U.S. Government Streamlines Short Sale Process To Help Homeowners Avoid Foreclosure
The U.S. Treasury Department announced a plan that could help homeowners who are experiencing financial problems avoid foreclosure. This plan which was announced last November 2009 and has taken effect since April 2010, could help so many homeowners who are at risk of foreclosure be free of their mortgage debt. They will no longer go through foreclosure and will instead be given $3,000 in order for them to relocate. The U.S. Treasury plan grants incentives to homeowners and lenders to accomplish “short sales.” Short Sales are real estate transactions wherein the lender will conform to a sale price that is less than what the borrower owes on the mortgage. A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff – meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed. If you want to take a lesser hit in your credit then short sale is the way to go. However, short sale deals have the possibility to fail because the process takes too long. Short sales often get delayed because of the transaction’s complicated nature. But under the U.S. Treasury Department’s plan, mortgage providers have 10 days to approve or deny a request for a short sale so the process is really fast and simple unlike before. It streamlines and standardizes the documentation necessary for the short sale process. And the borrower must be fully absolved from the debt of the primary mortgage after the sale is done.
Below is the short sale process made simple:
Incentives To Borrowers
Borrowers who accomplish the short sale process are then absolved from the debt of their primary mortgage. They will also be given $3,000 in order for them to relocate.
Incentives For Lenders
Mortgage providers and investors who complete a short sale or a deed-in-lieu transaction are then given payments of $1,500. A deed-in-lieu transaction is the process in which the deed is simply turned over to the lender.
Standardized Documentation
The plan’s program created one standard set of documents which minimizes the complication of the short sale process. It has published standardized and streamlined documentation for short sales. This will significantly increase the use of the option.
Put The Lid On Payments to Subordinate Lien-Holders
Participating subordinate lien-holders can receive no more than $6,000 as a group from the proceeds of a short sale under the new plan. Because in the past, some holders of second mortgages have hindered short sales by asking for very expensive payments in exchange for the release of a claim.
Time Limits For Short Sales
The short sale process often takes a long time to accomplish in the past. But now lenders only have 10 days to approve or reject a short sale which is a very important step. Homeowners are then allowed at best 90 days for them to market their home and sell it, depends on their local market conditions. The marketing of the property can coordinate or continue at the same time as the foreclosure process. No foreclosure can take place during the marketing period, considering the borrower has honest intentions to sell the property.
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