New rules from the Federal Government Affects the Arizona Short Sale Process
Speed up the Arizona Short sale Process
One of the biggest complaints from Real Estate Agents, home buyers, and home sellers, is the amount of time it takes to process a short sale in Arizona.
In fact, many foreclosures may have been avoided had the clock not run out on distressed homeowners trying to short sale their home.
These new federal rules state that homeowners should receive an answer from their bank on a short sale offer within 30 business days. They should also receive a final decision within 60 days, if their home loan is owned by Fannie Mae or Freddie Mac.
A recent article broke the news and if it is carried out it could really shake up the way short sales are processed in Arizona and lead to faster turnarounds in
WASHINGTON — If you’re one of the estimated 11 million homeowners burdened with an underwater mortgage, a new federal policy change could be good news: Starting in June, when you want to do a short sale to shed your mortgage and avoid foreclosure, you may not have to wait for months to hear back from your bank when you submit an offer from a potential purchaser.
Instead, if your loan is owned or securitized by either of the dominant conventional mortgage market players — Fannie Mae or Freddie Mac — you can expect a response within 30 business days, with a final decision taking no more than 60 days. If you don’t hear back during the first 30 days, the bank will be required to send you weekly updates telling you precisely where the holdups are and when they are likely to be resolved. None of this is typical of short-sale procedures today. Banks and loan servicers that don’t comply will face monetary and other penalties.
The mandatory timelines, which real estate and mortgage industry experts say should help speed up what traditionally has been a glacial process, are being imposed by the Federal Housing Finance Agency, the regulatory overseer of Fannie and Freddie in conservatorship. Short sales, in which the lender or loan servicer agrees to accept less than the full amount owed by the borrower, represent an important alternative to foreclosure.
Although short sales can be complex and messy, and can take anywhere from several months to more than a year to complete, they are turning into a mainstay of the real estate market. According to a report from the foreclosure data firm RealtyTrac, short sales jumped 33% in January compared with the same month the year before. In 12 states — including California, Arizona, Colorado, Florida, New York and New Jersey — there were more short sales recorded during January than sales of foreclosed properties.
This trend is welcome, regulators say, but the time required to complete short sales is still far too long. The 30-day and 60-day mandates address just one of the key points of delay in the process, but regulators promise a series of additional steps during the coming months designed to speed transactions. They include clearer guidelines on borrower eligibility, property valuations, compensation for lenders holding second liens and mortgage insurance issues. All of these are points of friction that can delay short sales for weeks or months.
Read rest of article here - Washington Post Writers Group.
New Federal rules still leave many Arizona Short Sales in the endless time warp!
The bottom line is, there is still a lot of non Fannie Mae and Freddie Mac loans that remain untouched by these new rules and unfortunately if you have an FHA loan it may still take over a year to complete your short sale.
If the Federal Government is truly serious about helping homeowners the would come down hard on all lenders that sit on short sale offers and in some cases force homes into foreclosure because time ran out on the homeowner.
What do you think? Will these new rules help speed up the short sale process in Arizona? Did the Fed go far enough? What do you think should be done to help force banks to get serious and make an effort to help distressed homeowners in Arizona? Feel free to comment below!
