December, 2010

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27
Dec 10

New Rules And Regulations For Short Sale Home

“Here’s some good news for homeowners fed up with the home short sale process: new rules are expected to

make it faster, easier, and more efficient for both buyers and sellers. The Home Affordable Foreclosure

Alternatives (HAFA) program, a follow-up to the Home Affordable Modification Program (HAMP), aims to help

homeowners by simplifying home short sale procedures and encouraging more banks to participate. Read on

to learn more about the HAFA home short sale and how it can help you.

What’s New?

HAFA is offered to borrowers who have previously applied to HAMP, but either did not meet the requirements

or failed to benefit from it. The Home Affordable Foreclosure Alternative (HAFA) program put into effect a

new short sale rule in which borrowers must be approved for short sales before putting their home on the

market. This greatly lowers the pressure in most banks, as they often have to deal with borrowers who would

be better off with a loan modification. The reduced pressure allows them to cater more effectively to those

who do qualify for the home short sale process.

Documentation Requirements

Borrowers are now required to present all their documents to the bank upon application. Earlier HAFA rules

allowed them to get the home short sale process started while still gathering their documents. But many were

unable to complete them and ended up going to foreclosure instead. New HAFA regulations avoid this problem

by having sellers provide all the paperwork up front, so the home short sale process can proceed more

smoothly.

Preset Time Frames

Under HAFA, lenders must write a home short sale offer to borrowers who fail or are found ineligible for loan

modification within 30 days. The borrower must then reply within 14 days. Offers must be forwarded to

lenders within three days, and lenders must either approve or reject them within ten days. This ensures that

none of the parties causes unnecessary delays, and forces banks to pursue the home short sale process

instead of going straight to foreclosure.

Pre-Approved Sales

Another thing that makes the HAFA home short sale different is that banks and borrowers now have to agree

on the price before the home is listed. Previously, the home short sale process allowed sellers and their

agents to set their price without informing the lender. But since banks have the last word on Home Short Sale

pricing, it often took a lot of negotiation between banks and buyers. By approving the price before a home

hits the market, the time between offer and closing is much shorter. ”

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17
Dec 10

Offshore Banking in Singapore

While not as well known as other jurisdictions offering offshore banking, the Singapore government has enacted legislation which makes it an attractive international financial center. The legislation which allows Singapore banks to assist investors with company formation, trust and corporate administration makes Singapore’s over 200 banks a popular offshore banking destination.

The Singapore banks offer safe offshore banking opportunities for those looking to protect their privacy, preserve their capital and assets and legally reduce their tax liabilities through offshore tax planning strategies like foreign corporations, limited liability corporations, foundations and annuities.

Advantages of Opening an Offshore Banking Account in Singapore

• Banking services in Singapore are delivered over a safe, reliable internet service – in English.

• Singapore has a state of the art financial centre and highly developed economy.

• Singapore’s banking regulations and independent, English-based judicial system offer a flexible offshore banking opportunity.

• Interest earned on bank deposits and income which is not generated in Singapore is exempt from Singapore taxes.

• Singapore has no capital gains tax or estate tax.

• The Singapore accounts are multi-currency accounts offering a protection for those who foresee the devaluation of the US dollar or Euro.

• Accounts may be opened in the name of foreign corporations, trusts and LLCs, providing a greater degree of privacy and asset protection and avoiding, in some instances asset reporting requirements.

• Protecting account holders privacy is not only a strong component of the Singapore banking laws it is part of the banking culture in Singapore.

Disadvantages of Opening an Offshore Account in Singapore

• The biggest obstacle to opening an offshore account in Singapore is the banking regulations do not permit the opening of accounts by mail, unless the client is already known to the bank. So, in most cases you will have to travel to Singapore to open an account. You may be able to open an account without taking the trip to Singapore if you have enough assets or are already a client of the bank. HSBC, for example, may be able to arrange for banking officials to open a Singapore account at a local HSBC office in your home country. If you are talking about a substantial investment some of the private banks may be willing to arrange for banking officials visit you at your home to establish the account. Also a possibility for wealthy clients is the option of opening an account through a representative office. A representative or foreign sales office is staffed by private bankers who will handle the day-to-day management of your account.

• The level of deposit required to open a Singapore account can be substantial. Some of the most discreet private banks require 0,000 or more to open an account. Initial deposit requirements will vary among banks so shop around. Just understand you will most likely get a higher level of personal service at the private banks requiring the higher initial deposits.

So, depending on your banking requirements and level of investment you are considering the advantages of banking with a Singapore bank may outweigh the initial hassles associated with opening the account.

