Buying a Short Sale Home May Get Easier

"Buying short sale may have its benefits, but it isn’t the easiest way to get hold of a home. Every short sale buyer has heard stories of difficult lenders, title problems, the approval process dragging on for months on end. But here’s some good news: things may be taking a turn for the better. New government proposals promise to further improve the system for Buying Short Sale Home, making it easier not just for the short sale buyer but also for the lender and selling party.





The Current Picture





Several factors can slow down the short sale process from all sides. However, it’s the lender—the party that the short sale buyer has the least control over—that often holds up the game. Lenders often take a


while to approve short sales because they have to weigh in the costs of the sale against their projected losses, and most of the time, get secondary lenders to agree to the sale as well. And with the rise in short sale requests in the past few months, many banks are still struggling to keep up. As a result, buying short sale homes can often take six months or more, rather than the 30 days originally expected.





HAFA Short Sales





The Home Affordable Foreclosure Alternative (HAFA) program, launched last April, is one of the government’s earlier attempts to improve the short sale process. A partner program to the Home Affordable Modification Plan (HAMP), HAFA encourages lenders to be more active in helping troubled borrowers avoid foreclosure. Most notably, it set the rules and timelines for buying short sale homes,from proposing the short sale to returning replies and decisions. Under HAFA, a short sale buyer can close in 60 to 90 days, sometimes even less.





The 45-day Rule





A new legislation, HR 6133, was presented in Congress last month proposing a 45-day deadline for lenders to make final decisions on short sales. Also known as the "Prompt Decision for Qualification of


Short Sale Act of 2010," the law requires lenders to issue a short sale decision within 45 days of receiving the request. This will keep lenders from sitting on a file for months while going over the costs or waiting for decisions from junior lien holders. The bill is still in its early stages, but if it gets enacted, buying short sale homes will be a much smoother process—and a rise in short sale buyer activity may not be far behind."