About Short Sales

The first item is a letter to the lender requesting help with your loan. It is important to inform them of the reasons why you need help. The lenders are really willing to work with you because it is more time, work and money for them to foreclose. When you write the letter be sure to include the individuals you will be working with on facilitating your short sale. By giving the lender permission to talk with these people, you will save time and the lender will appreciate the information. Your letter should always include the loan number, address of the property, the full name on title and your real estate agents name and phone numbers.

If one is presented with two investments of equal risk, the informed investor will choose the investment that offers a higher return rate. This is fundamental to personal investing and is called Risk Aversion.

If the investment with greater risk will yield greater returns, an individual may choose greater risk as part of the Risk Aversion process.

Government and mortgage debt traditionally differ by 1.5 percent. The difference between return rates is called the “spread.”

However, the spread started to grow in July 2007.July 2007 marked the “official” start of the Credit Crunch and as mortgage delinquencies grew nationwide, so did the market’s perceived risk of investing in them.

The “spread” almost doubled in a year. On September7, 2008 the takeover of Freddie Mac and Fannie Mae was announced by the federal government. This action offered the “risk free guarantee” for mortgage debt. After the announcement of the takeover the “spread” decreased.

This is one reason why mortgage rates fell Monday and why they should continue to stay low over the near-term. With the U.S. government backing the mortgage market, there’s no room for the risk premium that helped keep rates high this past year.

This will not mean more people will be able to get mortgages. However, those who qualify may find that financing is cheaper.

Don’t be shy on the phone when you call the lender. It may take several calls (don’t give up, just call again later if you don’t get the answer you want) but eventually you will talk with the right person. The person you want is the one responsible for handling short sales. If you get someone else they may not take the right information from you or give you the right information that you need. The most important person is the one that can make a decision regarding your situation. Ask the right questions and you get the right answers.