Probably the most aggravating aspect of short sales for everyone involved in the transaction is the length of time some lenders and servicers take to move through the approval process and each lethargic step along the way. Although there have been numerous steps by governmental entities as well as some of the banks themselves to find a cure to this time dilemma, there is still much room for improvement.
For those of us heavily involved in short sales, the bill proposed by Congressman Tom Rooney, H.R. 839 ‘Prompt Short Sales Notification Act’, would be a welcome addition to other guidelines previously initiated. If passed H.R.839 would require a lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale. This bill contains some similarities to the guidelines initiated by the US Treasury Department in the HAFA (Home Affordable Foreclosure Alternatives) Program, but presumably would apply to all lenders and servicers. Currently not all lenders participate in the HAFA program and there is some latitude for those that do to alter the guidelines a bit.
Following are the primary guidelines set forth in H.R. 839
Notification – once the lender receives a written request for a short sale from the borrower they have:
- 3 days to acknowledge receipt
- 5 days to give notice of any missing or incomplete information required by the lender
- 30 days to provide a definitive response approving or denying the short sale
In exceptional situations the 30 day response time can be extended to 60 days, but the lender must notify the borrower that the application is still under review and provide weekly status updates including a reason why the review is extending beyond 30 days.
Civil Actions – Violations are subject to $1,000 per violation plus attorneys’ fees.
“By streamlining short sales, we can help keep homes out of foreclosure, fuel growth in the housing market, and deliver a needed boost to Florida’s economy,” Rooney said in a statement to the media.
The more people like Congressman Rooney become aware of the dilemma’s facing so many distressed homeowners in America and take this type of action the better chance we have to assist these homeowners to avoid foreclosure and accomplish a more dignified, less devastating option such as a short sale.