New Short Sale Rules Could Benefit More Borrowers

Short Sale Experts In Boca Raton

New federal guidelines that automatically qualify some borrowers and offer incentives to second mortgage holders to approve short sales could benefit Florida home owners who owe more than their homes are worth. In the past, home owners had to be delinquent on their payments in order to qualify, however, the new rules now state that having a qualifying hardship is enough. It is required that borrowers have their loans backed by either Fannie Mae or Freddie Mac though.

The Federal Housing Finance Agency issued the new rules that take effect November 1. Here’s an overview of how the new rules will change the short sale process:

  • The reduction or elimination of financial hardship proof from home owners who have missed several mortgage payments and have low credit scores.
  • Homeowners with specific hardships, such as death in the family, divorce, disability or job transfer can be approved by their loan servicer without going through Fannie Mae or Freddie Mac.
  • Second mortgage holders will be offered up to $6,000 to approve a sale.

 

Presently, close to 44% of Palm Beach County home owners owe more on their home than it’s worth. During the first quarter of 2012, that number was at an all time high of 47%, so this is good news in one regard. On the other hand, it still includes thousands of home owners around Palm Beach County who are struggling to sell their homes in the current market.

The Federal Housing Finance Agency is hopeful that the clause incentivizing lenders to approve short sales will help expedite the process. While some strides have been made in the time it takes lenders to respond to a short sale request, many borrowers still cite lengthy periods of silence that often turn buyers away. The hope is that the $6,000 stipend will help more lenders see the value in a short sale versus having to endure the foreclosure process.

According to Irvine, California-based RealtyTrac, short sales are on the rise in Palm Beach County. During the first quarter of 2012, 1,777 Palm Beach County homes were sold in a short sale, which is a 53% increase from the last quarter of 2011.

Another new rule was also recently announced that would waive a deficiency judgment against a borrower if the home owner can contribute cash at closing or sign a promissory note for a certain amount.

We are a team of Boca Raton short sale agents who specialize in beach and luxury realty. If you’re interested in learning more about beach communities in Palm Beach County, or would like more information about short selling your home or the short sale process, please contact our office. We would love to help.

 

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