WASHINGTON (Associated Press <http://www.statesman.com/business/content/business/stories/other/2009/12/02/1202shortsales.html> ) – Guidelines for short sales to help homeowners who need to sell their houses but cannot secure contracts at a high enough price to pay off their mortgages have been revised by the Treasury Department.
The plan was created to aid homeowners whose income or debt is too low to qualify them for a loan modification under the Making Home Affordable program. The plan establishes timetables, a standard process and documents, and cash incentives for participation.
The new guidelines require the:
* property be the homeowner’s primary residence;
* homeowner be delinquent on the mortgage or likely to default;
* loan was made before Jan.1 this year and is less than $729,750; and
* borrowers’ total monthly mortgage payment exceeds 31 percent of their before-tax income.
The guidelines are expected to reduce paperwork by requiring mortgage companies to use the financial and hardship documents submitted by borrowers seeking a loan modification. To speed up the approval process, mortgage companies will have to approve short-sale terms, including the minimum listing price, before the house is put on the market.
Mortgage companies will be required to offer the program as of April 5, 2010.