Author: Atlas Home Group

Short Sale vs. Deed in Lieu of Foreclosure

Not having enough money to pay your monthly mortgage is a common issue faced by millions of Americans. If you’re having trouble paying your monthly mortgage on time and your lender has denied a request for a loan modification plan or if the loan modification seems unmanageable, there are a few options to consider prior to foreclosure: a short sale (if the equity is underwater) or a deed in lieu of foreclosure.

If you can relate to this situation, you may not be not sure which path is right for you. In this article, we will go over the pros and cons of short sales and a deed in lieu of foreclosure. You can use these as an informal guide when considering your options. Before finalizing your choice, consult a real estate agent experienced with short sales and distressed properties. Agents experienced in these areas understand that these sales are about you, the homeowner, moreso than they are about the house itself.

What Is a Short Sale?

A short sale is when you attempt to sell your house for less than what you owe to the bank. For a short sale to take place, your lender must agree to allow it. There are requirements for the owner to complete a short sale since the lender wants to ensure everything is done to recoup any potential loss. Typically, homeowners are late on their payments before a lender to consider a short sale.

Upon the sale of your home, you may or may not owe money to the lender, depending on your situation. Short sales typically occur when property values have gone down significantly in the area, substantially affecting property value.

The Benefit of a Short Sale

The benefit of a short sale is that you are provided with an avenue to sell your house and “make good” with the bank. Essentially, the benefit of a short sale for the seller is that they can wash their hands and walk away from the situation. There is also an opportunity to request a waiver of the deficiency amount.

Does a Short Sale Affect My Credit?

Yes, a short sale will make a significant impact on your credit score. The higher your score before the short sale, the more significant the drop will be, up to -150 points. Each credit profile will be impacted differently.

What Is a Deed In Lieu of Foreclosure?

We know that foreclosure is not a fun option, so what exactly is a deed in lieu of foreclosure? Technically, a deed in lieu of a foreclosure is a document that transfers the title of the property from you to the bank in exchange for being relieved of your debt.

When struggling to make monthly payments, a homeowner may request a loan modification from their lender, which is a new agreement at lower monthly payment terms. However, if a loan modification is no longer an option, a deed in lieu of foreclosure might make sense.

The Benefit of a Deed in Lieu of a Foreclosure

The main benefit of a deed in lieu of foreclosure is how quickly a homeowner can wash their hands of a property they no longer want or can afford. If approved, the process is quick and efficient, and when it’s over and done.

Foreclosures can be incredibly time-consuming and costly by nature. The process is also public and out in the open. By contrast, a deed in lieu of foreclosure is a private transaction with your bank and you.

Reasons You Might Be Rejected for a Deed in Lieu

If your home has depreciated in value to the point that it is worth less than what you owe to the bank, your lender may only accept a deed in lieu of foreclosure if you can pay the difference.

If there are liens (HOA, condo, utilities, etc.) or tax judgment on the property, a lender will not agree to a deed in lieu. Also, there are some government-backed loans where the lender is only given a payout if the home goes to foreclosure. In this instance, your lender will not agree to a deed in lieu of foreclosure.

Reasons Why Your Lender May Be Interested

Rather than pay legal fees to undertake foreclosure proceedings, your lender might be happy to take control of your property and move on with business. In many cases, your lender will save both time and money by agreeing to a deed in lieu of foreclosure, rather than foreclosing on the property.

Does a Deed in Lieu of Foreclosure Affect My Credit?

A deed in lieu of foreclosure will have a negative affect on your credit. You may also owe taxes on your loan forgiveness if it totals more than $600.

What If I Have Multiple Mortgages?

It is still possible to partake in a short sale with multiple mortgages. But it is not an option for a deed in lieu of foreclosure.

Where do I look for help?

If you’re in a financial position that you aren’t sure how to manage, there are a couple of places to seek help. Ff you’re considering selling your home, talk with a team of agents experienced with helping sellers in distress. Atlas Home Group has over a decade of experience in this area. Please call us at 443- 660-8080 or visit our website to submit a consultation form on our website.

You can also call the Maryland HOPE hotline at 1-877-462-7555 to find a state-approved nonprofit agency that can provide individual guidance for homeowners facing foreclosure.

