I like it when our elected officials get excited about a program that helps homeowners and former homeowners in specific.
this bill introduced by Rep. Edolphus “Ed” Towns (NY-10) is a great idea…however, this proposed bill completely eludes the Short Sale. Not even mentioned?
Odd that the “Short Sale” which is the “responsible” approach to todays housing problems…simply working with your mortgage company to sell a home for less than it’s worth…and do it successfully is becoming a fairly streamlined process accepted by all banks, would not be seen in Mr. Towns proposed bill.
Mr. Towns proposes that we “reward” the homeowner that chooses “foreclosure” -vs- Short Sale and reward them…but leave the responsible folks that list their home for sale, show the home and sell it with no gain in their pocket, out of the equation.
You’re thoughts?
Here’s the article from NAR:
Bill Seeks 1-Year Cap on Foreclosure Deficiencies
A bill introduced in the U.S. House of Representatives Tuesday aims to limit and standardize the timeframe that a mortgage company can go after a home owner following a foreclosure for a deficiency judgment.
Known as the Fairness in Foreclosures Act of 2011, H.R. 3566, the bill seeks a one-year cap on any deficiency judgment, except in states that already have shorter time limits already in place. The bill also proposes that mortgage lenders not be allowed to go after “low-income” borrowers for a deficiency judgment.
Deficiency judgments vary greatly by states. In some states, when a bank does not recover the money owed on the mortgage after a foreclosure or short sale, the bank may pursue the former home owners and require them to make up the loss. In some states, lenders can pursue borrowers for deficiency judgments up to six years after a foreclosure sale, HousingWire reports. Other states, such as California and Nevada, have banned deficiency judgments in some circumstances.
“A deficiency judgment after foreclosure seems to be one of the greatest injustices that occur to home owners after they have gone through the arduous foreclosure process,” Rep. Edolphus “Ed” Towns, D-N.Y., who introduced the bill,said in a release. “Not only are they behind by thousands of dollars on their mortgage payments and facing public auction of their houses, the ordeal may continue indefinitely.”
Source: “House Bill Proposes 1-Year Limit on Foreclosure Deficiencies,” HousingWire (Dec. 7, 2011) and “Rep. Town Introduces the Fairness in Foreclosure Act,” Congressman Ed Towns (Dec. 6, 2011)
I would love to see this one pass, some states allow them to come after you for 20 years, how can you every get on with your life. I do know that many states have created bills that do not allow DJ after a short sale my state has . So checck your state laws. Also if your realetor knows what they are doing papers can be drawn up on your short sale docs that talks about a DJ and can protect you from that. Just part of the agreement of the short sale terms.
My daughter had her short sale handled that way. Good luck to all! 🙂
While I agree that there should be no deficient judgements to pursue…period…why define who gets pursued based on “low-income”?!!! If it is determined a “low-income” situation, then who will initiate the investigation to determine if there was possible fraud in the first place with the loan origination…blah, blah, blah…why the heck do these politicians, who are not in our indusrty declare policy…-it’s right there in front of their faces!!! The answer to turning our housing market towards a correction is to provide the incentives to do it. The banks get it! Their incentivizing. The homeowners are beginning to understand and embrace it….our national, state and local real estate industries understand it and are embracing this direction by creating more and more short sale specific training…so what on earth is wrong with these politicians?!
Robert,
Couldn’t agree more.
Politicians seem to ignore the State Licensed Agents and Brokers that work with these homeowners every day.
Kris