New bill for short sales

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A new bill that would give lenders 45 days to respond to short sale requests was introduced in the in the U.S. House this week.

If passed into law, the Prompt Decision for Qualification of Short Sale Act of 2011, would “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.”

If this sounds too familiar to you it may be because a similar bill was introduced in September of last year but the session ended before the proposal could be heard in the house.

According to the text of current bill, upon submitting the required paperwork, including the contract with potential buyer, if the homeowner “does not receive from the servicer, before the expiration of the 45-day period beginning upon receipt by the servicer of such request and information, a written notification of whether such request has been approved, that such request has been approved subject to specified changes, or that additional information is required for such a determination, such request shall be considered to have been approved by the servicer.”

If you are a buyer or seller who has been waiting for months for a short sale approval while wondering how a yes or no answer can take so long, don’t get too excited about this.

I’m not very hopeful the bill will pass and if it does pass, I suspect servicers will find a loophole in the rule.

Remember HAFA, the Home Affordable Foreclosure Alternatives program, which was expected to encourage servicers to respond to short sale requests in 10 days? Granted, this was more of a guideline, rather than a rule imposed on servicers. Not surprisingly, HAFA’s guidelines have been completely ignored by most servicers.

I have heard of some short sale cases that have been approved in 45 to 90 days. But I’ve met several people who waited more than a year for an answer on a short sale before they gave up on buying the house.

Do you think servicers would comply with a 45-day deadline when responding to short sales?