U.S. Plan Will Help Homeowners Avoid Foreclosure
Homeowners across the United States who are undergoing financial hardship could avoid foreclosure under a plan announced on Nov. 30 by the U.S. Treasury Department. Under the plan, millions of at-risk homeowners could be free of mortgage debt without going through foreclosure, and given $1,500 for relocation.
The Treasury plan, which potentially applies to 75 percent of the mortgages in the U.S., including those backed by Freddie Mac or Fannie Mae (those two organizations are currently devising guidelines), provides incentives for lenders and homeowners for completing Short Sales - transactions in which the lender agrees to a sale price that's less than the borrower owes on the mortgage. Short Sales are preferred to foreclosure because homeowners take less of a hit on their credit and lenders realize a smaller loss.
However, Short Sales often get bogged down because of the complicated nature of the transaction. Deals can fall through because they take too long.
The official effective date of the plan is April 5, 2010, but participating mortgage servicers can begin operating under the terms of the program before then if they are ready to meet all reporting requirements.
Under the plan, which speeds up and simplifies the Short Sale process, mortgage servicers have 10 days to approve or reject a request for a Short Sale. And when the sale is done, the borrower must be fully released from the debt.
Read more details of the Treasury plan.
The announcement is a positive step for the real estate market and for communities across the country, RE/MAX International CEO Margaret Kelly says. RE/MAX has been advocating simplified Short Sales for more than a year and has been working actively with U.S. government officials, including legislators and Obama administration officials.
"We're extremely pleased with this development," Kelly says. "Foreclosures have played a major role in keeping housing values down. This will help the market return to normal, stabilize prices, improve neighborhoods and prevent hundreds of thousands of homeowners from suffering the agony of being evicted from their homes. It should also play a role in the continued recovery of the economy."
If you've fallen behind in your mortgage payments or received a pre-foreclosure letter from your lender, I can help, please don't be afraid to call.