Tuesday, December 08, 2009

Hope for short sales and loan modifications- new guidlines this week!

Finally! Home owners, Realtors, Lenders, and home buyers are all going to benefit from these new guidlines. The faster and easier the process becomes the closer offers will come to being fair market value.

This will lead to reduced inventories, and market stabilization. The Treasury department created a 46 page guide for major lenders to follow with regards to short sales, deed in lieu, and loan modifications. The frustrating process was in need of standardization, and streamlining.

Short sales that are dragged out for months and months. Homes that sell as short sales tend to go pending with prices that are below market value since the buyer(s) brace themselves for the long drawn out process with no guarantee that their offer will be accepted.
These guidelines go into effect in April of 2010. Hopefully, most lenders will become early adopters of the new guidelines.

One major point of the guidelines is that the lender has to offer a plan to help the borrower with a loan modification ahead of entertaining a short sale, or deed-in-lieu.

This is a great requirement, since I see many people that would rather keep their current home, but are having a tough time making the payments, or they are so far "underwater" that they question the rational of paying on a mortgage that is much higher than the actual value.

I think that one aspect that was missing was creating an incentive for the lend ers to "cram-down", or reduce the principle balance to the actual value of the home. Many borrowers would work to keep their homes if they had equity, or at least didn't have negative equity.

Some of the major points that relate to short sales.

1. Lenders must respond to Short Sale requests within 10 business days of receipt of the offer package.
2. The seller will be released from all liability for repayment of the mortgage debt.
Subsequently, the seller is entitled to a relocation incentive of $1,500, which will be deducted from the gross sale proceeds at closing.
3. The lender will be paid $1,000 to cover administrative and processing costs for a Short Sale or a deed-in-lieu.
4. The property must be listed with a licensed real estate professional who does regular business in the community where the property is located.
5. The lender is prohibited from requiring, as a condition of approving the Short Sale, a reduction in the agreed-upon real estate commission.
6. The investor will be paid a maximum of $1,000 for allowing a total of up to $3,000 in Short Sale proceeds to be distributed to subordinate lien holders, or for allowing payment of up to $3,000 to subordinate lien holders.
LINK to Home ownership retention guide https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf

If you are looking for help with a short sale or loan modification for a home located in Manatee or Sarasota Counties I would be happy to help you understand your options. I have helped dozens of homeowners either sell or assist to modify their home loans. I can help you too with no cost. For all your real estate needs I am ready to go to work for you!
Joe Murphy 941-780-3260

1 comment:

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