ORANGE COUNTY, CA.: With around 43,000 notices of default last month in California, and 2,500 defaults in Orange County, now more that ever the industry is in need of an alternative to Foreclosure. The Obama administration has recognized the need to curtail foreclosures, and has recently added some provisions to the Housing Resue Plan to help streamline the short sale process. These programs provide viable options to homeowners who owe more than their home wi worth.
The Obama administration announced the new details under its Foreclosure Alternatives Program (FAP) enabling lenders and borrowers to pursue Short Sales and Deeds-in-lieu of foreclosure in cases where the property owner does not qualify for a Loan Modification. The program requires that before proceeding with a foreclosure, lenders must determine if a short sale is appropriate.
Orange County homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period. Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate.
The FAP plan also offers incentives to banks and Orange County homeowners. Incentives include: (1) $1,000 for banks for successful completion of a short sale; (2) $1,500 for Orange County homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders). In addition, some Banks and mortgage servicers are now adding additional incentives for certain homeowners to cooperate with a short sale. As an example, we recently negotiated a $6,850 cash back incentive for one of our short sale clients in Laguna Niguel.
Efforts are also being made to standardise the short sale process. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.
Servicers will independently establish both property value and minimum net return to the bank, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs)
In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional and no foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.
Servicers may not charge fees to borrowers/homeowners for participating in the FAP. In addtition, the Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received. The short sale provisions of this program begin on May 14th 2009 and is in effect through 2012.
For more information about our Free Short Sale services, and short sale cash back incentives from mortgage banks, feel free to give us a call at: (949) 388-3396, or email us at: Info@ShortSalesASAP.com
