NorthJersey.com has posted an article that discusses how “short sales” can actually take quite a long time. A short sale becomes an option when the seller’s lender agrees to accept less in payment than the homeowner owes on the mortgage.
As a buyer, you can get some amazing deals from short sales. However…
“It’s like a gamble,” said Jan last week. “You have to go through multiple stages, and at the end they [the seller’s lender] can say no. You can win; you can lose.”
People who are interested in buying a home through a short sale often find that lenders make the process exceptionally difficult. They can ignore you for months, argue behind your back and in the end try ask you to give more money that originally.
This month, the federal government aims to limit those behaviors as it rolls out guidelines to streamline the short-sale process. The Home Affordable Foreclosure Alternatives Program – or HAFA – would require the seller’s lender to agree on what price it would accept before the house is listed for sale; would set clear and short deadlines for the seller and lender to respond; and would offer cash incentives to get the deal done.
To qualify for this, homeowners must be a part of the Home Affordable Modification Program, or HAMP, which is one of the government’s loan modification efforts. Homeowners who applied for but were turned down by HAMP, or are still unable to meet the requirements of their mortgage modification, are qualified for HAFA. HAFA is looking to institute a concrete deadline to force short sales to move along at a reasonable pace and reduce fighting amongst lien holders.
Yet another difficulty with the short sale is that many sellers have not only primary mortgages, but also multiple home equity loans.
“Some of the problem is dealing with second mortgages and third mortgages,” said Nick Tselepsis of Nicholas Realty in Clifton. “They [secondary lien holders] have to agree to the short sale to clear the title, and they play so tough.”
Giannantonio said: “Sometimes the second-lien holder holds things up. The first-mortgage holder may say, ‘Give them a thousand,’ and the second says, ‘No, we want $5,000.’ “
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