New Short Sales Rules to Increase Eligibility For Palm Beach Homeowners

November 02, 2012 (Press-News.org) New Short Sales Rules to Increase Eligibility For Palm Beach Homeowners

According to the latest data, the U.S. real estate market remains catastrophic. Foreclosure and underwater mortgages all across the country are, unfortunately, still commonplace. In Palm Beach County Florida alone, roughly 44 percent of homeowners have mortgage loans for more than what their house is worth.

Fortunately, short sales are one avenue borrowers can utilize to help get out from an underwater mortgage or one they can no longer afford to pay. Despite this option, short sales haven't always been easy for homeowners. New federal rules, however, recently released should soon make it much easier for those, including Florida homeowners, wishing to pursue a short sale and get out from under a detrimental mortgage.

What is a Short Sale?

A short sale is an agreement between the homeowner and their mortgage lender where the lender agrees to accept less than what the homeowner owes on their real estate mortgage. This typically happens when a homeowner is either deficient on their mortgage payments or can no longer afford to pay the monthly payments on the original agreement.

For instance, a lender agrees to sell a home for FMV for $350,000 even though the homeowner owes $500,000 on the mortgage note.

A short sale is often used in lieu of foreclosure because it benefits both the homeowner and lender. It usually saves both the homeowner and lender additional fees that go in tandem with repossessing a property through foreclosure.

The New Short Sale Rules

In the past, short sales were time consuming, strict and unpredictable. Now, the new rules put forth by the Federal Housing Finance Agency should streamline the process of short sales to help all homeowners sell their homes--not just those who are behind on their mortgages.

The new rules include:
-Giving mortgage servicers of Fannie Mae and Freddie Mac the authorization to approve short sales to borrowers who aren't delinquent on their mortgage payments, but are simply underwater or can no longer afford to pay on their loans.
-Allowing servicers to act directly on the short sale request without additional approval from Fannie or Freddie.
-Offering homeowners with second mortgages up to $6,000 to give to second-lien holders that approve any short sales.
-Providing for exceptions to military personnel planning to transfer to another post.

To qualify for a short sale under the new rules, however, homeowners must have loans backed by Fannie Mae or Freddie Mac. Additionally, they will have to prove a hardship. They can include but are not limited to a divorce, death of a borrower or co-borrower, long-term or permanent disability, or job transfer.

Palm Beach Florida homeowners interested in learning about the new rules and how they can benefit their situation are encouraged to consult with a real estate attorney.

The new rules will go into effect Nov 1, 2012.

Article provided by Law Offices of Larry E. Bray, P.A.
Visit us at http://www.braylawoffices.com