The Attias Group Real Estate is proud to join the National Association of Realtors (NAR) in praising the Federal Housing Finance Agency (FHFA) for issuing new rules governing short sales. According to the FHFA mortgage servicers must now acknowledge receipt of short sale purchase offers within three business days; respond to short sale requests within 30 days (with a possible 30 day extension); and make a final decision within 60 days of receiving purchase offers. This new program will dramatically shorten the transaction time on a distressed mortgage situation.
In a short sale, a homeowner sells the property below what is owed on the mortgage, and the lender agrees to accept the lower amount. These new rules will lessen the transaction time, which averages more than 120 days. A major benefit of this more expedited process calls for lenders to use standardized paperwork and to establish an acceptable sale price before the home is put on the market. Sellers will be allowed at least 120 days to market the home and possibly as long as one year, without the fear of foreclosure.
In conjunction with this new program from the FHFA, the Internal Revenue Service (IRS) has announced a short term program that ignores lender-forgiven mortgage debt from now until December 31st 2012. The IRS is allowing homeowners to go through a short sale or foreclosure, on a primary residence without any tax consequences, provided the lender officially releases the debt. This is significant, as the rules change on January 1st, 2013: the amount the lender forgives, in either a short sale or foreclosure, on a primary residence will be taxable on federal income taxes.
The Attias Group Real Estate believes with these new rules and programs in place the lower quartiles of the market will see increased activity throughout 2012 through the expedited flow of short sale properties. Over 2300 homes have sold year-to-date, in Middlesex County under $500,000. We believe these new rules from FHFA and the IRS will help flush out under water properties and their constant negative value impact on the rest of the market. Year-to-date 1097 homes have sold in the $500,000 to $1.5 million price range in Middlesex County; this is an increase of 23.9% over the same time period last year. The Attias Group Real Estate attributes this significant increase due to the activity taking place in the lower sector of the market. Therefore allowing people to take advantage of the favorable market conditions, and buy up, at what is the tail end of a buyer’s market.