2012: The Year of the Short Sale?
Over the past couple of years, we’ve seen an increase in successful and closed short sale transactions. Short sales used to take an indefinite amount of time before having a negotiator assigned, and often times, the process took so many months that buyers lost interest and walked away, resulting in foreclosure for the seller.
A short sale, by definition, is when the seller’s lender accepts a sale price on the property for less than what the seller owes on the mortgage. Sometimes the seller has multiple notes on the property (a 1st, 2nd, and sometimes a 3rd trust deed). Usually, if there is a 2nd or 3rd on the property, this will make the approval process on the short sale very complicated, and much more challenging since there are many moving parts to juggle in order to satisfy the various lien holders. In the recent past, short sales have been very difficult for borrowers with more than one trust deed on their property, since the sale of the property typically only paid for the first mortgage. HAFA is now offering up to $3,000 for second lien holders. Re/Max International Chairman and Co-Founder, David Liniger states: “Second trust lien holders are often owed five or ten times that of the $3,000 payment, but if the property goes to foreclosure, the second trust holder is not likely to get any money at all. This, at least, guarantees something.”
Due to recent streamlined short sale incentives and rules, which allow borrowers and lenders to work together in order to avoid foreclosure, 2012 will see a much higher rate of short sale transactions going through compared to previous years. These rules and incentives have been established by the Home Affordable Foreclosure Alternatives (HAFA) program to speed up the short sale...