Fast short sale process with the help of new short sale rules
Short sales, despite the name has always taken a long time to process that’s because the short in short sale refers to a shortage of money and not time. Buying a house via short sale allows a homeowner to sell their property for less than what’s owed on the mortgage, with the lender’s approval. For starters, only banks that owe the federal government TARP (Troubled Asset Relief Funds) bailout funds have to participate in this program. But there are carrots designed for all banks to join in, like offering $1,000 to lenders for administrative costs. If they work the way they’re supposed to, include:
- Buyers have to offer documentation of funds or a preapproval letter from a lender with their offer for a short sale; if you’re selling your house, you have to give this to your lender within three days.
- Lenders have to approve or deny the offer within 10 business days.
- To avoid kicking the existing homeowner out to the restriction, the lender can’t require a closing earlier than 45 days from the date of the sales contract unless the seller gives his or her okay.
- If you’re buying a house through a short sale, you can’t sell it for another 90 days. Most people wouldn’t be dreaming of sellingtheir house so soon, but members, out to make a quick contradiction and able to screw up the market with inflated prices. This new rule is designed to help to prevent that.
- Short sales through HAFA (Home Affordable Foreclosure Alternatives program) aren’t allowed to involve selling the property to a friend, family member or anyone with whom you have a close personal or business
- Up to $3,000 will go toward paying the junior lien holders to release their lien.
- No foreclosurecan occur during the marketing period specified in the short sale agreement.
- Mortgage services can no longer charge fees to borrowers who opt for a short sale instead of a foreclosure. Nor can they lower real estate agent commissions after an offer has been received.
Negotiation of a short sale deficiency agreement or any other type of mortgage collection forbearance with a Sellers’s mortgage lender is not within the scope of a real estate license. This is the decision of the Maryland Real Estate Commission, and accordingly there are now new rules governing how Maryland real estate agents can handle short sales. Such a determination by other State Real Estate Commissions could impact agents and brokers all over the United States.
The law patterned after the Federal Trade Commission’s MARS Rule is designed to protect homeowners in financial trouble. Whenever the economy delays, predators come out to prey on unsuspecting and worried homeowners by offering false mortgage relief services. The FTC rule specifically prohibits any mortgage relief company which now could include Maryland real estate agents from collecting any fees until they have provided the homeowner with a written offer from their mortgage lender that is acceptable to the consumer. Additionally, anyone engaged in mortgage relief must disclose such matters as
- They are not associated with any government,
- The lender may not agree to the proposed plan, and
- If the homeowner is told to stop paying the mortgage, they must also be told that they could lose their home and damage their credit rating.
Treasury’s Home Affordable Foreclosure Alternatives HAFA program’s new rules are aimed at speeding up lenders’ decisions on short sales and making life easier for sellers. HAFA is an alternative to the more desirable HAMP the Home Affordable Modification Program. Both programs are intended to keep borrowers in their homes and out of foreclosure. Homeowners are evaluated for a HAFA short sale if they are eligible for HAMP and the following two criteria apply to the borrower:
- Drop out of a HAMP modification by missing payments or isn’t offered a trial modification; or rejects a loan modification offer.
- Lender doesn’t have a non HAMP loan modification for the homeowner.
Borrowers who qualify for HAFA and request a short sale receive a seven page document called a “short sale agreement” from their lenders. A borrower has two weeks to respond. After responding, the borrower has four months to sell the house.
- The borrower hires a real estate agent. Meanwhile, the lender hires someone to assess the property’s value.
- The borrower continues to make mortgage payments, but the payments are reduced to a maximum of 31 percent of monthly income. The lender keeps track of the shortfall between what is owed and what’s being paid.
- While the borrower waits for prospective buyers to make offers, the lender decides the “minimum acceptable net proceeds.
Of course, reading about all of these rules might easily to persuade a homebuyer or owner to stay away from the short sale. But keep in mind that the real estate specialists and bankers are the ones who contend with the paperwork and phone calls, and that’s why a Realtor is there to help walk you through the process.
Title: Fast short sale process with the help of new short sale rules
Des: Buying a house via short sale allows a homeowner to sell their property for less than what’s owed on the mortgage, with the lender’s approval. Learn More!
Key: Short sale buyer, Buying Short sale, Short sale, Short sale process, Short sale process California,