Late Monday afternoon The Obama administration came to a conclusion on the final guidelines that may make it easier for some financially troubled borrowers to have the ability to shortsale their homes.
The guidelines are to help encourage the use of short sale transactions in which the borrower with lenders approval sells the home for less than what is owed on the loan.
The program taunts that it will now become easier for borrowers to voluntarily relinquish ownership of properties through a “deed in lieu of foreclosure.” (In the past banks said this program would be rolled out, but it has never quite taken off.) A homeowner just gives the property back voluntary to the bank while being in default, and it was not to have as much damage as a foreclosure to the credit score, but banks balked at this program.
Short sales generally results in higher profits for the bank than a foreclosure, and will have less economic effects to the local neighborhood, because homes aren’t left vacant, they are not exposed to squatters, and vandalism.
The new proposal would allow borrowers to receive $1,500 from the government if they sell their home as a short sale. Mortgage-servicing companies(the companies who manage the mortgage for the investor.) will receive $1,000 for each completed short sale. Is this a big enough incentive for them to get the job done?
The program is open to borrowers who have 1st pursued a government loan modification but did not qualify, or are delinquent on their modification.
This program was first introduced in May, but did not include short sales. This is the Obama administration’s $75 million foreclosure-prevention plan, which include incentives fore mortgage companies and investors to rework these troubled loans.
Under the new guidelines, second- mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens.
Another great idea(hopefully it works) is that borrowers who complete a short sale under the new program must be “fully released” from the future liability for the debt. Susan Park, an Exit Real Estate Group Realtor said ” this will be a huge opportunity for homeowners to help insure no further repercussions of worrying if they will be sued from their lender over the remainder of the mortgage balance.”
Bernie Germani, a short sale investor in California said “he has been waiting for this day to come, but has some reservation that it will not be able to help more people out who truly need this program.”
Jeff Coga, said ” If this program works out the way it is designed to, this will have a very positive impact on the real estate community across the country.”
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