Federal program aims to streamline short sales in 2010

Like many of her colleagues, Chicago Realtor Carol Grobman  has been wondering for a long time why the real estate community at large, and  the federal government in particular, have not made a move toward relieving the  prolonged short sale process that has been trying the patience of their sellers  and buyers alike.

Since the real estate bubble burst back in 2007 many  Realtors have been avoiding short sales altogether, either due to lack of  training, or simply to avoid the hassle involved.

“Why are they taking six months to make a decision? By then  the original buyer is gone. A lot of people can’t afford to wait because they  have to move,” Grobman said.

Well, the federal government has finally answered back,  adding another acronym to its list of government-sponsored programs. This one  is called HAFA (it stands for Home Affordable Foreclosure Alternatives) and is  part of the Home Affordable Modification Program (HAMP).

HAFA: The Government  Response
Hoping to positively influence the nation’s housing market  by shortening and simplifying the short-sale process, the Treasury Department  released new guidelines for servicers late last year. 

Under those directives, HAFA offers servicers and borrowers  incentives for utilizing a short sale or a deed-in-lieu to avoid foreclosure on  any loan that is eligible under the HAMP program thereby reducing the need for  a potentially lengthy and expensive foreclosure process.

Key features of the program include:

     
  • Sellers/borrowers can receive up to $1,500 for relocation expenses
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  • Lenders will receive $1,000 for each completed short sale
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  • Up to $1,000 for investors who allow up to $3,000 in short sale proceeds to be distributed to subordinate lien holders.Borrowers can receive pre-approved short sale terms prior to the property listing
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  • Borrowers are fully released from future liability for the debt

 

Shifting Short Sale  Strategies
Both the popularity and thorniness of short sales are  evidenced by the existence of Short Sale Pros, a San Diego Web-based company  promoting itself as a solution for real estate professionals, investors and  homeowners trying to navigate the short sale negotiation process.

“Homeowners are starting to realize that loan modifications  aren’t as great as they thought they were going to be. From the loan  modification end, if you can’t help with that then the short sale is the next  logical thing,” said the company’s president, Michael Corradini.

As Corradini explained, negotiating short sales comes down  to how a potential homebuyer, investor or real estate professional approaches  the bank and presents the numbers. One tip he suggests when negotiating a short  sale: show the bank the difference between your offer and an estimate of what  they will net if the property goes to REO.


Finding short sale bargains on RealtyTrac
RealtyTrac members can easily identify potential short sale  bargains on RealtyTrac using the following steps. Get a 7-Day Free Trial Membership.  

  • Search any county, city or zip code nationwide.
  • Click the Pre-Foreclosure or Auction tab on the search results.
  • Click the “Status” column to sort all for-sale properties to the top.
  • Click the “FOR SALE” icon to view the listing and foreclosure details.
  • Compare the List Price to the First Loan Amount and Est. Market Value to determine if       the property represents a potential short sale bargain.
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