House Bill Would Force Lenders to Decide on Short Sales in 45 Days

Here is some news I am passing on to you. It's an article I was emailed last week that states a house bill would force lenders to decide on short sales in 45 days. Here is the full article:

Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.

The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.

The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).

Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.

“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”

The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of

2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.

“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.

“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.

According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.

Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.

Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.

HAFA in Action

The administration’s Home Affordable Foreclosure Alternatives (HAFA) program is in effect, and players from every corner of the industry – agents, lenders, and technology vendors – are teaming up and working in unison to help ensure the short sale program’s success.

Monday evening, on HAFA’s debut, RE/MAX co-founder and chairman Dave Liniger held an informational Webinar for the company’s agents, broadcast live from the RE/MAX studios in Colorado. Liniger pulled in some heavy-hitters to provide his agents with the insight, answers, and tips they need to become integral spokes in the HAFA wheel.

First on stage was one of the administration’s driving forces behind the HAFA plan, Laurie Maggiano, policy director of the Treasury’s homeownership preservation office. Maggiano delved deep into the HAFA workings, touching on everything from second lien holder participation and pay-off incentives to the fact that GSE loans currently are not eligible for the program.

She even encouraged real estate agents to step up and provide the Treasury with feedback on the program and suggested they submit any issues directly to the Department, particularly if they haven’t received an answer on a short sale offer within the 10-day window as directed under HAFA for borrowers that don’t qualify for a federal modification. That window expands to 30 days if the borrower hasn’t applied for a mod but comes to the servicer with a short sale already in hand.

Maggiano told DSNews.com following the Webinar that while there may be some additional ramp-up time for smaller servicing shops to be fully equipped to handle the influx of short sale requests, large servicers are ready, with dedicated staff on hand to manage the expected increase.

“We learned a lot from the rollout of HAMP [Home Affordable Modification Program],” Maggiano said, when asked if HAFA would have the same logistical hurdles as the government’s modification program. She pointed out that servicers have had since November, when HAFA was first announced, until now to prepare.

“We’re cautiously optimistic that they’re ready to go” and have their staff and processes in place to hit the ground running, Maggiano said.

In the interview with DSNews.com, Maggiano said Bank of America had already received 20 HAFA applications on the program’s first day, and Wells Fargo, too, was “moving full speed ahead.” She stressed that the Treasury has significantly streamlined the program in order to help servicers and borrowers alike avoid the financial and social pitfalls of foreclosure.

Matt Vernon, short sale and REO executive for Bank of America Home Loans, was also on hand, and he explained how BofA is taking the streamline even one step further. The nation’s largest mortgage lender is working side-by-side with the Los Angeles-based technology firm Equator to automate its short sale process – a venture DSNews.com first reported on back in October.

BofA is one of seven top 10 lenders to employ the Equator short sale platform. Equator CEO Chris Saitta, who also participated in the Webinar, explained that the system has sliced the timeline for a completed short sale down to two months. He says 165,000 transactions have already been moved through the Equator short sale platform.

Vernon stressed to the RE/MAX crowd that it is very important for Bank of America to solicit the help of experienced real estate agents to successfully maneuver the short sale transaction. In line with that sentiment, the bank has begun accepting short sale requests directly from agents on behalf of borrowers through the Equator platform – a direct fast-track feature that Equator added to the system in late January.

The RE/MAX webinar was sponsored by Bank of America – an effort to ensure the company’s agents are fully informed of the bank’s short sale procedures and acclimated with the Equator technology in place. And to do their part to pull short sale agents into the mix, Saitta explained that his company’s system is free for agents to use.

Saitta summed it up nicely when he said, “We’re all involved in this community.”