Short Sales to be Streamlined
The federal government is launching a program April 5th to increase and streamline short sales. It's called Home Affordable Foreclosure Alternatives (HAFA). The program aims to standardize short sale regulations and paperwork. All servicers participating in HAMP, the federal Home Affordable Modification Program, are contractually obligated to consider those ineligible for modifications for a foreclosure alternative.
Short sale processes have caused huge frustrations for homeowners as they can linger for months. Some borrowers have received multiple short sale offers on their properties, but get nowhere when the Lender’s short sale department needs to finalize the deal. Borrower’s have stated that most Lenders do not have a valid excuse for why it takes so long to sell a house.
Industry leaders have also said that the reluctance from Lenders is taking too long for short sales to process and it’s slowing down our recovery. The White House also is getting involved to streamline short sales. It's like a second step in the making home affordable program. If a family can't get a loan modification, banks will have to consider them for a short sale--prior to foreclosing.
Considering track records of many banks, this idea is skeptical to some struggling Borrowers. Their thoughts are that the Lenders don't care and they are constantly telling the same lies over and over.
Bank of America offers tips to its homeowners to guide them through the short sale process:
* Contact the servicer as early as possible to advise them you are considering a short sale.
* Work with agents with specialized knowledge and experience in working with short sales.
* Present a reasonable offer, in line with the current market.
* Demonstrate financial hardship that precludes the borrower from participating in the shortfall on the sale.
* Ensure that the sale is an arms-length transaction and that the buyer is not planning to "flip" the property.
* Provide the appraiser with contact information and access to the home as early as convenient.
* Respond in timely fashion to requests for information and documentation.
Overview of Federal Short Sale program: www.realtor.org/government_affairs/short_sales_hafa
Full description of Federal Short Sale program: www.hmpadmin.com/portal/docs/hamp_servicer/sd0909.pdf