There couldn’t be a better time to walk away from your house! As a refresher, see my blog post from November 5th 2008 regarding the short sale process and the “Cash For Keys” some lenders offer homeowners as an incentive to go away quietly.
I’m posting today about another government program that could put some cash in your hands. That is, if you’re facing the foreclosure of your home. The government program I want to tell you about was created to increase the viability of short sales; here are the rules if you want to play.
In December, the Treasury Department modified the rules of the Home Affordable Foreclosure Alternatives Program (HAFA). The new and improved rules have streamlined the process at the national level. Some of the interesting excerpts of the rules require lenders to answer a request for a short sale within 10 business days (including furlough days). To sweeten the pie, lenders will receive $1,000.00 to help cover the cost and speed up the process of a short sale. Just like in the movies when you tell the cabbie to, “step on it” as you toss a Benjamin at the driver.
Now here’s the good part. You, the former homeowner receive FREE CASH. That’s correct, if you act now you’ll receive $1,500.00 as a “relocation incentive” to cover moving costs or other incidentals. Fine print: to be deducted from the sale price.
Okay, here’s the catch: The new rules don’t kick in until April 2010. So if you can’t afford a loan modification (do you know anyone who has received a loan modification?) or if you don’t qualify for a loan modification, you’ll be stuck searching for other government program(s). Stay tuned as I will be posting more government programs as they become available (subject to taxpayer funding.)
Note: A short sale is the process of selling a house for less that what is owed to the lender (bank). Therefore, the lender(s) must agree to a short payoff. Why would a lender agree to accept less than what is owed? The lender may agree to a short sale if the market conditions would cause a house to sell for a lower amount than the outstanding loan balance. The lender also has other options including foreclosure. Sometimes the lender may profit from a short sale, check out a prior post “How Banks Can Profit When You Lose Your Home” In most cases, it’s the lender’s option to agree to a short sale.
Due to the current financial climate in Shasta County, it’s my experience many lenders agree to participate in short sales. In most cases, the owner of the property fares better in a short sale too. The homeowner can mitigate any legal ramifications and/or further damage to their credit rating by using the short sale process. Short sales offer many other benefits to homeowners too numerous to discuss here. If you’re considering a short sale, you’re welcome to email or call. Often times we can turn your “lemons” into lemonade.
What do you think? I’d like to hear your thoughts, post your comments below.