10 Day Short Sale Rule

If you read HAFA carefully you will see this is more smoke and mirrors. GSE 's (Fannie & Freddie) which hold something like 78%of toxic Mortgage Backed Securities are not eligible to participate in the HAFA program. Also those Banks with notes held by private investors are not forced to participate in HAFA, its voluntary. 

Second Lien holders are refusing HAFA because it limits their payout to $3000. Why would 2nd lien holders participate when the industry standard currently nets them 10% of the 2nd's balance?????

Please enjoy the read.

 https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pd

This Supplemental Directive provides guidance to servicers for adoption and implementation of

HAFA for first lien mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie

Mac (Non-GSE Mortgages). In order for a servicer to participate in HAFA for Non-GSE

Mortgages, the servicer must execute a servicer participation agreement and related documents

(SPA) with Fannie Mae in its capacity as financial agent for the United States (as designated by

Treasury) to participate in HAMP on or before December 31, 2009. In certain circumstances,

Supplemental Directive 09-01 requires participating servicers to consider borrowers for other

foreclosure prevention options, including short sale and deed-in-lieu programs. As a result,

servicers already participating in HAMP must follow the guidance set forth in this Supplemental

Directive, which provides servicers with the option to determine the extent to which short sales

or deeds-in-lieu will be offered under this program.

I agree with Lenn, this is NEVER going to happen. There is too much at stake and too much to document~~~Kelly

I agree with everyone who comment on this post that 10 days is impossible. 30 days as majority said would be ideal.

Well Said! Thanks for sharing.....

IN HB1359 mandates 7 days to acknowledge receipt of an offer and response by 30 days. Since Jan of 09 (when this law went into effect) it has definitely helped expedite short sales! !! You can file a complaint with both the attorney general and state banking commission if it's violated (we have not had to do this yet :) - fine is up to 2k per occurance. some lenders are not even aware of this IN law, so we fax it over - most will comply after knowing this.

We're surprised most states don't follow suit ?

Are you kidding? Why my shot sale buyer waited for 5 months to get approved from July 09 to Dec

Grace Keng

30 days would be great but, of course 10 days would be even better. If there was a shorter timeline for short sales, more buyer agents would show these properties-- which would result in a lot more sales!   

While 10 days sounds great, I agree that it isn't feasible in most cases. I worry that the timeline of 10 days may force lenders to reject offers too quickly as opposed to accepting them. They have to give a decision within 10 days- that doesn't mean they have to have the home appraised and the file thoroughly reviewed as that won't likely happen in 10 days. I think we could see something as simple as an automated zillow like service that formulates a value a home should sell for and automatically rejects offers below that amount. Hopefully, I wrong.

Doesn't this start April 1st?  April fools day?

I think they mean the 10 days apply after the seller has applied to and been accepted into the HAFA program -- which is after a loan mod has been denied and all the docs are received. So the bank has already reviewed the seller's financials, bank statements, hardship, and it's received and reviewed the BPO. The only things the bank has left to do are approve the buyer's offer, HUD and look over the prelim at that point so, no, it shouldn't take longer than 10 days.

That 10 days is workable if it is 10 countrywide days. The "ten days" in Countrywide language means 10 business days which excludes Saturdays, Sundays, Holidays, Tuesdays, Thursdays, and Fridays. I know because it's always closer to 35 actual days when countrywide says something will happen in 10 days.

Jeffrey SMith's comment is spot on!!!!!!  The 10 day rule -- More government BS......telling people what they WANT to hear rather than reality.......the EASY out for Servicoers is CLAIMING to not having the "complete and updated" short sale package. 

Don't hold your breath on 10 days....use someone familiar with the process, with contacts up the food chain, and you will be fine, make more money, and help more homeowners.......Good Stuff.

Sincerely,

Ben Benita, Expert Negotiator, www.United-IG.com and www.BestShortSaleService.com

I would be happy with a 60 day.  My 120 day process is getting old.  Very frustrating to complete these without any issues.

How do they get all the banks to cooperate? Most of the new guidelines are just that - suggestions, right? I'd be happy w/ a 30 day time frame.

If, as you wrote, "it shouldn't take a lender more time to decide on a short sale than it currently takes to underwrite a mortgage", then I don't see 10 days as being totally unrealistic.  Most home loans can be approved in 10 days, but not all.  However, in California, if a loan isn't approved in 17 days, then the buyer may back out.  I would think that 17 days would be very achievable by most lenders to approve a short sale.

How can it possibly be enforced.  They can't handle the short sales they have now.  I think it will just force the banks to deny short sales.

I think that it is 10 days after they have the entire package, the BPO, and after they submit the counter offer to the buyer. So, basically it is a slightly shorter time period from counter to approval.

I'd even be happy with 10 WEEKS!  Pfft! I'm waiting for approval since the beginning of January... patiently... 10 days is impossible... I agree it's not enough time.  30 days would and should be ideal... or better yet a deal  :)

~ Vienna

Like with everything else you hear there is more to it.  Page 5 of the Making Home Affordable, Supplemental Directive 09-09 ( https://www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf )states;

"Prior to approving a borrower to participate in a HAFA short sale, the servicer must determine the minimum acceptable net proceeds (minimum net) that the investor will accept from the transaction. Each servicer must develop a written policy, consistent with investor guidelines, that describes the basis on which the minimum net will be determined. This policy may incorporate such factors as local market conditions, customary transactional costs of such sales, and the amounts that may be required to release any subordinate liens on the property. A servicer's policy for determining the minimum net must be consistently applied for all loans serviced for that investor. The minimum net may be expressed as a fixed dollar amount, as a percentage of the current market value of the property, or as a percentage of the list price as approved by the servicer. Once determined, the servicer must document the minimum net in the servicing file for each property subject to HAFA."

Translation:  The minimum price the lender will accept must be determined when the borrower applies to be in HAFA not after the package is submitted.

Go 30 days!!! That would be awesome.