Here are the new short sales guidelines that are going to go into effect on April 5th, 2010. Not all banks are participating in the program so check with your lender to see if you qualify.
New Short Sale Rules
- Sellers must be unqualified for a loan modification under the Home Affordable Mortgage Program or be unable to afford the modification.
- The bank will set an acceptable value of the home upfront, based on an appraisal or broker’s price opinion.
- Lenders must approve or deny a purchase offer within 10 days of it being submitted.
- Once the bank approves a home for short sale, sellers may stop paying all related mortgage payments, and unpaid mortgage debt will be forgiven.
- These mortgage payments will not be shown as late on credit reports.
- At closing, sellers are entitled to as much as $1,500 from the government to cover relocation expenses.
Click herer to see the unintended consequnces of the new short sales rules.
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Your blog on the new short sale rules and the link provided to the FHA's new mortgage program debuting tomorrow, April 5, couldn't have been more timely. Thanks.
Can we tell which banks are subscribing to the program? I think that it is a step in the right direction but I do have some concerns regarding "Bandwidth" with the banks and their ability to be as responsive as required.
Thanks for sharing these. I'm glad I found someone who puts them all in one place and easy to understand. I will be able to use this link in conversations with my clients!
From a buyer's point of view: if I'd place an offer on a property up for short sale (about two weeks ago) and still haven't' heard back from the bank whether they accepted or declined my offer, should I go ahead an remake the offer in order for it to qualify under the new (10 day response) regulation?
Thanks for the informative post.
JD
Good information. Thanks for the post, it will be helpful.
Phew! Finally some useful information – thank you!
Some very good information. Thanks.
I love that banks will have to approve or deny a purchase offer within 10 days. I wonder how many will actually comply.
What is the difference on the new Legislation effective in May 2010?
I am a Realtor in South bay area of LA. I have a transaction it is Short sale just closed on 4/26/10. Final my commission I only got 2.5% Bank cut 0.5% and also let me pay $1600 the second loan shortage from my commission. Is it unfair?
Well, the 10 day thing is great if the bank follows the guidelines. I put an offer on a house 12 business days ago and no word yet. Anyone have any insight as to how to get the bank to get going on it?
While the new rules seem attractive, you have to study them. For example the seller must contact their servicer before they list the property. There is even a suggestion in the new regulations that the bank will set the list price.. If the borrower refuses to the follow the HAFA rules, the new regulations do not apply. The seller must try to renegtiate the loan with the bank as well.
As far as the 14 days: the bank will ONLY review loans wherein the buyer’s mortgage is already APPROVED. So–the contract to buy is not even sent to the bank until the mortgage (and all other) contingencies are removed. This is somewhat incongruent because HAFA regs state they want the offer in 3 days of being signed.
I was just asked to teach a course on the new regs and refused to do so; we all need to have more experience about the process before we repeat anything as Gospel.
Lorraine- A NYS real estate broker
Read this 43 page document:
https://www.hmpadmin.com/portal/docs/hamp_service…
It is very important to have a short sale Realtor who is experienced in getting deals approved.
i am selling a commercial property with a mortgage of $1,150,000 left on it. the tenant abandoned. i can not rent it after 2 yrs of trying. the bank approved a short sale. there are tax liens on it. i have an offer of $525,000. i offered a deed in lieu of foreclosure as well. the bank's attorney said the bank can not take the offer because it is less than 50% of the remaining mortgage. is this true?
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