The Obama administration will soon propose a new standardized short-sale plan. The new plan will introduce standardized documents, timelines and financial incentives that will be enforced throughout all financial institutions.
Those individuals who filed for a loan modification and were denied will be able to use this program in order not to have their properties foreclosed on. Before the property gets into the hand of their lender, consumers can negotiate short sale agreements with their lender. The bank will do further research and gather information that will determine if a short sale would be more profitable for them instead of a foreclosure.
In this case, the homeowner will need the expertise of a real estate agent to gather the necessary information that will increase their chances of the bank accepting the offer of a short sale. Then a consumer would need to find a buyer who has the financing available. For those who have a second mortgage or home equity credit line on the property need to think about how much that lender will receive from the sale. If the second lender disagrees with the amount they will not sign the agreement and the consumer will not be able to proceed with the short sale process.
The Obama administration will also include some incentives for homeowners who complete the short sale, mortgage services, investors, second-lien holders, and real estate agents. Homeowners will receive $1,500 in relocation fees, mortgage servicers might receive $1,000 per case, investors can get $1,000, second-lien holders will be given $3,000 and the real estate agents will continue to receive the same amount of commission they would get on a regular sale. Real estate agents are protected by the plan because the plan will not allow banks to cut their commissions. The only problem here is that second-lien holders usually have a higher cash value on short sales without the plan. If they deny the $3,000 and chose not to sign the agreement, the short sale will not go through. Unless, the second-lien holder is paid more than $3,000, there will be less chances of a short sale.