Thursday, November 7, 2013

ARE SHORT SALES A VIABLE REAL ESTATE PROCESS IN THIS ECONOMY?

Many people are not aware of the changes that have occurred in the short sale arena. Brian Meara and Jason Lucchesi recently held a webinar where they discussed the changes resulting from The National Standard Short Sale Policy, Federal Housing Finance Agency (FANNIE/FREDDIE), November 1, 2012. Many people are unaware of the changes and keep thinking that you have to hold property for 90 to 180 days before you can sell.

I am not an expert on this subject so you should check out the source and the news release from August 21, 2012 from Federal Housing Finance Agency . You may find two additional links to be of interest as well:

The changes by FHFA have helped to standardize the short sale policy and process and works to consolidate existing short sale programs thus making it easier to work with short sales:

1)    “Fannie Mae and Freddie Mac will waive the right to pursue deficiency
judgments in exchange for a financial contribution when a borrower has
sufficient income or assets to make cash contributions or sign promissory
notes”

2)    Special treatment for military personnel.

3)    Clarity on foreclosure sale process.

4)    If you buy the property in a short sale and the house was backed by  FREDDIE MAC or FANNIE MAE, you must hold the property for 30 days before re-selling.

5)    If you sell between day 31-89, there is a 20% CAP on the profit.  That means if you purchase the property for $200,000, the maximum you can sell for is $240,000 without incurring the wrath of FHFA.

6)    If you hold the property and sell after 90 days on day 91 there is no cap on the profit.

7)    There is a $6,000 maximum on Junior Lien payout. You no longer have to fight with or have the junior lien holders holding you up for a bigger take during the short sale process.

8)    You no longer have to be behind in your payments in order to qualify to sell your home through a short sale, but you do have to have a “justifiable hardship”. To name a few, the document outline these hardships as “Common reasons for borrower hardship are death, divorce, disability, and distant employment transfer or relocation.”

The webinar was also an explanation of a legal, but not well understood process for maintaining and equitable interest in the property and being able to market the property without actually buying it. If you get a chance to sit on one of their webinars, I would suggest that you do.

So the answer is yes. Real Estate short sales are still a viable process in the current real estate market, but it is becoming a bit harder to find the short sale-able homes as the market shrinks and the values raise. Short sales won’t be going away any time soon.

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