SHORT SALES GET HOPE FOR SIMPLER PROCESS FROM HAMP/HAFA

12.5.09

Note:  I have been working with buyers who have been submitting offers to buy homes under the short sale process.   It is uncertain, takes way too long, and puts a burden on all involved.  Some have taken over a year to resolve.  This is ridiculous.  Jim Coleman, an instructor to realtors in Short Sales & Foreclosures,  has written this article which explains proposed new processes which will shorten the process greatly.

The article below was written by Jim Coleman, St George Realtor and Instructor, Assoc Broker and Partner Owner of ERA Brokers Consolidated

The short sale status is often referred to as a pre-foreclosure condition.  It reflects a situation where the owner owes more on the property than what the current market value would indicate it is worth.

The process of working in a Short Sale has been drawn out and uncertain for way too long.   Borrower/Sellers have tried to get the home sold to prevent foreclosure.  Purchases have tried to take advantage of the selling situation and make a purchase that makes economic sense in these difficult market times.  But the procedures that have been employed by lenders who hold the notes of the indebtedness have not had stipulations of how or when action much to taken to approve or even respond to offers submitted in good faith and  with high hopes of having results of a closing and a relief of the debt. 

This week, the industry got a glimmer of hope for simplifying  the process when the US Treasury set some long-awaited guidelines with a plan for mortgage companies to speed up the process.   Guidance was given for loan modification alternatives to help avert the involuntary loss of home ownership through foreclosures, a condition that has struck as mighty avalanches in flu-like epidemic proportion. 

In a press release and notice Dec. 2nd, 2009 to its members, the National Association of Realtors provided some summary information of the announcement by the Treasury Department.   The following are some key points summarized and issued by the NAR's Real Estate Buyer's Agent Council, REBAC, to help educate professionals on this very sensitive topic.  The Treasury's new Home Affordable Foreclosure Alternatives program (HAFA) is part of the Home Affordable Modification Program (HAMP).

Highlights:  Some notes interpreted from the announcement provide that mortgage servicers will have 10 days to approve or disapprove a request for a short sale, and when done the transaction must fully release the borrower from the debt of the first mortgage (no cash contribution, promissory note, or the deficiency judgment is allowed).

Borrower financial and hardship information already collected in connection with consideration of a loan modification are to be used.

Allow borrowers to receive pre-approved short sale terms before listing the property (including the minimum acceptable net proceeds.)

Servicers are prohibited from reduction real estate commissions agreed upon in listing agreements.

Standard processes, documents and timeframes, deadline will be effected.

Monetary incentives will continue to be in effect for servicers to encourage expediting the process and allowances to investors and lien holders.

This program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements and then the program sunsets on December 31, 2012.

While this information is deemed to be accurate and is received with great excitement, anticipation and expectation, caution is given to verify all sources:  there is yet much that needs to be clarified and procedures systematizes.   This is not intended to be a basis for legal counsel or tax advice and consumers are encouraged to seek competent counsel suited to individual circumstances.

Jim Coleman can be reached at jim@JimColeman4Homes.com or 435-674-0600. 
Read his other columns at www.WinningTalk.com/articles .