The real estate economy in Lee County has been hit harder by foreclosures than most other
marketplaces in the United States. One foreclosure alternative is the proper utilization of a short sale
with proactive guidelines to increase the chance for a successful loan workout.
Recently, the Obama administration, through the Treasury Department, created a modification to its
existing mortgage foreclosure program, "Making Homes Affordable", which purportedly "streamlines"
the short sale process to assist lenders, homeowners and real estate professionals in closing short
sales. Unfortunately, they have missed a great opportunity and the new guidelines fall far short of their
mark to accomplish the goal.
In a short sale, the purchase price of the property is less than the amount necessary to pay off the
mortgage. The lender must consider waiving the deficiency or negotiating with the borrower for a
settlement amount.
Currently, participants in short sales are frustrated with the process due to the amount of time to get a
short sale offer approved by the lender. During this long delay period, interest, taxes, insurance,
maintenance and expenses continue to increase.
The Obama administration, in an attempt to address this concern, created a program which will, sadly,
have no real positive effect on the problem:
1. The short sale seller must apply for and attempt to qualify for the mortgage modification program.
This is a flawed requirement that creates more red tape inasmuch as a short sale has nothing to do
with modifying a borrower's mortgage. In Lee County, the current loan-to-value ratio on most
distressed properties eliminates these borrowers from qualifying for the mortgage modification
program.
2. Borrowers with second home mortgages or investment properties are eliminated from the program.