This National Association of Realtors article showed up in my news this morning: Government Announces Short Sales Guidelines.
In short, new the Treasury Department has announced new and improved guidelines to encourage the use of short sales, where the seller owes more than the outstanding mortgage(s).
These guidelines address most, if not all the issues, associated with the pain and frustration of completing a short sale.
For instance:
- Mortgage companies have 10 days to approve or deny a short sale request
- When the transaction is completed, the borrower must be completely released from the debt.
- Mortgage servicers will not be allowed to reduce real estate commissions on the sale.
Of course, restrictions apply. Such as:
- Property must be home owner’s primary residence.
- The home owner must be delinquent on the mortgage, or on the verge.
- Loan must have been closed prior to Jan. 1, 2009.
- Loan amount must be less than $729,750.
- The borrowers’ total monthly mortgage payment must be more than 31 percent of their before-tax income.
And there are incentives for borrowers and lenders to complete the short sale:
- Borrowers receive $1,500 from the government if their home sells for less than the outstanding mortgage.
- Mortgage servicing companies receive $1,000 for each completed short sale.
- Second lien holder can receive up to $3,000 for releasing their claims to the property.
The catch:
- Mortgage companies don’t have to launch the program until April 5, 2010.
Other articles related to these short sale recommendations include:
- Guidelines Aim to Ease Short Sales – Wall Street Journal
- Gov’t unveils rules to speed up ‘short sales’ – Associated Press
- Short Sales Get Boost From New Obama Treasury Guidelines – The Massachusetts Real Estate Law Blog
- Home Affordable Modification Program – Administrative Web Site for Loan Servicers administered by Fannie Mae
{ 3 comments… read them below or add one }
Nice post. I always wanted to know about how a short sale works. Thought about going i this direction, but never could understand the process. You post has shed some light on this for me. Do you short sale homes for profit when people are delinquent on their mortgage? Love to see more information here. I will surely return to see any new posts concerning short selling. Thanks again for your post.
scott @ Vintage Bictcle Posters´s last blog ..Do Follow Blog, Comment Luv Keyword Luv
Nice post. I always wanted to know about how a short sale works. Thought about going i this direction, but never could understand the process. You post has shed some light on this for me. Do you short sale homes for profit when people are delinquent on their mortgage? Love to see more information here. I will surely return to see any new posts concerning short selling. Thanks again for your post.
scott @ Vintage Bicycle Posters´s last blog ..Do Follow Blog, Comment Luv Keyword Luv
The government has helped out the real estate market as much as they can, with not only the changes you mentioned in the short sale process, but also developing and convincing lenders to be a part of the HAFA and HAMP programs that have incentives to get lenders willing to do the extra paperwork and moving money for homeowners.