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Real Estate Investing Information

Dec 08

Short Sale Guidelines Have Changed

WASHINGTON - NOVEMBER 13: (L-R) CEO of the Ce...

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Short sales are a big strategy in the today’s economy for most real estate investors. If you are just starting out or a seasoned pro, this information may be helpful to you. If you understand what the rules are it will help you weed out homes that won’t work.

Government Announces Short Sales Guidelines

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.

To qualify under these new guidelines:

1. The property must be the home owner’s principal residence.

2. The home owner must be delinquent on the mortgage or close to defaulting.

3. The loan must have been made before Jan. 1, 2009, and be for less than $729,750.

4. The borrowers’ total monthly mortgage payment must exceed 31 percentof their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments. –more

2010 IS THE YEAR of the SHORTSALE | Treasury Department Short Sale Guidelines

From Bloomberg News:

Banks are beginning to go along with short sales in increasing numbers, three years into a U.S. housing slump that pushed the economy into a recession and cut resale values by 30 percent from the peak in July 2006. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier. Yet for each short sale, there were 25 foreclosures started or completed in the first half of this year, according to data from the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

Wells Fargo, Bank of America Corp. and JPMorgan Chase & Co. this year have hired and trained more staff, developed software systems for expediting short sales, and increased marketing of short sales to delinquent borrowers.

Banks are increasing such sales under pressure from the Obama administration and lawmakers who criticized them for favoring foreclosures and delaying short sales, Green said. Lenders and loan servicers also stand to receive up to $2,000 in incentives to close short sales under a Treasury Department plan unveiled Nov. 30. –more