Huntsville Foreclosure | Huntsville Alabama Foreclosed Homes Blog

A short sale is a real estate transaction where a lender or lenders approval is required to complete the sale of the property.  There are many short sale scenarios.  Sometimes the banks will write off the debt, or convert the debt to a non-secured loan while releasing the lien against the property.  Each bank has its own policies and procedures.  These policies and procedures change often and without notice.  It is a very fluid environment.  

The short sale process is complicated and there are many pitfalls.  Be sure to find someone who has experience and can guide you step by step through the process without charging you additional fees outside a typical real estate transaction.  If you need someone to talk to you can reach us at:

Bert Klimer- 256.656.3759

or Paul Schuppener- 256.658.9340

Many short sales never actually make it to a closing table.  There are many ways a short sale can fall apart.  There are also more decision makers than you would  see in a normal transaction.  It is important for all parties involved to have a clear understanding of reasonable expectations and the process.
In a short sale there are at least three separate decision makers.  The buyer, the seller, and each bank that has a mortgage on the property.  If any one of these parties does not agree with the negotiated terms through the contract process, the deal can not proceed. 

Many short sales have someone handling the process.  This person is usually referred to as a "short sale negotiator".  This is typically an attorney, listing real estate agent, seller, or a third party.  If you plan on having a successful short sale, it is important to find someone with experience in successfully completing these types of sales.  The better the "short sale negotiator", the better chance you have of making it to the closing table. 

The more prequalifying that is done, the higher the likelihood of a successful closing.  There are clear expectations that need to be understood for both the buyer and the seller to increase the likelihood of this successful transaction. 

Let's begin with the seller.  It is important to know the sellers overall financial situation.  The seller is also going to need to put a short sale package together.  Think of this package as a mortgage application of sorts.  The only difference is that the seller will be  explaining why he or she can't afford the mortgage.  It is important that the seller understand that the stronger they are financially, the higher the likelihood they will be asked to take a signature loan for the difference.  This is especially true lately with the second mortgages. 

The buyer needs to understand that it is highly unlikely that this  contract will close in 30 days.  It could easily take 90 - 120 days.  Depending on the banks involved and the number of mortgages against the property, I have seen some take up to six months.

Many people don't understand how a short sale will affect their credit.  The short sale itself does not harm one's credit in any way.  It is possible to complete a short sale without having a major impact on the person's credit.   We are going to go through several scenarios to explain short sale options and the ramifications of each scenario.

The largest impact to ones credit is the missed payments.  If someone is 30, 60, 90, or 120 days late on a mortgage, it will significantly impact their credit.  There is a misconception that one has to be  late on the mortgage to be eligible for a short sale.  This is not accurate.  It is possible to negotiate a short sale without missing any payments on the  mortgage.  If someone does this and converts the remaining balance due at closing to a signature loan, their credit should not be impacted in any way.  The credit report should show one of two following scenarios:

• The existing loan shows "paid in full" and a new loan shows up with the remaining balance.
• The existing loan balance is reduced and your payment is adjusted.

It is also possible to not miss a payment and have the bank write off the remaining balance.  This will affect your credit and the account will show that some sort of settlement was reached on the account.  Depending on the person's credit score, they can expect a 50-100 point reduction in their credit score initially.

If one misses payments and reaches a settlement on the mortgage or mortgages then they are likely to see a much more substantial credit impact.  There are several advantages to completing a short sale if one is having financial challenges.  By relieving this debt, that person may put themselves in a position to keep  other accounts in good standing.  A short sale is also significantly easier to recover from than a foreclosure.  One can bring their credit score back up in a relatively short period of time after they have started making all their remaining payments on time.  This has a much smaller impact than the long term credit damages that a foreclosure or bankruptcy can create.

Alabama home prices, including those in Madison County, are more affordable than ever, according to a University of Alabama study released Friday.

The Alabama Housing Affordability Index for the first quarter reached 210.4, the highest number on record, according to the study.

The affordability index is defined as the ratio between a market's median income and the median home selling price. An index of 100 means a family earning the median income has just enough money to qualify for a loan for that market's median-priced house.

According to the report, a Huntsville-area family earning the area's median income of $67,500 has 2.27 times the income needed to qualify for a loan to purchase the median-priced home of $143,467, or an affordability index of 227. That's a 16.7 percent increase in affordability from the previous quarter, which had an affordability index of 194.6.

Courtesy of The Huntsville Times by Gina Hannah

Statistics for Entire MLS from 03/01/2009 to 03/31/2009

Many Smaller Cities Dodge Crunch in Consumer Lending

Wall Street Journal | MARCH 30, 2009

Consumer-lending activity has increased in numerous midsize cities in the U.S., a sign they are riding out the recession better than big cities and rural towns, an analysis of credit data shows.

As banks pull back on risk taking across the nation, consumer-loan balances in places like Huntsville, Ala., are rising. In Huntsville, a metropolitan area of 376,000 that is home to many government contractors, borrowing increased 13.2% per household in last year's fourth quarter, compared with the year-earlier period, according to data provided to The Wall Street Journal by Moody's Economy.com and Equifax Inc.

Prospective buyers given look at what's out there; homes ‘do need work'

 One by one, they stepped from the charter bus into the late morning sun, carrying clipboards, pens and cell phones. They made notes and took pictures of the three-bedroom, bungalow-style house in southwest Huntsville. They gazed at stained carpet, missing soffit and fascia boards, holes punched in walls and doors, possibly by owners angry at having to move out of their home.

Our February foreclosure tour featured 11 homes on a rare sunny and unseasonably warm day.  We started out in West Huntsville in a sub-division with a lot of builder foreclosures and move-in ready houses.  We followed up by visiting two "fixers" which were a HUD home and bank owned property on the same street in SW Huntsville.  We then swung up into Madison, to visit a couple properties, including a short sale.  Next stop was Northwest Huntsville to visit another HUD home, followed by two properties in 5 points, and one in Olde Towne.  Last stop was two properties in Southeast Huntsville.

Since this was Huntsville's first foreclosure bus tour, we had local media from WAFF and the Huntsville onboard covering the tour.  We also want to thank all of our riders who took the time to spend part of their day with us.  We appreciated all the feedback and comments they provided about what would make future tours better, but most importantly we feel as if we made a new set of friends. 

We had a story about us in the Huntsville Times!

Heres the print version

Below is the web version of the article.  How exciting!

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Program will include wide range of prices

You'll see them in places hit hardest by the housing crisis: Tour buses rolling through the streets of Las Vegas, Atlanta, Detroit, shuttling prospective buyers interested in finding a deal on a foreclosed property.

But area still better off than most of country

Foreclosures are up in Huntsville - way up.

According to RealtyTrac, 825 homes in the Huntsville market entered some phase of the foreclosure process during 2008, compared with 76 filings in 2007 and 73 in 2006.