This just in as of a few hours ago, as first mentioned earlier today here:
NEW YORK (Reuters) – The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed “short sales” of homes and other loan modification alternatives to stem a rising tide of foreclosures.
The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed, according to an announcement on the Treasury’s website.
Until now, sellers on a short sale receive absolutely nothing. If the Treasury department’s guidelines take hold, that also will change.
Financial incentives for completing short sales or similar deed-in-lieu transactions — in which the deed is simply transferred to the lender — include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would receive $1,500 in relocation expenses. [Emphasis added.]
And here’s the best part, at least for those of us who have spent months in the past trying to elicit some sort of response from a lender:
Among requirements, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt.
Second lien holders won’t necessarily be happy, but their position always has been untenable – by being in secondary position, they receive nothing if a home’s foreclosed upon.
In one of the most contentious issues gumming up negotiations between lenders, the guidance caps the aggregate proceeds to subordinate lien holders at $3,000.
The Reuters story references a release on the Treasury Department’s website; hell if I can find it right now, but it is 11:13 p.m. … I’ll try again when I’m awake.
Questions abound, at least in my sleep-deprived mind. Will lenders suddenly start to follow these guidelines in general? Will they implement these guidelines for the stacks of files they already are holding? Will those sellers already waiting simply be grandfathered into the short sale purgatory in which they’ve been sitting?
One thing’s for certain … if these guidelines do take hold across the board and if short sales are handled primarily by agents who know the process and the details of the mountain of paperwork that comes with a short sale, all the advice I’ve given to buyers about staying out of the short sale game will turn 180 degrees in a heartbeat.
[tags]Phoenix real estate[/tags]