Real Estate Information Archive

 Is a Short Sales Boom Coming?

Banks are ramping up short sales thanks to government incentives and the realization that short sales result in lower losses than foreclosures. On average, banks lose 50 percent on a foreclosure, but only 30 percent on a short sale.

Bank of America, the nation’s largest mortgage servicer, has dramatically reduced the time it takes to process short sales. Elizabeth Weintraub, a Sacramento, Calif.-based real estate practitioner who handles many short sales, said, "Bank of America approved [a short sale] in 24 days. That flipped me out."

The hang-up for many short sellers has been second liens, but the new government program gives first lien holders incentives to share and offers second lien holders and investors a $6,000 cash incentive.

Under the new program lenders must tell the seller the minimum they’ll accept. When the seller comes back with a good offer, it must be accepted within 10 days.

Chris Saitta, CEO of Equator, which produces short-sale software, predicts a boom in short sales. “The challenge will be handling all the volume,” he said.

Source: CNNMoney, Les Christie (03/29/2010)

 This is good news for those considering short sale of their home…Government program to encourage short sales includes incentive to Seller and Lender & no further liability to the Seller for the debt. This and other changes could make 2010 the year of the short sale.

Guidelines Aim to Ease Short Sales

The Obama administration laid out final guidelines on Monday that should make it easier for some financially troubled borrowers to sell their homes.

The short-sale program is the latest addition to the Obama administration's $75 billion foreclosure-prevention plan, which includes incentives for mortgage companies and investors to rework troubled loans. The government first said in May that it would include short sales in the program, but it has taken months to finalize the details.

Under the new guidelines, second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgages, meanwhile, can collect up to $1,000 from the government for allowing such payments.

Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Printed in The Wall Street Journal, page A6

If you or anyone you know is having financial difficulties making their mortgage payment, please contact me to discuss if you can qualify for short sale at www.AshlieDuCros.com or ashlieducros@mailpcr.com

Government Announces Short Sales Guidelines

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.

To qualify under these new guidelines:

• The property must be the home owner’s principal residence.
• The home owner must be delinquent on the mortgage or close to defaulting.
• The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
• The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.

Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)

If you or anyone you know is having financial difficulties making their mortgage payment, please contact me to discuss if you can qualify for short sale at www.AshlieDuCros.com or ashlieducros@mailpcr.com