A short sale occurs when a homeowner is in danger of foreclosure and they come to an agreement with their lending institution to sell their home for much less than what they owe on it. The bank forgives the remainder of balance. These types of sales are becoming more and more popular in the mortgage industry as more homeowners face the danger of foreclosure and they look for alternatives that are acceptable for both the homeowner and the lender.

Some realtors advise their clients that short sales are a bad idea and they should never purchase one of these properties. Other realtors advise their clients that a short sale is a good idea if they know what they are getting into. Here are three things that you should know about buying a short sale so you can make an independent decision that is right for you.

The Majority of Short Sales Do Not Close

Buying a short sale can be frustrating. If you are in the market for a home and you search through the listings that are available, you may find a short sale home at an incredible price. It can be exciting thinking that you are going to get a huge bargain on a home that you are going to love. But just because a short sale home is listed, doesn’t mean it’s going to close. In fact, only about 10 percent of the short sale homes actually close because the seller and their lending institution often cannot agree on a price for the property. Short sale listings are typically subject to lender approval so you may get your hopes up only to have them dashed.

It Can Take Up to Four Months to Close a Short Sale

A short sale transaction typically takes a long time to close. That is because there are three parties to deal with - instead of just two with a normal home purchase. The three parties include you and your agent as the buying party, the homeowner as the second party, and the lending institution as the third party. The seller and the lending institution have to come to an agreement on the price of the sale before it can be sold at any price. Unfortunately, this agreement often happens several weeks or even months into the purchasing process, if an agreement is even reached at all.

Short Sales Are Not Always the Bargain They Seem to Be

Finding a short sale that has an incredible price is very common, but have you researched the surrounding area and comparable sales to see if that price is really such a steal? Often the short sale is priced at or even above the sale prices of other homes in the area. And since buying a short sale is generally more of a hassle than doing a traditional purchase for a home, the price may not be worth it. If you find a short sale home with a great price, check housing comparables in the same area. You may find a better bargain elsewhere.

Now that you know a few more things about buying a short sale, do you think it is the right path to home ownership for you?

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Millions of Americans are facing foreclosure these days and they simply do not know where to turn or how to halt the process. While there are many cases where a foreclosure may be too far into the process to stop it, there are some things you can do if you are in danger of foreclosure in the early stages of the process. Try some of these alternatives before you decide that it is a lost cause.

• Temporary Rate Reductions
  With interest rates as low as they are, there may be a good chance that you can convince your lender to lower your rate temporarily. A lower rate would result in a lower payment and the difference in your monthly payment would depend on your mortgage rate at the beginning of the loan and the current mortgage rates in the market. It may not be a significant reduction, but it may be that extra little bit that helps you make your payments for the next few months.

• Payment Deferments
  If you are experiencing a temporary financial hardship, you may be able to defer your payments for a month, two months or even longer depending on your situation. But deferred payments are typically for borrowers who are current on their mortgage payments. Don’t wait until you fall a month or two behind on your payments before you contact your lender and ask for a deferment or else you probably are not going to get this extra help that you need.

• Loan Term Extensions
  Extending the term of your loan means that you will be paying longer on your loan and you may be paying more in interest, but your payments will be smaller each month. If you are having financial difficulties, this can be a great temporary fix. Once you have gotten back on track financially, you can refinance or do what you need to do in order to pay off your loan on your previous schedule or even faster than originally planned.

• Get Federal Help
  The federal government has several programs, including the Making Home Affordable Program, designed to help troubled homeowners who are facing foreclosure. At the first sign of financial trouble, start researching which federal programs will fit your particular situation so you know where to turn in case you need to slow or halt the foreclosure process.

If you are facing financial troubles and you think you are going to miss a mortgage payment or several mortgage payments, the best thing to do is consider the options available to you right away. The longer you wait, there less options available to you as lenders typically prefer to work with people who are current on their payments. After missing a couple of payments, you will be in a predicament that you may not be able to get out of. Even then, however, you should still be able to get some sort of help, but you will not know what is available if you do not try.

Going through a foreclosure can have a negative impact on a person’s life in many ways. In addition to the financial damage of a lower credit score and a foreclosure on your record, you could also experience a wave of emotional damage, shame, depression and other problems that aren’t easy to solve. If you have gone through a foreclosure or going through one right now, you aren’t alone and you can come through the experience in a better position. Here are some ways to survive a foreclosure and make the experience less damaging financially, mentally and emotionally.

1. Get help. With all of the government programs charitable programs available to troubled homeowners, there really isn’t an excuse to avoid getting financial help with your mortgage. But emotional help may be more important. Seek out trusted friends who will take the time to listen to you vent about your foreclosure problems. Or if you prefer to talk to a stranger, programs like Good Grief America (www.goodgriefamerica.ning.com) offer support groups for people in your situation. Sometimes just venting and talking about things can be a huge relief and it can take a load off.

