Mar 15, 2012
New rules for short sales
15 Mar 2012
Posted by Andrew Kantor
One of the biggest issues brought up in our recent Housing Policy Forum was how long banks take to process short-sale requests. Thanks to the robo-signing settlement, though, mortgage servicers will have to follow a set of guidelines that should speed the process.
If a borrower makes a short-sale request to his
lender servicer, that servicer has 30 days to give a decision, or to notify the borrower that some documentation is missing or that he needs to make a deficiency payment (and about how much).
In other words, if you ask a bank up front what documentation is needed, your client can have a decision within 30 days of filing for a short sale.
That’s the theory, anyway. While banks run the risk of a million-dollar penalty for non-compliance, the standard they’re being held to is rather loose. As HousingWire put it, “if a servicer takes longer than 30 days on more than 10% of the requests, the firm is considered in ‘potential violation’.”
So they run the risk of being in “potential violation.” It’s something, at least.