Here is an amusing bit of news from the federal government. Once again they are trying to make it look like they are doing something to help your average American homeowner instead bailing out the banks that created the mortgage crisis in the first place.
The Feds are stepping in AGAIN, perhaps to the advantage of everyone…homeowners, buyers and the real estate community.
In an effort to curtail foreclosures, the Feds have introduced HAFA, Home Affordable Foreclosure Alternatives, effective April 2010.
This is a big push to get banks to approve and move expeditiously on allowing homeowners to short sale their homes or possibly turn in their keys WITHOUT deficiency recourse.
Up until now, foreclosures have outnumbered short sales and loan modifications 20:1. Banks have been very non-responsive to short sales…or they take “a month of Sundays” to even respond to an inquiry. Homeowners, buyers and agents may see some relief around the horizon.
With HAFA, banks will be required to streamline and simplify the process of short sales or DILs.
Here are the highlights:
- Allows homeowner to receive preapproved short sale terms before property listing.
- Prohibits servicer from reducing real estate commissions as a condition of approving the short sale.
- Homeowners are fully released from future liability for the debt…No more deficiency judgments!
- Servicer must respond within 30 days of the homeowner requesting a short sale. Respond. Sure they will deny EVERYTHING and then make you go through the same 4 to 6 month process of hoop jumping to get an approval.
- $1,500 relocation incentive to the homeowne.
- The bank MUST respond within 10 business days of receiving an executed purchase agreement, it’s decision on approval or denial. You read it right…TEN DAYS TO DENIALS! Right now many of the major lenders can’t even acknowledge receipt of a file in 30 days.
- The servicer (bank) may not charge the homeowner administrative processing fees…the servicer must pay all out of pocket expenses
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How exciting would it be if they actually pass this law! I suppose the next hurdle will be the implementation of it with the banks! I suspect it can’t hurt and all we can do it go up from here!