Short sales are a disaster!
Banks take months before they decide whether or not to allow the seller to do a short sale. Once they do, and an offer comes in, banks take months to approve the offer. And if there are two lenders involved (seller has a first and a second loan against the property) it's even longer before a sale is approved.
This week, the U.S. Treasury Department announced new guidelines which are supposed to help.
In order to qualify under these new guidelines:
The property must be the home owner’s principal residence.
The home owner must be delinquent on the mortgage or close to defaulting.
The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.
Here's what the plan has to offer:
Borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages.
Mortgage-servicing companies will get $1,000 for each completed short sale.
Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens.
Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.
In addition, borrowers who complete a short sale under these guidelines must be "fully released" from future liability for the debt.
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