New Short Sale Legislation Should Improve Vero Beach Home Sales
On April 5th the Treasury
Department’s new Home Affordable Foreclosure
Alternatives Program (HAFA) will take
effect. Here is a brief rundown on how it will
effect Vero Beach Short Sales:
-
Deadlines for each stage of the short
sale process are established
-
Standardized forms are to be used by all sellers,
buyers and lenders
-
Pre-approval of sale terms will be agreed upon BEFORE
listing the property
-
Borrowers are released from future liability on the
unpaid portion of the first mortgage
debt
-
Financial incentives provided to the borrower, lender,
and all subordinate lien
holders
HAFA Means Deadlines for Each Stage of the
Process
Deadlines are the critical aspect that has been missing from
short sale transactions. Both the seller and
buyer
need to know the time frame right from the
start. After the bank has informed the borrower of
their options to avoid foreclosure, the borrower has
14 days to respondto their bank about which option
they choose.
Once the borrower has requested a short sale, the lender has 30 days to respond. Once the lender responds, the
borrower has 14 days from the date of the Short
Sale Agreement to sign and return the agreement to
the servicer.
This gives the borrower 120 days to sell their property. After receiving an offer, the borrower or their agent has
three business days to submit a completed Request
for Approval of Short Sale (RASS) to the servicer.
The servicer
will then have 10 business days to approve or disapprove a request for a short sale and advise the borrower.
In regard to closing, the servicer may request a closing no
sooner than 45 days from the date of the sales contract
unless agreed to by the
borrower. After closing, the servicer must
release the first loan within ten business
days
after receipt of the sales
proceed.
HAFA Means Standardized Forms for Short
Sales
The use of standardized forms will greatly improve
the process, allowing all steps to be done correctly on
the
first attempt. This will also avoid
banks creating extra hoops for buyers to jump
through.
HAFA Means Pre-approving Sale Terms Before Listing
the property.
Currently, banks do not disclose their bottom line to their borrowers until they have submitted a written offer.
One of
the major problems is that sellers and their agents having no idea what banks will accept; they list the property at a
price that will hopefully result in multiple offers.By informing the borrower which terms will be acceptable ahead of
time, the home can be put on the market correctly
from the start.
HAFA Means No Future Liability on the Unpaid Portion of
the First Mortgage
Debt
Lenders must waive the right to seek deficiency judgements and can no longer require a promissory note for any deficiency. This is great for the seller, as prior to this a
bank could have come after the seller years down the
road seeking retribution for a short sold
loan.
HAFA Means Financial Incentives Are Provided to
All
Financial incentives provided by this legislation include: $1,500 for borrower relocation assistance; $1,000 for
servicers to cover administrative and processing
costs; up to $1,000 matching funds for investors
allowing a total
of up to $3,000 in short sale proceeds to be
distributed to subordinate lien holders. Having standardization in
forms, deadlines, and a release of liability on the
part of the borrower should move this sector of
the housing market in the
right direction.
This legislation is a huge step in the
right direction.
However, by April
5th, it will be much too late for anyone who
hopes to purchase a short sale in time to take
advantage of the home buyer tax credit which
will expire later on that month.
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