If you're a struggling homeowner trying to avoid foreclosure there are two options available to you - a loan modification or a short sale.

What is a Loan Modification - A loan modification is a written agreement that permanently changes the original terms of your promissory note to make your mortgage payments more affordable. To reduce the monthly payment amount, the modification typically lowers the interest rate and extends the length/term of your loan.

Who qualifies for a modification - Eligibility is based on guidelines that the Lender/Bank develops and not everyone will be approved. Though, if you meet the program guidelines and take all the necessary steps, you’ll get one.

Basic Eligibility Requirements to Get a Modification

No law details explicitly who qualifies for a loan modification, and who does not. But lenders tend to have similar guidelines and criteria when considering whether to modify a borrower's loan.

In general, most lenders look at:

• Your finances. As part of the review process, the servicer will evaluate your income, loan payment, and financial circumstances.
• Whether you have a valid economic hardship. Lender guidelines almost always require the borrower to have experienced a hardship that has made the current payment amount unaffordable. A valid financial hardship is an event that was generally unavoidable or outside of your control, like the death of a coborrower, job loss, or a divorce.
• Ability to pay. Lenders want to see that you have some source of regular income, although the amount of income might be less than what it was when you took out the loan. For example, a borrower who has resumed earning income after a period of unemployment might qualify for a modification that lowers the monthly payments.

Depending on the type of loan you have and your circumstances, you might qualify for a Fannie Mae or Freddie Mac modification, an FHA modification, or a proprietary (in house) modification.

Documents You’ll Need to Provide With Your Loan Modification Application

To get a modification, you’ll need to submit a complete application to your servicer/mortgage bank. As part of that application, you’ll need to provide specific documents. While the exact list of documents your servicer will require might differ from the list below, the following items are generally required as part of an application:

• an income and expenses financial worksheet
• tax returns (often, two years’ worth)
• recent pay stubs or a profit and loss statement
• proof of any other income (including alimony, child support, Social Security, disability, etc.)
• recent bank statements, and
• a hardship letter or affidavit.

If you do not qualify for a Loan Modification your next option is a Short Sale.

What is a Short Sale - A short sale is a home that is available at a purchase price that is less than the amount owed by the current homeowner. The short sale benefits the bank by allowing it to avoid repossessing the home in foreclosure, which is expensive and time-consuming. The seller avoids the credit hit that comes with foreclosure and the bankruptcy that sometimes accompanies it.

How a Short Sale Work - A short sale is a financial option that is sometimes available to homeowners who are distressed borrowers. They are behind on their mortgage payments and have a home that is underwater. That is, the home is worth less than the outstanding balance on the mortgage.

Short sales are usually initiated by the homeowner and before the process can begin, the lender who holds the mortgage must sign off on the decision. Additionally, the lender, typically a bank, needs documentation that explains why a short sale makes sense. After all, the lending institution could lose money in the process

If approved for short sale, the buyer negotiates with the homeowner first and then seeks approval on the purchase from the bank second. It is important to note that no short sale may occur without lender approval.

Short sales tend to be lengthy and paperwork-intensive transactions however, they do not impact as negatively a homeowner's credit rating as does a foreclosure.

A short sale looks better than a foreclosure to future lenders and creditors. It shows that the person acted before the bank moved to repossess the home. A homeowner who has gone through a short sale may even be eligible to purchase another home immediately.

If you need help with modifying your loan or doing a short sale give us a call at 516-300-2427. Our experts are ready to assist you.

1. Rent control will spread more widely, eating into investor interest in higher-cost markets
2019 was a big one for rent control. It all started with Oregon's statewide rent control bill, which passed in February, capping rent hikes at 7% annually. New York and California followed suit later in the year with similar bills (7.5% in NY and 5% in Cali).

The reform caused multifamily investments to dip in many of these states' major markets. In New York City, for example, multifamily investing has fallen 9.2% over the year, while Los Angeles saw a 9.8% drop.

Rent control would freeze investment nationwide and eliminate property owners' ability to recoup costs and reinvest in maintenance and upgrades.

2. Mortgage rates will fall to record lows
The average interest rate for a 30-year fixed-rate mortgage is 3.99% as of December 10, and the all-time low (reached in 2012) is approximately 3.3%. Plus, the latest projections from the Federal Reserve show no further cuts in the federal funds rate in 2020, and the U.S. economy is generally strong by most metrics -- unemployment, wage growth, and GDP growth are looking good.

