Home Owners Will Receive Payment To Short Sale Homes

Home Owners Will Receive Payment To Short Sale Homes

In the latest plan from the Obama Presidential administration to assist defaulting homeowners, the focus has moved from keeping homeowners in their homes to instead moving them on their way out of their homes.

The latest program will allow owners to sell for less than they owe and will give them a little cash to speed them on their way and is a change from many of the recent proposals and programs the government has initiated.

The plan aims to address the concern that millions of foreclosures could delay or even reverse the economy's tentative recovery.

This new plan will go into effect on April 5, 2010 and could encourage hundreds of thousands of delinquent borrowers who have not been assisted through loan modification programs to sell their houses through a short sale.

Under this new program, there would be up to three payouts aimed at bringing together the first mortgage holders, second mortgage holders and the borrower in order to streamline the short sale process.

First, the first mortgage loan servicer will get $1,000 to agree to the short sale. Then another $1,000 can go to the second mortgage holder, if there is one on the home. And finally, the government would also give $1,500 in relocation assistance to the homeowners themselves.

On the bank servicer's side of the equation, the new process is supposed to be a way to promote short sales on homes that may eventually go to foreclosure anyway and the servicer would receive more proceeds this way.

On the borrowers' side of the equation, there is the likelihood of suffering less damage to credit ratings. In addition, they will get the lender's assurance that they will not later be sued for an unpaid mortgage balance.

And finally for the real estate market, the plan is supposed to equal fewer empty foreclosed houses waiting to be sold by banks.

In addition, under the new program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. If an offer comes in that is equal to or higher than this amount, then under the plan, the lender would in theory have to take the offer.

Of course, when a homeowner has a second or even third mortgage this can complicate the scenario a bit more as well and perhaps not make it quite as easy as that. In addition, lenders will also still want homeowners to prove financial hardship as a reason to short sale their homes as well.

How quickly this new program is implemented and how effective it will be is still yet to be seen. However, as always, as new information becomes available we will provide updates and information accordingly.

For more information on home purchase loan or refinance programs for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com