New Hardship Rules Assist with Short Sales
Is your home worth less than what you owe on it? But do you keep making mortgage payments diligently? Putting more and more money into a situation that is building negative equity may not give you many financial choices, especially if you are going through financial distress and want to do everything you can to save your credit. Up until now, unless you were seriously delinquent on your mortgage, you could not qualify for a short sale or a principal reduction.
Under new federal rules that take effect Nov. 1, 2012, mortgages that are guaranteed, purchased or serviced by Fannie Mae and Freddie Mac are reforming the process for getting short sale approvals in an expedited manner. The key to qualify for the short sale is meeting the hardship criteria, which include:unemployment; divorce; long-term disability; a change of employment that is more than 50 miles from the current home; a business failure; death of the primary or secondary wage earner, or a natural or man-made disaster.
Broadening of Short Sales
The broadening of short sales to those who are current on their mortgage payments but also encountering serious hardships may help huge numbers of underwater homeowners. Opening up the market to people who have continued to make an effort to make pay diligently despite having no equity in their homes is a big change.
Short sales allow borrowers and lenders to avoid the time-consuming and exorbitant costs of foreclosure by putting the house on the market and finding a buyer who will be approved by the bank to buy the property for a price less than what is owed on the mortgage. In a successful short sale the seller receives a write-down of the portion of the principal not covered by the new buyer’s price.
Short Sales Made Speedier
These rules come on the heels of more recent rules that took effect in June requiring loan servicers to operate on a fast timeline for reviewing and approving short sale requests. They are supposed to respond to a borrower’s request for short sale approval within 30 days of the receipt of an offer and must give applicants final decisions within 60 days of receipt of the completed short sale package.
Although these rules do forge a clear pattern to assist distressed homeowners with the short sale process, they still involve financial and legal decisions that best should be handled by an experienced short sale attorney. In the New Jersey area, contact one of our Burlington County short sale lawyers for a free consultation and assistance with this process.