How New Rules for Short Sales Will Impact the Real Estate Market
Dec
4
Written by:
12/4/2009 11:31 AM
Mom tells me that the U. S. Treasury Department has released new rules this week governing short sales. With this simpler way to implement a short sale, it should decrease the amount of foreclosures and thus, protect property values.
Here are the new rules:
- Mortgage servicers have 10 days to accept or deny a short sale request. After a sale is completed,the borrowere could be completely released from debt.
- Borrowers are eligible to receive a $1,500 moving allowance, if they sell their home through a short sale.
- Mortgage servicers will receibe $1,000 credut fir each completed short sale.
- Investors who hold first mortgages can get as much as $1,000 for allowing second lienholders to release their liens.
- The property must be a homeowner's principal residence.
- The homeowner is delinquent on the mortgage or default looks likely.
- The loan was made before Jan. 1, 2009, and is less than $725,000.
- The borrowers' total monthly mortgage payment exceeds 31 percent of their before-tax income.
With these rules in place, it should greatly decrease or even eliminate entirely the long period of negotiations or banks failing to offer timely answers to sellers.
The other rules will help the seller to exit his property, as he has tried to do the right thing, with dignity and help him move on with his life. Many delinquent homeowners are in their predicaments through unemployment, medical situations, or the overall decline of the economy. They want help in satisfying what they can of debts.
Mom feels by the dramatic increase in short sales, causing the decline of foreclosures, will help from keeping values to further plummet. If a house sells for less than is owed on it, it is still better for all involved than for a bank to dump it in a foreclosure sale.
Therefore, in my meager dog brain, I see that less foreclosures means an evening out of plummeting prices and values. It will help values to become more constant faster, reduce inventory, and save millions of dollars in foreclosure proceedings.
If you have become underwater in your mortgage and need to sell your home, always remember to contact a real estate professional (like my mom) to help you determine the true value of your home and help you negotiate your way through the short sale process.
Later,
Divot