However, it is felt that the economy will be weaker in 2020 than most experts predict. Although we keep hearing about progress toward a trade deal, the reality is that the trade war is dragging on much longer than anticipated. In addition, global economic growth is projected to reach its lowest level since the Great Recession of Dec 2007 – June 2009.

So, there's a good chance the Fed will end up cutting interest rates at least a couple of times in 2020. Plus, the weaker economy will cause consumer interest rates to generally drift lower as well. It is quite likely we will see mortgage rates fall to a new all-time low in 2020.

3. Homebuilders will keep focusing on starter homes
Coming out of the Great Recession, homebuilders didn't spend much time -- or capital -- building starter homes. And for good reason. Young people were buying homes at record-low levels, and the only money to be made was building custom homes aimed at well-to-do buyers in the upper and upper-middle classes.

Fast-forward to now, and young people want to buy homes but there's just not enough of starter homes inventory to meet so many years of pent-up demand. That's been a boom for homebuilders specializing in entry-level properties like LGI Homes and Meritage Homes. So far in 2019, LGI Homes has sold 18% more homes than in 2018, while Meritage's closings are up 7% and orders are up 17% through the third quarter of 2019.

We see little reason to expect that to change in 2020. The economy will continue to perform reasonably well, unemployment has stayed near record lows as companies continue to need highly skilled and highly educated workers. The Millennials meet these qualifications of highly skilled, educated workers.  They also now getting married, starting families, and looking to take part in the American dream of homeownership.

With interest rates near record lows, and a solid economy, we expect LGI and Meritage, along with most of the other large builders, to continue investing much of their capital into starter home communities in 2020.

4. The private sector will bring new solutions to the affordable housing crisis 
The current affordable housing crisis is not breaking news. The need for low-cost housing is at an all-time high -- and not just for the lowest income earners but for median income, blue-collar wage earners, too. According to the National Low-Income Housing Coalition (NLIHC), the United States needs more than 7 million affordable homes to meet the current housing demand.

Traditionally this problem was left for government entities and not-for-profit companies to solve, but with new local and federal tax incentives and looming rent control laws spreading to more high-rent metro areas, the private sector is finding a way to become part of the solution without compromising profits.

According to the Economic Innovation Group, as of October 2, 2019, 115 listed funds have identified affordable and workforce housing, as well as community revitalization, among their investment priorities—a nearly four-fold increase since the beginning of 2019. Most of these developments are focused on providing affordable housing for wage earners who make around 40% to 70% of the area median income.

As construction and development for investment projects in Opportunity Zones begin, we expect more private firms to follow suit. We are already seeing a growing number of private companies outside of OZ investment areas focus their efforts on constructing new housing projects, converting existing housing into affordable housing, or creative new adaptive reuse projects, where they convert old, vacant buildings like factories, schools, and office space into residential housing.

As long as incentives for investors like the low-income housing tax credit (LIHTC) are around in 2020, private investment participation in affordable housing will likely increase.

What are your predictions for the real estate market in 2020? Do share them with us.

Although they are similar, condos and co-ops are not the same, and it is essential to understand their differences before buying one.

Many people confuse condos with co-ops, thinking they are interchangeable. A condo is a private residence in a multiunit structure that includes ownership of commonly used property. A co-op is also a multiunit building, but that’s where the similarities end. A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit.

Co-ops are collectively owned and managed by their residents, who own shares in a nonprofit corporation. The corporation holds the title to the property and grants proprietary leases to residents, Isaacs said. The lease grants permanent rights to residents to live in their units and to use the common elements of the cooperative according to the co-op’s bylaws and regulations.

The first housing cooperatives arrived in New York in the late 1800s, and co-ops remain popular in that city. Thirty percent of all housing there is co-ops, according to the National Association of Housing Cooperatives. Co-ops flourished in Washington starting in the 1920s, particularly along Connecticut Avenue. The first D.C. co-op, the Concord, was introduced in 1891, while it took the first condo 70 more years to arrive on the scene, Isaacs said. Chicago is another city where co-ops are popular.

The difference in costs. Co-ops tend to be cheaper per square foot. They typically offer buyers more control as an individual shareholder and often have lower closing costs. Condos are often easier to finance. Obtaining a mortgage for a co-op can be tricky. Some lenders shy away from co-ops or require higher down payments. Condo fees are usually lower. A co-op owner’s monthly fee can include payments for the building’s underlying mortgage and property taxes, amenities, maintenance, utilities and security.

