CPFB announces servicers MUST hand over appraisal or BPO to borrower being considered for a Short Sale.
On January 18th, Short Sale Negotiators around the country will rejoice regarding the new Consumer Protection Finance Bureau, Equal Credit Opportunity Act (ECOA) amendment, under Regulation B which stipulates that servicers MUST provide borrowers with free copies of all appraisals and other written property valuations developed in connection with an application for credit.
The final rule is written as follows:
To the extent a loss mitigation transaction is covered by Regulation B, the transaction is covered by the final rule, including its requirement of providing copies of appraisals and other written valuations. Consumers generally will benefit from receiving information about the value of their dwelling, both in the context of making a decision about the loss mitigation transaction and also in detecting potential discrimination, consistent with the purposes of ECOA. http://www.gpo.gov/fdsys/pkg/FR-2013-01-31/pdf/2013-01384.pdf (p. 7223)
The days are over when servicers can deny a sale with the simple response, “the offer doesn’t meet investor requirements.” Now servicers will be held accountable to describe exactly what about the offer does NOT meet investor requirements.
In my opinion this will add a huge layer of transparency between us as negotiators and the servicers/investors.
Will this change the future of short sales? I suspect not as greatly as we’d like. With every new announcement I’ve seen in the last 3 years between servicers and investors trying to streamline the short sale process, I have yet to see any REAL improvement in the amount of time it takes to expeditiously negotiate a sale. So let’s say we find the value of a property from the servicer to be in line with what the buyer’s offer is? What is to say the investor has a requirement that they will only accept a net 20% MORE than the FMV of a property. That leaves us in the same position we are today, which is fighting values, or losing buyers and relisting property higher and wasting more time on the sales.
I do look forward to this change next year, but I’m skeptical if the layer of transparency will really work to the benefit of short sale negotiations in Massachusetts or New Hampshire.