they are hopelessly upside down in their homes and they want to get out,” says Bob Saltzman, regional manager for Advantage Mortgage in Tampa. Saltzman thinks that 2012 is the year that homeowners will finally stop being emotional about their home and look at it like a business decision.
“They will realize it will take more than a decade for housing prices to return to their 2005 levels, and in the meantime, they could be saving money by moving into a rental,” Saltzman continues. But he doesn’t want the homeowners to blame themselves or feel helpless and hopeless: “People have to realize that this crisis is much bigger than they are. It is a multi-generational disaster that originated from the top down…it’s bigger than any one person. So they shouldn’t put it all on their shoulders.”
He’s right. There’s not anything that any homeowner could have done to predict or prevent the collapse of the housing market, and even if employment was up and gas prices were down, the fact would still remain that there are a large number of people who are 25% to 65% upside down in their mortgages! And the only way to get out of that mortgage debt and spare your credit and your sanity is by doing a short sale.
So, maybe this Herald Tribune article has hit the nail on the head. I wouldn’t be surprised at all if 2012 IS the year of the short sale. It would be great news, too, for all of those upside down homeowners to make a business decisions that will increase their net worth, reduce their debt level, and put them ahead of the curve for the next decade!