My Real Estate Blog

• Borrowers qualify under FAP if they meet the minimum eligibility requirements for the Making Home Affordable Program but don't qualify for a loan modification or do not successfully complete the trial period.  Before proceeding to institute foreclosure, servicers are required to determine if a short sale is an appropriate alternative.
• Incentives are provided for completion of a short sale or deed-in-lieu of foreclosure as follows:  (a) $1,000 to loan servicers for a successful short sale or deed-in-lieu of foreclosure; (b) $1,500 to borrowers to help with relocation expenses; (c) up to $1,000 toward the cost of paying junior lien holders to release their liens ($1 from the government for each $2 paid by the holders of the senior lien to the second lien holders.
• Standardized documents will be utilized for short sales to minimize complexity and to encourage the use of the short sale option.
• Loan servicers must provide borrowers at least 90 days to market and sell the property, or up to one year, depending on market conditions.  The property must be listed with a licensed real estate professional with experience in the neighborhood.
• The short sale agreement must specify the reasonable and customary real estate commissions and the costs that may be deducted from the sales price and the servicer must agree not to negotiate a lower commission after an offer has been received.
• Servicers have the option to require that the borrower agree to deed the property to the servicer in exchange for a release from debt liability, if the property does not sell within the time allowed in the short sale agreement.