New Guidelines for Short Sale Approvals.

Finally the long awaited government guidelines for short sale approvals and deeds in lieu of foreclosure have been released. The government is hoping that lenders will participate in the program to receive incentives for closing a short sale transaction. The program only applies to financial institutions that are federally regulated. The new government program is called The Home Affordable Foreclosure Alternatives Program.

The Obama administration set long-awaited guidance on a plan for mortgage companies to speed up short sales of homes and other loan modification alternatives to stem the rising tide of foreclosures. The Home Affordable Foreclosure Alternatives Program provides financial incentives and simplifies the procedures for completing short sales, a growing practice in which a lender agrees to accept the sale price of a home to pay off a mortgage even if the price falls short of the amount owed. The new federal guidelines address barriers that have often sidelined short sales by setting limits on the time it takes a bank to approve an offer, freeing borrowers from debt and capping claims at $3,000 of subordinate lenders. New financial incentives for completing short sales or similar "deed-in-lieu" transactions - in which the deed is simply transferred to the lender - include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on payments to subordinate lien holders, the Treasury said. Borrowers would also receive $1,500 in relocation expenses.

Under the new rules, mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt. The rules also prohibits mortgage servicing companies from reducing real estate commissions on the sale, a practice that has discouraged many agents from taking short sale listings

4.Define what you want. The next step is to create a realistic idea of the property you'd like to buy. What features are most important to you? Make two lists: one of the items you can't live without and one of the features you would enjoy. Refine the lists as you house hunt. It is also helpful to search online to see what is currently available on the market. We can then show you houses that meet your expectations.

The federal guidelines apply only to banks and lenders subject to federal banking oversight. That means big boys Bank of America, JP Morgan Chase and Wells Fargo, but not necessarily local and state chartered banks who remain free to be as unreasonable as they want in short sale transactions.

This will help, At this point. How much? Only time will tell!

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD's website.

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