Treasury Bringing Back Hope to Foreclosure Victims with New Plans About Short Sales

The Treasury is bringing back hope to foreclosure victims with new plans about short sales. But they must nurse patience.

Since last summer the government has been promising that it would launch a plan that would expedite and streamline the process of short sale. As yet the method is complex and frustrating. In the first week of December the Treasury outlined the rules and monetary incentives for those involved in the short sale deals – the borrowers, servicers as well as the investors.
A short sale is when the cash strapped borrower opts to sell the property at a price that is less than the loan amount due. But this would be possible only if the lender gives the nod and aggress to forgive the balance due.

In the beginning it was thought to be the best and better alternative to foreclosures. But in reality it turned out to be a nightmare of waiting for the sellers and buyers as lenders dragged their feet with servicers and investors raising objections. Soon buyers and real estate agents began to shun the offers. Joyce Zelazik aptly summed up the situation and said, “If someone needs something in the next several months, I tell them please don’t consider a short sale. You’re not going to be happy with me.”

But there seems to be hope for the short sale option with the government firmly stepping in. It has set 5th April as the deadline for the servicers taking part in HAMP to implant this measure known as Home Affordable Foreclosure Alternatives Program.

The details released by the Treasury runs into 43 pages. Some important points may be cited. The servicer has to first offer loan modification to the troubled borrower before proceeding for short sale. The servicer has to decide within 30 days of the borrower being refused a trial modification run or if he or she fails to continue by missing two consecutive payments during the trial period or cannot complete the trial run and asks for short sale. The servicer has to be explicit on the minimum it is ready to accept in such a sale. The servicer has to inform the seller within 10 days of having received the offer. If the offer is equal or more than the minimum the servicer is bound to accept it.

Dan Rouso of LaGrange based Prime Property Partners said, “That is a huge plus, not just for the borrower but for the potential buyer. The problem [has been] the borrower is trying to get a contract but he doesn’t know what will get approved. It’s putting the cart before the horse, getting a contract before you know what will fly.”

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Treasury Bringing Back Hope to Foreclosure Victims with New Plans About Short Sales

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