Is the Government Finally “Attempting” to Assist in the Short Sale Debacle?

We have been watching our government layout plan after plan to stabilize the housing market.  Finally—we are hearing parts of the puzzle that make sense to real estate agents and investors alike, whom are currently performing short sales by the truckload.

The U.S. Treasury Department, in a recent press release, has encouraged homeowners and servicers to do short sales as an alternative to foreclosure for all borrowers that are not eligible for a modification.  They have even outlined a process by which the short sale process should be handled, indicated the use of standardized forms, and injected incentives for the borrowers and servicers. With this being said, if they actually follow through with this plan, it would only make working a frustrating short sale deal very smooth!

The following points regarding the suggested short sale policies have been pulled directly from the recent Department of Treasury Press Release:

http://www.treas.gov/press/releases/docs/05142009FactSheet-MakingHomesAffordable.pdf

• All borrowers that are not eligible for a MHA modification plan should be encouraged to do a short sale because it has less of a “negative impact” on the borrowers, lenders, and the community.
• Short sales have been historically so complex that often a foreclosure is pursued even though a “short sale …would have provided a substantially better outcome for borrowers, investors, and communities.”
• Servicers will receive a $1000 incentive for successful completion of a short sale.
• Borrowers will receive up to $1500 for moving expenses.
• Junior Liens will be offered an extra $1 for every $2 that the investor is willing to pay at a $1000 max.
• Properties may be evaluated prior to receiving an offer to establish value and minimum net required.
• Borrowers will be allowed 90 days to sell their home provided they list the property with a licensed REALTOR, which could be extended for a marketing year if all other requirements are met.
• Commissions will be protected—”Servicers will agree not to negotiate a lower sales commission after an offer has been received.”

Currently more than 75% of all the mortgages in the country are covered by the new Making Home Affordable guidelines and that will include these new short sale rules.

With over 48% of all ARMs in default, or full foreclosure status, and the highest foreclosure rate in four years being hit just last month (April 2008, 1 in 374 homes foreclosed; RealtyTrac), combined with these new policies….we are going to see a greater need for short sales than ever projected. We will also be in need of a way to manage all of these transactions in the most professional and systemized manner for our clients and ourselves.

These new guidelines could not come at a better time.  We expect for the process to become easier and more streamlined as the kinks are worked out, and for lenders to become more and more systemized and agreeable over time once the government fully regulates every facet of the short sale process.

The NAR President recently commented that “expertise and negotiating skills have never been more important.”  This means that information and training sites will be in high demand. We have two of our own that we contribute to on a weekly basis that keep every real estate agent and investor that specializes in this niche informed and educated, www.RealEstateBusinessMentors.com and www.ManageMyShortSale.com.  For more information and updated short sale changes, check out these aforementioned sites.