How Many Borrowers Will Choose Bank of America's Rescue Plan Over a Short Sale Attempt?

By
Real Estate Agent with Lyon Real Estate BRE #00697006

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Thanks to California Attorney General Jerry Brown, an agreement has been reached with Countrywide's parent Bank of America to rescue an estimated 125,000 Californians from foreclosure. The terms are narrow, targeting owner occupants who took out from Countrywide Option ARM or subprime mortgages from 2004 through 2007, with a few provisions tossed in to assist homeowners with prime and Alt-A loans.

Starting December 1, apart from freezing foreclosures, Bank of America has agreed to waive prepayment penalties and late fees, plus offer to some ARM holders interest rates as low a 3.5% on a new refinance at 95% of loan-to-value, based on today's market value.

All of this sounds fine and dandy, but it makes me wonder how many borrowers will take advantage of these rescue programs? It seems like in today's fast-fix-society that many home owners would prefer to do a short sale and get rid of the property, freeing themselves from the entire homeownership process.

Many of the homeowners who took out these Option ARM and subprime loans, especially those who opted for the 2/28 programs, were not in a position to own a home in the first place. Given the choice between staying put and continuing to make mortgage payments under a reduced interest rate plan (on a lower loan balance) or selling the home on a short sale, I'm guessing that many would choose the latter. The reason I suspect this might be true is because every time I lay out the available options to homeowners, encouraging them to pursue a different avenue than trying to do a short sale, they choose the short sale route every time.

Which do you think homeowners will choose? And those for those who choose a short sale, do you think Bank of America will work any harder now to get short sales approved?

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Elizabeth Weintraub is an author, home buying expert for About.com, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area with an emphasis on Elk Grove. Call Elizabeth Weintraub at 916.233.6759. Put 40 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. BRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available with free shipping.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

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Topic:
ActiveRain Community
Groups:
CALIFORNIA REAL ESTATE
California Short Sales, REO's, and Foreclosures
Club Chaos
Lyon Realtors
Short Sales Specialists
Tags:
short sale
bank of america
countrywide
foreclosure
option arm
subprime mortgage
elizabeth weintraub
sacramento

Comments 64 New Comment

Rainmaker
1,149,675
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Put 40 years of experience to work for you
Lyon Real Estate

You know, Myrl, I really gotta wanna use my tired and sore scrolly finger to scroll alllll the waaaaay downnnn to the end of this to say hi to you.

However, homeowners who never refinanced nor took out a hard money loan have nothing to fear in CA regarding a deficiency judgment. It's the rest of them . . .

elizabeth weintraub sacramento real estate agent in land parkelizabeth weintraub sacramento real estate agent in land park

October 09, 2008 10:45 PM
Rainmaker
489,778
Sergio Rebollo Jr.
Real Estate TeamMates

Great post Elizabeth and equally as great discussion!!!  Lets see what happens.  So many rescue plans are being tossed around and discussed but I see far more people in distress than what many of these plans can do to help.  In Miami, many got in over their heads on heir personal residence and can't afford it anyways and many got in on he flipping craze and got stuck with several units, especially condos, that didn't sell.  I still see Short Sales playing a role for a while.  Lets see if the banks continue to be receptive to them.

October 14, 2008 01:06 AM
Rainmaker
1,149,675
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Put 40 years of experience to work for you
Lyon Real Estate

Hi Sergio: I see short sales as the second best game in town, right next to REOs. All the rest of that hoopla about saving homeowners' homes is beginning to sound like politicial positioning to get us to hold on another four weeks until the election. Take the FHA refinance program, Hope for Homeowners. Not one lender will fund it. It's a joke. And not a very funny joke at that.

elizabeth weintraub sacramento real estate agent in land park

October 14, 2008 11:34 AM
Rainer
33,314
Robin Siddle
Robin M. Siddle, Broker
Tucson Expert Agents LLC

Elizabeth,

I think that there are indeed many homeowners who will want to take the quickest route out, especially since they are pinched financially on so many sides right now.  However, there are certainly still some with integrity out there and this is great for those who are willing to honor the prior commitment that they made.  Instead of being in a position to be forced to lose their home, this plan makes keeping the home and paying the mortgage possible because the mortgage is now affordable.

October 27, 2008 02:13 PM
Rainmaker
1,149,675
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Put 40 years of experience to work for you
Lyon Real Estate

Hi Robin: That assumes though, that the homeowner wants to try to save the home. Many just want to walk away when their home is worth half of what they paid for it.

Hi Non Member: Sorry, I had to delete your post because it contained self promotion.

elizabeth weintraub sacramento real estate agent in land park

October 27, 2008 06:53 PM
Rainmaker
1,149,675

Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents

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Additional Information

Broker-Associate at Lyon Real Estate, midtown Sacramento office. Selling since 1974. Homebuying expert at About.com. Best short sale agent in Sacramento. Elizabeth sells homes from Galt to Lincoln.
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Author Bio: Elizabeth Weintraub is a Sacramento real estate broker, author, home buying expert for About.com, a Land Park resident, who specializes not only in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento but sells extensively from Elk Grove to Lincoln. Weintraub is prominently known as the #1 Sacramento Short Sale agent throughout the Sacramento four-county area. Call Elizabeth Weintraub at 916.233.6759. Put 40 years of real estate experience to work for you.