The Anna Maria Island Sun Newspaper

Vol. 13 No. 36 - July 3, 2013


Mortgages, myths and independence


Tomorrow is July 4, commonly known as Independence Day celebrating the adoption of the Declaration of Independence declaring our independence from Great Britain in 1776. But if you’re in the market for a home and require a mortgage to make that happen, you may be looking to declare your independence from your bank, especially if a short sale or foreclosure was in your past.

As a consequence of the bursting of the housing bubble and the resulting under water properties, banks started accepting short sales in an effort to get the property off their books and eliminate the necessity of a full foreclosure. A short sale involves seeking approval from your mortgage lender to sell your home for less than the balance of the mortgage as a way of avoiding foreclosure.

One of the reasons homeowners worked toward finding a buyer rather than just walking away from the property was the assumption that a short sale would have a lesser impact on their credit rating and would allow homeowners to rebuild their credit scores sooner. In fact the guidelines from Fannie Mae and Freddie Mac, who approved most of the original mortgages, indicate that short sale sellers should be able to buy another home in two years’ time as opposed to the seven-year waiting period required after a foreclosure proceeding.

Many of these short sales buyers are starting to get back into the market thinking they will qualify for financing again. Unfortunately, they are finding out that what was a common belief that a short sale can affect your credit score less than a foreclosure is not necessarily the case.

Fair Isaac or FICO, the company that provides analytics for credit scoring, says credit scores for either short sales or foreclosures are negatively affected about the same, for example: 30 days late: 40 to 110 points, 90 days late: 70 to 135 points, foreclosure, short sale or deed-in-lieu (voluntarily turning over the deed to the property to the bank): 85 to 160, and bankruptcy: 130 to 240.

Part of the reason short sales are lumped in with foreclosures at the credit bureaus is their inability to code short sales differently from foreclosures. This problem is just starting to surface since more short sale sellers think enough time has elapsed for them to qualify again for a mortgage. Florida Sen. Bill Nelson has asked federal regulators to start looking into this problem, and credit bureaus are considering a new coding system for short sales, so help may be on the way.

In the meantime, until this credit scoring issue is resolved, homeowners who are facing foreclosures need to decide if it’s in their best interest to a pursue short sale. Avoiding a foreclosure is of course the best course of action, possibly by negotiating a payment plan with the lender or refinancing the mortgage for an extended period of time. There are also government programs that could be utilized for those who qualify to avoid a foreclosure.

There is a New England tradition said to have originated on Nantucket Island that when a mortgage was paid off the ashes of the mortgage document would be placed in the Newel Post of the stairway topped off with a scrimshaw button. However, some people think the mortgage button is really just a myth, since mortgages as we know them didn’t exist until long after many of these homes were built. Unfortunately, in the financial world we live in, there aren’t too many mortgages being set on fire as a matter of fact, I wouldn’t be surprised if some people think mortgages themselves are the real myth.

Real Estate Transactions
Real estate transfers of February 2013
Sponsored by Alan Galletto Island Real Estate

Sold Date | List Price | Sold Price | Address | Provision | Property Style

Anna Maria

02/28/2013 260,000 230,000 522 Pine Ave. # 5d 822 2 Br/1 Ba Condo
02/01/2013 499,000 480,000 142 Crescent Dr. 1282 116x111 2 Br/2 Ba SFR
02/07/2013 4,495,000 3,425,000 102 Mangrove Ave. 6483 115x125 4 Br/5.5 Ba SFR
02/13/2013 849,000 795,000 868 N. Shore Dr. 1490 50x110 4 Br/2 Ba SFR
02/14/2013 1,195,000 999,900 749 Jacaranda Rd. 2832 50x100 5 Br/3.5 Ba SFR
02/14/2013 599,000 547,000 301 S. Bay Blvd. 1500 61x116 3 Br/2.5 Ba SFR

Bradenton Beach

02/15/2013 399,000 400,000 2312 Gulf N. Dr. # 106 1180 2 Br/2 Ba Condo,

Bank Owned

02/19/2013 159,900 145,000 2312 Avenue C # 9 651 2 Br/1 Ba Condo
02/19/2013 169,000 160,000 611 Gulf N. Dr. # A12 794 2 Br/1 Ba Condo
02/21/2013 333,000 300,000 1000 Gulf Dr. # 3 480 1 Br/1 Ba Condo
02/27/2013 239,000 205,000 1301 Bay N. Dr. # 5b 1079 2 Br/2 Ba Condo
02/28/2013 99,900 114,500 117 7th N. St. # 25 594 1 Br/1 Ba Condo,

Short Sale

02/28/2013 135,000 122,000 611 Gulf N. Dr. # D24 745 1 Br/1 Ba Condo
02/22/2013 389,000 368,000 108 5th St. S. 764 42x98 2 Br/2 Ba SFR

Holmes Beach

02/01/2013 649,000 610,000 2700 Gulf Dr. # 204 1350 3 Br/2 Ba Condo
02/05/2013 399,000 385,000 6500 Flotilla Dr. # 225 1793 3 Br/2 Ba Condo
02/15/2013 369,500 350,000 7100 Gulf Dr. # 105 1081 2 Br/2 Ba Condo
02/22/2013 180,000 186,000 201 35th St. # 3 630 1 Br/1 Ba Condo,

Short Sale

02/26/2013 325,000 315,000 26 Seaside Ct. 978 2br/2 Ba Villa
02/26/2013 549,000 525,000 207 55th St. # A 1232 3br/2 Ba Villa
02/01/2013 679,000 650,000 417 Clark Dr. 2400 3 Br/2.5 Ba SFR
02/08/2013 565,000 535,000 520 70th St. 1296 85x103 2 Br/2 Ba SFR
02/15/2013 158,900 145,000 445 62nd St. # B 588 1 Br/1 Ba SFR
02/20/2013 335,000 330,000 5617 Gulf Dr. 1076 58x105 2 Br/1 Ba SFR
02/28/2013 579,000 535,000 205 68th St. 1384 75x100 3 Br/2 Ba SFR

Source: Manatee County Property Appraiser’s Office

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