Borrowers Need Act to Take Advantage of New Federal Short Sale Guidelines
Since the housing crisis struck a few years ago, news about efforts to fix the problem and help homeowners makes headlines on a seemingly daily basis. It is easy to get overwhelmed by the information and confused about what programs might actually help in your situation. Many remain resigned to a fate of foreclosure or struggling with payments on an underwater home.
Yet, those working on New Jersey real estate issues appreciate that it is important for local homeowners not to miss out on truly favorable new programs and rule changes designed to help the millions of residents in trouble. For example, one particularly positive federal rule change took effect only a week and a half ago. As a result of the new guidelines, many borrowers who investigate their options are positioned to not only get out from troublesome mortgages but also receive cash relocation expenses to help move on to their next opportunity and receive a fresh start.
The crux of the new rules from Fannie Mae is a stepped-up timeframe for lenders to respond to short sale requests. A new “60-day rule” requires certain lenders to respond to proper short sale offers within 60 days. The changes were made in order to increase the total number of successful short sales. In the past lender-stalling often meant short sales took six, eight, ten months or more to complete. Potential buyers often gave up in the middle of that long wait, scuttling the sale. Requiring lenders to act quickly will likely ensure more of these sales are completed.
Borrowers Must Act
However, it is a mistake to assume that the new rules only impose more requirements on lenders. Borrowers wishing to take advantage of the changes must also act appropriately to complete the sale properly. This usually requires the help of experienced professionals in the area.
For example, a short sale decision can be delayed if all of the required paperwork is not submitted in a proper and timely fashion to the lender. Even seemingly minor errors or omissions may result in the process starting over. The “packaging” of a short sale deal to the lender is critical, ensuring approvals are reached as quickly as possible. Hardship documents, medical records, divorce decrees, tax returns, bank statements, utility bills, listing agreements, price opinions, and many other documents may be needed throughout the process. If borrowers do not provide and complete these materials appropriately, then the new 60-day guideline requirement may be of no benefit.
In other words, while the new rules are incredibly advantageous to borrowers, it is still incumbent upon the homeowner to act prudently during the short sale process.
While various rule changes and new programs exist to help local homeowners, it is impossible to take advantage without being proactive about your situation. Those in our area are well-served by reaching out to a Burlington County real estate attorney who can explain how the recent changes apply to their situation and work with the lenders to take advantage of the unique opportunity.