NEW GOVERNMENT INCENTIVES FOR SHORT SALES
Recently, I heard of this program for the government to pay incentives to the seller and the servicing agent of the loan upon the closing and funding of a short sale.
A short sale is when a property is sold to an arms-length third party and the investor (the company who owns the loan) agrees to accept a sales price that is less than the amount owed on the property.
Previously, investors appeared to not seem too interested in pursuing short sales. The negotiators for the investors were mysterious behind-the-scene individuals who seemed to drag their feet at every turn and make it appear that the deal would never close. Most real estate agents avoided short sales because of the extra work and headache. The last two deals I have worked on have gone pretty smoothly. It may be because I was in the mortgage business for 30+ years and am comfortable dealing with lenders and it could be because I am laid back and non-confrontational, but understand the internal workings of a large mortgage company. It works well when patience is one's best virtue.
One of the deals I am currently working is in the final stages and down to the final bits of negotiation. The investor has just informed me that the seller will receive a check in the amount of $1,500 after closing. The check is to facilitate relocation. The servicing agent for the loan (usually the company to whom you make your monthly payments) also receives $1,000 for their participation in the short sale. The only party that may lose out is a second lien holder as they are offered only up to $3,000 for their lien and nothing for their participation.
My advice to anyone who is struggling to make their mortgage payment is to first contact your lender and request a modification agreement. A modification agreement modifies the original terms of the note. Normally, the rate is lowered. I must caution however, the borrower must be able to qualify for the new loan. So if you have lost your job and do not have a verifiable source of income, a modification will probably not work for you. The same with a refinance-the borrower must be able to qualify for the new payment.
When you realize you are in trouble, do not waste valuable time dragging your feet. Talk to a Realtor about a possible short sale. Their advice should include contacting a lender about a modification or a refinance of the property.
Not everyone qualifies for a short sale. A job loss, medical issues or some other situation not under your control usually meets muster. A property whose value has been lost is simply not enough to qualify for a short sale. In addition, a short sale affects your ability to buy another home for only 3 years, whereas a foreclosure stay with you on your credit report for many more years.
Work with a Realtor, preferably one who is experienced working short sales. A Realtor can answer your questions and give you peace of mind during a difficult period.
Visit my website at www.PatOwensRealty.com for more information on short sales.
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