NEVADA COUNTY SHORT SALE RULE CHANGE JUNE 2012

Federal regulators have hopes of greatly streamlining the short-sale process beginning next month which will help many Nevada County residence who wish to purchase a home through the short sale process. (In a short sale, a lender agrees to accept less than the balance on a mortgage.)

Starting June 15, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, will require both agencies to give short-sale buyers a final decision within 60 days.

Click here for an explanation to the IRS short sale tax rule change.

Fannie and Freddie must also respond to initial requests for a short sale within 30 days of receiving the buyer’s submission.

“Short sales are huge right now,” said Peter Spino, the foreclosure services manager for Community Housing Innovators in White Plains, N.Y., a housing counselor certified by the Department of Housing and Urban Development  told the New York Times. Distressed homeowners often prefer them to a foreclosure, he noted.

Expedited sales as a result of the new directive will benefit the entire housing market, said Michael McHugh, the president and chief executive of Continental Home Loans and the president of the Empire State Mortgage Bankers Association, a trade group. They could also remove some risks for buyers — many of whom previously had to wait months for a decision and then ended up not getting the house they wanted.

In March, the most recent month for which data were available, short sales represented more than 14 percent of existing home sales, according to CoreLogic, a data analytics company, compared with 12 percent for all of 2011 and about 10 percent in 2010. And as the number of short sales has risen, foreclosures have fallen. Completed foreclosures represented 25.3 percent of home sales in March, versus 34.9 percent in all of 2011 and 42.7 percent in all of 2010.

Lenders favor short sales because they are less costly and more efficient than foreclosures. Yet the homeowners, trying to exit as gracefully as possible, never know how long the process will take or how badly their credit will be hurt.

Scott Hopper - Realtor, 530.477.2277