The Federal Government has added new incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP), which is part of the administration’s Making Home Affordable plan.
Loan servicers may consider short sales or deeds-in-lieu of foreclosure for borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program.
1. Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program, but don’t qualify for a modification or do not successfully complete the three-month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
2. Incentives include: $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; $1,500 for borrowers/homeowners to help with relocation expenses; and up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).
3. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
4. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.
5. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions.
6. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
7. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price.
8. Servicers may not charge fees to borrowers/homeowners for participating in the FAP. Homeowners can sell their home with NO-COSTS!
9. The program is in effect through 2012
10. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer (Deed-in-lieu) in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).
Take advantage of the Mortgage Forgiveness Debt Relief Act of 2007; which former President Bush signed into law. This measure gives tax breaks to homeowners who have mortgage debt forgiven. A taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence. The tax break applies to debts discharged from January 1, 2007 and expires December 31, 2009.
For a copy of the Mortgage Forgiveness Debt Relief Act of 2007 visit: http://www.govtrack.us/congress/bill.xpd?bill=h110-3648
Hector Aguilar of the ALMA Real Estate Group with Coldwell Banker Town & Country, is an expert at listing, negotiating, and selling ”SHORT PAY SALES” in Southern California. We serve Los Angeles, San Bernardino, Riverside, & Orange Counties. We have a full staff of experienced and skilled negotiators.
Call today for a private consultation. Ask for Hector Aguilar. We look forward to assisting you through this difficult market.
Hector Aguilar, The ALMA Real Estate Group
Office (626) 966-3688 Ext 301 Direct: (626)255-2783
Email: haguilar@ALMARealEstateGroup.com, info@HectorSellsHomes.com
Visit us: www.ALMARealEstateGroup.com , www.HectorSellsHomes.com
Coldwell Banker Town & Country, 345 E Rowland St, Covina, CA 91723
{ 5 comments… read them below or add one }
Hi Hector,
I am a Realtor in Bloomington, Indiana. I am the listing agent and the buyer’s agent for a particular property that I have sold. This is a short sale. There are two mortgage companies involved. The first mortgage company can be paid off without going into a short sale. The second mortgage company is taking a short sale. Since I am a limited agent, they are refusing to give me at least 6% commission. They are demanding no more than 4.5% because I am the only Realtor involved. They said that if this wasn’t a limited agency situation, they would be willing to pay 3% to each agent. March 1st, the Federal Government passed a law stating that they must pay no less than 6% unless my listing contract stated less. This is for Fannie Mae and Freddie Mac. The first mortgage was a government backed loan. I’m not sure yet what the second is considered. What do you know about the new rules? I noticed above that rule number 7 states, “The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price.” Who determines what the “customary real estate commissions” are? I have worked hard and feel that I am being slighted for all of my hard work. If you are familiar with this issue, could you please enlighten me of my rights? Thanks.
I am having similar issues. Please get back to us hector. Thanks
Hector, I am having similar issues to ^ above, can you get back to us?
I have found a home that is empty, its new, and looks abandoned. It does not appear on the foreclosure list, but I want to negogiate a short payoff with the owner of this home. What should I do to kick off this process? Is there a way for me to confirm if the mortgage on an empty house is current?
404-786-3297
Hi Hector
I am looking to buy property in Fort Lauderdale, Florida and I have been told by my real estate agent that unless I can show cash in my bank account for the total amount of the purchase, the banks will not accept my offer on any short sales. I have excellent credit and I have a pre-approval letter from my bank. My friend just purchased a short sale home in Pa. and she did not have to do this. Can you tell me is this a policy for Florida only or is my agent lazy?
Thank you