Real Help for Short Sales Coming NOT from DC but from the STATES!
In an encouraging move toward action and accountability, the States Attorneys Generals have collaborated to actually do more than just propose programs and threaten consequences for uncooperative mortgage lenders! The home-ownership assistance initiatives that have come from the current administration in Washington have generally received failing grades from the real estate industry, homeowners losing their homes, and buyers afraid to make offers on upside down homes. And in defense of the Obama regime, it is difficult to centrally regulate the procedures and lenders in all 50 states when the real estate laws vary so much between them.
Take heart! the AGs of the individual states have met and established a reasonable enforcement mechanism for lenders who do not comply with the formerly feckless DC short sale guidelines. The efforts are aimed primarily at the “Big 5” of mortgage lenders and will have the greatest impact on the historic “sand states” where blood letting to lenders and homeowners tend to make our losses in Virginia look more like a mild bruise for a hemophiliac. But with the penalties for slow or non-responsive short sale processing potentially costing the lenders a million dollar fine here and a million dollar fine there, eventually they would be talking about “real money” and should accordingly be willing to invest in appropriate staffing levels and training.
Important Take Aways: (1) If you are one of those rare and blessed entities in the U.S. – a pre-approved buyer with stable income, a positive job outlook, and some savings . . . don’t fear making an offer on a short sale! When the new guidelines are enforced, your deposit will be safe and your time to close should not take much more than it would under a “standard” purchase transaction and you may actually get a better deal! (2) If you are an upside down Seller – there is still time to sell by the end of the year. The mortgage home debt forgiveness act provisions that minimize the tax impact of having principal debt forgiven on your primary residence are still not extended into 2013 but with the enforcement of the 30 day review rule, it is realistic to be able to sell your home in 2012 and avoid paying taxes on Phantom Income.
The key is finding an experienced short sale listing agent for a seller to help you price to move in the 4th quarter but not so low that you get the offer rejected by your lender. Likewise, for the buyer looking for a deal on a short sale, the devil is in the details and the safety provisions that your buyer broker includes in your contract offer. Don’t hesitate to call us if you need a referral for an experienced short sale savvy realtor!