Don't let the bank foreclose...do a short sale

By Les Christie, staff writer March 29, 2010: 2:30 PM ET

NEW YORK (CNNMoney.com) -- Short sales are the hottest thing going in the distressed-property market, and the trend is expected to get even hotter in coming weeks and months, when the government starts handing out cash to encourage lenders to close these deals.

"In the past, many short sales would never come to fruition and the ones that did averaged over half a year to complete," said Chris Saitta, CEO of Equator, which produces short sale software. "Things would just fall into a black hole and not come out again".

But, recently, a few things have happened: 1) the banks have finally begun to get an organized, trained staff and 2) the banks may be realizing that they lose less money in a short sale as opposed to a foreclosure 3) the govt has just come out with the HAFA program that incentivizes the lender, the investor and the homeowner when they complete a short sale according to HAFA guidelines. Under the new Home Affordable Foreclosure Alternatives program, borrowers will earn a $3,000 "relocation incentive" and servicers will get $1,500 for handling a short sale. And the investors who actually own the mortgage notes will get $2,000 in exchange for sharing proceeds of the short sales with any second-lien holders. And, finally, those second lien holders will receive up to $6,000 for releasing their claims.

Lenders participating in the program must also determine the market values of properties early on and inform the owners of just what price they're willing to accept. Then, if owners come back to the lenders with bonafide offers, they have to be accepted within 10 days. Also, not mentioned in the article was the requirement that the lienholder release the homeowner of any deficiency.

If you are behind on your mortgage, or believe that you will fall behind soon and your home is worth less than you owe...please call me 561-602-1258. Or email me with your contact information if you prefer. Just don't ignore the situation, get in front of it and get your lender working with you, not against you.