Thank goodness and what a breath of fresh air -- The Federal Housing Finance Agency laid out new rules aimed at speeding up the short sale process, a move that could keep many homes from falling into foreclosure. Last month this happened to one of my clients. If only the banks wouldn’t drag their feet for so long, my sellers would have had a sale! It is almost like I can’t give them them the money. I brought them three contracts in the Pawleys Island area over the course of seven months and we still couldn’t get the deal done.
In a short sale, the bank that holds the mortgage must agree to accept a price for the home that is less than what is owed. Even though short sales are considered a better alternative to foreclosure, banks often take so long to review and approve short sales that the deal falls apart and homes get repossessed. Once again, both of those two scenarios happened to my clients just recently. One transaction took too long and the other is in the process of going into foreclosure.
"Delays in approving short sale requests remain a significant challenge for realtors and consumers and often results in canceled contracts and the property going into foreclosure," said Moe Veissi, president of the National Association of Realtors. The organization attributed much of the closing problems to extended lender response times. Some agents said that lenders even foreclosed on the homes before a short sale could close.
To help avoid the trend from continuing, the Federal Housing Finance Agency, which oversees Fannie Mae (FNMA, Fortune 500) and Freddie Mac, laid out rules that will require lenders to review and respond to short sale requests within 30 days and make a final decision within 60 days. The lender is also required to provide weekly status updates to the borrower if the offer is still under review after 30 days. The new guidelines, which go into effect on June 1, 2012 can prove to be beneficial for all of the parties involved.
In the long run, this will benefit borrowers by not getting hit so hard with their credit scores in a foreclosures. Buyers will also benefit by getting a home that is in better condition typically because it has been being maintained and taken care of by the sellers. I'm smiling ... how about you?
Check out the latest short sales in Pawleys Island!
Melissa Dunn
Pawleys Island Real Estate Pro
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