Short Sales Changes Coming?

In November of 2009, the guidelines were set for non Freddie Mac/Fannie Mae short sale procedures. The guidelines are set to take place in April 2010. Fannie Mae and Freddie Mac are due to reveal their own version of the HAFA Act very soon. The acts, if implemented and workable, will solve some daunting short sale problems and hopefully begin to clear short sale inventory.

The act will address two of the biggest frustrations of short sales.

1) Blind offers - in the past, the listing agent often set the listing price without input from the bank as to what they will actually take.

New procedures will allow borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).

2) Unacceptable time frames - In the past, buyers and sellers had no choice but to wait for unspecified amounts of time - average 6 months, but up to a year or more in some cases - for a decision from the bank.

The new act will allow for standard processes, documents, and timeframes/deadlines.

It is my opinion that should these new processes be implemented in an enforceable way, the inventory will begin to rapidly drop to a normal level. At the moment, short sales dominate the market, and buyers are often unwilling to enter into a contract with so many unknowns and opt instead to wait until a "traditional" sale hits the market. Once lenders begin to utilize these procedures, and short sales are easier to navigate, buyers will begin to take advantage of the sales.