Real Estate Market Updates in the City of Baltimore and Baltimore County

The real estate markets throughout Baltimore and Baltimore County are in a much different place today than they were in January 2020. For homeowners short on equity, struggling to make payments, and considering foreclosure, this market delivers a lot of hope of a favorable outcome.

Both the City of Baltimore and Baltimore County experienced rapidly increasing sales prices throughout 2020. Below, we’ll look at the latest trends and what to expect from the Baltimore real estate market in 2021.

What Is Driving the Baltimore Real Estate Market?

Similar to the Metro D.C. area, Baltimore City and Baltimore County are suffering from severe decreases in available inventory. With the supply of homes so constrained, prices were bound to rise. But in addition, this recent decline of available homes has coincided with an increase in demand, a recipe for skyrocketing listing prices.

Here’s a quick look at December’s available inventory compared to the historical average:

Baltimore City Active Listings

December 2020: 1,447

5-year December Avg: 2,449

Baltimore County Active Listings

December 2020: 763

5-year December Avg: 1,767

Baltimore City Market Snapshot

The real estate market in Baltimore was friendly to sellers, as median sales prices hovered just under $200,000 for most of the year. Prices reached an average of $175,000 as soon as the spring selling season began, and the market retained those gains throughout the year.

Sales momentum was peaking as the year came to an end, with closed listings blowing away their historical averages:

Closed sales at 934 were up 22.7% from November and up 27.2% from December 2019.

The December median sales price of $197,000 is up an incredible 35.6% from a year ago.

The average number of days on the market in December was 39, down from the year-to-date average of 50 days.

Overall, the median sales price in 2020 was $180,000 in Baltimore City, up 12.5% from 2019 at $160,000.

On average, listings in the City of Baltimore are selling for 96.9% of the original list price. This number is considerably higher than the 5-year December average of 94% and up slightly from the 2020 average (96.1%).

Baltimore County Snapshot

The real estate market in Montgomery County reached new heights in 2020, and the momentum is likely to carry over into 2021. Despite a drop in available inventory, closed sales in 2020 were up 7.2% over 2019, and closings in December were well-above historical averages.

With 1,084 closed sales, December 2020 was up 24.7% over December 2019.

The December median sales price of $270,000 is up 11.1% over December 2019.

The December average number of days on the market was 25, which is 21 days below the 5-year December average of 46, and a week less than the YTD average of 32 days.

Compared to the original listing price in Baltimore County, the average sales price was 99.3% this past December. This number was well-above the 5-year December average of 96.1% and was also trending higher than the 2020 YTD number of 98.5%.

Median sales prices peaked in August at around $285,000 but have adjusted down to $270,000 more recently. Moving forward, we are likely to see months that reach a median sales price of $300,000 as the 2021 selling season heats up.

If you’re on the fence about selling, now is the time to get off

All markets can be fickle, and real estate is no different. A seller’s market today can become a buyer’s market in a month. As far as we can tell right now, though, this is prime time to sell the home you’re no longer able to afford or to potentially minimize shortfall in equity if you’re living anywhere in the city of Baltimore or Baltimore County. If you’re thinking about selling your home, please do not hesitate to reach out for a consultation.  

Moratorium on Foreclosures Ends Soon, the Time to Seek Relief is Now

Homeowners have endured a whirlwind of emotions over the past 12 months. From the lows felt when the virus first took hold to the temporary relief when the CARES Act was passed, one constant through it all has been a sense of uncertainty. Luckily, homeowners struggling to pay their mortgage each month have a source of support—but as of January 31, 2021, that assistance may no longer be an option.

What Happens on January 31?

On January 31, 2021, mortgage lenders can begin to initiate foreclosure proceedings on defaulted loans. Currently, there is a moratorium on single-family foreclosures, which was extended on 12/2/2020. So, no matter how many payments you may have missed recently, your lender was unable to initiate a foreclosure. That all changes on January 31.

An important exception to note is that if you had a foreclosure in process on April 3, 2020, your foreclosure might proceed at any time—so do not wait to take action.

What Does This Mean for Me?

You must act quickly to avoid a foreclosure if you have missed multiple payments. If your lender is unwilling to extend the forbearance, arrangements need to be made to bring payments current quickly.

What Is a Mortgage Forbearance Plan?

