The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale — known as a short sale — or agree to turn over the deed of the property to the lender. It is designed for homeowners who are in financial trouble but who do not qualify for the administration’s $75 billion mortgage modification program.
Owners will still lose their homes, but a short sale or deed in lieu of foreclosure does not hurt a borrower’s credit score for as much time as a foreclosure. For lenders, a home usually fetches more money in a short sale than a foreclosure. The bank avoids expensive legal bills, cleanup fees and maintenance costs that follow a foreclosure.
Along with the financial incentives, the new government program makes another key change. Mortgage companies will have to set their minimum bid before the house is listed. If the offer is above that, the lender must accept it.
That is a big change from current practice. Lenders generally do not calculate how much money they are willing to accept on a short sale until they have an offer in hand, causing long delays before the sale is approved.
Under the new process, buyers who submit an offer to purchase a home in a short sale should get a response within two weeks, as opposed to months. If that happens as planned, it would be a big improvement. Real estate agents across the country have complained that lenders are often difficult to reach, sometimes only communicating by e-mail and infrequently at that.
–The Associated Press
Interesting article. I’m a real estate agent the the Northeast Florida area myself, and things are pretty difficult around here. I’m grateful I have also been able to find a way to stay in the business. Thanks for providing this good resource for people!