Welcome relief for the Short Sale process!

On May 14, 2009 the Obama administration announced incentives and uniform procedures for short sales thanks to the new Foreclosure Alternatives Program (FAP).

This new program helps troubled homeowners who do not qualify for loan modification AND requires banks to determine if a short sale is appropriate before proceeding with a foreclosure. It also helps Realtors and loan originators by standardizing documents for the the short sale process. This will include a standard "short sale agreement" and a standard "Offer/Acceptance letter".

In addition;

• For every successfully completed short-sale the government is offering a $1,000 incentive to banks and $1,500 to borrowers to help them relocate! They will even throw in up to $1,000 for any junior lien holder (typically a 2nd mortgage)
• The bank is to determine the property's value and the "bottom dollar" figure they are willing to take for the property. The bank then agrees to give the homeowner not less than 90 days (up to one year in some markets), to have the property listed for sale by a licensed Real Estate agent at that price. No foreclosure can take place during this time!
• The bank must agree not to try and negotiate a Real Estate agents commissions once an offer has been received and accepted. The Real Estate agents commissions are specified in the short sale agreement up front and are deducted from the sales price. (ie., bank proceeds)
• The bank may not charge the borrower/homeowner ANY fees for participating in FAP.
• There is a "deed-in-lieu" of foreclosure option that can be written into the short sale agreement that requires the borrower to deed the property over to the bank in the event that it does not sell in the 90 days or whatever time period was agreed upon. This allows the borrowers to walk away instead of being foreclosed upon. Although, it should be noted that this is still a negative action on a homeowners credit report. The goal in this situation would be to have the borrower walk away owing nothing else to the bank once the deed is signed over.
• This program is in effect through 2012.

So there you have it folks! More help! CONTACT Pinellas Financial for questions about this or anything else you can think of! We are a mortgage broker located in Clearwater, Florida! Have a great day! :)