A forbearance agreement is between a borrower and a loan servicer that suspends or reduces mortgage payments for a period of time. One of the critical benefits of forbearance for a homeowner is that the loan servicer cannot initiate a foreclosure during this time.

While homeowners receive relief from their monthly mortgage payment, the relief is only temporary, and the payments must still be paid in full. Speak with your mortgage provider for the specific details of your forbearance agreement.

Key points to remember with a forbearance:

  • The total amount you owe does not decrease
  • Interest continues to accrue on skipped payments
  • The forbearance period is temporary

Differences in Forbearance Rules

The terms of your forbearance agreement can vary depending on the type of mortgage you have and who your lender is. Some of the variables can include:

  • How long the forbearance period lasts
  • What, if anything, is due during the forbearance period
  • How the skipped or lowered payments will be repaid once the forbearance period ends

Once the forbearance period ends, the lender is expecting payment to begin as agreed. If you are still facing financial hardship when the forbearance period ends, your lender may offer you a modification agreement.  If a modification is declined, the lender is then able to begin foreclosure proceedings.  An avenue to avoid a foreclosure is to consider selling your home. 

Short Sale or Quick sale

If selling your home becomes the best option to avoid foreclosure and the lingering impacts, a short sale (home is valued at less than is owed) or a quick sale (there is equity in the home however it needs to be sold quickly) are options to consider. 

In both cases, these sales require special expertise to be handled properly and quickly. Contact us for a confidential conversation to learn more about available options before it is too late.  We have specialized in sales like these since 2008. 

Low Inventory and Increased Demand Lead to Hot Seller’s Market in D.C. Metro Area

On the outside looking in, you may not have thought that 2020 would be a strong year for the real estate market. But despite social distancing and stay at home orders as a global pandemic presided over the year, the real estate market continued to produce ever-increasing sales prices.

As we enter 2021, both Prince Georges County and Montgomery County continue to experience red-hot sellers’ markets.  This creates a big opportunity for underwater sellers who need to choose a short sale to escape the burden of their current mortgage payment, maintenance issues or delinquency.

What Is Driving the D.C. Metro Real Estate Market?

There are various reasons for the sizzling markets in Prince Georges County and Montgomery County. But primarily, the market is being driven by two factors: low inventory and low interest rates.

Buyer demand increased throughout 2020 due to record-low mortgage rates, which have dipped below 3% at times. When an increase in demand combines with minuscule inventory levels, the result is a market that heavily favors sellers. No statistic bears that out more than “Sales Price to Original List Price,” which in December was 101.2% in Prince Georges County and was 100.2% in Montgomery County.

When homes are selling for above original listing price, that is a market you want to enter as soon as possible as a seller.

To illustrate how little inventory is available, we can compare the active listings in December 2020 to the 5-year December average:

Prince Georges County Active Listings

December 2020: 663

5-year December Avg: 1,475

Montgomery County Active Listings

December 2020: 906

5-year December Avg: 1,463

Prince Georges County Market Snapshot

The real estate market in Prince Georges County continues to reach new heights, as closed sales finished 23.1% higher in December than they were a year ago.

The median sales price of $355,000 is up 12.7% from a year ago.

The average number of days on market was 15, down from the year-to-date average of 25.

Overall, the median sales price in 2020 was $345,00, up 11.3% from 2019 ($310,000). Continued momentum has carried over in 2021, and the selling market will only grow hotter as the spring season approaches. With an average market time of just 15 days, make sure your bags are packed when the listing goes live.

Montgomery County Market Snapshot

The market continues to stay hot in Montgomery County, where closed sales were up 26.4% compared to December 2019 and were up 9% over November’s numbers.

The median sales price of $480,000 is up 6.7% from a year ago.

The average number of days on market was 22, down from the year-to-date average of 27 days.

Compared to the 5-year December average of 40 days on market (DOM), the December 2020 DOM nearly cut that in half at 22. While the Montgomery County market does not seem quite as on-fire as Prince Georges, that is most likely due to the higher price point of Montgomery County.

Selling your Home Has Never Been More Lucrative in the D.C. Metro Area

You might be thinking, “sell my home during a pandemic, are you crazy?” Besides being a hot market for sellers, it has also never been simpler to sell your home. With innovations such as virtual walkthroughs and digital signatures, selling your home is much easier than you may be imagining.