The tax advantages of owning a condo or a co-op are about the same. If the owner has a mortgage, the yearly interest paid on the loan is deductible. Co-op owners also can deduct their share of the mortgage interest paid on the building’s underlying mortgage and their share of property taxes the co-op pays. Property taxes often are lower for co-ops than condos.

Living with the rules. An important distinction between a co-op and a condo is that most co-op associations require a prospective purchaser to be approved by the co-op board. The upside is being able to pick your neighbors. The downside is that when you sell, the board must approve the buyer and that can delay the sale. By laws the board can reject applicants for only two reasons: financial or a refusal to abide by the association’s rules and regulations.

Some people worry that a co-op board has too much power. However, during the financial downturn, co-ops came through better than most condos.

Can you rent it out? 
There’s nothing inherently good or bad about buying one versus the other, however co-ops tend to have restrictions that limit secondary rentals, residents generally feel more invested in the property, which can foster a strong sense of community among shareholders.

So what do you think? Is it better to buy a condo or a co-op?

Many people think winter is a bad time to look for a new home however there are several advantages to shopping for a home in the cold months. Here are a few.

1. Possibility of lower a negotiated price than during the warmer months - Most people do not like to shop in the cold, this means there are less buyers and therefore less competition for houses. Less persons making offers on the same house will allow you to have a better chance of negotiating down the asking price.

2. Easier to spot deficiencies in the house - A house tend to show all its problems in the winter because the systems have to work extremely hard to keep up with frigid temperatures.  With the home working at the highest level you can easily find leaky windows and door.

3. You see and experience the property at its worst - Going house shopping in the winter lets you see the property at its worst. Once you see what the house looks like during the drab months of the year you can easily image how much nicer the other months will be.

4. You can avoid areas with bad winter parking - Looking at houses when there's snow on the ground lets you see where parking problems occur in the area. You can avoid houses that have access problems, drainage issues or are last on the list for the snowplow.

Can you think of other advantages to shop for a home in the cold months?

Here are 6 steps to help guide you through the for sale by Owners (FSBO) process:

1. Think like a Salesman - Start detaching yourself emotionally from the property. A real estate pro looks at a house as structure, property and location without any thought to the specific changes you might have made like a backyard deck.

2. Research -- What are similar homes going for in the neighborhood? Do some online research about what homes have sold for in the past couple of years and most important, when they’ve sold. You may find that your neighborhood has a flurry of sales activity in spring or summer, which could affect your decision of when to hang up the “For Sale” sign. 

3. Get Help -- Depending on where you are, you’ll want to talk to a title company or real estate attorney about handling the closing. Ask to see the paperwork involved to familiarize yourself with it. The attorney or title company is really a good partner for you since they handle the complicated disclosures during the closing so you don’t have to.

4. Pricing – See what similar homes in your neighborhood sold for in the last 3 months.

5. Marketing Your Property
i) Yard Sign - Start with a professionally printed sign in the yard, designed to catch the eye of neighborhood hunters.
ii) Word of Mouth -- Phone or e-mail everyone you know and tell them your house is for sale. Include friends, relatives, even people you’ve exchanged business cards with at trade shows. 
iii) Advertise -- You can create a nice, free ad with pictures on Craigslist or publicize your home on web sites that cater to FSBOs like https://www.zillow.com/for-sale-by-owner/  and https://www.forsalebyowner.com. Post ads with pictures on public bulletin boards at grocery stores, gyms and workplaces.

6. Making the Sale - When you use a Realtor or agent, your job is simply to say yes or no to a buyer's offer, whom you often never meet. When you’re selling your house yourself, you’re doing everything, handling the open house, taking calls from buyers and brokers and negotiating. Here are some ideas to get a good buyer on the hook:

i) Be a Pro -- Keep paperwork like the sales agreements in a neat folder, be on time for appointments and look presentable when showing the house. Buyers aren’t expecting you to be a Realtor, but they’re going to want some confidence that you know what you’re doing.

ii) Look for Pre-Quals -- As you probably know, loans are tougher to get nowadays and a pre-qualified buyer is golden in the market. They know just how much of a mortgage they can acquire and they’re serious about buying, they’re not there to snoop around your closets and pantry. Let local mortgage brokers know about your place and ask for referrals from their pre-qualified clients.

iii) The Negotiation -- Here’s where it’s best to let emotions about the property go. At this point, you’re selling a house, not your “home.” If you get an offer that you feel is way too low, don’t get bent out of shape and slam the phone down. Take a deep breath and counter.