Just released....
 
According to the National Association of Realtors®, the Obama Administration has just added new incentives and uniform procedures for "short sales" under its new Foreclosure Alternatives Program.
 
Loan servicers (banks, lenders, investors) may consider short sales or deeds-in-lieu of foreclosure for borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program.
 
Some of the provisions include:
 
·         Before proceeding with a foreclosure, loan servicers must determine if a short sale is appropriate.
·         The program will streamline and standardize documents to minimize complexity and increase use of the short sale option.
·         Servicers (rather than the owners of the property) will establish both property value and minimum acceptable net return, in accordance with investor requirements.
·         Once the short sale agreement is established with the servicer and property owner, the servicer must give borrower/homeowners at least 90 days to market and sell the property, or up to one year in slow markets, prior to proceeding to foreclosure.
·         Property must be listed with a licensed Real Estate Professional. No foreclosure may take place during the marketing period specified in the Short Sale agreement.
·         Servicers cannot charge extra fees to borrowers/homeowners for participating in this program.
·         The program is in effect through 2012.
·         Government paid incentives will be available to the servicers, junior lien holders, and in some cases the borrowers/homeowners to participate and cooperate under the guidelines of this program.
 

 

What will this mean to the real estate market?
 
For homeowners who are facing foreclosure, these options will be much better options than losing their property in foreclosure, the stigma, the stress, and the credit consequences.
 
For Buyers, the number of short sales will probably increase during this summer, creating some very attractive pricing on homes.  And, if the standardization of procedures, forms, etc. is established, hopefully the "agonizing waiting period" for lender consideration and acceptance of offers will be greatly reduced. 
 

Having been in the trenches for numerous short sales, we have long felt that the arduous process was not supportive of a strong market place.  Many ready and willing buyers and sellers have been hung up for months unable to complete a transaction which is in the best interest of all involved (including the bank).  Short sales are currently a four letter word in our industry, but we are very hopeful that these guidelines can change that.