Houses for Sale in San Diego Says New Short Sale Rules Should Help Distressed San Diego Homeowners
Apr 27th, 2010 by Kathleen Behrens
Houses for Sale in San Diego- New changes to the short sale process, which became effective as of April 5, 2010, are expected to not only provide much needed financial relief for distressed San Diego homeowners, but also will increase the inventory of houses for sale in San Diego. This is welcome news for prospective San Diego homeowners who have had a limited supply of houses for sale in San Diego from which to select.
Under the federal government’s Home Affordable Foreclosure Alternatives Program (HAFA) banks are now required to offer a short sale option to San Diego homeowners who have requested home loan modifications, but were deemed ineligible. The new rules have been designed to speed up and simplify the short sale process of San Diego homes for homeowners who do not qualify for loan modifications and cannot make their monthly mortgage payments.
Previously lenders were reluctant to approve short sales of San Diego homes for homeowners whose mortgages are underwater. A mortgage is considered underwater when the value of the home is less than the amount the homeowner owes on the mortgage. A short sale occurs when the lender agrees to the sale of the house for less than the amount due on the home loan. Since lenders lose money when homes are sold as short sales, they frequently decide not to approve the short sale of a home. Without lender approval for a short sale, distressed San Diego homeowners who do not qualify to receive home loan modifications are left with little or no recourse and often face losing their San Diego homes to foreclosure.
Money from the federal government’s HAFA loan modification program has now been earmarked to provide financial assistance and incentives for San Diego homeowners, mortgage servicers, and second lien holders. Second lien holders also have the power to prevent short sales as a means of leverage for negotiating payment of the money owed to them. The new HAFA provisions include payments of up to $6,000 to second lien holders to encourage their cooperation in short sales of San Diego homes. A $1,000 payment has been designated for mortgage servicers, and a $3,000 moving allowance has been allocated to assist San Diego homeowners, who sell their San Diego homes in a short sale, with relocation expenses.
Another new short sale rule, which should help facilitate the short sale process for San Diego homes, requires banks to approve the seller and the listing price for the San Diego home before it is listed for sale. Previously, first the San Diego home was listed for sale. When an interested homebuyer was located, then an offer for the sale of the house in San Diego was submitted to the lender for approval. This is where the short sale process would become bogged down for several months. As lenders lagged and dragged their feet, prospective San Diego homeowners would continue their search of houses for sale in San Diego. If the bank ever did get around to approving the short sale, chances were usually by then the homebuyer had moved on and purchased another house for sale in San Diego.
This meant the poor, distressed San Diego homeowner would have to begin the painful and arduous short sale process again and struggle to make his or her San Diego home loan payments while seeking out another homebuyer. Then a new offer had to be negotiated to determine the sales price of the San Diego home and once again be submitted to the bank for approval. The new procedure of requiring lenders to approve the seller and set the minimum acceptable sales price for the house before it is listed for sale will help streamline the short sale process for San Diego homes and reduce stress for both current and prospective San Diego homeowners.
The new rules for short sales of San Diego homes will not only encourage cooperation among the involved parties and provide financial relief for distressed San Diego homeowners, but they will also increase the inventory of houses for sale in San Diego. By reducing the number of San Diego foreclosures, the new rules for short sales will bring additional stability to the San Diego real estate market.
If you have questions about the short sale process or are interested in the possibility of a short sale for your San Diego home, contact San Diego Realtor and Broker Russ Petrone of Petrone Properties Real Estate Associates at 858-259-1000 for a free, no obligation consultation. With 25 years of real estate experience, Russ has the knowledge, skills, and expertise to help you obtain the highest price possible from a short sale of your San Diego home. Visit the Petrone Properties website today to receive a complimentary Comparative Market Analysis to determine the current market value of your San Diego home.