The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.
To qualify under these new guidelines:
- The property must be the home owner's principal residence.
- The home owner must be delinquent on the mortgage or close to defaulting.
- The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
- The borrowers' total monthly mortgage payment must exceed 31 percent of their before-tax income.
Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.
Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.
Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)
i need help! im a realtor who does a lot of short sales. new guidelines as of april 5th states that banks accepting a short sale rather than foreclosure will forgive the deficientcy. only BANK OF AMERICA hands out towards the end of the short sale an addendum stating they are going after the borrower for the remaining balance owed! and makes the people sign them, otherwise they pull the file and property goes into foreclosure!!! is there a way around this? what can we do to make them change this policy?