2. Stay calm and do what you have to do. Once you’ve gone through a foreclosure, you may find yourself homeless. On the bright side, it should be easier to save up money for a rental since you no longer have a house payment. But until then, you may have to suck up your pride and ask some family and friends if you can sleep on their couch for a couple weeks (or months) until you can get back on your feet. If all else fails, you may have to consider living in a shelter for a couple weeks until you can get your finances straightened out.

3. Rent for awhile. Renting isn’t the worst thing in the world and it can be a big help if you are in a pinch. With renting becoming more popular, many landlords and property managers are offering great deals, such as one or two months free rent, a smaller security deposit and other specials. You also don’t have to worry about closing costs, property taxes, maintenance costs and other fees that you had to pay when you were a homeowner.

4. Focus on improving your credit score. The better your credit score is, the better chance you will have of owning a home again. A foreclosure will bring down your credit score dramatically – as much as 200 points in most cases. It will take some time to fix that damage but it can be done. Make sure you pay your bills on time, pay down your credit cards and avoid opening up any more credit accounts while you are building up your score. Before long, you may be a good financial risk for banks and you may be able to buy another home while putting the lessons you’ve learned throughout your foreclosure process to good use.

Going through a foreclosure doesn’t have to be the end of the world. These are just a few things you can do to help make the experience make you a more educated person when it comes to home ownership.

There are millions of stories of homeowners getting foreclosed on and then losing their home as a result. Many of these foreclosures followed the proper and legal procedures and there is no question that the homeowners were rightly forced out of their home for nonpayment of their mortgage. But there are about 4 million instances that are now eligible for review to find out if the procedure was illegal and the lenders acted too quickly to foreclose on many homeowners. The federal government has now announced plans to do something to help these homeowners and now there is an action in place to help those who have been wronged by the "robo-signing" scandal of 2010.

The 4 million homeowners who are possibly affected by these robo-signing foreclosures have the option of having their individual case reviewed. Some of the most recognizable names in the banking industry are included in this investigation, including JPMorgan Chase, Citibank, Wells Fargo and Bank of America. According to the federal government, there were many foreclosures that were rushed through the system without proper review of the documents.

In cases where it turns out that the lender processed the foreclosure without the proper review, the homeowner that was illegally forced out may get reimbursed for late fees and other charges that they had to pay as a result of the foreclosure proceedings. The legislation does not specify a maximum or minimum amount for this reimbursement.

In Congress, there are many who are critical of this new legislation. For one thing, the banks are being allowed to review their own cases. Some congressional members are saying that there should be an outside review and investigation of the cases as it is inappropriate for lenders to review their own mistakes. However, regulators are saying that there will be independent consultants reviewing the cases in addition to the lenders reviewing their own cases. If there are mistakes spotted in the cases, there will be additional reviews to see if the lender is trying to cover up other mistakes.

Another criticism of this legislation is that the lender will decide how much compensation a homeowner will receive if they have been financially damaged. There are many who feel that the Office of the Comptroller of the Currency, the government office in charge of this new legislation, should either oversee the financial reimbursement given by the lenders or appoint a federal government office to help ensure fair and timely reimbursement payments to homeowners who were unfairly and illegally foreclosed on.

If you think your foreclosure was illegal, call 888-952-9105 for more information on how to get your individual case reviewed. You can also visit www.independentforeclosurereview.com for more information. The deadline to request a review of your foreclosure is April 30 so make sure you get the information you need right away.

Recent studies have shown that the frequency of crime in an area is related to the number of foreclosed homes that are in that area. For homeowners who are left in these areas, the crimes can have a major impact on their lives. Here are some things you can do to protect your neighborhood from the criminals who prey on areas where there is a large number of foreclosed homes.

Collect Newspapers and Mail
Once big sign that a home is not occupied is that there are newspapers and mail that have been left uncollected. If the homeowners have moved out in a rush due to foreclosure proceedings, they probably forgot to stop their newspaper subscriptions as well as changed their mailing address. Keep all of these things in a box and give the box to the realtor when they come by to prepare the house for putting it on the market.

Keep the Lawn Looking Nice
This may seem like a lot of work, but if all the neighbors work together, the foreclosed homes will look occupied and it will reduce the chances of criminals targeting the neighborhood. Water the lawn and mow it if necessary to keep everything looking nice. You can also make sure the flowerbeds are kept up, the bushes are trimmed and the leaves are raked if you really want to make the home look occupied.

Report Abandoned Property
Foreclosed homes often become a type of garbage dump for people who have nowhere else to take their trash. You may wake up one morning to see a pile of trash in the driveway of the foreclosed home next to you. Report this to the authorities immediately to get it taken care of as soon as possible. A home with trash in the yard is a sure sign that nobody lives there and it will be like a magnet to criminals.

Start or Participate in a Neighborhood Watch Program
Neighborhood watch programs are very effective in keeping the rate of crime down in an area. If you don’t have one right now, it’s never too early to begin one. Even if your neighborhood isn’t full of foreclosures, having a neighborhood watch program can help everyone feel a little more secure. If you do have a program in your neighborhood, become an active participant in it. If criminals know the neighborhood has one of these programs, they are less likely to target your neighborhood regardless of the number of foreclosures.

