April 14, 2011: A bill was introduced in the House of Representatives this week, requiring mortgage servicers to respond within 45 days of receiving a short sale request.
The bill was introduced by Rep. Tom Rooney (R-Fla.) and Rep. Robert Andrews (D-N.J.). The National Association of Realtors immediately 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 problem 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.
According to the bill, however, 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.
The Treasury Department launched the Home Affordable Foreclosure Alternatives program in April 2010 to provide the first guidelines for short sales in the industry. Through February, 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.”