Short Sale assistance from the US Treasury

As Real Estate Agents, we have all faced challenges with short sale transactions from acceptable valuation to inconsistent, or lack of, communication from the homeowner’s lender. This is a double edged sword for many of us; however the most heart-wrenching is our inability to assist the homeowner in their endeavor to sell their home – and not from our lack of trying. Today, we have some very hopeful news from the US Treasury in the form of new guidelines that servicers will be required to put into effect on April 5, 2010.

Homeowners that do not qualify for HAMP assistance can now find relief through the just released Treasury short sale guidelines. Under the short sale guidelines, the Treasury is offering incentives for servicers to complete short sales in a timely and efficient manner. Most notably incentives include:

• Servicers receive $1000 for each completed short sale and $1000 for each completed Deed in Lieu
• Subordinate lien holders receive up to $3000 from the short sale proceeds as long as the primary agrees to share; and if so, the investor will receive $1000 for cooperating. (Should the 2nd want more than $3000, a short sale may still be pursued outside of the Federal program.)
• Homeowners will receive $1500 for relocation costs and will be fully released from future liability.

For agents and brokerages there is also good news - servicers are not allowed to force a commission reduction as a prerequisite for approving the transaction! Finally, our efforts are recognized in full compensation.

For buyers and sellers, an end to exorbitant waiting periods is in sight. The new Treasury guidelines will require servicers to adhere to a tighter timeframe for compliance. Relief for stressed homeowners will come in a mandatory 30 day window from the time a servicer determines a homeowner does not qualify for a modification until the time the borrower must be considered for the HAFA program. Preapproved short sale terms will be provided to the borrowers that qualify for HAFA prior to the listing of the property, and once an offer is made, mortgage servicers have only 10 days to approve or reject.

Additional protection is provided to the homeowner as the guidelines mandate that every potentially eligible borrower must be considered for the HAFA program prior to the borrower’s loan being referred to foreclosure or a pending foreclosure sale goes through. The guidelines also require that values of the property must be assessed by the servicer and independent of the borrower or any other interested parties.

The Home Affordable Foreclosure Alternatives Program (HAFA) becomes effective April 5, 2010 however the Treasury will allow earlier implementation.

Find more information at http://marcynovak.point2agent.com/

Marcy Novak, MBA, SFR