New Short Sale Timeline: Will It Make a Difference?

Big news this week as Fannie Mae issues a new guideline covering the short sale timeline. The new rules will apply to every conventional mortgage held in the said government-sponsored enterprise’s portfolio. Loans bought for aid portfolio but eventually securitized and loans originally delivered to the Mortgage Backed Securities pool.

 

The new policies involve establishing the maximum required time to respond to short sale offers, requiring mortgage services to provide their borrowers with status updates especially during the evaluation process and eliminating the servicer’s need to look for an alternative solution before offering a response to the offer.

 

As for the new short sale timeline:

 

-          Countdown starts when the servicers receive the Borrowers Response Package inclusive of the short sale offer.

-          The servicer should be able to acknowledge the receipt of the package, notify the borrower of missing documents, and provide a response within 30 days.

-          Servicers are allotted 60 days maximum to evaluate the pre foreclosure sale offer. Fannie Mae must be notified if the original 30 day deadline will be exceeded.

 

Before, servicers have the option to consider if the borrower is qualified for a HAMP modification or other HAFA alternatives. The one caveat is the new guidelines allow the mortgage servicers to skip this step and proceed to the non-HAFA review without any HAMP evaluation.

 

Fannie Mae declared June 25 as the deadline for implementing the new guidelines/requirements and urged mortgage servicers to comply sooner, if possible.

 

What It Means for the Borrowers Considering a Short Sale

 

The new guideline will indeed speed things along and allow many distressed borrowers to avoid a foreclosure. The shorter timeline will also bode well for the housing industry in general as it could encourage short sale buying. A lot of buyers turn away from a short sale, because they can take too long to close. With these new rules in place, the risk of the buyer walking from the short sale transaction is reduced.

 

Of course, the entire short sale process can proceed without problems if all documents are in order. Hire a short sale Realtor to make sure documents are complete.

Florida Short Sales Finally Outpaces Foreclosures

 

It was bound to happen – Florida short sales overtaking foreclosure sales – as more and more lenders take the faster and less costly solution. According to anews report, short sales accounted for 23.9 percent of home purchases in January, the most recent month available, compared with 19.7 percent for sales of foreclosed homes, data compiled by Lender Processing Services, a Jacksonville, Florida-based company. A year earlier, 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

For many, such news is certainly a welcome one considering that until now, there is still no end in sight when it comes to the housing crisis. With lenders obviously seeing the wisdom of short sales versus a foreclosure, it is highly likely a lot of homeowners with negative equity can finally heave a sigh of relief.

Keep in mind the housing market is currently having trouble addressing the billions of dollars lost, in terms of home equity. Lenders tried to clear this negative equity with options including foreclosure but as you can see, it did not work. Foreclosures, in particular, come with negative ramifications not only for your credit history but also for your neighbor and community.

On the other hand, A Florida short sale leaves the seller almost debt free, the previously unsalable home with a new owner and the lender with smaller losses. It would probably hurt the nearby properties but not as bad as foreclosures will.

Tip to Homeowners Considering a Florida Short Sale

Rushing to the lender and submitting an ill-prepared short sale proposal is tantamount to financial suicide. Even if lenders are keen on accepting short sales rather than proceed with a foreclosure, you should still convince them you are worth the trouble. Work with a Florida short sale Realtor to make sure your proposal will leave no doubt in the lender’s mind a short sale is indeed the answer.

The Realities of a Palm Beach Florida Short Sale

A lot of cash-strapped homeowners in Palm Beach certainly appreciate having the option to sell their home via a short sale. Of course, there are many facts about short sales you need to familiarize yourself with in order to truly understand the process involved and determine if it is indeed the answer you have been looking for.

 

Reality #1: Lenders approve Palm Beach short sales IF you convince them of your hardship.

 

In a short sale, the lender accepts an amount less than what is owed on the mortgage because of financial difficulties on the part of the homeowner. In many cases, the deficiency or difference between the mortgage balance and the short sale proceeds is even forgiven, resulting in the owner walking away virtually debt-free. The big requirement is you need to convince the lender you are deserving of the short sale.

 

Reality #2: Palm Beach Short sales take twice  even three times as long as regular home sale.

 

Even if you have all the proper documents, a very good hardship case and a qualified buyer, the short sale can still be lengthy and riddled with complication. It would be smart to find out first if your lender is willing to consider a short sale. If they are, you need to look for an experienced and knowledgeable short sale Realtor to help you out with the entire process. You will find your situation to be a lot more bearable with someone on your side.

