Yesterday we told you about banks beginning to offer cash and principal reductions for delinquent homeowners to do short sales rather than go into foreclosure. It seems like short sales are getting more and more press all of a sudden.
Earlier this week Freddie Mac said it will begin to offer larger incentives for mortgage servicers to complete short sales, as part of the Home Affordable Foreclosure Alternatives program. (HAFA is designed for homeowners who are in trouble, but who don’t qualify for a loan modification. It’s goal is to get them and their lenders to do short sales.)
“Borrowers and servicers may receive incentives for successfully closing a HAFA Short Sale or HAFA Deed-in-Lieu,” says Freddie. And soon those incentives will increase. By how much? To whom? Freddie hasn’t said. But the message is clear: Short sales are better than foreclosures.
You can almost see the light bulbs above their collective heads — banks, it seems, are beginning to realize that it’s better for everyone (especially them) to do a short sale than to foreclose on a homeowner.
Now banks have decided the deals [short sales] are faster and less costly than foreclosures, which have slowed in response to regulatory probes of abusive practices. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives.
Those are the words of Bill Fricke, senior credit officer for Moody’s Investors Service. His point: If lenders can’t fast-track their foreclosures, short sales are a better option. Imagine that.
Faster short sales would reduce foreclosures
No one likes foreclosures. That's why Virginia REALTORS® support federal legislation to speed up the short-sale process.
It's impossible to talk about real estate in Virginia—or any other U.S. state, for that matter—without bringing up the subject of foreclosures. While experts disagree on exactly how much damage foreclosures cause to neighborhoods and home sales, there's no denying that the effect is generally negative. Foreclosures, truth be told, hurt everyone and benefit almost no one.
So what's the status of foreclosures in Virginia today?
Short sales have become common transactions for most Realtors®. These lengthy transactions are always a challenge to take on. But those Realtors® who have rolled up their sleeves are realizing the benefit of gaining expertise on these time-consuming transactions. The end result is better service to your clients and better business for you in a trying market.
This is your one-stop-shop to access a variety of resources to make you an expert on short sales and other complicated and distressed transactions.
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