Program Will Pay Homeowners Who Sell at a Loss

By
Real Estate Agent with Century 21 In the Mountains

Short SaleThe Obama administration has announced a new short-sale program aimed at alleviating some of the roadblocks that now impede the process, which will hopefully inject some life into the nation's ailing real estate market.  

According to a New York Times article, the program -- that will take effect on April 5 -- will help some of the five million households who are currently behind on their mortgages by compelling lenders to accept a short-sale arrangement in lieu of foreclosure. A short-sale can occur when a lender agrees to take less for a property than the amount owed on the mortgage, thereby avoiding foreclosure.

The program will not help everyone; those who have a second or third mortgage on their properties may have the subordinate lenders block the sale.
But for those with only one loan, they will be able to get out from under a crushing burden with less of a negative impact on their credit rating, plus they will receive $1,500 in relocation assistance.

This is not a get-out-of-jail-free card.
The homeowner must be able to document that they are under extreme hardship and have exhausted all their  resources in an effort to stay in the home.

Our local housing market here in the North Georgia mountains has been as hard hit as most other areas of the country. The confusion surrounding short sales has only exacerbated the problem. If this new short-sale program works as promised -- and that is a big if -- this should help clear the way for renewed vigor in our housing market.

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Location:
Georgia Fannin County Blue Ridge
Groups:
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Posts to Localism
GEORGIA REAL ESTATE INVESTORS
Tags:
market conditions
north georgia mountains
short sales
new york times
kim southern
dawn mcguire
the southern team

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Ambassador
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Craig Rutman
Helping people in transition - Cary, NC
Raleigh, Cary, Apex area Realtor

I so hope this keeps homeowners from the grips of a foreclosure. And I hope that banks who do agree to a short sale situation will speed up the process so buyrs can actually buy the home and not wait forever for the bank to make a decision.

Mar 09, 2010 07:21 AM #1
Rainmaker
116,746
Kim Southern- "Sold" with Southern Hospitality
Century 21 In the Mountains - Ellijay, GA
Greetings from the North Georgia Mountains!

Craig: Absolutely! It is my understanding that this program should speed up the process...Although, at this point, I don't know if I believe anyone!!

Thanks for stopping by!

Mar 09, 2010 07:42 AM #2
Rainer
225,278
Kirsten Lindquist
Pacific Union International - Sonoma, CA
Realtor - Sonoma Wine Country

Hi Kim:  Just posted a blog featuring a video clip of a mortgage banker who blasted this program.  Check it out and post a comment...I'd love to hear what you have to say.  I hope we can get a real discussion going about this!  Thanks, Kirsten.

Mar 09, 2010 10:31 AM #3
Rainmaker
116,746
Kim Southern- "Sold" with Southern Hospitality
Century 21 In the Mountains - Ellijay, GA
Greetings from the North Georgia Mountains!

Kristen: I'm not sure that I follow the logic of David Likens (sp?)...It will ultimately be up to the lender to decide which offer to take, not the homeowner. There is still going to have to be a basic valuation done by a (hopefully) objective third party that will set the asking price -- not the homeowner. The lender will not be compelled to take any offer that doesn't come in at or near that price. So, I don't see how the homeowner will be able to, as Likens claims, go into cahoots with someone to buy the property and make money out of the deal.

As I see it, the inherent danger in this program lies with the 'objective' third party who is doing the valuation...Now there's someone who -- if they're inclined to dishonesty -- could stand to gain something for undervaluing a property.

All that said, if the program works as we should all hope it does, it will help clear this tremendous log jam of short sales by compelling lenders to make a decision in a reasonable length of time...Something that is long overdue.

Thanks for stopping by!

Mar 10, 2010 12:21 AM #4
Rainer
353,386
Bill Somerset
Re/Max Realty Group - Dover, NH
ABR, e-PRO - Realtor - NH Real Estate Agent

Let's hope that it clears a lot of problem-ed areas.  In NH we have not been hit too hard, but I fear if there was not any reform that we would have seen another large wave of foreclosures.

Mar 12, 2010 06:46 AM #5
Rainmaker
116,746
Kim Southern- "Sold" with Southern Hospitality
Century 21 In the Mountains - Ellijay, GA
Greetings from the North Georgia Mountains!

Bill: I agree...Something needed to be done -- and fast! I am keeping my fingers crossed that this program actually works!

Thanks for stopping by!

Mar 12, 2010 07:41 AM #6
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Rainmaker
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Kim Southern- "Sold" with Southern Hospitality

Greetings from the North Georgia Mountains!
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