New Foreclosure Settlement. Will it REALLY IMPACT the Short Sale Process?

Mortgage servicers should be held to to strict short sale timelines agreed to under the state Attorneys General foreclosure settlement in March 2012.

According to the settlement servicers must let homeowners know within 30 days whether their short sale is approved, if the homeowner has submitted a completed short sale packet. Interestingly the same settlement allowed servicers 30 days to NOTIFY homeowners if they felt there was missing paperwork. In my opinion, there still is not enough tightening of the belt here. Frequently a complete short sale packet is submitted and we have seen servicers ask for information outside the normal set of paystubs and bank statements. We have also been witness to a processor marking a file “COMPLETE” only to see it held with a negotiator for 30 days, who then exclaims paperwork is now outdated.

We suspect that we won’t see much change in short sale approval timelines with the new rules imposed on the servicers. Much like HAFA’s failed attempt to hold servicers accountable the AG foreclosure settlement allows servicers to rectify a situation by meeting with a monitoring committee. There are penalties to be imposed, including a million dollar fine for a first offense and 5 million for each repeated offense, however, I highly doubt we will ever see a penalty imposed.

For us at Short Sale Mitigation, LLC it’s business as usual and we are telling all the list agents and homeowners we work with to expect the transfer of title to be between 60-90 days from the submission of the contract which is currently our average time frame.

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