Credit card sharks circling
(Be careful. What happens to your mortgage also happens to your credit score.)
by Broderick Perkins
© 2008 DeadlineNews.Com
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - The U.S. Treasury is poised to announce a finalized plan to expand mortgage relief efforts to include short sales.
A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance.
It's a strategy to avoid foreclosure, but banks have been more likely to let a home go into foreclosure, rather than short sell it, even if it means holding the property during moratoriums set by some jurisdictions.
That's because short sale bids often come in well below the last appraisal, real estate agents don't want the extra work involved and buyers fear a four-to-five month transaction period that could end in a no-deal scenario.
To help move more distressed properties through the clogged pipeline, the Treasury, under the Making Home Affordable's Home Affordable Modification Program (HAMP) is expected to announce a $1,500 closing cost incentive for those who agree to short sales or deed-in-lieu deals (the deed is transferred to the lender, avoiding the more costly foreclosure proceeding).
The Treasury will also pay the lender $1,000 for accepting a short sale or deed-in-lieu deal.
Earlier this year when the plan was first announced, there was also a provision to pay second lien holders up to $1,000 to relinquish their claim in such transactions.
(Be careful. What happens to your mortgage also happens to your credit score.)
Thus far, refinancing Fannie Mae or Freddie Mac mortgages under the Home Affordable Refinance Program (HARP) and HAMP mortgage modifications have been the "go-to" foreclosure options among federal mortgage relief programs.
Some 260,000 homeowners have refinanced under the HARP program since January, according to the Federal Housing Finance Agency.
FHFA also said during the second quarter this year there were 11,700 short sales and 202,200 trial loan modifications under government programs.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
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• National Real Estate Examiner
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