Will the Bank Agree to a Short Sale?

Sometimes, and usually only after the bank has already tried to keep you in the house. Since Fannie Mae and Freddie Mac’s conservatorships began in September 2008, the two companies have completed 7,425,684 foreclosure prevention actions. Of those, 707,232, under 10 percent, were short sales or deeds in lieu.

How Many of Those Actions Actually Keep Someone in the House?

Most of them. 6,718,452 of the 7,425,684 total actions since 2008 kept the borrower in the home, including 2,871,396 permanent loan modifications. I walked through this quarter’s own version of that split on September 26: 404 short sales and deeds in lieu combined against 48,035 retention actions and 25,908 foreclosure starts, all completed between April and June. FHFA doesn’t break the 404 apart by type at the quarterly level. The historical total does, and across eighteen years it comes out to 707,232.

Is Forbearance Still Something the Bank Offers?

Less than it was. FHFA’s second quarter report, published September 24, shows 26,906 new forbearance plans started, down from 27,477 in the first quarter. At quarter end, 37,283 loans remained in forbearance, which is 0.12 percent of all loans serviced and 6.51 percent of loans that are actually delinquent. That’s a small and shrinking group next to the size of the two companies’ whole book.

Is Delinquency Actually Getting Worse?

Barely, and it depends which measure. Loans 60 or more days behind sat at 0.83 percent at quarter end, up from 0.81 percent in the first quarter. Serious delinquency, the deeper bucket, held flat at 0.59 percent. Neither number is a flow of new people falling behind. Both are a snapshot of where the book stood on June 30.

Why Does the Rate on a New Loan Matter If You’re Already Behind?

Because it closes the refinance door a little more each quarter. FHFA’s reported average 30 year rate for the quarter was 6.42 percent, up from 6.11 percent in the first quarter. A rate that high makes refinancing your way out of a problem loan a lot less useful than it was two years ago, which is part of why the workout options above carry more weight than they used to.

So Will the Bank Actually Say Yes to a Short Sale?

It depends on what’s already been tried. A short sale or deed in lieu is what happens after a modification, a forbearance plan or a repayment plan has already been worked through or turned down, not instead of one. That’s the order the numbers above lay out on their own: millions of retention actions against a few hundred thousand exits, spread across eighteen years. A homeowner who assumes a short sale is a form usually finds out it’s a negotiated approval that comes at the end of a process, not the start of one.

Also of note today, a University of North Florida poll released this week put a number on something else that pushes people toward that conversation in the first place.

My Insurance Company Dropped Me. Is That Normal in Florida?

Yes. The University of North Florida’s Public Opinion Research Lab surveyed 1,511 Florida homeowners with property insurance in July, released the results Monday, and found that 25 percent of them have been dropped by an insurer at least once in the past five years. You’re not the only one this happened to this year.

How Many Florida Homeowners Actually Switch Insurers?

Just over half. 54 percent changed their primary insurer at least once in five years, and 33 percent changed twice or more. Among the people who changed, 47 percent say they did it because they were dropped, not because they went looking for a better deal. Of that group, 25 points came from Citizens, 12 from a private insurer, and 10 because their insurer stopped writing policies in Florida altogether.

What Happens If You Actually File a Claim?

It doesn’t always get paid the first time. Of the 261 people in the poll who filed a claim, 45 percent said it was initially denied. That’s a much smaller group than the 1,511 total respondents, so treat it as a read on claims specifically, not on every policyholder in the state.

Is the Market Getting Better or Worse?

Most people don’t see it moving either way. 55 percent see no sign of improvement, 26 percent think it’s getting worse, and 18 percent think it’s improving. On who benefited from the state’s reform efforts, 69 percent said the insurance industry did, against 16 percent for consumers and 9 percent for trial lawyers.

None of that tells you what happens with your own policy at your next renewal. It tells you that if you do get a non renewal letter, you’re one of a lot of people this has already happened to.

Jacksonville, Florida is my market, and distressed property is the bulk of what I work. Questions about your own file are always welcome.

JimArmstrong904@gmail.com, or (904) 671-4161 if a call’s easier.

Jim Armstrong, REALTOR, Momentum Realty. SFR (Short Sales and Foreclosure Resource) certified. This is general information, not legal, tax, or financial advice.

Momentum Realty is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.