Treasury sets new rules for Short Sales process
The Treasury has a new set of rules for Short Sales. Under the new rules, which will go into effect April 5th 2010, the Short Sale Process will be simplified and give the homeowner some protection from the bank foreclosing on the property before the property has been sold.
These new changes will allow the Short Sale to start before a purchase contract offer has been created. The idea is to create a time-line that is fair for the homeowner and their agent to find a buyer and sell the property.
The law says that Foreclosures can be initiated during the Short Sale period but the banks should not sell the property at Sheriff Sale while the Short Sale is in process. The new law should help to protect the homeowner and the Broker’s commission – disallowing the banks to slice and dice on the co-ops.
THE NEW TREASUREY SHORT SALE CRIETERIA
- The property must be Owner Occupied.
- The homeowner will not qualify for a Loan Modification or have the capability to refinance.
- The loan on the property had to taken before January 1, 2009 and be in arrears or at risk of being in arrears in the opinion of the lender.
- The homeowners total housing expenses exceeds over 31% of borrowers total monthly income.
- Loan amount can not exceed over $729,750.00
- Borrowers would be entitled to $1,500.00 for relocation costs upon vacating the property in a clean condition.
- The Loan Service Company would be entitled to $1,000.00 for agreement to the Short Sale or deed-in-lieu.
- Lenders would be entitled to $1,000.00 for the agreement to the Short Sale or deed-in-lieu.
- Second Lien holders would be entitled up to $3,000.00 for Short Sale or Deed-in-lieu approval.
This is the government’s way of giving everyone a little slice of the pie in the hope they will walk away quietly.
The law demands the Lender waive their rights to any deficiencies judgments and release the deed promptly upon completion of the sale.