Immediately Report Suspicious Activity
Have you seen a car driving slowly through your neighborhood? Have you seen people walking around the foreclosed homes as if they are “casing them out”? If so, report that activity immediately. The police may not be able to do much until something actually happens, but they might patrol the area more often.

Foreclosed homes affect more than just the people who once lived in them. They can affect the economical standing and the safety of a neighborhood and a surrounding community. But if you are diligent and you can organize programs with others in your area, you can minimize the impact that the large number of foreclosures has on your neighborhood.

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With President Obama introducing an expansion of what many are calling a failed program, there are critics speaking out about the best ways to solve the housing crisis. On one end of the spectrum, some senators like Barbara Boxer and Johnny Isakson want the FHA, Fannie Mae and Freddie Mac to refinance every mortgage that they hold at the current mortgage rate around 4 percent. Their idea would place no consideration on the homeowner’s credit score or the value of the home as long as the borrower has been current on their payments. But would this solve the problem?

Critics say this would not work. With homeowner equity falling by more than $7 trillion since the start of the housing bubble, many analysts are saying this is not the best answer. The Congressional Budget Office has estimated that refinancing all of the Fannie Mae and Freddie Mac loans would result in nearly 3 million homeowners being able to refinance their mortgage. As a result, there would be about 111,000 fewer homeowners defaulting on their mortgage loan.

But an article by Anthony Sanders in USA Today says that refinancing these nearly 3 million mortgages would only generate about $7.5 billion during the first year. As a result, only a tenth of one percent would be added to the overall economy through personal spending. And that figure is making the assumption that people would spend that extra money rather than put it into a savings account.

If refinancing these homes at a lower rate won’t work to solve the problem, would it help to reduce the mortgage principal to make the loan come down to what the homes are actually worth? While this could stimulate the economy and prevent some defaults, it would basically be a $7 trillion bill to the federal government. And if you’ve been keeping up with the news and how far in debt the nation is in, it’s no surprise that bringing down the principal balance isn’t the solution either.

The article concludes by saying the best solution is to let the mortgage market heal itself. Sanders, who is a professor of real estate finance at the prestigious George Mason University, says the mortgage problem will solve itself if we can improve economic growth and reduce unemployment. While this sounds like a great idea in theory, Sanders does not give any insight in the article about how to do this. He spends the entire article criticizing the possible solutions while offering no solution of his own.

So can the mortgage problem fix itself if we simply focus on reducing unemployment and increasing economic growth as Sanders says? If so, how can we do that? Or has the mortgage problem outgrown its option to fix itself and, as a result, needs the federal government to step in with a variety of plans, programs and solutions? Let us know your thoughts below.

The Obama administration has revamped the mortgage refinancing program in an effort to help more than one million homeowners take advantage of the record low interest rates regardless of the current value of their home. The new plan was announced on Monday and it could be a huge step in stabilizing the housing market, but some economists say more is needed.

The new plan extends the help that a previous plan – HARP – offered. Instead of only helping homeowners who have fallen behind on their mortgage payments, the new guidelines are designed to help homeowners who are current on their payments but are ineligible for refinancing their loan due to the lack of equity that they have built up in their home. The new plan is also designed to help homeowners who owe more on their homes than its current market value.

President Obama, when making his announcement, stated that most underwater homeowners can only refinance with their original lender. Unfortunately, some of the lenders refuse to refinance these loans for various reasons. He went on to say that the changes will encourage lenders to compete with each other for the business of homeowners by offering better mortgage rates and terms.

One of the high-ranking officials with the Center for Economic and Policy Research told CBS News that the program would be “very good” if it ended up helping 800,000 homeowners refinance their current mortgage. But he also said that it probably wouldn’t be enough to make a huge difference in the overall economy. Edward Pinto, a housing analyst, said that the plan will mostly help borrowers who owe less on their mortgages than their home’s current market value and it is not going to make a huge difference for homeowners who are “underwater” on their homes. He cited numbers that showed only about a tenth of the homeowners who refinanced their loan through the HARP program were actually underwater on their mortgage loans.

Under the extension of the current program, qualifying borrowers would need to be current on their mortgage payments that are owned or guaranteed by either Freddie Mac or Fannie Mae. Right now, more than 10 million homeowners owe more on their mortgage loans than the current market value of their home. HARP was started over two years ago in hopes of helping 5 million borrowers with their mortgage payments, but fewer than 900,000 were actually helped by the program. But with the expanded program, that number could double by the end of 2013.

With the presidential election just over 12 months away, this expansion of the existing program may provide a small victory for President Obama that he can carry at least for the next few months. With the Republicans criticizing his handling of the economy, unemployment and other important issues that Americans are concerned about, this is something that has to be a success to help drum up support for his success in the 2012 election.

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