Inquiring minds are reading that, once again, the Feds could be finally understanding that the distressed real estate market can not be gamed higher with incentives:
Loan servicers participating in the Obama administration’s short-sale incentive program are being given more freedom to pay off second-lien holders, but will be held to stricter timelines for approving or rejecting short sales and forbidden from deducting vendor expenses from commissions paid to real estate brokers.
A new directive from the Treasury Department, which administers the Home Affordable Foreclosure Alternatives Program (HAFA), lifts a cap that had restricted loan servicers to paying second-lien holders no more than 6 percent of outstanding loan balance in exchange for releasing subordinate liens.
It’s the second significant revision of the HAFA program since it launched at the end of 2009. Initially, the cap on payoffs to second-lien holders was 3 percent, with an aggregate total of no more than $3,000. The cap was increased to 6 percent with an overall limit of $6,000 in March 2010.
This is very good news. Anything that ‘streamlines’ selling distressed property is a good idea. Also, it is a fantastic sign that they are getting rid of ‘caps’. The market is what it is.
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