A key component to the success of a short sale involves working with a Mortgage Originator who is well versed in the short sale process. The short sale negotiation process is a patience testing task. The complications are many, however if the buyer is securing mortgage financing and is working with an originator that understands that short sale process the buyer and seller can be rest assured, in most circumstances, that the transaction will get to the closing table.

There are 5 key questions to ask when choosing a Mortgage Originator for the purchase of a short sale transaction.

1.) Are they versed in the Anatomy of the Short Sale process?

The proper mortgage origination process pertaining to a short sale purchase is a bit different than a normal non-distressed property purchase. However, it is always my belief that in order to lead the cavalry one must have sat in the saddle. Putting this in terms of the short sale process, in order to originate a loan for a buyer who is interested in a short sale, one must understand the entire anatomy of the short sale process. This includes the challenges that the sellers faces regarding financial difficulty and hardship, the challenges that the selling agents face regarding listing and negotiating the short payoff and most importantly the strict timelines that come along with a short sale transaction.

2.) Will they issue a “TRUE” pre-approval prior to Short Sale approval?

A complete short sale package should include a mortgage pre-approval for the buyer if the buyer is securing mortgage financing to purchase the property.  The originator should have taken a full mortgage application, documented income, assets, reviewed the buyers credit and submitted the file through the appropriate automated underwriting service (ex DU,LP) prior to issuing a pre-approval letter to the buyer.

The pre-approval process for a short sale transaction should not be any different than the pre-approval process in a non-distressed sale. Having said this,  we have closed over 2500 short sale transactions nationwide. Many times, because of the long timeframes that are involved in a short sale, originators are not properly pre-qualifying the buyer prior to short sale approval. Originators are waiting until the short sale is approved by the short selling bank to submit the client profile to underwriting and is some cases to even issue a complete pre-approval. That is too late!  In every circumstance the pre-approval process should be done thoroughly before the short sale approval.

3.) Will they order the appraisal prior to Short Sale approval?

In a non-distressed sale typically, once the purchase contract is signed, the Mortgage Originator or their processing team will then order the appraisal for the property so that it may be reviewed by underwriting. Underwriting will then make sure the property is acceptable as collateral based upon the loan that is being applied for.

This process should hold true if the buyer is buying a short sale. Many times however, the appraisal is not ordered until the short sale is approved by the short selling bank. Often, this will delay the closing timeframes.  Also, consider this, if the short selling bank based upon their appraisal, counters they buyer with a higher price, the buyer who has already had their appraisal done will have the ability to issue a rebuttal based on their appraisal.   The Buyer’s/Lender’s appraisal is a great tool to negotiate value disputes with  short selling banks.

4.) Will they communicate with the Short Sale Negotiator?

There is one line of communication that is a must during a short sale.  This is the communication between the Short Sale Negotiator and the Mortgage Originator. The Mortgage Originator should be in touch with the negotiator on a weekly or bi weekly basis to obtain the status of the negotiation. It is imperative that the originator be informed of such deadlines as closing dates, approval expirations, BPO time lines, contract changes etc.

5.) Will they keep the Buyer engaged throughout the process?

In a non-distressed sale the timelines are usually short from pre-approval to closing. The potential buyer will obtain a pre-approval for mortgage financing; they will shop for a home, make an offer and then close on the property.  Most cases this process takes between 30-60 days.

In contrast, the short sale purchase timeline could take the normal 30 to 45 days of shopping but, from the time a buyer puts an offer on a property to the time they actually close could take 90-120 days. During this time frame, the mortgage originator must keep the buyer engaged. The information gathered in the pre-approval process meaning paystubs, bank statements etc. will need to be updated appropriately so that when the short sale bank issues their approval the buyer is ready to close on time and within the approval guidelines.  All too often short sale negotiators are asked to obtain short sale approval extensions from the short selling bank because the buyer could not close on time. Most of this stems from the Mortgage Originator scrambling to obtain last minute documentation that could have been avoided if the buyer’s credit file was routinely updated throughout the entire short sale process.

In closing, with the abundance of short sale transactions permeating the marketplace, it is imperative that all interested parties to a short sale work with a Mortgage Professional that understands this segment of the marketplace. By keeping the 5 questions above in mind, you may alleviate the possibility of a short sale transaction failing because of buyer financing falling apart.

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NEW YORK (CNNMoney) — Ten hard-hit housing markets will record double-digit price increases through 2013, according to a report Wednesday.

