The Federal Housing Agency or more commonly known as the FHA has put out new rules aimed to quicken the pace of short sales in order to save many from foreclosure. For those of you who do not know what a short sale is with regards to real estate, here is a brief description. In a short sale, the bank holding the mortgage must agree to accept a price for the home that is less than what is owed in the mortgage. The problem with this method in recent years is that banks take so long to review the sales that the deals often fall apart and homes are repossessed before the short sales are approved.
The rules that are being established by the FHA will require lenders to review and respond to short sale requests within 30 days and make a final decision within 60 days. These new rules will go into effect in June 1 and the goal is for it to benefit all parties involved, the lenders and homeowners. The lenders are hurt in a foreclosure because they get back less than what they loaned out and they end up paying for property taxes, heating and maintenance costs. Homeowners are hurt by a foreclosure because of the multiple deliquesces that show up on the homeowners credit score, a short sale will only be a one-time hit on their credit.