Short Sales on home are actively encouraged and pushed by Treasury Department as of April 5th.
We hear new buzz words these days that we haven’t heard in the past.¬† In the world of real estate we hear about “short sales”.¬† A short sale is when a seller is selling a home for less than what is owed on it.¬† I know this sounds like a fairy tale but it’s true, they are happening all across the country today.
So what happens when an offer is made on a property that is less then the mortgage payoff?¬† First the mortgagee must approve the amount, what happens to the difference?¬† The lender writes it off.¬† Banks are not as quick to approve short sales due to the fact that what they write off now goes on the negative side of their books and this is something they are trying to avoid.
The problem with short sales have been the time it takes for lenders to approve the sale.¬† I have heard of some sales taking upwards of six months to hear any news from the lender. The Treasury Department has a new rule they are going to implement this April that should speed up the process. This new rule goes into effect on April 5th.
Sellers, Realtors and buyers are happy to see the new rule, most banks are probably not as enthusiastic about it.¬† The rule simply says a bank must respond within ten days of an offer being made.¬† We will see how this plays out after April 5th.