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9
Dec 10

Short Sale

In the real estate business, a short sale is not a distinct possibility.  In fact, with the worsening financial crisis being experienced globally, people are forced to compromise their monetary obligations.  But what exactly is a short sale? A short sale occurs when the mortgagor is unable to pay off the loan balance on the property which he had acquired.  The lender, which is usually the bank, instead of forcing the borrower to pay off his monetary obligation, opts to sell the property at a much lesser price than the amount borrowed, where in effect, the loss suffered is minimal.  It actually poses a win-win solution for both parties, since they would avoid the tedious foreclosure proceedings which would entail heavy costs on the part of the lender and at the same time give the borrower the prospect of losing his piece of property and inflict heavy damage to his credit standing which can be quite difficult to salvage.  

When parties go for a short sale, it poses the best economical solution for both parties, since the borrower would be able to have some sort of damage control on his credit rating while the lender will minimize the losses which he should be incurring.  Of course, any agreement reached pursuant to a short sale only affects the loan balance and does not in any manner affect the remaining balance unless both parties provide otherwise.   Nevertheless, the resort to a short sale is being resorted to because it is actually much more faster and less expensive than going through the flow of foreclosure proceedings which can admittedly drag for months or even years, not to mention the added costs and expenses.   Though consenting to a short sale may inflict damage on one’s credit standing, it is manageable when a piece of property is about to be foreclosed.  This is why both borrower and lender agree to this type of arrangement because aside from the fact that it is not that costly, the negative effects are cushioned and controlled.  In this type of arrangement, neither party wins, and neither party loses.  

Calculate your short sale profits by using the Short Sale Software. For more info visit http://www.shortsalesoftwarepro.com/.

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9
Dec 10

Bank OF America Methodically Leaking Out Shadow Inventory Over The Next 3 Years

Close to 7 million mortgages amounting to over a trillion dollars are being transferred by Bank of America into a Bad Bank Model in order to start dealing with the massive shadow inventory being held.  They are putting these loans into a “Bad Bank” to liquidate them.  This is about half of all of Bank of America’s mortgages.  We are seeing more and more homes hit the market to slowly leak out the inventory.  The actual number of distressed inventory is down from a year ago from approximately 8 million mortgages to 7 million but the time of delinquency before foreclosure has risen from 410 days to 507 days.  People are staying in homes for over 1.4 years before foreclosure.  Even thought default rates have come down over the last year foreclosures have increased across all loan types over the last 6 months as banks get a better handle on dealing with the delinquencies and implement more streamline foreclosure systems.  The numbers are staggering, especially in California where the housing prices are still artificially high.  The new subprime loan is the FHA loan with delinquency rates skyrocketing as people only put 3.5% down along with further reductions in values causing people to go underwater in equity.  However, the option ARM loan is the most toxic of all loan types and 50% of all outstanding loans in California are option ARMs.  It amazes me that people still invest in the California market for buy and hold investments.  If you are investing for cash flow, get out of California.  The rent to price ratios do not make sense, especially when taking into consideration the risk of the market and the current economics.

This problem is going to continue until the banks are held responsible for their lending practices.  Currently the government is by far the largest mortgage lender at 86% of all loans.  The government is running the housing market right now and letting people put less than 4% down in a declining market.  This means they are artificially propping up the housing market by lending but in doing so causing further deterioration of the quality of the mortgages and increasing default rates into the future.  The FHA loans default rates are skyrocketing and FHA loans are still the primary lending source.  This is like betting on the Cleveland Cavaliers to win the NBA Championship the day after Lebron James left, things are just going to go downhill further.  What is absolutely crazy is that when this entire mess started the banks made all of these risky loans, sold them to wall street as triple A rated paper and then bet against them because they knew they were risky.  And why aren’t these bank CEO’s in jail with Madoff?  Because they give political contributions.  What happened to the good old days when a bank would not lend you money unless it was less than 25% of your annual income?  What happened is the banks have found a way to line the politicians pockets so that they can lend without recourse for their actions. 

Now why pay attention to all of this information if we cannot do anything about it.  Actually we can, the more educated we are about the current economic problems the more we can strategically place our investments for growth and control.  For example, after going through this housing meltdown don’t you think it would be a good idea to invest at an all time low in the housing market cycle (in some markets) for cash flow ONLY and not for capital gains (or appreciation) first?  If you invest for cash flow then you have more control over your assets.  The assets value should be determined based on how much cash flow it gives you not based on some appraisers opinion.  Find ways to take advantage of the economic problems and increase your financial intelligence in order to take control of your financial future.