As the banks are realizing they are better off with reduced losses via a Short Sale as opposed to the greater losses with a Foreclosure resulting in REO (bank owned) properties, the government is actually coming up with programs to provide incentives for them to approve Short Sales.
In this article http://tinyurl.com/yfssm4o written by Richard D. Vetstein which I found on the Shortsaleman’s Twitter site you will find some good information and links regarding the Home Affordable Foreclosure Alternatives Program.
While it is encouraging to see the government taking steps to to incentivize lenders in this direction, the lenders will not be required to participate in the program. Making stipulations such as a maximum of 10 days for the lenders to approve a short sale would be a great improvement over the 60 – 90 days or more many of us have been experiencing in the past. However, that could be a two edged sword as lenders who are overwhelmed in their loss mitigation departments may be reluctant to sign up for participation if they fear they will not be able to comply with these type of rules, or it could lead to some files being denied simply to meet the deadline.
It will be interesting to see how it all plays out. Bringing some conformity to the process would sure be a breath of fresh air to those of us in the thick of the short sale processes as we continue to help as many distressed property owners avoid foreclosure as possible. At the very least both the lenders and government are making it very clear, they would prefer a short sale over a foreclosure resulting in more bank owned properties, and everyone in the process will be better off for it, especially the borrowers in distress.