All economic factors indicate an onset of a storm that will dwarf what we have observed in 2009. The foreclosure barometer doesn’t lie as clock on the bulk of the option arms is ticking away. The general concession in the industry is such that a much bigger wave of defaults coming in 2010. Government’s most ambitious effort to prevent foreclosure with a loan modification program as been largely ineffective. That program, however, has been a disappointment at best for a number of reasons. Borrowers who complete three reduced loan payments are eligible for a permanent modification that reduces their monthly payment for up to five years. However, fewer than 5% of program participants have successfully gone through the process. Without a doubt the above statistic helps make the case for banks to embrace the short sale.
Even more favorable development in the industry comes from Washington, DC. The federal Home Affordable Foreclosure Alternatives Act (HAFA) will become effective on April 4, 2010. This companion legislation to the Home Affordable Mortgage Plan (HAMP) enacted last March will duplicate most of the guidelines of HAMP for short sales and fix many of the problems that have become evident with HAMP. Lenders are going to increasingly feel the heat of this legislation as time passes from now on. Most notably, lenders will be required to respond to short sale offers in a timely manner. Anyone experienced in short sales can cite lenders’ tendency to not respond to short sale purchase offers as the biggest reason for failed short sale property sale closings. Motivated bargain property buyers regularly tire of the lack of response and abandon their purchase efforts.
Agents are also guaranteed the standard 3% listing and 3% buyer’s commission. The other often-cited complaint by real estate agents is that lenders typically low-ball the agents for their sales commissions. Homeowners are promised to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
With that said we’re excited to join many of our industry peers and declare 2010 the year of the short sale. Turning Leaf Advisors is uniquely positioned to leverage our experience, relationships, and tools to respond to the market demands. We encourage everyone in the business to prepare and adjust their business model whether with the help of our services or any others. As any industry, ours is evolving and becoming more streamlined and focused on efficiency. Indeed, as more and more realtors find the majority of their business driven by short sales, their ability to effectively guide their clients through the process will determine their survival in the business.
We are proud to have pioneered the professional service of short sale negotiations. It’s our goal to continue to help keep you abreast of this ever changing industry with clear, easy to understand interpretations of the regulations and guidelines to help you close more short sales.
