The Obama administration has announced “enhancements” to its housing program that will make it easier for a homeowner to lose their home via short sale. Huh?
If this is part of a home retention program, I don’t get it. A short sale nets no money for the seller. It simply allows a buyer to get clear title to the property even when the existing lenders get less than they are owed.
The Obama program will also try to make it easier for homeowners to deed their properties to the lender without the necessity of a foreclosure.
It makes little difference to the former homeowner whether the mechanism of home loss is foreclosure, short sale, or deed in lieu. The home is gone, and the family may be sliding out of the middle class. I spend lots of time pointing out to those on the brink of losing their homes that living there payment free til the foreclosure may be the only return they will get on their investment.
The cynic in me wonders whether this program is simply another attempt to bolster the bankers, rather than the home owners.
A short sale cannot be considered a method to “bolster” the bankers, because an investor is in fact loosing money in the process. A short sale is a very intelligent option for people who simply cannot afford their mortgage payment regardless of how much modifying is done.
The HASP program is not designed to “give away” homes to people who cannot afford them, rather to help responsible consumers keep their home that they have worked hard to maintain. Too many people who took advantage of the “stated income” days, cannot afford their homes at all, so why is a short sale a bad option? I honestly believe that it is as much of a resolution as a modification, because one workout option is not going to “work out” for every borrower.
Truth be told, there are many people living in homes that they cannot afford, whether it be due to job loss, another hardship or just irresponsible behavior on the consumers end. One of the things that is going to help this nation pull out of this mortgage mess is honesty. Homeowners need to evaluate themselves and their financial situation, and determine if keeping their home is indeed the best option. If it isn’t, why put everybody through the time consuming and costly process of a foreclosure? Who wins during that process? Anybody familiar with one, know that it is a lose-lose-lose situation, not only for the homeowner, but for all parties involved.
A short sale or Deed in lieu is in fact the least painful option for consumers who are unable to afford their property, and need to get out of where they are, and simply start again. I would think that lenders hesitation to approve short sales, would confirm that bankers are not making a profit, since that tends to be their ultimate goal.