The US Treasury Department has decided it is taking too long for short sales to be approved or rejected by mortgage servicers. Several changes have been made and were announced last night that could greatly impact home owners facing foreclosure.
Realtors have complained that sales fall through as lenders bicker over the sales price, what they should receive from the proceeds, and whether the borrower will be held accountable for the debt in the future.
Among the changes designed to help homeowners:
- Mortgage servicers have 10 days to approve or disapprove a request for short sale, and when done the transaction must fully release the borrower from the debt
- Borrowers would receive $1,500 for relocation expenses
- Mortgage servicers will receive a $1,000 incentive for completing a short sale and investors will receive incentives up to $1,000 for signing off on payments to subordinate lienholders.
The effective date has not been announced as of yet but I will make the leap and guess it will be right away. This should help stem the tide of foreclosures and reassure homeowners that they have alternatives to simply letting their home go back to the bank. By selling the home, even on a short, homes will have new owners living in them rather than remaining vacant for long periods of time. This helps to stabilize neighborhoods and in the long run will help home values.
Among the changes designed to help homeowners:
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