Funding Deals Fast Like A Real Estate Heavyweight

Short selling is an arbitrage strategy exercised by short sellers when they believe that a security price will decline. Short sellers borrow the shares of a company, sell them and buy them back at a lower price. Naked short selling is exercised when short sellers sell a company?s shares without having borrowed them first and they look for an offsetting position in the underlying asset after the sale.

The Securities and Exchange Commission (SEC) decided to reinstate the uptick rule that was withdrawn in June 2007 to ensure orderly markets. For many, this removal was the reason that initiated the downward trend in security prices causing extreme volatility in the stock markets and contributing to the credit crisis. The original rule ensured that short sales occurred at higher price than the previous sale, i.e. on an uptick, keeping out short sellers from exacerbating the downward momentum of security prices. However, with its removal, bears were allowed to find their way to overvalued stocks.

The reinstate of a modified version of the original uptick rule considers five alternative methodologies to find an answer to the stock market imperfections.

(1) Proposed Uptick Rule suggests – like the original rule – that short sellers are not allowed to trade until a stock ticks at a price higher than the previous trading price.

(2) Proposed Modified Uptick Rule suggests that short sellers are allowed to trade at a price lower than the previous trading price if the price is higher than the national best bid.

(3) Proposed Circuit-Breaker Halt Rule suggests that, if there is a 10 percent decline in the price of a particular security, short selling for this security is banned for the remainder of the day.

(4) Proposed Circuit-Breaker Uptick Rule suggests that, if there is a 10 percent decline in the price of a particular security, a short sale price test is imposed based on the last sale price of the security for the remainder of the day.

(5) Proposed Circuit Breaker Modified Uptick Rule suggests that, if there is a 10 percent decline in the price of a particular security, a short sale price test is imposed based on the national best bid of the security for the remainder of the day.

The reinstate of the uptick rule is an anti-fraud measure that limits short selling by preventing the acceleration of downward momentum. Short selling is largely exercised by investment banks and hedge funds, mainly attracting institutional investors, who are experienced in riding the market when they estimate that a security is overvalued. This explains the reasonable belief that the modified version of the uptick rule can have an effect on stock prices providing protection against abusive short selling.

Besides, historical data show that upside volatility is more controlled than downside volatility when the uptick rule is enacted. Looking at the daily and weekly closing prices of S&P 500 over a period of 25 years one can observe that negative percentage changes are more likely to occur than positive percentage changes. An extreme percentage change of greater than 5 percent occurs more often on the downside than on the upside on a daily basis. Weekly, a percentage of 10 percent occurs almost twice as often on the downside than on the upside.

Conclusively, the reinstate of the uptick rule will help offset the extreme sell off patterns observed in stock market downturns and the effects of upside and downside volatility as a smoothing mechanism to the downside. The uptick rule can also help offsetting the effects of hedge funds that create a bandwagon effect when expecting extreme profitability.

The Long-Short Fund, which is still a baby in terms of the overall market, appears to be a rising star that could potentially be the saving grace of investors. Since its inception it has attracted billions of dollars in investments. That, by the way, is actually part of the fund’s overall strategy because it’s important to have knowledgeable and experienced investors. Due to asset allocation the volatility of the fund is reduced and performance is improved. The Long-Short Fund is not a fund that relies on NASDAQ or the S&P 500 to be successful. Instead, it’s a fund in a class of its own working to offer its investors consistent returns. It is believed the long short fund investment model will become wildly successful and explode in both popularity and growth over the next decade. The strategy used by the Long-Short Fund is not market neutral, although it might sound that way at first to newcomers. It is in fact a fund that includes both short and long positions to provide a balance to the investment and to reduce the risk of loss. The goal is to have your long and short positions make money regardless of market direction. The investments will be diversified and include many sectors. The exposure of the fund on the short side will be quite low while exposure on the long side will be higher. Nevertheless, the long and short stocks will work together to provide returns despite the market conditions. The Long Short Fund strategy is to limit short sale losses to 10% and to 20% on longs. Annually, the fund’s goal is to return 20%. In a market that appears to continue its volatility over the coming decades investments like the Long Short Fund could be just the right medicine for investors.

If you take a look at most of our rural areas you will be amazed to see just how many farm lands have run down

Most investors purchase stocks at a low price and they expect their return from an increase in value. However, if investors believe that a stock is overvalued and want to take advantage of an expected decline in price, they may sell the stock short.

Homeowners seeking relief from overwhelming mortgage payments may be able to get help from President Obama’s stimulus package. There may be three options to avoid foreclosure available to you that you hadn’t thought of: Refinancing, loan modification, or short sale.

If your home mortgage has become almost impossible to afford each month, or if you have already begun to fall behind in payments, you may be able to get assistance under President Obama’s stimulus package. You may be able to avoid foreclosure by one of three options.

There are 75 billion dollars worth of funds available to help struggling homeowners and stop the nationwide home foreclosure crisis. If you qualify, here are the three options that are available: straight refinancing, loan modification, and if those are not feasible, short sale.

