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Professional, ethical mortgage modification firms and real estate agents who have dared to list short sale properties are eagerly anticipating the implementation of a new federal law that will facilitate the sale of these distressed properties.
It's well known that they depreciate local property values and contribute to neighborhood and community blight. Those of us experienced in distressed mortgages, whether a distressed homeowner, real estate agent, or mortgage modifier are well aware of the reluctance and refusal of mortgage lenders and servicers to timely liquidate these properties.
It is a documented fact that the number of adjustable rate mortgages coming due for interest rate adjustment in 2010 will exacerbate the distressed mortgage situation to more than twice the level seen so far. Mortgage modification and short sale reform is critical.
The federal Home Affordable Foreclosure Alternatives Act (HAFA) will become effective on April 4, 2010. This companion legislation to the Home Affordable Mortgage Plan (HAMP) enacted last March will duplicate most of the guidelines of HAMP for short sales and fix many of the problems that have become evident with HAMP. Lenders are going to increasingly feel the heat of this legislation as time passes from now on.
Most notably, lenders will be required to respond to short sale offers in a timely manner, (supposedly 10 days). Any real estate agent experienced in short sales can cite lenders' tendency to not respond to short sale purchase offers as the biggest reason for failed short sale property sale closings. Motivated bargain property buyers regularly tire of the lack of response and abandon their purchase efforts.
Agents are also guaranteed the standard 3% listing and 3% buyer's commission. The other often-cited complaint by real estate agents is that lenders typically low-ball the agents for their sales commissions.
Homeowners are promised to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed). The market for negotiating second mortgages is heating up already.
For a professional mortgage modifier or short sale consultant the application process for distressed mortgage relief will be identical. This means that the distressed homeowner counseling process now takes a much more personal, beneficial and efficient approach.
The first question that should be addressed in a distressed mortgage consultation should be the wishes, wants and desires of the distressed homeowner. The conversation can now start with, “In a perfect world, would you modify your mortgage to new, affordable, permanent terms so you can keep your home? Or do you want to liquidate your mortgage obligation and preserve your eligibility to purchase a home in the near future?” Outlining a plan of action in solving a distressed mortgage, (and indeed any distressed debt), is always easier once the emotional concerns are addressed first.
Hopefully, the distressed homeowner can be assured, and realize, that foreclosure; and probably bankruptcy, are the last resort. This will benefit the homeowner, community, and country as a whole.
Chris Dix writes a blog about mortgage modifications and short sales at www.mortgage-mod-monster. A linked page details the complete new Home Affordable Foreclosure Alternatives guidelines.
It's well known that they depreciate local property values and contribute to neighborhood and community blight. Those of us experienced in distressed mortgages, whether a distressed homeowner, real estate agent, or mortgage modifier are well aware of the reluctance and refusal of mortgage lenders and servicers to timely liquidate these properties.
It is a documented fact that the number of adjustable rate mortgages coming due for interest rate adjustment in 2010 will exacerbate the distressed mortgage situation to more than twice the level seen so far. Mortgage modification and short sale reform is critical.
The federal Home Affordable Foreclosure Alternatives Act (HAFA) will become effective on April 4, 2010. This companion legislation to the Home Affordable Mortgage Plan (HAMP) enacted last March will duplicate most of the guidelines of HAMP for short sales and fix many of the problems that have become evident with HAMP. Lenders are going to increasingly feel the heat of this legislation as time passes from now on.
Most notably, lenders will be required to respond to short sale offers in a timely manner, (supposedly 10 days). Any real estate agent experienced in short sales can cite lenders' tendency to not respond to short sale purchase offers as the biggest reason for failed short sale property sale closings. Motivated bargain property buyers regularly tire of the lack of response and abandon their purchase efforts.
Agents are also guaranteed the standard 3% listing and 3% buyer's commission. The other often-cited complaint by real estate agents is that lenders typically low-ball the agents for their sales commissions.
Homeowners are promised to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed). The market for negotiating second mortgages is heating up already.
For a professional mortgage modifier or short sale consultant the application process for distressed mortgage relief will be identical. This means that the distressed homeowner counseling process now takes a much more personal, beneficial and efficient approach.
The first question that should be addressed in a distressed mortgage consultation should be the wishes, wants and desires of the distressed homeowner. The conversation can now start with, “In a perfect world, would you modify your mortgage to new, affordable, permanent terms so you can keep your home? Or do you want to liquidate your mortgage obligation and preserve your eligibility to purchase a home in the near future?” Outlining a plan of action in solving a distressed mortgage, (and indeed any distressed debt), is always easier once the emotional concerns are addressed first.
Hopefully, the distressed homeowner can be assured, and realize, that foreclosure; and probably bankruptcy, are the last resort. This will benefit the homeowner, community, and country as a whole.
Chris Dix writes a blog about mortgage modifications and short sales at www.mortgage-mod-monster. A linked page details the complete new Home Affordable Foreclosure Alternatives guidelines.
