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Short Sales Get a Boost From New Guidelines
Vero Beach Florida Real Estate Market Recovery
The Obama administration announced long-awaited guidance on a plan for mortgage companies to speed up short sales
of homes to stem the rising tide of foreclosures. The Home Affordable Foreclosure Alternatives Program provides
financial incentives and simplifies the procedures for completing short sales. This should help the Vero Beach
Florida Real Estate market recovery, as up to 1/3 of listed homes are "short sales".
The new federal guidelines address barriers that have often sidelined short sales by setting limits on the time it
takes a bank to approve an offer. New financial incentives for completing short sales or similar “deed-in-lieu”
transactions, include a $1,000 payment to servicers, and a maximum of $1,000 to go to investors who sign off on
payments. Borrowers requesting the short sale, would also receive $1,500 in relocation expenses.
While a short sale may be preferable to a foreclosure, they have been frustrating for borrowers and buyers, because
they are often hung up by lengthy negotiations with multiple lien holders and mortgage insurance companies.
Realtors have complained that sales fall through as lenders bicker over the sales price and what they should
receive from the proceeds.
Under the new rules, mortgage servicers have 10 days to approve or disapprove a request for short sale, and must
fully release the borrower from the debt. The rules also prohibits mortgage servicing companies from reducing real
estate commissions on the sale, a practice that has dissuaded many agents from taking short sale listings.
The majority of my short sale transactions have received lender response within 40 days, but a few have dragged on
for 2 months. These new guidelines will help, but by how much remains to be seen.
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