I’ve been so excited about the new Government Short sale program. But the improvements have been so slow- April 10th is when I understand the servicers will have to comply, so they only have a couple months left to get their act together!
Fourteen servicers, including the five largest, signed contracts and began modifications and refinancings under MHA. Between loans covered by these servicers and loans owned or securitized by Fannie Mae or Freddie Mac, more than 75 percent of all loans in the country are now covered by the Making Home Affordable Plan. In light of the fact that some homeowners still can’t afford their homes after a loan modification, the government is now creating a program that would encourage banks to accept a short sale or deed-in-lieu rather than foreclosing.
They have also out a streamlined short sale process to help short sales close faster. Right now it can take at least 2 months to close a short sale. 4-6 months is typical.
Who Will Qualify
The qualifications for Making Home Affordable still apply. You must be eligible for a loan modification under the current plan, but unable to meet the new payments. In the Sacramento area, only 8% of HAMP loan mods are actually working to provide a long term solution. Failure is common because many borrowers have seen payments stay the same or even go up after fees and past due balances are tacked onto the loan balance. Under the MHA plan, you must be the owner-occupant of the home and be current on your payments. The original plan only modified loans up to 105% of the original loan amount. It’s unclear whether the new plan would include homes that have lost significantly more value, which is typically the reason for the short sale in the first place.