The first option is for homeowners who are not yet falling behind in their payments. This plan allows for refinancing at current low interest rates. This plan is only available to those who owe less than 105% of the home’s current market value. Also, if you have a second mortgage, that lender also must sign on to the transaction.

The second option available is a loan modification plan that offers homeowners who qualify a reduction in interest rates, extended loan terms and some deferral on principal! The idea is to achieve a monthly mortgage payment that is below 31% of gross income each month. Second mortgages now qualify for loan modification with 1 or 2% interest rates and sometimes complete loan forgiveness. This is a once in a lifetime opportunity and you can only apply once! There is only a window of time when this will be available. If you don’t qualify for the straight refinancing because you owe too much or have fallen behind already in monthly payments, loan modification may be the perfect solution to your financial problems.

The Department of Treasury is encouraging lenders to complete these loan modifications by financially rewarding them for completed modifications. Borrowers are also to be rewarded financially for maintaining these new payments up to date for the next six years. Be sure and become knowledgeable about the requirements and options before applying. You want to be sure and do it right the first time, since there are no second chances.

The third option, if refinancing and loan modification is not an option for you, is short sale or deed in lieu of foreclosure. The property is sold at a price that could be less than the amount owed. The government is paying each lender $1,000.00 for allowing a short sale, and if it is unsuccessful, the homeowner can turn over the home without foreclosure and also receive financial relocation help.

Refinancing, Loan Modification, and Short Sale are three options available to most homeowners through the stimulus package. Since incentives are given to lenders, they are often more receptive than not to a loan modification request. The government is encouraging your lender to work with you to avoid borrowers working with loan modification companies who charge exorbitant fees to help you. Check out all your options, and see what your lender can do to relieve your financial burden. Do your homework before you contact them, but be aware that not everyone will qualify. Start now and get your financial future turned around while the opportunities are available.

Many homeowners are now finding themselves in a situation where they cannot afford to pay off their mortgage any longer. This maybe because they had taken advantage of the short-term interest-only loans or had their properties valued lower than the loan they have obtained. In such an event, there are some options available to them rather than to go through the whole process of mortgage foreclosure and run the risk of being evicted.
Short sale is a good solution. It involves the sale of your mortgage property at a low price. Keep in mind that banks would rather take the money that your property. As the borrower, you can propose a short sale to the lender so that everybody is benefited. This strategy is getting very common in the U.S.
There are mortgage foreclosure specialists and buyers works as facilitators of short sales. If you’re lucky, you might even be approached by them and have you sign a release or an authorization form of your property. The specialists would write up all the paperwork involved, including the contract of sale. The contract would contain the offered amount and all the conditions involved in the agreement. You’re free to review the document before signing it. Also included in the contract is a hardship letter indicating the reason why you can’t pay for the property and how the short sale can be beneficial to the lender.
A short sale of the real estate can be advantageous to the homeowner or borrower because:
1. It can help them save their credit history
2. It can help them find a solution to an otherwise embarrassing situation
3. It could reduce the stress of finding funds to answer a certain financial obligation
4. It is the faster solution to mortgage foreclosure process
In today’s housing market, there are tons of property inventories. And that causes the banks to lose a lot of money each day. The whole foreclosure process can be a long and tedious one for the lender. For the borrower, it is a stressful, embarrassing, and dreadful experience. Short sale could actually stop the mortgage foreclosure process involved and benefit all parties involved. Through it, the lender gets his money from the sale and the homeowner can walk just away from the property that he can’t pay for any longer. The buyer gains advantage too as he ends up buying a good property at a discounted price.

Short Sale FlippingShort sale flip has become one of the most popular scenarios in the real estate market today. Short sale flip, back-to-back closings, transactional funding, and a million other terms are associated with short sales. In short sale flipping, a homeowner with a bad debt agrees to sell off his property on a lower price. The lender or the bank purchases the property at a price that is less than what the owner actually owes, in turn preventing the homeowner against foreclosure. This a win-win situation for both the buyer and the seller because the seller is able to dissolve his bad debts and the lender purchases the property on a lesser amount and can sell it off for more at a later stage. This kind of buying and selling is legal. However, there are many controversies associated with short sale flips. Many title companies and real estate brokers find it illegal and unethical to indulge in short sales. Bill Bronchick, a proficient attorney reveals the truth about this dissension. Short Sale Flips are Legal says Bill BronchickBill Bronchick opines that a short sale flip is not much different from a regular wholesale flip; the only exception being that in short sale flipping, investor pays off seller’s lender at a discount instead of paying in full in case of regular flips. Bill Bronchick puts forth certain points that are important to avoid falling in a legal battle in case you are indulging in short sale flips. According to Bill, it is a fair game to make profit in a short sale flip, as the seller is not entitled to get any money out of the deal in any case and furthermore, the lender will not agree to flip while the seller walks away with the money. He further affirms that if the investor keeps the property as a rental, it is absolutely legal and triggers no issues at all. In addition, if the property is sold off few months later instead of selling immediately, there is no contention involved with it. It is also imperative for a lender or an investor to disclose to the seller about the intention of reselling the property for a profit, asserts Bill Bronchick.To know more about short sale flipping and to get some more useful tips from Bill Bronchick, please visit http://www.legalwiz.com

When you work with the homeowner to put together short sale negotiations with the bank, you?ll also be assembling vital evidence in a short sale package. This package is very important in preforeclosure deals. It provides enough information to (hopefully) convince the bank to accept your short sale offer on the homeowner?s property.

