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The US Treasury laid out final guidelines on November 30, 2009, that should make it easier for some borrowers in financially dire circumstances to sell their homes through either a short sale or deed in lieu of foreclosure. The guidelines expand on the government’s Home Affordable Modification Program, known as HAMP, and provide financial incentives and simplify the procedures for completing short sales, which occur when a borrower sells a home for less than what is owed on his mortgage(s). The guidelines encourage the use of short sales by providing incentives to investors, servicers and borrowers. Additionally, the guidelines help to address hurdles that occur in the short sale process, by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims of subordinate lenders. Some of the primary incentives under the plan include:
A borrower would receive $1,500 from the government (for relocation expenses) if he sells his home for less than the amount of his mortgage(s).
Mortgage servicers and Investors who hold a first mortgage could receive up to $1,000 from the government for each completed short sale.
Second mortgage holders can receive up to $3,000.00 of the sales proceeds in exchange for releasing their liens.
Borrowers who complete a short sale under the program must be “fully released” from future liability for the debt, according to the guidelines.
Mortgage servicers have 10 days to approve or disapprove a request for short sale
Mortgage servicers are prohibited from mandating reduced real estate commissions on the sale.
The program is open to borrowers who may be eligible for the government’s loan-modification program, but don’t end up qualifying, or are delinquent on their modification, or request a short sale or deed-in-lieu transaction.
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The above may contain general legal information from the legal staff at Fidelty National Title. It is not intended as legal advice for any specific situation. Please contact an attorney directly for such advice.