Thursday, March 11, 2010
Short Sales R Us
It appears 2010 will indeed be the year of the short sale, according to a report from the New York Times.
Apparently the Treasury is planning to add another weapon to its growing foreclosure prevention arsenal, though this latest one involves the loss of the home.
Come April 5, a streamlined and standardized short sale process will emerge – lenders will rely on real estate agents to determine the value of a home and the corresponding minimum offer to accept (hmm).
The homeowner won’t know the figure, but if an offer comes in that meets or exceeds it, the bank or lender must take it.
Similar to programs already in place, participants will receive incentive payments; the servicing bank will get $1,000, and another $1,000 will go towards a second mortgage if one exists.
Additionally, the homeowner would receive $1,500 for relocation costs if they participated.
The aim of the program is to reduce the large number of vacant homes and minimize losses for banks that would otherwise face costly foreclosure-related expenses.
And former homeowners wouldn’t have to worry about the bank coming after them for the unpaid mortgage balance.
However, skeptics are concerned that short sales have a high propensity for fraud and could lead to intentional default and shady dealings.
Short sales continue to be used sparingly, as they are time consuming and complicated, though government mortgage financier Fannie Mae saw them triple in 2009.
There’s always the option of a short refinance as well, but those come with the risk of re-default, which could end up extending the crisis.
Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.
Tel (631) 687-3510 Ext. 101
Fax (631) 687-3513