How much impact does a short sale have on FICO® Scores? How about a foreclosure? Since I frequently hear these questions from clients and others, I thought I’d share new FICO research that sheds light on this very subject.

The FICO study simulated various types of mortgage delinquencies on three representative credit bureau profiles of consumers scoring 680, 720 and 780, respectively. I say “representative profiles” because we focused on consumers whose credit characteristics (e.g., utilization, delinquency history, age of file) were typical of the three score points considered. All consumers had an active currently-paid-as-agreed mortgage on file.

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Results are shown below. The first chart shows the impact on the score for each stage of delinquency, and the second shows how long it takes the score to fully “recover” after the fact.

All in all, we saw:

• The magnitude of FICO® Score impact is highly dependent on the starting score.
• There’s no significant difference in score impact between short sale/deed-in-lieu/settlement and foreclosure.
• While a score may begin to improve sooner, it could take up to 7-10 years to fullyrecover, assuming all other obligations are paid as agreed.
• In general, the higher starting score, the longer it takes for the score to fully recover.
• Even if there’s minimal difference in score impact between moderate and severe delinquencies, there may be significant difference in time required for the score to fully recover.

This study provides good benchmarks of score impact from mortgage delinquencies. However, it is important to note that research was done only on select consumer credit profiles. Given the wide range of credit profiles that exist, results may vary beyond what’s in the charts above.

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67.5% Increase In Bank Shadow Inventory July 26, 2011 ·

Has the state of the housing market gotten better or worse since the first quarter of 2009?

To answer this, you have to define what you mean by the state of the housing market. If you mean sales alone, then the state of the market hasn’t changed much: existing home sales are up a little from that time, while new home sales are down a bit. But assessing the inventory of defaulted, unsold homes in the market probably provides a better measure of health.

The following chart created by Laurie Goodman, a housing market expert at Amherst Securities, shows the ominous rise of shadow foreclosure inventory. It was part of a slide in a presentation she recently gave at an event last week at the American Enterprise Institute on how the Dodd-Frank financial regulation bill is stifling mortgage credit. Click to enlarge:

This chart answers the question: what’s happening to the homes of all those defaulted borrowers that we hear about? Many of those properties are a part of so-called shadow inventory. This is the sort of limbo between when a home’s loan defaults and when the property is put on the market for purchase.

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The increase shown above is staggering. The shaded area shows mortgages more than 12 months delinquent or in foreclosure (darker blue) and those seized by the bank (lighter blue). The sum has risen from just below 2 million in early 2009 to 3.35 million in April 2011. That’s an increase of more than 67.5% over this period of about two years.

Also interesting: despite accumulating more defaulted properties, banks are very careful not to increase the number of loans sold very much. Loans sold has been very steady from 80,000 to 95,000 over this period. So recently prices have begun declining again even though the inventory for homes available for sale is being kept relatively low compared to the number that should actually be available to buyers.

According to Goodman’s presentation, even though homes sold are only about 90,000 per month, inventory is growing by around 60,000 per month. So the homes sold each month would have to increase by two-thirds just to keep up with the growing inventory — not to begin to cut the 3.35 million homes in the shadows. To conjure up enough demand to meet 150,000 sales instead of just 90,000, home prices would almost certainly have to fall faster.

Excellent Analysis from the Atlantic

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I really like this report because it gives you a number of perspectives.

The reality is rarely what we see in the news, but it’s always nice to see the interaction and ideas expressed by the people appearing on this show.

Case Shiller Report on CNBC.

Home prices fell all over the country except in Washington DC. where our government is growing.

San Diego home prices fell ever so slightly, still they are beginning to move down once again.

San Diego is resilient because of it’s diverse job opportunities, everyone wants to live here.

If we could get our state and local governments off the backs of businesses our housing market could really sore. The problem right now is businesses being pushed out of the state by ridiculous laws.

Be sure to make a comment or email me and get a FREE copy of the book “Should I Short Sale My Home”. This eBook can be yours today.

There is a consensus that the bottom is not going to happen until some time in 2012.

Adam Leitman Bailey thinks now is the best time in history. Right now interest rates are very low.

I am part of a large group of Realtors from all kinds of brokerages across the country (over 10,000 Realtors). The consensus is that things are only going to get worse.

This group works very closely to the lending institutions and the word from them is once this robo signing mess clears up the gates will open and more homes will be foreclosed on.

Banks are offering incentives to home owners right now to short sale their home rather that go into foreclosure. You can get money in your pocket to move out and save it up for a down payment on your new home at a lower price. Just maybe.

Think about it…… we are going to be in this for a while so could it make sense to Short Sale your home now (saving your credit score a 150 point drop) and put money away to buy your next home at a lower price. You might just get a nicer home for less. This is theory….not an absolute.

