Many people say that 2012 will be the year of the short sale. There are lots of reasons that short sale sellers might be getting off the fence and selling their homes as short sales in the coming year.
First off, the Mortgage Forgiveness Debt Relief Act of 2007 is set to come to an end. Through this program that is slated to help those with debt forgiven between 2007 and 2012, many folks are alleviated of a significant amount of taxable income. However, for transactions closing after 2012, short sale sellers will not have the advantage of protection from tax liability. For some, that could be a big bummer.
Another reason that 2012 may be the year of the short sale is because there are many wonderful short sale incentive programs that can pay short sale sellers up to $35,000 in order to participate in a short sale (depending upon the mortgage lender and investor note holder). Some programs include the HAFA program, the Bank of America Cooperative Program and several independent programs stemming from the major lending institutions. For a prospective short sale seller, money might be a key motivator in 2012.
Also, there’s that new HARP 2.0 program, a refinance program for responsible borrowers. If that program is anything like any of the other Government programs (such as HAMP and HAFA), it might be doomed for failure and bring about yet another faction of short sale sellers—those who thought they would qualify for a refi, but did not.
So, it seems to me that there will be lots of folks poised to participate in short sale transactions. However, will the banks be prepared to accommodate them and process the short sales quickly and efficiently? Now that might be a question for the Magic 8 Ball®.
Photo: flickr creative commons by Waifer X