New timeline for acceptance of your short sale offer

The federal government has just released new short sale regulations which is great news for many homeowners that are trying to sell in a short sale situation. It’s great news for Realtors® as well as the short sale process can be slow and grueling, eating up hours and hours of extra time. Buyers will also look on this favorably as they can go into a short sale situation with much more confidence than before. Qualifying homeowners in a short sale situation will also get up to $1500 to help with moving expenses. These new short sale regulations were created to help homeowners that do not qualify for home loan modifications under President Obama’s plan. Short sales are a large percentage of the market supply nowadays and I believe the new regulations will help us get through them much faster and bring us to a more balanced market much sooner!

The down side is that mortgage companies don’t have to put the program into action until April 5, 2010. I think this time frame was established to give these companies time to get their act together. My understanding is that this program is voluntary for lenders that hold second mortgages. These lenders can receive up to $3,000 to release the loans. I’m sure that will be a gamble for many lenders that stand to lose a substantial amount of money and opt to hold the borrower accountable instead.

The new short sale regulations made the following qualifying guidelines:

• The home must be your principle residence
• You must already be delinquent and default inevitable
• The total monthly mortgage payment must exceed 31% of your before tax income
• The loan must have been made prior to Jan. 1st of the current year and be less than $729,750 

I think there are some other incentives being given to mortgage companies as well and also that much or this whole process will be standardized including the paperwork! (too bad Microsoft isn’t doing that) President Obama is also beginning to put more pressure on lenders to modify loans for qualified borrowers and streamline that process. I haven’t heard of too many borrowers actually being granted modifications yet, but the pressure is on now. I think in time you will also see the “cottage industry” of “Short Sale Specialists” begin to dwindle now that there are new short sale regulations.

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