Since we are going to be in this for a while doesn’t it seem to makes sense?

Let me know your thoughts.

Don’t forget to make a comment or email me and get a FREE copy of the book “Should I Short Sale My Home”. This eBook can be yours today.

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This is a brief from an article in the Seattle Times by Associated Press writers  Derek Kravitz and Pete Yost .

Two mortgage Lenders will pay more that $22 million to settle civil charges that they improperly foreclosed on 178 members of the military, some of whom were serving in Iraq or in Afghanistan.

The Justice Department said, that between 2006-2009 Bank of America and Morgan Stanley  failed to get court orders before foreclosing on military personnel in 22 states. The Justice Department awarded to these men and women an average of $125,562. 

Some of the members foreclosed on were wounded or had post-traumatic stress disorder.

Under the agreement the lenders agreed to create additional mortgage loan protections for military personnel.

The law the lenders were accused of breaking was the Serivcemembers Civil Relief Act. This act provides that military personnel can’t be evicted or creditors can’t seize their property while they are on Active Duty.

Lenders

Bank of America, BAC Home Loans Servicing formerly Countrywide Home Servicing

Morgan Stanley subsidiary, Saxon Mortgage Services

An other earlier case that has been settled settled:

2005 JPMorgan acknowledged that it had overcharged about 4,000 service members and wrongfully foreclosed on 14 of them. JPMorgan had paid out $2 million to service members and reversed some of the foreclosures.

Feds say they are working to provide better protection for military families and have launched a new agency called Consumer Financial Protection Bureau.

Servicemembers Civil Relief Act

To get a copy of the Servicemembers Civil Relief Act  I’m providing you a link to it, it’s in a PDF that will load in  a separate browser window and take about one minute to load. Click here to open and upload.

Get to know your rights especially when you are active military.

This is a brief from an article in the Seattle Times by Associated Press writers  Derek Kravitz and Pete Yost .

Be sure to get your free copy of “Should I Short Sale My Home” by making emailing me Keith Cox or making a comment on this article.

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Wondered why they say the economy is doing so well?

Whether you like Jim Cramer of CNBC or not, he hit the nail on the head in this video about what is keeping this economy afloat. I’ve been saying what he just said in this video for about a year and a half now.

I’ve noticed,  when showing homes to buyers a very common occurrence…. people have big screen TV’s, Wii systems, toys, computers, new cars, motorhomes, and more…..yet they aren’t paying their mortgages.

There are literally millions of people out there doing this very thing. Imagine a house payment of about $2400 a month times one million. That’s only $2,400,000,000 for only one month. Now take that times one year and……well you get the point. That money is what is fueling our economy today.

Now there are about 17 million homes expected to me lost…….ouch!

There seems to be a different mentality today…….When I was young (now I’m sounding old) people begged, borrowed, sold, or hawked what ever they could to pay the bills…..

…..Now it seems the action plan is … don’t pay the mortgage, no worries…. it’ll take years before I get kicked out…… enjoy life and when the knock on the door comes…..then I’ll move on.

This seems to be the way it is today…. believe it or not some families have 2, 3, or more homes they bought when things were good….they collect rent…..and don’t pay the mortgages on any of them (free money).

This doesn’t seem right….. what should people be doing?

What should you be doing if you are underwater in your home? 

Here is the first step…. learn about what it means to short sale your home.

One of the best ways is to read “Should I Short Sale My Home” by Keith Cox, and Tim and Julie Harris. This book will help you no matter what state you live in to understand the cause and effect of short sales.

Get a FREE copy of “Should I Short Sale My Home” for making a comment on this site or emailing Keith directly. You can call Keith also at 858-922-5060 and give him your email and he will email you a copy right a way. Email post to a friend you know.

Plan for your future.. learn to move forward from where ever you today.

If you are underwater today, Short Sale your home …..with interest rates and housing prices still very low….by the time your credit has been repaired (about 2 years) you will be in position to buy again.  And maybe at a better price.

Just remember……the sooner you sell…..the sooner you will be able to buy again.  Trust me……home prices will one day go up again.

With the short sale inventory running around 3 years out at todays pace…….you will be in a better position to buy.

If you wait you may not be able to afford a home at all ever again.

The government is looking to increase your down payment requirement to 20 percent. If this happens you will need to have put away a fair amount of savings for your down payment on your new home.

FHA is looking to increase the down payment from 3.5 percent to 5 percent. Still you will need more money.

SAVE….SAVE….. SAVE.

Don’t get caught up in the next new gadget….

SAVE… SAVE….SAVE.

If it doesn’t help your bottom line (help you financially) forget about it.

That’s my opinion……What’s yours?

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Michael Farr(President of Farr, Miller & Washington plainly says “NO!”

