Government Looks to Help More Homeowners
On Monday, the government launched a new effort to speed up the time-consuming process of selling your home if you owe more than it’s worth.For moving expenses to homeowners who complete such a sale, known as a short sale, or agree to turn over the deed of the property to the lender, the Obama administration will give $3,000. A home typically fetches more money in a short sale than a foreclosure, for lenders. Also, the bank avoids cleanup fees, expensive legal bills and maintenance costs that follow a foreclosure.According to Mark Zandi, chief economist at Moody’s Analytics, the expanded incentives will help accelerate short sales. Through the end of 2012, he expects 350,000 homeowners nationwide to use the program, which is more than double his earlier forecast.The new government program makes another key change, along with the financial incentives. Before the house is listed for sale, mortgage companies will have to set their minimum bid. The lender must accept it if the offer is above that.Generally, until they have an offer in hand, causing long delays before the sale is approved, lenders don’t calculate how much money they are willing to accept on a short sale.Buyers who submit an offer to purchase a home in a short sale should get a response within two weeks, as opposed to months, under the new process. It would be a big improvement if that happens as planned. Real estate agents across the nation have complained that lenders are frequently hard to get a hold of, sometimes only communicating by e-mail.Last November, the Treasury Department outlined the plan, but doubled the original $1,500 in relocation money after realizing that several homeowners need more cash to move out. That’s because usually, landlords want big deposits from people whose credit records have gone bad after not making mortgage payments.The home needs to be a borrower’s primary residence in order to qualify. Homeowners either have to be on the verge of becoming delinquent or behind on their mortgages.The program is not currently available for mortgages owned or guaranteed by mortgage finance companies Freddie Mac and Fannie Mae.Source: builderonline.com