With no catalyst in sight for a rapid increase of inventory, prices should continue to rise at a higher-than-average rate as the market matures in 2021.

The competition among buyers is already fierce and will continue to intensify, especially at lower price points that attract more offers. As a seller, this is music to your ears. If you’re considering selling an underwater property or need to sell a home with some equity quickly, it’s time to reach out to Atlas Home Group to understand the options.

military relocation and short sales

Short Sale Due to Military Relocation or Deployment

Short sales are never easy, given the overall complexity of the transaction.  So when a member of US Armed Forces is suddenly deployed or receives Permanent Change of Station (PCS) orders, the complexity and the urgency increases.

When this happens, the short sale listing agent and short sale loss mitigation company must not only understand the ins and outs of the short sale process; they also have to understand the potential emotional and personal complications that stem from this type of short sale.

On one hand, the potential short sale seller has a duty to follow the orders of his/her commanding officers and on the other hand, there is an obligation to repay the loan to the mortgage company.  When a property is worth less than the outstanding loan balance – about one in 6 homeowners (guess) around the country are under water – and traditional sale is not possible, these duties and obligations collide and serve as an element of additional stress for our service men and women.

At Atlas Home Group and Atlas Loss Mitigation, we understand what our military clients are going through.  After helping hundreds of sellers escape foreclosure, we know what it takes to prepare our clients for the best possible outcome given the circumstances.  Whether it’s advice on the timing, deciphering the intricacies of the personalized short sale roadmap, or connections with local professionals regarding taxes, credit, or legal, our team is always protecting the best interests of our clients.  After all, our military clients are protecting our freedom!

When you combine the above factors, with our in-depth knowledge of the short sale process, it is clear why more military short sale sellers trust our short sale team than any other in Maryland.  We are intimately familiar with lenders’ and investors’ guidelines as they relate to military personnel and PCS orders.  We know how to prepare the short sale package to minimize the short sale timeline; we know what buttons to push with lenders and their short sale negotiators; and we know how to keep the buyers and their agents in the transaction when difficulties arise.

We know that when deployment or PCS orders are given, our military clients do not have time to worry about the details of a short sale.  

Our expert short sale knowledge and understanding of lender guidelines as they pertain to military personnel puts us in a leading position to support those who protect us!

If you are a member of the armed forces and are facing a financial hardship related to your home, contact us today – we can help!

 

divorce and short sale

Divorce and Short Sales

Our clients undergoing the difficult process of a divorce understand, that a successful short sale will help alleviate a major financial pain point – so they can focus on healing their emotional pain, and on creating a new beginning.

As short sale experts, we are accustomed to working with clients whose both personal and financial situation is in distress.

Although no two short sales are the same given the difference in servicers, investors, mortgage insurance companies, types of properties, etc – we are able to help our clients navigate the turbulent waters of the short sale process with confidence.  This is especially needed in situations where divorce is the primary factor for seeking short sale services.

What we’ve discovered in working with hundreds of homeowners going through separation or divorce is that this particular hardship adds an emotional element that must be acknowledged and dealt with as a part of the short sale.  

We understand the emotional and financial nature of a marriage break up.

On one hand, there could be negative feelings between the homeowners that prevent clear and timely communication.  On the other hand, there are financial and often parental considerations that must be worked through as the household unwinds.  

Needless to say, such circumstances present a new set of challenges that must be overcome, or at least mitigated, in order for a short sale to be successful.  We also understand that in many cases, short sale of the property is the last thing that holds the divorcing couple together from moving on with their lives.

Our approach is simple: apply empathy and experience to help our clients close this chapter of their lives!

We establish straight lines of communication with all parties involved including divorce attorneys if needed.

We prequalify both sellers for the short sale and explain to each what the process will look like – and it can be different for each.

We answer all the questions based on our experiences dealing with similar situations and we often play a conduit of information between all involved.

Most importantly, we focus on the end result – getting the short sale to settlement while neutralizing the effects of deficiencies – by moving the short sale forward with each communication.

Our divorcing clients understand that a successful short sale will help alleviate a major financial pain point of a marriage breaking up, so they can focus more on healing their emotional pains to create a new beginning.

If you are facing the hardship of a divorce and need to find out whether a short sale is right for you, contact us today – our team of short sale experts can help.