New Short Sale Bill Aims to Speed Up Decision Making Process

The prevalence of short sales and foreclosures, and the process in place now for short sales, which is said to be time-consuming and inefficient, has prompted a new bill to be considered in Congress. On April 12 a bill regarding short sales was introduced into the House of Representatives. H.R. 1498, "Prompt Decision for Qualification of Short Sale Act of 2011", was submitted by Representatives Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.) Its purpose is summarized, "To require the 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."

The general idea of the bill is that a mortgage servicer must respond with a decision to a borrower within 45 days from the time the short sale request is received by the servicer.

The National Association of Realtors® (NAR) immediately responded with a supportive press release. NAR President Ron Phipps commented enthusiastically and, according to the release, "praised Reps. Rooney and Andrews for their efforts on the bill and urged Congress to pass the bill quickly." Phipps said, "Streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers and the entire community."

Our own Steve de Laveaga, SVP Sales and Marketing of Fidelity Phoenix comments on this proposed bill:

“There is no doubt this is a step in the right direction, but remember, today, most of our major servicers are at this time frame on current files. There are definitely properties that slip through the cracks but we have seen in our state of Arizona that Bank of America, Wells and Chase have all SIGNIFICANTLY increased their response times and turn times, which has resulted in more buyers and sellers getting deals done and less frustration as well on both sides. Also, what has made one of the biggest differences is the improved knowledge, process and understanding of our Realtors, who have improved here by leaps and bounds!! So, it is a good step by the government to push this forward, but the truth is, the major servicers have worked hard over the last several months with their staff and processes and are drastically improved.

Something the government could assist with is helping our Lenders find a good, jumbo, conventional lending product. We need to be able to lend to folks who want to buy an 800K house and want to put 20% down and get a good rate.”

What are your thoughts about this new bill? We’d love to hear your comments.