Despite the best intentions of just about everyone, except maybe the banks, loan modification programs are only helping a very small number of people in trouble.
That means many homeowners are coming back to the dreaded short sale in an attempt to get out from under.
In theory the short sale should be a really good idea, but the bank departments handling them are plagued by high turnover, high stress and chronic overwork. What theoretically could take a few days or weeks can drag on for many, many months. Buyers give up. Agents spin their wheels re-submitting the same materials over and over. The bank can say yay or nay to any and all terms of the contract. And there’s no guarantee the property won’t go to auction anyway.
But maybe, just maybe, things will improve. The new Home Affordable Foreclosure Alternative program will run until Dec. 31, 2012. Among its provisions:
- The lender must offer a short sale in writing to the borrower within 30 days after the borrower either is ruled ineligible for mortgage modification under the HAMP program or has been ruled unable to sustain payments under a trial plan.
- A borrower may receive up to $1,500 to assist with relocation expenses.
- Incentives of $1,000 will be offered to lenders for each completed short sale. For each deed in lieu of foreclosure, in which the borrower voluntarily transfers the property to the lender, $1,000 will be paid to the lender.
- A lender with a second lien on the property will get up to $3,000 of the short sale proceeds, or can pursue a short sale outside the program if it doesn’t agree to share.
- The lender will not be permitted to reduce the real estate agent’s commission after an offer on a property has been received.
Short sale transactions are not for the faint of heart or anyone who has to be in a new home within a certain time frame. In many ways I think it is a whole lot better to skip these properties and go straight to properties that have already been through the foreclosure process and are now bank-owned.
If you’d like to discuss this in more detail, I’ll be happy to talk to you.
[Source: http://rismedia.com/2010-03-11/government-urges-short-sales-experts-arent-sure-theyll-help/]