And with mortgage rates low, many house hunters have already started to pounce on bargains, said David Stiff, chief economist at Fiserv, a financial analytics company that prepared the forecast.

"Some markets may have overshot to the downside, and people are jumping in to try to catch the bottom," Stiff said.

Nationwide, home prices will start rebounding late this year and gain an average of 4% a year over the next five years, Fiserv projects.

In a separate report released Wednesday by the National Association of Realtors, the national median home price declined by just 0.4% in the three months ended March 31 compared with the same period in 2011.

About half of the 146 metro-area markets surveyed by NAR showed a price increase, as buyers make inroads into the supply of homes for sale all across the country. National inventory has dropped by 22% compared to a year earlier.

"Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future," said Lawrence Yun, NAR’s chief economist.

Home prices will also be driven higher as banks opt for short sales instead of repossessions. Repossessed homes sell for between 25% and 50% less than comparable homes sold by conventional sellers, according to Daren Blomquist, a spokesman for RealtyTrac, which markets foreclosed properties.

Bank repossessions often go through lengthy foreclosure processes and long periods of vacancy, during which they may deteriorate and lose value.

Mortgage payments at lowest level in decades

Fiserv’s Stiff forecasts that Madera, Calif., will produce the largest home price gain over the next two years. This market bubbled during the housing boom, with the median home price jumping above $300,000, according to the National Association of Home Builders.

Prices have since tumbled 53% off their peak, to about $125,000. Fiserv is projecting a price jump of 21.5% by the end of 2013 with 16.5% of that increase coming next year.

Other double-digit gainers will include Medford, Ore., with a 20.1% rise, Yuma, Ariz., with 16.7%, and Corvallis, Ore., with 11.4%.

Although regionally, home prices vary, as a nation, there is little change between this year and last year, with CoreLogic implying price stabilization is the current state of the market.

Home prices stabilizing

With a 0.6 percent drop in home prices between March 2011 and March 2012 and a 0.6 percent increase in prices from February, CoreLogic’s Home Price Index (HPI) shows that national home prices not only saw the first month-over-month increase since July 2011, the movement up and down is slight, indicating the market has found its bottom. Excluding distressed sales, month-over-month prices increased for the third month in a row. The CoreLogic HPI also shows that year-over-year prices, excluding distressed sales, rose by 0.9 percent in March 2012 compared to March 2011.

“This spring the housing market is responding to an improving balance between real estate supply and demand which is causing stabilization in house prices,” said Dr. Mark Fleming, chief economist for CoreLogic. “Although this has been the case in each of the last two years, the difference this year is that stabilization is occurring without the support of tax credits and in spite of a declining share of REO sales.”

“While housing prices remain flat nationally, in many markets tighter inventories are beginning to lift home prices,” said Anand Nallathambi, president and chief executive officer of CoreLogic. “This is true in Phoenix, New York and Washington, for example, which all reflect higher home price values than a year ago. A continuation of this trend will be good for our industry across U.S. markets.”

Regional performances vary

As always, all real estate is local and some states continue to perform extremely well while others continue to decline. Including distressed sales, the states with the highest appreciation were Wyoming (+5.9 percent), West Virginia (+5.3 percent), Arizona (+5.1 percent), North Dakota (+4.7 percent) and Florida (+4.5 percent) and excluding distressed sales, the top performers for March were Idaho (+5.4 percent), North Dakota (+5.1 percent), South Carolina (+4.7 percent), Montana (+3.5 percent) and Kansas (+3.4 percent).

Not everyone had such stellar results, however, as CoreLogic reports that including distressed sales, the states with the greatest depreciation were Delaware (-10.6 percent), Illinois (-8.3 percent), Alabama (-8.0 percent), Georgia (-7.3 percent) and Nevada (-5.8 percent), and excluding distressed sales, the poorest performers were Delaware (-7.6 percent), Alabama (-4.1 percent), Nevada (-3.9 percent), Vermont (-3.9 percent) and Rhode Island (-2.9 percent).

Including distressed transactions, the peak-to-current change in the national HPI (from April 2006 to March 2012) was -33.7 percent. Excluding distressed transactions, the peak-to-current change in the HPI for the same period was -24.5 percent. The five states with the largest peak-to-current declines including distressed transactions are Nevada (-59.9 percent), Arizona (-48.6 percent), Florida (-48.1 percent), Michigan (-45.1 percent) and California (-42.7 percent). Of the top 100 Core Based Statistical Areas (CBSAs) measured by population, 57 are showing year-over-year declines in March, eight fewer than in February.

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