Tampa Bay Real Estate

On Tuesday, Bank of America decided to launch their test Short Sale incentive program taking it nationwide and offering cash to many troubled homeowners unable to take part in the trial program. The offer could pay a delinquent homeowner as much as $30,000 if they agree to complete a short sale.

It seems that BofA has finally figured out that going through the foreclosure process and taking the home back, is costing them more money in the long run.

When people go into foreclosure, they generally do nothing to take care of the home. Some walk away taking light fixtures, appliances, cabinets- even sinks and toilets. Others who are angry about their situation do major damage to the house. These cost the bank ten’s of thousands of dollars by either forcing them to fix up the property so an owner occupant will buy it, or deeply discount the house so an investor will be able to purchase, rehab, and sell for a profit.  

The program was tested in Florida between Sept. 26th and Nov. 30th of last year, and nearly 11,000 Florida borrowers, some in the Tampa Bay real estate market, verbally agreed to complete their short sales by August of this year. So far only 847 of those short sales have closed and according to BofA, the  average payment to cooperating homeowners in Florida was $12,000.

How to Qualify:

The seller must work with Bank of America to obtain a preapproved price prior to submitting an offer from a prospective buyer.

The short sale must be started by the end of 2012 and close by Sept. 26, 2013.

Bank of America must own and service the mortgage.

Some Homeowners currently in the process of a short sale with Bank of America may be eligible for the program as well and the amount of money the homeowners receive “will be determined on a case-by-case basis using a calculation that includes the value of the home, amount owed and other considerations.”  

For more information about the program, call (877) 459-2852.

This short sale program could help reduce the number of distressed homes in Tampa and the surrounding areas. Nearly two thirds of the homes under contract in Hillsborough, Pinellas, and Pasco counties are Short Sales. A very small number, only 9% on average, of those homes actually close on a monthly basis. If more lenders were to get on board with this type of program, they would save themselves a lot of money and it would help stabilize prices in some of the areas hardest hit neighborhoods.

Tony Delgado-RE/MAX Bay to Bay-South Tampa

According to a recent report by market researcher Realty Trac, the number of closings on Short Sales was higher than the sold foreclosure properties in 12 different states. They said this was an indication that homeowners are finding Short Sales to be easier than they used to be and a better way out of a distressed situation or underwater home loan. The numbers in the report may be true, but reality says we have a long way to go when it comes to closing shorts sales in Tampa Bay.

Short Sales occur when a lender agrees to take less than what is owed to them and allows the sale of the home to a new buyer. Short Sales in the Tampa Bay real estate market currently represent approximately 20% of the homes available for purchase. That number is nearly half of what it was this same time last year, but it’s not because they were sold and closed.

Last month over 7,200 of the homes under contract were Short Sales, but only 618 of those actually closed. Last month there were 1,116 foreclosures pending and 458 closed. The foreclosure number may be lower than closed short sales, but the ratio of pending to closed shows a staggering difference.

The Realty Trac report seems to lead us to believe that lenders’ have an increased willingness to do short sales. It looks to me that the numbers in Tampa Bay show that we have a long way to go with lender cooperation on Short Sale offers.

RealtyTrac says foreclosure sales still outnumber short sales nationwide but that is not the case in the Tampa Bay area. Short sales have outpaced foreclosures in Tampa since August of 2011. But is that because banks are approving a lot of shorts sales in Tampa and the surrounding areas.

Obvioulsy not.

What it suggests is that there aren’t many foreclosures available for sale in the Tampa Bay.

Some mortgage servicers say they started pursuing short sales more aggressively months ago. Bank of America says it approved 107,000 short sales last year, nearly double the amount in 2009.  But if there are over 3,300 short sale homes available in a 3 county area here, how many more are scattered across the country. I’m afraid these numbers are very small in the grand scheme and much needs to be done to make the process faster and more efficient.

It has been well documented that Short Sales tend to harm neighborhoods less than foreclosures. They are usually maintained better and typically sell for a higher price. The homeowners also have the opportunity to get a new mortgage sooner than those who go through foreclosure. It makes perfect sense for Banks to try to find a way to get more of them closed. Or so you would think.

There have been new measures introduced recently that could boost short sales.

Freddie Mac and Fannie Mae will soon require lenders to decide short sale offers within 60 days.

I guess we’ll have to see if the changes come and hope that these types of deals start closing at a better clip. 8% isn’t going to cut it.

