New bill to speed up Short Sale Housing process

This looks promising!

A new bill was recently introduced in the House of Representatives requiring mortgage servicers to respond within 45 days of receiving a short sale request.

This new legislation was introduced by Representative Tom Rooney and Representative Robert Andrews. Almost immediately, the National Association of Realtors backed the bill saying it would assist homeowners who are unable to avoid foreclosure, though member real estate agents have long complained of extended short sale transactions taking as much as year to complete.

“The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure,” NAR President Ron Phipps said.

The central issue is that so many entities are involved with the short sale decision. Servicers, investors, insurers, buyers, sellers and the lender must all agree to either execute the transaction or deny it. However, according to the bill, the servicer must send notification to the borrower within the deadline whether or not the request is approved, changed or if additional information is needed.

This follows the April 2010 launch by the Treasury Department of the Home Affordable Foreclosure Alternatives program, which provided the first guidelines for short sales in the industry.

Through February 2011, servicers started 10,488 agreements with homeowners and completed 4,488 short sales under HAFA.

“Streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures,” Phipps said. “This benefits sellers, lenders, buyers and the entire community.”