As reported by Reuters on Monday The U.S. Treasury released terms for mortgage companies to increase approval times on short sales and loan modification programs to reduce the numbers of foreclosures. The Home Affordable Foreclosure Alternatives Program will provide financial incentives and simplifies the procedures for completing short sales.
Since the HAMP program encounters situations where lenders are unable to approve loan modifications, they have expanded the program to include financial incentives for completing short sales. Such as $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to junior lien holders. In addition, the borrowers would receive $1,500 in relocation expenses.
Short sales can preserve the borrower’s credit rating and can prevent home maintenance issues due to vacancies caused by evictions. Even though primary lenders often experience deep losses through short sales the outcome is typically better than that of a foreclosure.
Until now, short sales have been frustrating due to laborious negotiations and in fighting between lien holders or whether the borrower will be held accountable for the debt in the future.
New requirements include:
– mortgage servicers have 10 days to approve or disapprove a request for short sale
– transaction must fully release the borrower from the debt
– no reduced real estate commissions
– 2nd lien holders to be capped at $3,000
We are hoping the new incentives will help us close our numerous Stockton short sales, Lathrop short sales, Lodi short sales, Manteca short sales and Tracy short sales quicker.