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 April 04, 2010

NEW PROGRAM WILL SIMPLIFY SHORT SALES
As of April fifth, purchasers who are qualified will gain from a new program set up by the Federal Government that will simplify and shorten the length of time that it takes to accomplish a short sale. This program is called "Home Affordable Foreclosure Alternatives" or "HAFA" and will provide monetary incentives to lenders to increase the number of short sales that they do. Buyers should also find negotiating a distressed property purchase much easier to accomplish.

At the present time, without this new program in effect, a lender would usually wait until a seller who was in distress produced a possible purchaser who offered an amount less than that remaining on the balance of the loan before requesting an appraisal or a Broker's Price Opinion (BPO).

Once this new program is in place, lenders will order the BPO prior to the listing of the home. Sellers will also have a share in the lowest net amount that the lender finds acceptable. Should the seller procure a purchaser who presents an offer that is equal to or more than the approved amount, the lender must accept that offer (or a higher one) within ten days.

While sellers are obligated to provide the purchaser with a clear title under the rules of HAFA, due to the fact that quite a number of distressed properties come with various financial problems attached such as second mortgages, liens or unpaid property taxes, the phrase "Caveat emptor" must apply. In other words, the purchaser must make it absolutely clear in the contract that they will not be responsible for any issue that may prevent the issuance of a clear title.