Short Sales News

I have recently had the opportunity to work with some short sale properties (from the buyer’s perspective) and since then have really dug in to find some more information to not only share with clients, but also just to be more knowledgeable around the much involved process. 

Some of you may be familiar with short sales, and some of you may not. Following you will find the basic definition of a short sale as well as some interesting and much welcomed news regarding short sales properties.

A short sale, as defined by Wickipedia, is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties.

A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower; however both will often result in a negative credit report against the property owner.

And the welcomed news…

Short Sales Get Shorter: New Deadlines to go into Effect 

Daily Real Estate News | Thursday, March 15, 2012 

As part of a settlement with state attorneys general, the five largest mortgage services are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.

Here are some of the new requirements for servicers under the settlement: 

• Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request.
• Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request.
• Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They must also provide an estimated amount for the deficiency payment needed for the short sale.
• Servicers are also required to form an internal group to review all short sale requests.
• Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses.

“If a real estate broker can get a checklist from the bank detailing what documentation is needed, everything can be provided up front, and the bank will be required to give a thumbs-up or a thumbs-down within 30 days,” short sale specialist Chris Hanson with the Hanson Law Firm told HousingWire. “That’s not a bad deal.” 

Source: “AG Settlement Starts the Clock on Short Sales,” HousingWire (March 14, 2012)

Until next time, stay on Top of the Market,

Erik Hart
REALTOR®
Severna Park Sales
Long and Foster Realtors
410-544-4000 Office
443-889-6860 Cell
www.erikhart.lnf.com