New Short Sale Rules Should Help Everyone

On Monday, the U.S. Treasury set new, more streamlined rules for short sales. Real estate agents, home sellers and buyers should all benefit from these new guidelines.

The Home Affordable Foreclosure Alternatives Program (HAFA), which is part of the Home Affordable Modification Program (HAMP), gives important financial incentives while simplifying short sale procedures. The HAFA rules set limits on the time frame for lenders to respond to buyer offers on distress properties, free many borrowers from debt and cap the claims of subordinate lenders. The new guidelines also ensure that real estate agents get paid the agreed upon commission for the work they do regarding short sale transactions.

Here are some of the important highlights of the new guidelines ...

• Lenders must now respond to short sale requests within 10 business days of receipt of the offer package.
• Sellers are now released from all liability for repayment of the mortgage debt.
• Sellers are now entitled to a relocation incentive of $1,500. This amount will be deducted from the gross proceeds of the sale.
• Lenders will receive $1,000 to cover various administrative and procedural costs for short sales and for deed-in-lieu transactions.
• Properties must be listed with a licensed real estate broker doing business on a regular basis within the community where the property is located.
• Lenders can no longer require that the agreed upon real estate commission be reduced as a condition of approving the short sale.

There are other guidelines associated with this matter, but these seemed to be the "biggies" to me.

I think this will make short sales faster and easier for everyone involved. Moreover, with a new batch of adjustable-rate mortgages ready to reset in 2010, an unemployment rate holding in excess of 10-percent, and a generally dark cloud still hanging over the nation's economy, many real estate gurus see a huge new batch of distress properties coming onto the market next year. So, anything that makes selling and closing these troubled properties faster has to be considered as great news for the real estate industry -- and heaven knows we can use a little of that.

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