For any buyer trying to get a deal out of a short sale, the waiting time and frustration level must be balanced with the savings realized. Banks have been notoriously slow, sometimes taking up to six months, in responding to participants in a short sale transaction. This often results in frustrated buyers walking away from the deal. Effective April 1, new Treasury guidelines will require lenders to respond to these offers within ten days ? hopefully helping the recovery of the stalled housing market. These new regulations will not apply to Fannie Mae and Freddie Mac guaranteed loans who, at this time, are also finalizing revisions on their short-sale requirements. The new Treasury guidelines will apply to any lender participating in the Obama Administration’s Home Affordable Modification Program, which includes Bank of America and JP Morgan Chase. The new rules require that sellers receive a $1500 moving allowance and are relieved of any responsibility for the remaining debt. Lenders will receive $1000 to cover administrative expenses and an additional $1000 for allowing up to $3000 in proceeds to go to less-senior lenders. These guidelines, however, are expected to see resistance from second lien holders, who have been demanding more money from sellers in exchange for releasing their liens.Email This Post To a Friend.
Treasury Releases New Regulations on Short Sales: Lenders Must Respond to Potential Buyers Within 10 Days
January 23, 2010
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