New Rules to Speed Up Short Sales?

Well the rules have finally changed and Short Sales are going to be a breeze!

Right?

I guess we'll have to wait and see. The rules have certainly changed but we'll have to take a wait and see approach to whether the banks will actually be able to implement the new rules.

HAFA came into effect on April 5. If everything works according to plan short sales are going to be approved a lot quicker, the sellers aren't going to be smacked with all those penalties and judgements.

Here's a quick overview of the law: (My standard disclaimer - I am not an attorney or an accountant. Please seek the advice of a competent professional in the legal or tax profession if your situation warrants).

HAFA is a complex program, with 43 pages of guidelines and forms, designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure. HAFA:

• Complements HAMP by providing a viable alternative for borrowers (the current homeowners) who are HAMP eligible but nevertheless unable to keep their home. 
• Uses borrower financial and hardship information already collected in connection with consideration of a loan modification. 
• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds). 
• Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent). 
• Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed). 
• Uses standard processes, documents, and timeframes/deadlines. 
• Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis). 
• Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

Deep Creek Realty specializes in Short Sales. We conduct short sales in Punta Gorda, Port Charlotte, North Port, Englewood, Lake Suzy and Deep Creek.