Good news on the home front!
As reported by WIS, the Obama administration launched a new effort on Monday designed to speed up the time-consuming, stressful process of selling your home if you owe more than it’s worth.
On the other hand, if you are looking to purchase a home or investment property, taking advantage of a short sale has just gotten easier.
If you owe more than your home is worth and you are trying to sell your home, you will receive $3,000 for moving expenses if you complete a short sale – or agree to turn over the deed of the property to the lender.
The program was designed for homeowners who are in financial trouble but who don’t qualify for Obama’s $75 billion mortgage modification program.
The new program benefits an upside down seller and the lender who financed the home.
• While you will still technically lose your home, a short sale or deed in lieu of foreclosure doesn’t hurt your credit score as drastically as a foreclosure.
• Your lender will receive more money for a home in a short sale than it would typically receive in a foreclosure.
• The bank also avoids expensive legal bills, cleanup fees and maintenance costs that typically follow a foreclosure.
“It’s very traumatic and embarrassing and frustrating to go through a foreclosure,” said Laurie Maggiano, policy director of the Treasury Department’s homeownership preservation office. With a short sale, she said, “your financial issues are your own problem and not neighborhood conversation.”
Reports indicate that at least 350,000 homeowners nationwide are expected to benefit from the program through the end of 2012.
For buyers looking to purchase a home, a short sale can be a great opportunity.
Along with the financial incentive for struggling homeowners, the new government program requires the mortgage company to set its minimum bid before the house is listed for sale. If the offer is above the minimum bid, the lender must accept it.
The change is expected to speed up the short sale process as lenders typically have not calculated how much money they were willing to accept on a short sale until they had an offer in hand, causing long delays before the sale was approved.
The new program “will give us a degree of efficiency that we have not had in the past,” said Matt Vernon, Bank of America’s executive in charge of short sales and foreclosed properties.
Under the new process, if you submit an offer to purchase a home in a short sale you should receive a response within two weeks, as opposed to months it previously took to get a response.
The plan which was originally outlined by the Treasury Department last November, recently doubled the original $1,500 in relocation money noting that many homeowners will need more cash to move out.
Now for the restrictions.
• To qualify the home must be your primary residence;
• You must be behind on their mortgage or on the verge of becoming delinquent; and
• Currently, the program is not available for mortgages owned or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac.
However, reports indicate that the two government-controlled companies will soon follow suit.
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