It's here, the much anticipated plan from the Treasury Department on how to streamline short sales was announced on Monday, November 30th. Since the Making Home Affordable program has been a miserable failure thus far, the Obama administration has turned their attention from loan modifications to short sales as a way to solve the real estate debocle in America. Here is what you need to know about the changes that have been enacted:
1. Who Qualifies:
Like all Gov't programs, there are stipulations…
- The property must be the homeowner'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 borrowers' total monthly mortgage payment exceeds 31 percent of their before-tax income
There has been a huge bandwagon-like shift to luxury short sales in the past several months. And while it is true that the “bigger the deal, the more money you can make”, this shows yet again that it is not wise to leave the under small deals aside. Our attitude is to BOTH. There is plenty of money to be made on the small deals as well as the big ones.
This also proves something we have preached for years…the borrower does not have to be in default in order to “qualify” for a short sale. So long as a default looks likely, you can start a short sale. Which basically encompasses just about everyone in America that has a mortgage.
2. What It Does Differently:
Here are the changes from the current system…
- Strict Deadlines (Finally, some accountability!)
- Standardized Paperwork
- $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.
- Allowing a minimum of 90 days up to 1 year to market and sell the property
- No foreclosure may occur during the marketing period specified in the short sale agreement.
- Mortgage services may not charge fees to borrowers for participating in Foreclosure Alternatives.
- Mortgage services may not lower real estate agent commissions after an offer has been received.
If you would like to hear my take on each one of these items individually, please refer back to a previous blog post on made on the subject a few months back titled Sneak Peak at Treasury's Plan for Short Sales.
3. So What?
Well, if it hasn't dawned on you yet, bless your heart, it may not dawn on you in time for you to cash in. The mere fact that the government of the United States, with all it's battles it fighting, from Afghanistan, Pakistan and Iraq to all other domestic issues, for it to take the time and energy to try to help improve the short sale process, is a monumental milestone that can't be underestimated. How else can anyone better prove that “NOW IS THE TIME!” than to show that the Feds want to make short sale investors and agents lives easier.
Homeowners are being helped, banks are being helped and investors and agents are making a fortune right now, all around you, by doing short sales.
So get going doing short sales!