Equator announced on July 15 that 300,000 Short Sales have been initiated on its system since November, according to a DSNews article. The company, which provides an online platform for 7 of the top 10 U.S. banks to manage their REO and Short Sale inventory, reported that it had hit the 200,000 mark for Short Sale initiations in June. In just a month’s time, that number has increased by 50 percent.
Short Sales made up 18 percent of buy-side real estate transactions in June, according to an independent survey of more than 2,500 real estate agents across the country.
The survey, conducted by Campbell Communications, found that Short Sales constituted 12.5 percent of property sales in July 2009. That’s compared with move-in ready and damaged REOs, which comprised 17.9 and 19.8 percent, respectively, of all closed transactions during the same time frame.That trend has apparently reversed. In June, move-in ready REOs and damaged REOs comprised 15.2 percent and 13 percent, respectively, of closed transactions.
“These numbers are encouraging because it tells us that more people are avoiding foreclosure,” says RE/MAX Chairman and Co-Founder Dave Liniger (ABR, CDPE, CRB). “Short Sales are infinitely more complex and time-consuming transactions, so agents need to be educated on how to assist homeowners in this situation. We’ll see an even greater influx of Short Sales flood the market as people take advantage of the government’s Home Affordable Foreclosure Alternatives program.”
The HAFA program, which streamlines the Short Sale process, was created to help both homeowners and banks avoid foreclosure, through the use of Short Sales or a deed-in-lieu of foreclosure when homeowners don’t qualify for or maintain a loan modification
More about HAFA
- Lenders must respond to Short Sale requests within 10 business days of receipt of the offer package.
- The seller will be released from all liability for repayment of the primary mortgage debt.
- Subsequently, the seller is entitled to a relocation incentive of $3,000, which will be deducted from the gross sale proceeds at closing.
- The lender will be paid $1,500 to cover administrative and processing costs for a Short Sale or a deed-in-lieu.
- The property must be listed with a licensed real estate professional who does regular business in the community where the property is located.
- The lender is prohibited from requiring, as a condition of approving the Short Sale, a reduction in the agreed-upon real estate commission.
Comments (3)
I just went through the HAFA underwriting pile for 45 days with a seller, and contract in hand. The seller was denied as they had vacated the home as they were unable to afford to live there. Like good Americans they felt if they could not afford to live in the home they should move out. HAFA stated only verbally to us, so far, that it’s the reason for denial. So sad. Bank of America should have expressed this to the homeowner prior to 45 days of underwriting trauma. It’s clear that HAFA and BOA don’t communicate to each other.
– Donna Courter-Matsko, RE/MAX Metro Realty, Seattle, Wash.
Warning to those representing owners for short sale transactions. If the owner files bankruptcy after they’ve signed your listing agreement thinking they’ll postpone foreclosure, they’re right, but as their agent you’re screwed. During a bankruptcy, the bank cannot do anything with the file. The file is locked until the bankruptcy is discharged and even then it can take a bank weeks after the discharge before the file is released for processing. THEN, you finally have a qualified buyer, you get everything fully negotiated, and your seller then refuses to sign because the contract does not protect him/her from potential financial liability. The seller chooses foreclosure because he/she knows the law has them protected through their bankruptcy. Bankruptcy appears on their credit report, not the foreclosure if the mortgage was included within the bankruptcy. Word to the wise: Terminate your listing if you find the owner has filed bankruptcy. I’m sharing this story because it happened to me and I have yet to hear any of these short sale courses covering bankruptcy situations. I not only had one but two bankruptcies filed separately during this one short sale listing. I had brought not one but two buyers to the seller. The first one fizzled because of the waiting and the second one was lost because the seller refused to sign due to the mediation clause and the potential liability with attorney fees. 10.5 months WASTED!!!! and no paycheck to show for it in the end!Why haven’t our state commissioned attorneys promulgated contracts for our distressed sales? Our attorneys just don’t get it if they think the short sale addendum is sufficient. Absolutely not!
– Brenda White, RE/MAX Northwest, Spring, Texas.
