Short Sales May Finally Shorten Up

December 11, 2009

The Treasury Department has stepped up in their efforts to help lenders and servicers facilitate the ability to short-sell a piece of property.  A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

Now the government is stepping in, giving mortgage servicers participating in its Home Affordable Modification Program until April 5 to implement the Home Affordable Foreclosure Alternatives program.   The new guidelines are very detailed but a few key points are likely to be welcome. Now a servicer must first consider a delinquent borrower for a loan modification before a short sale, and a servicer has to consider a borrower for a short sale within 30 days if the borrower can’t get a trial loan modification, misses as least two payments in the trial period, doesn’t complete the trial period successfully, or requests a short sale.

Also, a servicer needs to spell out the minimum it will accept in a sale.  Perhaps the best news is now the servicer has to let the borrower know within 10 days of receiving an offer whether it will be accepted. If the offer is at least equal to that minimum, the servicer has to accept it.

Short sales have become a recent, yet frustrating method of trying to buy a distressed property that can take many months without any established time table or procedure in completing.  Often when the agreement to short sell a property finally comes to pass, the turn around time for the new buyer is so fast that the necessary funds are difficult to gather in time for the quickly scheduled closing.

A short sale can be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

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About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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