Can a Short Sale Save Your Credit?

Stuck in a house you can’t afford or can’t sell for more than you owe on it? Beware the Internet, where you will see plenty of claims that state short sales will save your credit, simple as that. But there is nothing simple about deciding whether to sell your house in a foreclosure or in a short sale, which means you sell the property for less than you owe the bank. And in most cases, going through either process will wreck your credit score.

Both short sales and foreclosures are considered negative by the score, because most data systems show it as being very predictive of future credit risk. The claim that doing a short sale is not going to hurt your score is false and inaccurate.

Credit scores, which are designed to assess how likely it is that consumers will uphold their side of the bargain, look at the severity (are we talking bankruptcy or a late car payment?), frequency (have you skipped a payment once or have you missed several payments?), and how recently (did you miss a payment last month or last year?) of items on your credit report. In both short sales and foreclosures, you made the loan holder take a great loss.

That is not to say that there are not some instances where short sales are better. If a borrower is current at the point of a short sale, for instance, then the consumer’s credit score will not sink as far as it would have if he had not made a mortgage payment for 6 months. Still, Fair Isaac says that the benefit from not having prior delinquencies on file pales when compared with the hit a score takes from a short sale.

If you are having mortgage trouble, seek help right away from a housing counselor or an attorney. Realtors are the go-to professionals to learn about the local housing market and what it takes to sell your home. They may not be credit experts, but they have valuable resources and may be able to steer you towards help. Do not pay someone a lot of money if they promise to quickly rehab your credit score after foreclosure. Credit scores are forgiving—over time.

Even if you do your homework, you ultimately can’t control how your housing woes are reported to the credit bureaus. For example, mortgage servicers may report your situation to the credit bureaus using different codes that could be interpreted more or less favorably by FICO.

Credit scores play such a central role in consumer’s lives. Yet it is so hard to understand them that people can end up making disastrous choices based on myths that are taken as fact. It is certainly not a catchall solution, but Congress should at least grant consumers free access to their credit scores, an idea which is currently being floated at the capitol.

If you or anyone you know needs short sale help or has any questions, feel free to call us anytime. We are so happy to help.

Lisa Doyle
925-855-4046

More Availability For Jumbo Loans!

An article taken from Realtor Magazine- September 2010

A year ago, even the most creditworthy borrowers struggled to secure home loans of more than $729,750- the cutoff for conventional conforming loans backed by Fannie Mae and Freddie Mac. But since this spring, the interest-rate spread between conforming and jumbo loans has narrowed and the number of lenders offering the loans has jumped. As of late July, lenders were offering jumbo loans at a typical rate of about 5.5%, down from almost 7% a year earlier and not too different from what’s available for conforming loans. Sales of existing homes priced at $750k and above jumped 30% from mid-2009.

Credit was extremely tight a year ago, but now it is beginning to loosen up. Among the big players in the market: Citigroup, which says in a July 10 Wall Street Journal article that it has seen a 30% rise in jumbo business, and Bank of America, which in an interview with Realtor Magazine late last year said it was making a big push in the jumbo arena.

As always, if we can be of any help to you or anyone you know, call us or email us anytime.

Greg & Lisa Doyle
925-855-4046
Ldoyle@rockcliff.com

New Bank Owned Condo For Sale In San Francisco!

This gorgeous 1 bedroom, 1 bathroom unit has many great features including fabulous views of the city, bay bridge and water, beautiful hardwood flooring, light and bright throughout and so much more. It’s also a quick walk to shopping, Embarcadero and more! Hurry!

400 Beale Street #813
San Francisco

For more bank owned inquiries and information, contact us anytime at 925-855-4046.

What you should know about Financial Reform by Lisa Doyle

Here are some things you should know about the financial regulations bill:

1) The end is too big to fail: If a big financial firm is failing, it will have only one fate: liquidation. There will be no taxpayer-funded bailout. Instead, regulators will have the ability to shut down and break apart failing financial firms in a safe, orderly way- without putting the rest of the financial system at risk, and without asking taxpayers to pay a dime.

2)Close loopholes in regulation of major financial firms: Loopholes that allowed firms like Lehman Brothers, Bear Stearns and AIG to operate without tough standards or oversight wer major contributors to the financial crisis. Regulatory reform will close these loopholes and create accountable regulation for all firms that pose the most risk to the financial system. It will end the ability of financial firms to avoid tough standards by manipulating their legal structure.

3) Bring transparency to hedge funds: Financial reform will require advisers to hedge funds to register with the SEC for the first time, bringing transparency and oversight to these unregulated financial firms.

4) Constrain the size of the largest firms: Financial reform will prevent any financial firm from growing by acquisition to more than 10% of the liabilities in the financial system. This will reduce the adverse effects of the failure of any single firm and prevent the further concentration of our financial system.

5) Reform executive pay and strengthen shareholder protections: Financial reform will give shareholders a say in the compensation of senior executives at the companies they own, and require that the compensation committees of corporate boards are independent.

6) Separate banking and speculative trading: Financial reform will protect taxpayers and depositors by separating risky, speculative “proprietary trading: from the business of banking.

7) Strongest consumer protections ever: Instead of 7 federal agencies with ony partial responsibilities for consumer protection, there will be 1 agency with the sole responsibility of establishing clear rules of the road for banks, mortgage companies, payday lenders, credit card lenders and other financial service firms and for enforcing these rules. From now on, every consumer will be empowered with the clear and concise information they need to make financial decisions that are best for them.

8) Crack down on the abuses in the mortgage markets at the center of the crisis: Financial reform will ban abusive practices in the mortgage markets, like those where brokers got paid more to put families into higher priced loans than those they qualified for, and require mortgage brokers and banks to consider a family’s ability to repay when making a loan. The reforms will also require lenders and Wall Street loan packages to keep skin in the game when selling off loans to investors and make full disclosure so investors know what is in those packages. Reforms of credit rating agencies will help make sure investors do not rely unwisely on their ratings on these packages.

For more information, visit www.financialstability.gov

Talk to you soon!

Lisa