Treasury Sets New Short Sale Guidelines

Treasury Sets New Short Sale Guidelines 

By Deborah Ball, 

RE/MAX Times Online Associate Editor

The U.S. Treasury Department's long-awaited guidelines to streamline Short Sales, announced Monday, will have a significant impact on families facing foreclosure, according to RE/MAX International Chairman and Co-Founder Dave Liniger.

The Home Affordable Foreclosure Alternatives Program (HAFA), part of the Home Affordable Modification Program (HAMP), provides financial incentives and simplifies Short Sales procedures by setting limits on the time it takes lenders to respond, freeing borrowers from debt and capping claims of subordinate lenders.

The Treasury's announcement comes on the heels of more than a year's work by RE/MAX leadership to persuade federal lawmakers to address the need for a simpler Short Sale process.

"While the plan doesn't include all of our suggestions, we feel it's a big step in the right direction," Liniger says. "These new policies will make Short Sales much more attractive to our clients and much easier for us to complete."

Tools are already being developed and collected to help you and your clients:
• Watch a Dave Liniger video about the guidelines.
• Read a Reuters news article about the Treasury plan.
• Watch and share a new consumer video, featuring Margaret Kelly, that is posted on remax.com and YouTube. Use this link to share the video: http://www.youtube.com/watch?v=fkuXvFBYXVU.
• Check out other older videos, such as "Short Sales: The Basics," and "RE/MAX Agents Help Homeowners Avoid Foreclosure with Short Sales," which can also help you introduce the concept to potential clients.
• Visit RE/MAX International's Facebook and Twitter pages to share your thoughts about the announcement. A social media Dave Liniger video clip (not the one here on Mainstreet) can be seen and easily shared through Facebook.
• Get Short Sale information from NAR's REALTOR.org site, including details on HAFA.
• Download a HAMP press release.
• Download a HAMP Supplemental Directive that spells out the details.

With unemployment over 10 percent and millions of adjustable-rate mortgages primed to reset next year, a "tsunami" of distressed properties could be on the horizon, Liniger says. The new guidelines, as well as a growing acceptance by lenders and second-lien holders, give homeowners a better chance of closing a Short Sale rather than losing their house to foreclosure.

Here are some of the program's key guidelines (download the program's full details in the HAMP Supplemental Directive):

• Lenders must respond to Short Sale requests within 10 business days of receipt of the offer package.
• The seller will be released from all liability for repayment of the mortgage debt.
• Subsequently, the seller is entitled to a relocation incentive of $1,500, which will be deducted from the gross sale proceeds at closing.
• The lender will be paid $1,000 to cover administrative and processing costs for a Short Sale or a deed-in-lieu.
• The property must be listed with a licensed real estate professional who does regular business in the community where the property is located.
• The lender is prohibited from requiring, as a condition of approving the Short Sale, a reduction in the agreed-upon real estate commission. 
• The investor will be paid a maximum of $1,000 for allowing a total of up to $3,000 in Short Sale proceeds to be distributed to subordinate lien holders, or for allowing payment of up to $3,000 to subordinate lien holders.

RE/MAX leaders have been advocating Short Sale improvements for quite some time. In September, Liniger met with Housing and Urban Development Secretary Shaun Donovan and other U.S. housing officials to discuss the need for prompt action. A meeting with Sen. Harry Reid (D-Nev.) also moved the process along.

For their part, RE/MAX Associates have embraced training in Short Sales and REOs. The network accounts for nearly 60 percent Certified Distressed Property Expert designees. That education will continue to play a vital role in order for Associates to successfully handle Short Sale transactions and establish themselves as the leading experts in their markets, Liniger says.

"Associates should become familiar with the new guidelines and put the details into their presentations," Liniger said.

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Editor's note: The official effective date is April 5, 2010, but participating mortgage servicers can begin operating under terms of the new program prior to that date if they are ready to meet all reporting requirements. The guidelines released in November 2009 do not specifically apply to loans owned or backed by Fannie Mae or Freddie Mac (representing about half of all U.S. mortgage debt). But those organizations are working with the Treasury to finalize applicable servicing guides, which are expected soon. 

© 2009 RE/MAX International, Inc. RE/MAX Affiliates may share this article, provided they do not charge for it and this notice is included. All other rights reserved.

Tips for Avoiding Foreclosure

Tips for Avoiding Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

Don't ignore the letters from your lender

Contact your lender immediately

Contact a HUD-approved Housing Counseling Agency

Toll FREE (800) 569-4287

TTY (800) 877-8339

If you are unable to make your mortgage payment:

1. Don't ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.  

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems.  Later mail may include important notice of pending legal action.  Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can't make your payments.  Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.  

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide.  Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority.  Review your finances and see where you can cut spending in order to make your mortgage payment.  Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets.  

Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income?  Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.  

9. Avoid foreclosure prevention companies.

You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender.  While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.

10. Don't lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home!  Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

* This information was from the hud.gov website* 

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***If you find that you can't save your home. Call us and we can help you do a short sale to avoid foreclosure. We average about 100 listings per month and are able to close most of them! Call Austin Heywood at 801-572-6161 or email max2@listingyourhome.com ***

What is a CDPE?

What is a CDPE?

The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. The developers of the CDPE Designation believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional. They have the tools needed to help homeowners find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale.
While enduring financial difficulties is challenging for any family, the process of finding a qualified real estate professional should not be. Selecting an agent with the CDPE Designation ensures you are dealing with a professional trained to address your specific needs. A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.

CDPEs don’t merely assist in selling properties, they serve and help save their clients in need.