Posted on: 10th Dec, 2009 09:33 am
Roughly 10 per cent of home sales this year have been short sales, according to the National Association of Realtors. In view of the importance of the short sale to America's homeowners and, the US Treasury Department has issued new rules to help those who need to sell their homes but who cannot do so at a price high enough to pay off their mortgages.
The rules provide for as much as $1500 to help cover moving costs, as well.
The plan has been provided to give assistance to those who are unable to qualify for a loan modification under the plans established in the Obama Administration's Making Home Affordable program, due to income/debt levels.
The plan establishes a standard process for short sales, and includes documentation requirements and timelines. There is even a cash incentive for participation in the program.
History has shown us that the short sale process is anything but "short" when it comes to timing; they are inordinately slow procedures. The new plan is designed to streamline the agreements that are required between buyers, sellers, lenders and realtors.
In order to qualify for this new plan, there are several elements that must be present:
1 - the property must be the homeowner's principal residence;
2 - the homeowner must be delinquent on the mortgage loan (or default is imminent);
3 - the mortgage loan was made prior to january 1, 2009 and is for less than $729,750'
4 - the borrower's monthly mortgage payment exceeds 31% of gross monthly income.
Mortgage lenders are not required to begin to participate in the program until April 5, 2010. Also, for lenders who hold secondary mortgages (home equity or "piggy-back" loans), participation is strictly voluntary.
Given the delay in required participation, it is clear that the new guidelines are not particularly helpful to those in trouble at the moment. It's hoped that plentiful relief will be available, however, once the plan is fully implemented.
The rules provide for as much as $1500 to help cover moving costs, as well.
The plan has been provided to give assistance to those who are unable to qualify for a loan modification under the plans established in the Obama Administration's Making Home Affordable program, due to income/debt levels.
The plan establishes a standard process for short sales, and includes documentation requirements and timelines. There is even a cash incentive for participation in the program.
History has shown us that the short sale process is anything but "short" when it comes to timing; they are inordinately slow procedures. The new plan is designed to streamline the agreements that are required between buyers, sellers, lenders and realtors.
In order to qualify for this new plan, there are several elements that must be present:
1 - the property must be the homeowner's principal residence;
2 - the homeowner must be delinquent on the mortgage loan (or default is imminent);
3 - the mortgage loan was made prior to january 1, 2009 and is for less than $729,750'
4 - the borrower's monthly mortgage payment exceeds 31% of gross monthly income.
Mortgage lenders are not required to begin to participate in the program until April 5, 2010. Also, for lenders who hold secondary mortgages (home equity or "piggy-back" loans), participation is strictly voluntary.
Given the delay in required participation, it is clear that the new guidelines are not particularly helpful to those in trouble at the moment. It's hoped that plentiful relief will be available, however, once the plan is fully implemented.
Hi George,
Thanks for sharing such an important news with the community.
Under the new rules for short sale, the secondary debt holders will get about $3,000 to release their claims on the property. The lender will also receive $1,000 to cover administrative costs. Most of the creditors believe that this is not a sufficient amount and thus, there are chances that most of them would not participate in the program. Experts also believe that the success of the program would depend upon the investors and their acceptance of the new rules.
It is expected that the new rules regarding short sales will trim down the paperwork of the mortgage companies. They can use the financial and hardship documents submitted by borrowers applying for a loan modification. The lender will have to give consent to the terms and conditions and minimum listing price of the property before it is put on the market for sale. This will help speed up the approval process.
Take care.
Thanks for sharing such an important news with the community.
Under the new rules for short sale, the secondary debt holders will get about $3,000 to release their claims on the property. The lender will also receive $1,000 to cover administrative costs. Most of the creditors believe that this is not a sufficient amount and thus, there are chances that most of them would not participate in the program. Experts also believe that the success of the program would depend upon the investors and their acceptance of the new rules.
It is expected that the new rules regarding short sales will trim down the paperwork of the mortgage companies. They can use the financial and hardship documents submitted by borrowers applying for a loan modification. The lender will have to give consent to the terms and conditions and minimum listing price of the property before it is put on the market for sale. This will help speed up the approval process.
Take care.
thanks for the additional information, sara. i hadn't seen that in the data that i'd received.
i think there will always be reluctant parties in these types of transactions. lenders like to hold out hope that they can collect the full amount of the mortgage, sometimes to everyone's detriment. actually - altogether too many times.
i think there will always be reluctant parties in these types of transactions. lenders like to hold out hope that they can collect the full amount of the mortgage, sometimes to everyone's detriment. actually - altogether too many times.
