Short Sales Approved in 7days

July 27th, 2009

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Coming Up Short, More And More
Troubled Borrowers Increasingly Allowed to Sell for Less Than Loan

By Renae Merle
Washington Post Staff Writer
Saturday, July 11, 2009

More than two years into the housing crisis, lenders are beginning to allow more troubled homeowners to unload their homes for less than they owe. The practice, known as a short sale, is gaining popularity as an alternative to foreclosure, but it remains a difficult and lengthy task to pull off because the lender bears the brunt of the loss.
This Story

The number of short sales completed jumped 208 percent during the first quarter of this year compared with the same period in 2008, according to a report issued last month by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate banks.

Short sales could increase further as home prices continue to fall, leaving a growing number of borrowers owing more than their home is worth. Also, the Obama administration is implementing a program to pay lenders to accept less than the balance owed by the borrower in such deals.

Already, Bank of America, the country’s largest mortgage lender, has seen completed short sales jump 50 percent so far this year, said Dave Sunlin, a senior vice president who manages the foreclosure and real estate division. “We understand this is an opportunity to mitigate our losses, while helping turn around the housing market and help homeowners,” he said.

Bank of America opened a short-sale call center last year. And the bank hopes to launch a pilot program within 30 days that would shrink to one week the time it takes to have a specific short-sale offer approved, Sunlin said. Under the program, prospective sellers apply to Bank of America to get preapproved to pursue a short sale in general, then go back to the bank for approval of specific offers as they come in. The program will initially focus on borrowers who fail to qualify for a government foreclosure-prevention program, he said.

“If they have come to the conclusion that there is no possible workout, they should contact us as quickly as possible,” Sunlin said. read the full article here.

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Commercial Real Estate Time Bomb

July 24th, 2009

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Posted by Carla Fried
July 20, 2009 12:24 pm
from: Money Magazine

There’s a new main character moving to center stage in the great real estate meltdown. Underwater homeowners vying to refinance or score a loan modification have grabbed much of the headlines (and bailout attention) to date. But now commercial real estate is moving into the spotlight as the next potential body slam for the economy.

Last week The Washington Post reported that the U.S. Treasury department has begun to contemplate what can muck things up for the economy and the recovery beyond what is currently being bailed out. This effort has come to be known as Plan C. As in, “Yikes, Plan B might not do the trick, so what do we need to focus on next?”

Reports the WaPo, “The officials in charge of Plan C — named to allude to a last line of defense — face a particular challenge in addressing the breakdown of commercial real estate lending.”

The story line reads like a sequel to the residential debacle: Commercial property owners are sitting on loans that need to be refinanced. The Real Estate Roundtable estimates that about $400 billion a year in commercial loans will need to be refinanced over the next decade.

bank_sign.ju.03But with commercial property values way down, vacancies way up, and the recession making it unlikely there will be a demand pick-up anytime soon, banks haven’t been inclined to offer refinancing deals. If they do open the spigot at all, the terms are nowhere near as cheap as what commercial property owners had enjoyed during the boom. Sounds familiar, eh?

Earlier this month, in testimony before the Congressional Joint Economic Committee, Jon D. Greenlee, the Fed’s associate director of banking supervision and regulation, summed up the Plan C worry: “At the end of the first quarter [of 2009],” he testified, “about seven percent of commercial real estate loans on banks’ books were considered delinquent. This was almost double from the level a year earlier.”

Greenlee says there is about $3.5 trillion of outstanding debt associated with commercial real estate, and banks had about $1.8 billion trillion of that tidy sum on their books. That computes to about $126 billion (so far) in delinquent commercial mortgages on the banks’ books.

Now if you’re Goldman Sachs, you might be able to absorb commercial real estate writedowns (reportedly of more than $1 billion) with record trading profits elsewhere. And, to be sure, the vultures are already circling in the hopes of picking up distressed commercial property.

But if the squeeze on commercial real estate is as persistent and pernicious as what we’ve seen in the residential market, it wouldn’t exactly be a shock if the government beefs up its support/bailout. Get your taxpayer dollars ready for Plan C.

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