Include everything you can in the short sale package that backs up your request for a short sale. Obviously, you?ll want to leave out extra evidence, (unless the bank specifically requests it), that may hurt your claim.

Common Items in a Short Sale Package:

Standard Purchase and Sales Agreement & Escrow Instruction

This is the standard sales contract between you and the homeowner, since you will actually be purchasing the property from the homeowner with the bank?s approval.

Authorization To Release Information

In order to get the bank to work with you, the homeowner need?s to sign this document stating that they authorize their lender, the bank, to share all vital information concerning their mortgage with you. If you don?t have this the bank won?t talk to you!

Letter Of Agreement and Addendum

This is the cover your butt document stating that you will work with the homeowner and the bank to stop the foreclosure, but you can?t guarantee that the bank will agree to stop the foreclosure during short sale negotiations with you.

Warranty Deed To Trustee

You?ll need to get a notary to authenticate this document. It basically shows who owns the property you are attempting to purchase.

Agreement and Declaration Of Trust

In order to keep your own name off of public records you?ll use this document to declare a land trust on the property, which you?ll have rights too.

Letter That Trustee is Making Payments:

This letter is used when you have an agreement with the homeowner that indicates you?ll be taking the property ?subject to? and notifies the lender that payments will be coming from a trustee.

Escrow Letter

You?ll use this letter to tell the bank to apply funds in an escrow account to the loan balance when the loan is paid in full and the short sale deal is complete. Be aware there is no guarantee the bank will comply with the instructions for your real estate investment. They may send the escrow proceeds to the original borrower, which is the homeowner. So, you?ll need to make arrangements with the homeowner just in case this happens.

Special Power of Attorney

You?ll get this signed by the homeowner in front of a notary. It applies only to the property and lets you make decisions concerning the property if something happens to it before the short sale deal closes.

Residential Real Estate Disclosure

This is basically to protect everyone involved. You?ll sign it as the purchaser. It discloses any defects in the property and prevents anyone from claiming after the deal is completed that they weren?t aware of certain defects in the property.

Hardship Letter

This is a very important letter in pre-foreclosure investing. The hardship letter allows the homeowners to explain in detail all of the reasons they were unable to make payments on their mortgage and why they?ll be unable to completely pay off the mortgage. A good hardship letter can really help you seal the deal.

Financial Statement

This is basically the homeowner?s pay stubs, copies of their past income tax returns and other items that show the homeowners really are in financial hardship. The bank will absolutely want to see this proof of hardship before discounting a loan and taking a known loss.

Suggested Extras to Seal the Deal!

There are a few extra pieces of foreclosure information you can include in your short sale package to get the bank?s attention in this preforeclosure deal.

Cover Letter

The cover letter helps your short sale package stand out. It basically states who you are as an investor and that you are requesting a short sale. It also states why the bank should take the short sale. You can also summarize the major points of your package in this cover letter for the bank officer reading it.

Proposed Closing Statement (HUD1)

Eventually you?ll find that a bank requests the HUD1form. It shows all the fees and payments that will be made to the parties involved in the short sale. It helps them know their bottom line on the deal at a glance. Plus, it ensures the seller is not receiving any compensation.

Opinion Of Value

This can be a professional estimate or your own statement. You?ll back it up with a quick list of all the negative points of the property, its needed repairs and the lowest comparable sales in the area.

Estimate Of Repairs

If this property in pre-foreclosure needs repairs make sure you get estimates for all of them and include those estimates in your short sale package to back up your discounted price. Use the highest priced estimates you get.

Notice Of Trustee?s Sale

This is the notice that the homeowner receives telling them that their property is going to the foreclosure sale. By including this document in your short sale package you are letting the bank know that you are aware of the foreclosure process. It also helps put a timeframe on the deal and can light a fire under them, so to speak.

Color Photos

You?ll get extra points with the bank by sending them pictures of the damaged and neglected areas of the house. They provide photographic evidence of the low market value of the property and encourages the bank to accept your discounted offer.

The short sale package usually contains quite a lot of foreclosure information. In fact, it?s an involved process and essential part of debt negotiation with the bank. The bank will want ample evidence to back up your short sale request for their loss mitigation department as can be seen by the bulleted list. This package contains information that the bank requests from you and your own research on the property including; damage estimates and the homeowner?s hardship letter, all of which work to back up your request for a discounted sale price on the property.