Michael Farr blames the mortgage lending practices of Fannie & Freddie and the tightening of the mortgage  requirements.

It’s not the job market.

Diana Olick says the peoples perception of owning a home is it is not a good investment. Some people are now paying higher rent than if they were to buy. Until the perception changes the market won’t change.

Also…the job market seems to be improving yet new home construction is down .8 percent. That’s not a good sign.

Be sure to make a comment or email Keith to get your FREE copy of “Should I Short Sale My Home?” This book has tons of information you will want to know. Get your copy and email it to a friend who may be in need of this information.

Shari Olefson author of “Foreclosure Nation” thinks the economy is improving without the housing market. She says “Housing is bumping along the bottom until we work out these foreclosures”.

Before the bubble burst housing was responsible for 70 percent of the total worth of the middle class of most of America.

What will this do for America if people rent verses buying? What effect will it have on peoples total wealth if they don’t have that nest egg(their home’s equity)?  What will the effect be on social services and other programs within our country.

We are now looking and another 2 trillion dollars loose in total equity by 2012. This is bound to have a longer term effect of the economy.

When people feel that they can buy cheaper that is where the real problem lies.

Keith Cox’s Realtor comment:

We have about 2 years of foreclosures to work through. The banks are trickling homes onto the market trying to artificially hold housing prices up.

What looks to be the problem with this is, as time goes on interest rates will go up (they have to) and as this happens the home you could afford now, may cost you more as this happens or…..you may only be able to buy a lesser priced home. You will pay more to the bank in interest and less of your money will go to the principle.

Another problem for home prices in the future is…….the government is looking to make it a requirement that you put 20 percent down…This would make homes unaffordable for most of the middle class of today.

So…..the questions is could you buy a house today if you had to put 20 percent down?

Would it be better to buy now, ride out the housing market bottom, and be able to have that home you want?……or Would your prefer to rent?

Remember to make a comment or email Keith to get your FREE copy of “Should I Short Sale My Home?” This book has tons of information you will want to know. Get your copy and email it to a friend who may be in need of this information.

Remember…There is still several Cash for Keys programs out there if you are upside down in your mortgage. Some of these programs offer between $10,000 to $35,000 to you if you short Sale your home.

Bank of America is now approving about 4 times the number of short sales they used to.

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How long does it take to complete a foreclosure process?

How long does it take to get foreclosed on?

These are questions I hear everyday.

As stated by CNBC’s Diana Olick,  it takes an average of 400 days from start to finish to complete a foreclosure.

In California it takes about 330 days.

Make sure you email me for a FREE copy of “Should I Short Sale My Home? or make a comment and I’ll send you a copy…..yes for FREE.

When does the does the foreclosure process start? About 90 days from the first missed payment.

The Bank executive at the end of the video said once all the paperwork was in it takes only about 5 to 15 days…..you can hear the crowd of Realtors saying aaaaaaaaaaaahhh….because that is total non-sense.

From an article by Diana Olick called Foreclosure Delays Plague Housing Recovery she mentions we are in a 40 month low fore Foreclosure activity..

One in 593 homeowners nation wide had a foreclosure filing in April.

The slow down is the result of processing and the enormity of the problem. There are currently 3.7 million loans that are 90 days or more delinquent.

Don’t Forget: Make sure you email me for a FREE copy of “Should I Short Sale My Home? or make a comment and I’ll send you a copy…..yes for FREE. It’s got great information for anyone in the USA.

At the current rate it will take 3 to 4 years to move those loans through the process.

Part of the problem was exacerbated by robo signing. Another problem is market saturation.

If you want help Short Selling Your Home contact Me Keith Cox at KeithC@CoxEstates.com .

Read more of Diana’s Article Click here….

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Distressed and Short Sales are 34 percent of the homes on the housing market nation wide.

Mostly what is keeping the housing market up a little is the influx of cash buyers.

Because of the down trend resuming the banks are looking to give you more money to short sale your home rather than foreclose.

By the bank giving you $10,000 or up to $35,000 to sell (Cash for Keys) rather than foreclose, the bank is trying to save themselves from loosing much more money by foreclosing on you and going through the whole foreclosure process.

If you need to Short Sale your home either to relieve the stress or to stop a foreclosure from happening please let me help you.

Yes, you can short sale just to relieve your stress. If you can afford your payments but are stressing about the value of your home today verses your purchase price you too can Short Sale and remove the stress. Some people are short selling their homes are able to buy  a new home right away (NOTE: They keep making their home payments all the way through the short sale process.)

Free Book Offer

Email me or make a comment and receive my book in your email  SHOULD I SHORT SALE MY HOME .

This book will really give you an understanding of what a short sale is all about.

Contact Keith Cox

858-922-5060 or email me directly.

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