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Not a day goes by where we don't read of new programs being instituted to aid rid our economy of foreclosures and distressed properties.
Much to the chagrin of banks, short sales are getting more and more publicity and the monetary blessings of being used to stay away from foreclosure altogether.
One positive aspect of a short sale is that it permits consumers to leave their house while eliminating a foreclosure type entry on their credit report.
Plus, the short sale can do a lot for the bank by helping them save money rather than going the more costly procedure of foreclosure.
Most St Louis mortgage owners would think that that in itself should make them a bankers favored option. But surprisingly it is not.
As a rule of thumb, shorts sales on the average can take 2 months or longer to be completed which can become annoying to both banks and homeowners.
One more issue banks and lenders run into is that in many cases, there're other liens being held on a property which again can be expensive.
With feeling the financial pinch and loss of business, the National Association of Realtors strongly pressured the Treasury Department to come up with a new program designed to basically promote the use of short sales.
The new kid on the block came to known as HAFA or the Home Affordable Foreclosures Alternatives which went into effect April 5, '10.
There are 4 main points to HAFA's terms for short sales:
I. Strict deadlines for certain areas of the process
II. Financial inducements - Incentives will include $3000 help for moving costs for house owners; $1500 for mortgage servicers; and up to $2000 for mortgage security investors who give as much as $6000 of the selling proceeds to other lien holders
III. Before any listing of said assets occurs, consumers need to be allowed pre-approval status for the short sale process
IV. By requiring that home owners be totally released from future liability for the first mortgage debt
Banks and lenders have ten business days to decide whether they'll approve or deny this short sale application process for said customer according to the St Louis finance review.
There are current statistics showing that banks already have an immense inventory of near 1100000 million foreclosed houses.
In fact, the numbers heading for foreclosure or the short sale procedure will be steadily rising.
The Mortgage Bankers Association (MBA) said more than 9% of homeowners were behind minimum one payment on their St Louis loan in the fourth quarter of 2009.
This number pales in contrast to what other mortgage statistical providers report. They say the number is actually close to 5 million who're either behind or already in foreclosure.
The problem that HAFA faces is that their financial program can't assist many of those houses facing this dilemma.
St Louis mortgage lenders who've actively participated in the federal government's effort to encourage mortgage relief for distressed homeowners with (HAMP) the Home Affordable Modification Program are also asked to participate in the new HAFA program too.
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