REO's, BPO's and other Foreclosure Terminology

Over the past year or so, those of us in Real Estate have become more and more accustomed to using certain acronyms that describe the current state of affairs in our business. Sadly, 60% of our current inventory of listed homes are considered distressed sales.

Since I just spent two days in class last week to become a specialist in the field of REO's, I thought I would tell you about this all-too-familiar term. REO stands for "Real Estate Owned". These are properties that have gone through the foreclosure process without a successful sale and have gone back to the bank or lender. Typically, the owner has already left the home, because he or she could not afford to pay the monthly mortgage. Now, the bank has the burden to market and sell the property for the highest possible amount. We in Georgia are one of the top 10 states in foreclosure activity.

One of the first things a bank does when taking possession of a foreclosed property is to order what's called a BPO or Broker Price Opinion. The lender may be in California and the property is here in Georgia. The BPO is what gives the lender "the truth, the whole truth, and nothing but the truth" about their reacquired asset. A licensed local realtor is hired by the bank to inspect the property, research comparable sales and write up a report including pictures. The realtor is the "local eyes and ears" of the bank. He or she recommends needed repairs, estimates how much those repairs will cost, and tells the bank what is going on in the local real estate market.

Sometimes, this same local Realtor is hired by the bank to manage the property and list it for sale locally. The Realtor is then responsible for getting repairs done while protecting the bank's asset until it sells. The management team might then include a home inspector, a contractor, an attorney, and a landscaper. Sounds like a lot of work, doesn't it?

And you thought Realtors just drove people around to look at houses! Realtors are in a critically important spot right now to help get bank-owned properties sold and back in the hands of individual homeowners. The faster we can do that, the better off we all will be. Our neighborhoods will look better and our cities and counties will be stronger financially.

Enough for today! I will continue with more foreclosure information in my next post.

If you have questions about short sale, foreclosure, or any other confusing real estate situation, please feel free to comment or call or e-mail me.

Linda

Linda@lindaschultehomes.com

770-286-1560

Short Sales- A Short Course

Over the past few months it seems those of us in the Real Estate world have developed a whole new vocabulary full of unfamiliar- and somewhat scary terms. Foreclosure, REO, Short Sale, Loan Modification to name just a few.

Let's start with "Short Sale". Only a couple of years ago, hardly any of us had ever heard this term, and today, unfortunately, it is an all-too-common situation. Nationally, about 11.18% of all mortgages are falling somewhere in the ballpark of "at least 1 past-due payment, all the way up the process to foreclosure. That is a staggering number!

As a Realtor, I wanted to become proficient in handling Short Sales, because I could see that this was the best way to help distressed sellers avoid the devastation of foreclosure and salvage some of their credit rating. Short Sales also help the community by keeping home values up.

So, what is a Short Sale? A Short Sale means that the lender agrees to take less on the sale of a home than is owed in order to avoid the expense of foreclosing on the property. The seller must demonstrate that there has been a hardship, e.g., job loss, medical expense, etc, that is making it impossible for him to keep up the mortgage payments. Sellers must provide documentation of income, expenses, etc., to the lender, and the lender ultimately approves the sale of the home at the lesser price. The seller does not receive any of the proceeds of the sale.

Recently, President Obama has proposed legislation that would help some distressed homeowners to stay in their homes. Some people will be allowed to refinance their mortgages and some will qualify for loan modifications. The specifics of these new laws are not totally clear just yet.

If you are a homeowner who has suffered job loss or other conditions making it very difficult or impossible for you to make your mortgage payment, don't hesitate to contact a knowledgable Realtor or Lender who can help you navigate through the process. Don't avoid the issue. If you are having trouble, talk to someone who can help you.

Enjoy the weekend and the beautiful sunshine!

Linda