Quicker Short Sale Approvals Would be Great News for Sellers and Buyers
Finally – a subtle admission by the lending industry that they are making their own losses worse on troubled mortgages with long delays and indecision in the short sale process. New common sense guidelines are being promulgated from above!
The FHFA has said that as of June of 2012, servicers will be required to do the following in short sales:
(1) review and respond to requests for short sales within 30 calendar days from receipt of a short sale offer and a complete borrower response package;
(2) provide weekly status updates to the borrower if the short sale offer is still under review after 30 calendar days; and
(3) make and communicate final decisions to the borrower within 60 calendar days of receipt of the offer and complete borrower response package.
These regulations will not govern all mortgage lenders and there do not seem to be any penalties in place yet for failure to implement these guidelines. But any industry movement in this direction will help underwater sellers attract more purchasers.
Note that all of these improved performance requirements are contingent upon the proper and efficient application process by the distressed homeowner seeking permission for a short sale. All bets are off if the seller’s financial condition, listing information, or other details of the sale are presented to the lender haphazardly or without prompt and strategic “presentation”. As has been the case for the past three years, it still makes no sense to entrust the job of negotiating a short sale to anyone who dabbles at it!
For additional reading on this topic, the Wall Street Journal has a good article: http://blogs.wsj.com/developments/2012/04/18/is-our-long-national-short-sale-nightmare-finally-coming-to-an-end/ . Make sure to read the comments at the end. Some are priceless. One comment says that all this faster service and communication on short sales is great, but if modifications continue to be a farce, more upside down homeowners should look for ways to get modifications by buying each other’s homes in short sale! It is basically a forced modification for the lender!