When the November elections roll around, there will be an amendment on the ballot that could help many Tampa Bay real estate owners get a lower property tax bill.

Here are the highlights of Amendment 4:

It will reduce the amount property taxes can be raised on non-homestead properties from 10% to 5% every year. This will promote investment in real estate and make it more attractive to small businesses and commercial property owners that operate in the Tampa Bay area.

It will also give some first time homebuyers an additional homestead exemption that will expire after 5 years. Rewarding new home buyers would help promote property purchases and further stabilize the housing market in Tampa Bay.

It will stop a recapture feature that forces homeowners to pay higher property taxes even when the value of their home falls.

The combination of these changes will put more money back into the home owner’s  and business owners pockets and make purchasing real estate a more attractive option for everyone.

The data reported in the Tampa MLS between February 26^th and March 25^th, 2012 showed that Tampa Bay home sales were up slightly from the previous month’s numbers and 11% higher than this same time last year.

3,177 residential units were reported as closed transactions during the period tracked in the Hillsborough-Pinellas and Pasco County areas. Consistent sales are the trend and with a falling inventory of homes, buyers are having a more difficult time finding one they like.

The number of homes for sale in Tampa and the surrounding areas fell for the 16^th straight month and just over 1800 homes expired without selling or were withdrawn from the market.

The bidding wars continue, low priced Foreclosures in Tampa and the surrounding communities are being snapped up by investors in multiple offer situations, and even Short Sales in good condition are beginning to see quick, full price offers from those buyers that are willing to wait out the banks in order to get a nice home.

The short sale process still takes around 4 to 6 months on average, but that’s a far cry from the 8 to 14 months they used to take and buyers are a little more optimistic about getting an answer in a reasonable time frame.

The Monthly Stats:

Pending sales increased for the 3^rd month in a row, up by nearly 1000 homes from last month.

60% of the homes under contract are short sales.

Only 8% of the Short Sales under contract last month actually closed highlighting again the slow process and struggles involved in these types of sales.

The number of foreclosures in Tampa Bay available for purchase declined and there were only 834 Banked owned properties for sale at the time research was done.

Most people tend to believe that the Tampa Bay area is flooded with foreclosures, but the fact is they represent a very small part of the available inventory. They did account for 14% of all home sales during the 30 days tracked.

Short Sales accounted for one fifth of all closed transactions bringing the total percentage for distressed sales to 34%, over a third of all sales. That number was closer to half of all sales this same time last year.

Overall, it seems that the Tampa Bay housing market is moving steadily if the right direction.

An agreement built in to the $25 billion settlement made with 5 of the nation’s largest mortgage servicers as a result of their fraudulent foreclosure practices may increase the speed and handling of short sale offers submitted by underwater homeowners. There is a credit that will be applied to the fine they must pay for each Short Sale approved. Industry experts are expecting to see an increase in short sale approvals because lenders and loan servicers are able to get this credit and reduce the amount of the fine they are being forced to pay.

All totalled, the settlement requires the mortgage servicers to pay $5 billion in fines and commit to a minimum of $17 billion in homeowner relief, including principal reductions. Another $3 billion is earmarked for helping underwater borrowers refinance.

In an effort to push the loan servicers to work hard and fast at approving a short sale, the thought was adding this incentive to the settlement agreement might give the Banks a good reason to approve these types of sales at a faster pace. This could lessen the number of foreclosures that hit the market and help improve the stability of our real estate market. Banks are also required to forgive a portion of the homeowners debt which helps relieve an additional burden of the person who is losing their home.

Unfortunately, this is only expected to help a small number of homeowners who owe more their properties are worth – somewhere around 1 in 20, but there is some hope that this will help bring certainty back to housing markets across the U.S.  by removing one of the obstacles that have kept homes stuck in the foreclosure pipeline for years in some cases.

According to the Wall Street Journal, allowing debt forgiveness on approved short sales to count against the required $17 billion in principal reductions helped secure a settlement that will reach more borrowers.

The settlement is also expected to increase foreclosure activity, because the servicers and lenders now know what they can and can’t do. Part of that increase will also be among loans that don't meet the criteria of the agreement and don't allow for a credit to the mortgage servicer.

Short Sales in the Tampa Bay real estate market represent almost a third of the homes available for purchase, and 61% of all properties under contract.

Eliminating that inventory would go a long way towards a full market recovery in our area and start driving prices in a positive direction in all neighborhoods.