Keller Williams Realty of Northern Colorado

Due to recent federal changes to their short sale guidelines, “short sales” may start living up more to their name.

A short sale occurs when a lender accepts less than a borrower owes on a loan. As part of the Foreclosure-Prevention Program, the government modified their short sale guidelines to make short sales more attractive alternatives to foreclosures. Short sales can frequently produce higher sales prices for distressed homes and are less harmful to communities than foreclosures. To-date, however, short sales have been cumbersome and difficult to complete.

The changes in guidelines are aimed to help distressed homeowners who are eligible for the loan modification program, but:

• Do not end up qualifying
• Become delinquent on modification
• Request a short sale or deed-in-lieu

The program offers the following financial incentives for successfully completed short sale or deed-in-lieu of foreclosure:

• Borrower……………….$1,500
• Lender…..………….….$1,000
• Second Lien-holder..…$3,000*

* From proceeds of the sale in exchange for releasing liens

In addition, the updated guidelines address the issue of second liens. Second liens, such as a second mortgage on the home, add an extra layer of complexity for short sales. After participating in this program, the borrower will be fully released of obligations and future debt liability.

You can read the complete set of guidelines at: https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf. If you have additional questions, be sure to contact your mortgage lender for more information.

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Posted By: Keller Williams Realty of Northern Colorado - Fort Collins Realtors
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Source: Keller Williams Realty Inc., “This Month in Real Estate - Released 12/4/2009″