How come Short Sales in Denver take so long? In terms of length of transaction, Short Sales certainly don't live up to their name. Instead of short sale, I have had lots of buyers tell me they should be called "long sales." I certainly can't argue with this, but hope is on the horizon. The Home Affordable Foreclosure Alternatives Program, or HAFA,announced today new guidelines bank must follow for short sales that take effect February 1st, 2011.
Under the new regulation, loan servicers will now have 30 days to send a borrower a short sale agreement that includes the price they will accept below what is owed for the home. Then once an offer has been received on the home, the loan servicer must respond within 30 days to the offer. This is a huge improvement to the standard now where it typically takes 90 days to receive an answer back from the loan servicer once the offer is received.
Another big change has to do with how second loans are handled. Currently, if there is a second-lien holder, they can refuse to go forward with a short sale if they aren't getting what they feel is enough out of the short sale. But now, loan servicers will no longer be restricted on paying second-lien holders, which is great news and should significantly speed up the process.
So what does all this mean? It means theoretically, the short sale process should take 1/3 of as long as they are taking now. We will have to wait to see how this will be enforced and if banks will follow the guidelines. But hopefully it will help move the process along and make short sales a more viable option for buyers out there.
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