The Short Sale - only a few short years ago this term was not part of our every day vocabulary! In case, you still are not sure what the term means; it is a property that is sold for less than the present balance of the mortgage. The "short" history of this process was often difficult and time consuming and was rarely successful.
The government is attempting to provide legislation to assist defaulting homeowners avoid foreclosure by speeding up the Short Sale process. The latest program will allow owners to sell for less than they owe and will give them a little cash to speed them on their way. Bottom line, the plan aims to prevent foreclosures.
The new plan which will go into effect on April 5, 2010 is intended to streamline and standardize the Short Sale process. Under this new program, up to three payouts would be made in hopes of bringing the mortgage lenders, second mortgage holders and borrowers in order to streamline the Short Sale process.
· The first- mortgage loan servicer will receive $1000 to agree to the Short Sale. The bank servicer avoids the cost and frustration of the inevitable future foreclosure of the home thus allowing for
more proceeds.
· Another $1000 can go to the second mortgage holder (if there is one on the home). The second is guaranteed at least some income.
· And, finally, the government would also give $1500 in relocation assistance to the homeowner! The borrower/owner should suffer less damage to his credit ratings and receive the lender's assurance that there will be no future action taken regarding the unpaid mortgage balance.
The real estate market also benefits by having fewer empty foreclosed homes waiting to be sold by the banks. Fewer foreclosures would be a benefit to all communities.
Of course, when there are second or even third mortgages on the property, the scenario is more complicated and perhaps not a short sale candidate.
The homeowner STILL has to provide financial hardship as a reason for the Short Sale. You cannot simply walk away from the property because the current value is less than you owe on the mortgage.
Should be a win-win for everyone...............nevertheless, how this new program is implemented and how effective it will be remains to be seen.
