The Obama administration has requested that the U.S. Treasury Department provide guidance, financial support and sales measures for short sales in an effort to kick-start the U.S. housing market. The Home Affordable Foreclosures Program is expected to provide financial incentives and streamline procedures for the completion of short sale real estate transactions that have been blamed for clogging the mortgage loan pipeline. Short sales favor real estate agents and mortgage lenders as they are the last opportunity for homeowners to avoid foreclosure if they are unable to have their mortgage modified.
In most cases where a home is sold via a short sale, the home is in reasonably good shape, unlike foreclosed homes where the home can be damaged by angry homeowners or looters after the home becomes vacant. Short sales benefit lenders and real estate professionals as the home is more or less in better condition, and can be sold far more quickly and easily than a foreclosed home. Short sales also help the home seller who wants to get rid of the debt obligation of their mortgage before the lender begins the foreclosure process. Further, if a lender accepts a short sale offer, the lender may forgive the difference between what is owed on the mortgage and the short sale price, or the deficiency balance.
Initial reports on the program’s success say its effectiveness has been very limited. “The incentives, first announced in May, expand the government’s Home Affordable Modification Program known as HAMP, which has seen limited success in lower payments for distressed homeowners.”
The HAMP incentives for completing short sales include $1,500 in relocation expenses for borrowers, servicers would receive $1,000 per transaction, second lien holders can receive up to $3,000 of the sales proceeds if they release their liens, and other incentives for lenders and borrowers alike. Looking to get a great home by buying a Louisville short sale? Call Louisville Properties today at 502.744.9504 for the area’s best selection of Louisville real estate.
