Up till now, “short sales” have been the real estate agent’s definition of an oxymoron; they have not been short, and, in fact, many have not resulted in sales. The banks have not been crazy about doing them, claiming they are understaffed or overwhelmed. Yes, consumer groups, HUD counselors, and Certified Distressed Property Experts (CDPE) like Marianne Bandy of The Bandy Team at RE/MAX Professionals have continued to promote short sales in Denver as excellent alternatives to foreclosures. Since the early days of the Making Home Affordable program, the Obama Administration has been promising some new rules to make short sales easier to complete.
All parties except the lenders agree that short sales help preserve neighborhood housing prices and keep homes occupied longer, which, in turn, further stabilizes prices. The process is less costly for lenders than foreclosure, though it may not satisfy the investors behind any financing deal. Finally, on December 2, the Administration released the long-awaited rules which attempts to touch all bases and actually get short sales moving.
The new guidelines offer financial incentives for borrowers, mortgage companies, and investors to participate in the program.
- $1000 to lenders for administrative costs
- $1500 to sellers to cover closing costs or for moving expenses
- Up to $3000 towards paying the junior lien holders to release their lien.
To qualify:
- The property must be the home owner's principal residence.
- The homeowner is delinquent on the mortgage or default looks likely.
- The loan was made before Jan. 1 2009 and is less than $729,750.
- The borrower's total monthly mortgage payment exceeds 31 percent of before-tax income.
What’s unique about the new program is that it standardizes paperwork and gives the lender 10 days to approve or turn down a request for a short sale. When it’s done, the short sale must release the borrower from the debt. During the process, the lender cannot foreclose on the property or charge fees. The new rules come at a time when at least one major bank has adopted improved software to streamline paperwork for short sales. Click here for the full text of the new rules.
What pleases sellers (and real estate agents) is that mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt. The rules also prohibit mortgage servicing companies from reducing real estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings. The deadlines remove a lot of the uncertainty from short sales, a relief to buyers as well as the seller and their agents.
The new rules have the potential to help three groups of Denver area residents, and as always, The Bandy Team is ready to help,
If you are facing foreclosure in Denver, and meet the criteria above, contact Marianne Bandy today about listing your home as a short sale.
If you are a potential home buyer, a short sale home is one more choice before you as you are house shopping at a time when the market is crowded with other buyers eager to use the home buyer tax credit.
If you are an investor looking for great potential rentals in Highlands, Aurora, Centennial, or other communities in the Denver metropolitan area, you can take advantage of great prices and interest rates.
For more information, contact Marianne at The Bandy Team today.
Marianne Bandy
Denver has Great Schools
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