Obama’s government has recently introduced a way to quicken the process of selling homes despite homeowners owing more than it’s worth. This is perfect for those who do not qualify for the $75 billion mortgage modification program, yet are experiencing financial hardship. This is great news for a lot of homeowners.
According to recent market stats for March, in Orange County, California alone, short sales represented 26% of the market. This is a jump from 17% last year, at the same time. The government will provide $3,000 in moving expenses to homeowners who short sale, or, turn the deed of the property over to the lender.
While homeowners still lose their homes, short sales or deeds in lieu of foreclosure, can’t hurt a borrower’s credit score for as much time as a foreclosure. And for lenders, short sale homes typically bring in more money than a foreclosure. Banks, consequently are pleased because they avoid legal bills and other costs which come hand-in-hand with a foreclosure.
Roughly 350,000 homeowners nationwide are projected to utilize the program by the end of 2012. And frankly, these days, such a number could rise or drop, depending on our country’s recovery.
In addition to the assistance, mortgage companies are now required to set their minimum bid before a home is listed for sale. If the offer is more than their initial bid, the lender must accept it. This is a more than welcome change for homeowners as most lenders rarely calculate how much money they would accept on a short sale until they actually have offer in hand. This causes long delays prior to the sale’s approval.
The Treasury Department developed the plan towards the end of last year. They doubled the relocation money, deciding many homeowners need more cash to move out. To qualify for the plan, the home must be the borrower’s primary residence. As well, owners must be behind on their mortgages or deemed, “delinquent.”
The biggest hitch in the program is it’s non-availability for mortgages owned or guaranteed by government-controlled companies, Fannie Mae and Freddie Mac, however, the two will eventually participate in the program.