It's Short Sale Time...........

Could the New Treasury Program Help This Foreclosure Alternative Run Like Clockwork?



An all-too common outcome in the housing industry today, foreclosure is a fact of life for defaulting homeowners who are saddled with mounting mortgage bills --and seemingly no other way to dig themselves out of debt. There may be a glimmer of hope, though, on the horizon, thanks to meaningful procedural changes to short sales that may eventually help ease this onerous situation for borrowers, servicers, and lenders alike.

With distressed property sales accounting for 40 percent of U.S. home sales in 2008, and the resulting logjam this has created for banks and servicers trying to address the glut of problem properties on the market, short sales --once resisted by banks --are gaining firm traction and positive attention.

Dave Liniger, chairman of the board at RE/MAX, said the short sale process has been cumbersome for all involved. "The vast majority of the real estate agents have not been properly trained to understand the actual process; the lenders have been overwhelmed with the sheer volume of the inventory; and the investors have not trusted the process, " he explained. But, he says the new guidelines issued November 30, "will add structure, policies, and procedures to the process." He predicts that short sale transactions will increase dramatically, leaving neighborhoods across the country with fewer vacant and vandalized properties.

Gerald B. Alt, president and CEO of HEART Financial Services, LLC, said "Short sales and deeds-in-lieu have to happen. The majority of moratoriums are finished, so these are one of the only options left for borrowers who don't qualify for a modification or refinance."

So will short sales become the savior of the housing crisis, helping emancipate masses of homewoners from the throes of foreclosure? While it's still too soon to tell exactly how much short sales will increase in the coming years, according to industry insiders, short sales very well could help alleviate many of the ills plaguing the servicing sector.