According to a US Treasury spokeswoman, The Treasury will soon finalize the long awaited plan to expand its incentives for mortgage companies to use “short sales” as a way to stem a rising tide of foreclosures.  Short sales eliminate the problem of negative equity and help alleviate fears that a second wave of foreclosures is in the pipeline.  Only 12 percent of eligible homeowners have had their loans reworked, leaving millions more foreclosures to come.  Lisa Marquis Jackson, a vice president at Irvine, California-based John Burns Real Estate Consulting says, “What they are trying to do is move some of these foreclosures in the pipeline, and bring them to a resolution before (foreclosure) happens. 12 percent of these being modified isn’t enough to clean them up.”

 How will these incentives help?  Negotiating a short sale can take four to five months to complete, and buyers often walk away from sales because banks are slow to respond, or balk at the offer.  The incentives will be calculated on recent declines of local home prices and average home prices in these markets, the Treasury said in May.  They would add to other incentives that servicers can receive for reducing loan payments.  In May, the Treasury proposed that lenders would receive $1,000 for allowing the owner to sell the house for less than the amount owed on the mortgage, and accepting the proceeds as full repayment.  They will also receive $1,000 for accepting a similar deed-in-lieu transaction, in which the deed is simply transferred to the lender instead of going through a costly foreclosure.  Borrowers who agree to short sales or deed-in-lieu deals can receive up to $1,500 in closing costs.  Treasury also said it will pay second lien holders up to $1,000 to relinquish  their claims in such transactions.

 There are many ways to get your home sold so you can get out from under that mortgage and move on with your life.  Call us at 301-785-5889 today.  We’ll listen to your specific situation and offer some options.

Remember – we’re here to help.

[Source: Chris McLaughlin newsletter]