Short sales sound like they could be the answer to a distressed Baton Rouge seller’s prayer, while offering buyers a great deal. They offer real promise to avert foreclosures. However, often the time to process them is lengthy and the ultimate success rate, low. Since the Making Home Affordable program came out in February, the Obama Administration has been announcing that new rules to make short sales quicker and easier were on the way. Recently, the Treasure Department has released these new rules to expedite short sales
Basically, the new guidelines offer financial incentives for borrowers, mortgage companies, and investors to participate in the program.
- $1000 to lenders for administrative costs
- $1500 to sellers to cover closing costs or for moving expenses
- Up to $3000 towards paying the junior lien holders to release their lien.
In order to qualify:
· The property must be the home owner's principal residence.
· The homeowner is delinquent on the mortgage or default looks likely.
· The loan was made before Jan. 1 this year and is less than $729,750.
· The borrower's total monthly mortgage payment exceeds 31 percent of before-tax income.
The new program standardizes paperwork and gives the lender 10 days to approve or turn down a request for a short sale. When it’s done, the short sale must release the borrower from the debt. During the process, the lender cannot foreclose on the property or charge fees. The new rules come at a time when at least one major bank has adopted improved software to streamline paperwork for short sales. (Click here for the full text of the new rules.)
Mortgage servicers have 10 days to approve a request for short sale, and when done, the transaction must fully release the borrower from the debt. The deadlines remove a lot of the uncertainty from short sales, a relief to buyers as well as the seller and their agents. Now sellers (and real estate agents) will have a clearer idea of how to proceed and buyers will know if they got the house in a timely manner too!
If you are at risk of foreclosure on your Baton Rouge home, Sandy can help you arrange a short sale. If you are looking for a home, Sandy and her team can also help you find a short sale property in the Greater Baton Rouge area, including Baton Rouge, Prairieville, Gonzales, Denham Springs, Watson, Walker, Central, Greenwell Springs, Zachary, Baker, Port Allen, Brusly, Geismar, and St Amant. We can also answer any questions you might have about the home buyer’s tax credit - $8,000 first time buyers or $6,500 for repeat buyers.