New short foreclosure alternatives were released today. Here is a summary...
The Obama Administration has added new incentives and standard procedures for short sales 5/14/2009. This is through the new Foreclosure Alternatives Program (FAP), part of the Making Homes Affordable plan.
If your home loan isn't eligible to be modified on a permanent basis loan servicers may consider short sales or deeds-in-lieu of foreclosure instead.
Borrowers must meet minimum eligibility requirements for the Home Affordable Modification program, but don't actually qualify for a modification. Before foreclosing, servicers must determine if a short sale is appropriate.
Incentives given include... $1,000 for servicers completion of a short sale or deed-in-lieu of foreclosure, $1,500 for borrowers to help with relocation expenses, and as much as $1,000 toward the cost of paying second lien holders to release their liens
The program will include standardized documents, including a Short Sale Agreement and an acceptance letter.
The price servicers place on the property value may be determined based on an appraisal or broker price opinions issued within a certain time frame.
In the Short Sale Agreement, servicers must give homeowners minimum 90 days to try to sell their property, or as much as a year, depending on conditions for that area. Property must be listed with a licensed real estate professional. Foreclosure can not take place during the minimum 90 day marketing.
Good point for realtors... Servicers will not be able to negotiate lower commissions after an offer has been received. And a good point for homeowners servicers can not charge fees for participating in the foreclosure alternative program which will last through 2012.
Servicers do have the ability to require homeowner to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement
Hopefully these programs will give those in trouble more means to recover.
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