From the Idaho Statesman 6-13-11
When it comes to short sales, the real estate transaction involving a mortgage that is worth more than the home it is tied to has long belied its name as a quick deal. That is starting to slowly change, thanks to increased bank staffing, a Department of Treasury program that aims to speed up the transactions, and increasing general acceptance of the deals.
A short sale allows for a home to be sold for less than what is owed on the mortgage — provided the transaction is approved by the lender. Unlike foreclosures, which can sell at substantial discounts, short sales tend to be priced closer to fair-market value. Still, some short-sale bargains can be struck by negotiating down the price based on work that needs to be done on a property. Short sales are taking less time to do now than a year ago.
About one in five home sales in the Treasure Valley this spring have been short sales. Short and foreclosure sales make up two of every three home sales in Canyon County, according to county Assessor Gene Kuehn.
The streamlining by big banks is a response to changes made earlier this year to a voluntary Department of Treasury program that aims to speed up short sales, even though that program has seen less than 5,500 short sales completed since it began in April 2010.
Banks participating in the Home Affordable Foreclosure Alternatives program, or HAFA, are making progress, said Colleen Badagliacco, head of the California Association of Realtors’ short sales task force. “One of the key components (of HAFA) is that lenders will give a response to an offer within 45 days. … Because of that, they have had to streamline their processes, which is helping them respond faster to loans that are not in the HAFA program. That certainly is a step forward,” she said.
But most smaller lenders have not done as much streamlining, she said. HAFA provides financial incentives to lenders and $3,000 in relocation assistance to sellers to encourage short sales. It is geared to homeowners who qualified for a trial loan modification through the Home Affordable Modification Program but were unable to obtain a permanent modification. Homeowners struggling to pay their mortgages can request to be evaluated for the HAFA program.
When HAFA was launched in April 2010, there was no time requirement for participating lenders to provide a yes-or-no answer to homeowners seeking approval for a short sale. That changed Feb. 1, when a new requirement required an answer in 30 days, which has since been increased to 45 days.
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