If you’ve been a buyer looking to purchase a home and put an offer in on a short sale, you know that the paperwork and the wait times can be excruciating. I’ve seen cases where buyers have had to wait months – as many as 6 – to hear from the lender about whether the short sale has been approved. The Obama administration is working on a new proposal that would help streamline the short sale process and hopes to roll it out over the next few months.
As a reminder, a short sale is when the lender is willing to accept a less amount of money for the property than what is currently owed. The lender needs to determine if they will make more money this way than if the home went into foreclosure by the homeowner no longer making payments and then being able to resell it. This is what can lead to extremely long wait times.
So what the government is proposing is quicker turnaround times. They haven’t named a figure yet, but hopefully it will be a maximum of X number of days to get a response from the lender. They’re also proposing uniform documents required by everyone. No more specific paperwork for each lender that makes each short sale request different. They’re proposing to pre-approved short sale terms. This has the potential to mean that it will be accepted no matter what if it meets a certain percentage back to the lender or if the buyer has a certain amount of financing covered. That’s still up in the air.
The proposal also includes financial incentives for everyone who takes part. This includes $1,500 back to the homeowners to help out with relocation costs and having to move. So a benefit to having to short sale your house will help a lot of people out. Especially if they need to rent right away and don’t have any money at their fingertips.
Mortgage servicers would earn $1,000. Investors purchasing the home would get $1,000. That can help with a lot of remodeling costs, if they’re needed. Even real estate agents wouldn’t be forced to cut their commission if the bank asked them to. We’re still waiting to see all the details related to the plan, but the news seems positive thus far. A streamlined process and money for all involved … what’s the negative?
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