I SERIOUSLY thought that our short sale days are really numbered, but base on what analyst and realtors are saying this year we would be flooded with short sale. I still don’t see it but that might be a good thing, it will signal the end to problem loans and borrowers. Once the market and consumers realizes that the whole foreclosure mess is behind us, then more buyers and sellers will come out of the woodworks and start to really jump start the economy.
Here’s are 5 reasons to why we might need to consider a short sale in 2013:
1.Short Sale Incentive Programs – There seems to be an exhaustive list of short sale incentive programs, but our all time favorite (expiring in September of 2013) is the Bank of America Short Sale Assistance Program. This program pays up to $30,000 in relocation assistance to certain (very strong word, because I have only seen one short seller getting this amount for relocation) short sale sellers at closing. There are other programs from Citibank and Chase, and there is also the Treasury’s HAFA program. Many borrowers who seek relief often get to take advantage of these great incentive programs. And, rumor has it that more incentive programs are on the way.
2.HARP 2.0 – Responsible borrowers who are desperate to get some relief may look into this loan modification program and then learn that they do not qualify or are not interested. So, here’s yet another faction of the market that may consider short sale as a viable alternative. It’s a great way to really cut your losses and never look back. I have been discussing new buying options with the homeowners that have short sale their homes in 2008 & 2009; they are actually able to buy now with the short sale being three years ago.
3.Fannie Mae and Freddie Mac Streamlined Short Sale Guidelines – The new guidelines that became effective on November 1, 2012 should improve short sale processing times for Fannie Mae and Freddie Mac short sales.
4.Tax Relief and Anti-Deficiency Waivers – You’ve probably heard all the hoopla about the Mortgage Debt Relief Act being extended through the end of the year. Additionally, there are other tax laws that could apply and provide forgiveness to certain short sale sellers. Many states also have anti-deficiency statutes that will protect short sale sellers from further collection of legal activity after their mortgages are forgiven in a short sale.
5. Once you have realized that your upside down property is not worth keeping, you will then realize that a huge burden have been lifted from your shoulders and that you can move on. There is no practical sense to keep on throwing money into a fire pit. This might be your last chance to consider this option if you absolutely have no other alternative.
Best decisions are made with practicality and sensible financial calculation, a home use to be a house that you had just bought and turned into a home. If this home becomes a burden and a bundle of debt to you, it’s time to make it into a lost business opportunity and cut your losses. You can always get back on your feet and start over in a couple of years.
For those who can actually afford these upside down mortgages and want to really keep their homes. You have to make sure you are looking at long-term recovery running 5-possibly 8 years depending on your location.
The government fiscal cliff issues are swept away for now, so you will start to maybe hear some news about the mortgage mess that is still in the air.
* * *
Thanks so much for your support and comments, please call Ken Go of 1st Innovative Finance at 562-697-7028 or write to [email protected].
Chinese New Year begins on February 10. It will also be the year of the snake.