 

Reality #3: Securing buyer interest is a must.

 

There are many instances when all aspects of the Palm Beach short sale are going smoothly and then just when the lender gives the go signal, the buyer is nowhere to be found. Such a scenario is hard to avoid as there are really no signs it may happen. You should consider putting safe guards in the form of a earnest money deposit to establish the person’s seriousness about the contract.

Is It the Right Time to Consider a Florida Short Sale?

Many homeowners are on the fence about doing a Florida short sale now or after 3 or 4 years. Thinking about such an important decision is actually good, since you are weighing the advantages and disadvantages of selling your home via short sale now or later.

 

If the decision to do a Florida short sale does not stem from a need to avoid foreclosure, then you certainly have the luxury of time to look at the pros and cons. Of course, if you are on the verge of foreclosure, considering a short sale could be the only way you can get out of such a mess.

 

Short Sale Later

 

If you choose to postpone the Florida short sale, you will certainly enjoy staying in your home much longer. You will also be able to avoid being the center of neighborhood talk, which will mostly bring to focus any of your financial problems. By delaying the decision, your kids will also get to stay in school and there will be no inconvenient uprooting. If you also decide to stay, you will continue to enjoy tax deductions associated with homeownership and might even discover a solution which will allow you to keep your home.

 

Short Sale Now

 

On the other hand, doing the short sale now means taking advantage of the Mortgage Forgiveness Debt Relief Act, which is set to expire by the end of this year. Not taking advantage of this can be costly as one of its provisions allows for a $1 million in debt forgiven. In addition, you will also be able to get out of your underwater status and start credit recovery. This means in as short as two years, you will be able to enjoy the same impressive credit history you were enjoying before all the mortgage problems.

 

To help you decide which option is best for your current situation, talk to an experienced Florida short sale Realtor.

Winning the Short Sale Approval Waiting Game

For short sale buyers, one of the most challenging parts of the short sale process is the part when you wait to hear from the bank. It can drive anyone insane not knowing what lies ahead for you and your family. In order to avoid getting anxious during this critical period, consider doing the following:

 

·         Move On – there is no reason for you to stop doing the things you usually do just because of the wait. Continue with whatever you have before the owner submitted the short sale proposal. Use this time to do projects you have always wanted to start but never got around to. You will not only avoid feeling anxious all the time, but you also be productive.

 

·         Be Optimistic. Think about the reasons why you are willing to wait. It could be because of the bigger rooms, the great location or the amenities. Whatever it is, you know the wait is worth it.

 

·         Avoid hounding your short sale Realtor. You should not be calling your Realtor every hour, inquiring about the approval. The only reason why you should contact him is if you have to clarify something regarding the process.

 

·         Set a goal for each 30 days. Since a short sale takes an average of 90 days to get approved, you should probably consider setting goals or targets for each of the 30 days. It can be something as simple as exercising everyday or something more challenging such as learning to play a guitar or a new language. You will be surprised at the many options available.

 

The short sale approval waiting game is certainly tough to play, but with the right attitude and some imagination, you will not notice the days passing you by.

3 Things to Check Out Before Buying a Palm Beach Gardens Short Sale

Finding a short sale home in Palm Beach gardens which interests you will certainly make you feel excited. However, you still need to make sure you do due diligence if you truly want to maximize this investment opportunity.

Here’s what you need to do:

1.       Instead of looking at pending sales, check out comparable sales. This is because it could take from anywhere between 2 and 4 months to close a short sale and by that time; the pending sales will then be the comparable sale and the pricing will just be right.

2.       For Palm Beach Gardens short sale homes priced way too low, expect them to receive multiple offers. If you are interested in such a home, be sure your offer is near the property’s market value. It is likely the lender will approve your offer compared to the low ball ones.

3.       Find out the exact number of loans attached to the property as well as the amounts.

4.       Check who the lender is and ask your Palm Beach Gardens short sale Realtor if the lender has a reputation of being difficult. This way, you can be prepared. It would be great if your Realtor has worked with the lender before and would be able to advice you accordingly.

5.       Try to find out if the seller has already prepared a short sale package which includes among others the hardship letter, tax returns, payroll stubs, bank statements and financial statements. Some sellers are not willing to provide such information quite easily, so you need to be patient.

As a Palm Beach Gardens buyer, you need to check all these things in order to protect your interest and avoid wasting your time. Do not let excitement get in the way of having a successful short sale purchase.