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Government Plan Will Help Homeowners Avoid Foreclosure

 

Government Plan Will Help Homeowners Avoid Foreclosure

Homeowners across the United States who are undergoing financial hardship could avoid foreclosure under a plan announced by the U.S. Treasury Department. Under the plan, which is in effect as of April 2010, millions of at-risk homeowners could be free of mortgage debt without going through foreclosure, and given $3,000 for relocation.

The Treasury plan provides incentives for lenders and homeowners to complete Short Sales – transactions in which the lender agrees to a sale price that's less than the borrower owes on the mortgage. Short Sales are preferred to foreclosure because homeowners may take less of a hit on their credit and lenders realize a smaller loss.

However, Short Sales often get bogged down because of the complicated nature of the transaction. Deals can fall through because the process takes too long.

Under the plan, which speeds up and simplifies the Short Sale process, mortgage servicers have 10 days to approve or reject a request for a Short Sale. And when the sale is done, the borrower must be fully released from the debt of the primary mortgage.

Read more details of the Treasury plan.

The plan is a positive step for the real estate market and for communities across the country, RE/MAX International CEO Margaret Kelly says. RE/MAX has been advocating simplified Short Sales for more than a year and has been actively working with U.S. government officials, including legislators and the Obama administration.

"Foreclosures have played a major role in keeping housing values down," Kelly says. "This will help the market return to normal, stabilize prices, improve neighborhoods and prevent hundreds of thousands of homeowners from suffering the agony of being evicted from their homes. It should also play a role in the continued recovery of the economy."

Fannie Mae and Freddie Mac have issued their own Short Sale guidelines, which are similar to the Treasury plan, but different in some respects.

Read more about the Fannie Mae and Freddie Mac plans.

If you've fallen behind on your mortgage payments or received a pre-foreclosure letter from your lender, a RE/MAX Associate can help.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
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