BOSTON HOMES BLOG

NorthPoint finds a little magic

— By: Marilyn Jackson

NorthPoint, the 45-acre site in East Cambridge that is slated to become one of the largest developments in New England has new investors.
Los-Angeles-based Canyon-Johnson Urban Funds, which developed an apartment complex on Brighton Street in Charlestown four years ago, has partnered with the HYM Investment Group LLC of Boston and Atlas Capital Group of New York to renew the project, which calls for retail, office, hotel, residential and laboratory space. Part of the former Pan Am rail yard spills into Charlestown and Somerville.

Pending sales fall in August

— By: Marilyn Jackson

Pending sales of condos and single-family homes in August fell in year-to-year comparisions, but the number of single-family homes placed under agreement between July and August increased, according to the Massachusetts Association of Realtors.
For condos, the pending sales dipped from 1,466 to 1,435 in a month-to-month comparison. In August 2009, pending sales of condos totaled 1,770.
Kevin Sears, broker-co-owner of Sears Real estate in Springfield and president of MAR, said that the rock-bottom interest rates may be starting to have an impact.

— By: Linda Goodspeed

 

‘Short sales’ are time-consuming

Last week I talked about how to buy a real estate owned (REO) property. This is a property that has been taken over by a bank or other entity and put back on the market. These are generally less risky than buying a property at auction.

Another point where you may be able to buy a troubled property is before foreclosure. These are often “short sales,” so called because the lender agrees to accept a sale price less than what the borrower owes on the house.

Although you’d think a lender would rather do a short sale than let the home fall into foreclosure, short sales can be extremely difficult to pull off.

If you make an offer on an REO, you can expect to get a response in a few days. Not so with a short sale. There is often no firm listing price (and if there is, it may be just a “teaser” figure designed to get offers.) Getting a response to an offer can take months. While the seller can be highly motivated, lenders are often not convinced the seller deserves a hardship sale.

Parties have to convince the lender the price is market value even though it is below the mortgage value. And if there is more than one mortgage involved, which there often is with short sales, the process gets even more problematic because all the lenders have to sign off on the deal.

It’s not easy, since many times they’d rather fight for a larger piece of the short sale proceeds than accept less than what they are owed. In some states, second lien holders can pursue borrowers for any unpaid balance of the loan after a short sale, adding to the difficulty of completing these transactions.

In an effort to bring some order to this highly chaotic and discretionary process, especially those with more than one lien holder, the Treasury Department has recently come out with some short sale guidelines. The guidelines suggest how second lien holders might be paid off.

Although they do not go into effect until April 2010, it is hoped the new guidelines will bring some structure to a painfully slow and complex process.

On the seller’s side, the home should generally be your primary residence, you are behind on your mortgage and in danger of default, do not qualify for a loan modification and your mortgage payment exceeds 31 percent of your total monthly income.

If you have only one mortgage holder, your prospects are better for a short sale. If you have more than one mortgage, the new Treasury Department guidelines suggest lenders offer second lien holders up to $3,000 of short sale proceeds with Treasury reimbursing lenders up to $1,000 for doing so.

You should speak to your lender as early as possible about an acceptable sale price rather than contacting your lender after a buyer makes an offer. If you can complete a short sale, you may be eligible to receive $1,500 from the federal government for relocation costs.

On the buyer’s side, be prepared for a lengthy process. Get pre-approved, check foreclosure websites for properties behind on mortgage payments, work with a real estate agent to identify short sale listings, and make your best offer. Hopefully, the new rules will spur lenders to do more of these sales. It’s in everyone’s best interest.

 

 
 

 

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