A proposed bill may soon help speed up the approval process for homeowners selling their home through short sale by requiring subordinate lien holders to review and respond to short sale requests within 45 days.
The legislation, “The Fast Help for Homeowners Act,” was offered in Congress today by U.S. Rep. Jerry McNerney (D-Calif.) and is strongly supported by the National Association of Realtors®.
“As the leading advocate for homeownership, Realtors® know that issues and delays with secondary lien holder remain an obstacle to streamlining the short sale process,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Short sale negotiations are much more difficult for borrowers who have multiple servicers involved and ongoing delays continue to severely limit the number of homeowners who are approved for short sales, forcing many homeowners into foreclosure.”
The proposed legislation would establish guidelines requiring the primary lien holder to inform secondary and any subsequent lien holders of a request for short sale. The bill would also impose a deadline for subsequent lien holders to respond to both the primary lender and the consumer following a short sale request.
NAR has been actively pushing the mortgage servicing industry for years to improve the short sale review and approval process, especially in cases where second liens are involved. Veissi praised Rep. McNerney for his efforts on the bill and urged Congress to pass it quickly.
“Second mortgage lien holders frequently hold up and cancel the short sale transaction while trying to collect the largest possible payout in exchange for releasing the homeowner’s lien, even though the secondary lien holder often gets nothing if the home ends up going into foreclosure,” said Veissi. “While efforts have been made to improve primary lien holders’ response times, issues still abound with second and subsequent lien holders, and this legislation is a step in the right direction.”
Realtors® continue to report that short sale transactions are being held up due to a lack of response regarding acceptance of short sale requests. NAR wants mortgage servicers to approve reasonable short sale offers so that homeowners can avoid foreclosure, and minimize the negative impact on families, home values and neighborhoods.
NAR believes that streamlining the short sale approval process for both primary and secondary lien holders will help close more short sale transactions. “We applaud any effort to help improve the short sale process and give distressed homeowners alternatives to foreclosure,” said Veissi.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.