Here is something that would be beneficial to all parties involved in short sales. Why can't these things not be resolved without government intervention? Still, I hope other states will follow the lead so that short sales can be expedited.
Governor Schwarzenegger has recently signed SB 306, which mandates lenders and loan servicing companies to respond in writing to short sale payoff requests within 21 days of receiving it. This law will be effective on January 1, 2010 in California. Wachovia Bank is ahead of the game and has already streamlined their short sale approval process -sometimes providing the short pay statements on the spot!
If the lender's short-pay statement requires approval of the settlement statement or HUD-1, which is prepared by an escrow officer, the lender must provide the payoff demand statement or rejection letter no later than four days after receiving that closing statement. I can't wait to find out if the banks are prepared to comply with this portion of the bill provision; If they do not meet that deadline, I don't know what the penalties are either.
Exceptions: Lenders are not obligated to respond so quickly with a payoff demand statement if the loan is subject to a recorded notice of default (NOD). The short sale package (equivalent to a written demand for the payoff statement) must be received prior to the first publication of the notice of trustee sale or the notice of the first date of sale established by a court.
While the lenders aren't required to approve short sales (oh we wish!), they ARE required to either reject or approve the sale in writing within that time frame. This is a huge win for everyone involved, the whole real estate market and community will benefit. I can envision fewer properties going into foreclosure, fewer vacant and abandoned properties, and more people able to afford their mortgages. Those that do a short sale of their homes even get to qualify to buy again that much sooner! And of course, they will NEVER have to say YES when asked if they've ever had a foreclosure.
If you or someone you know is facing foreclosure, please get off the fence. You will want to discuss your options with a qualified person. If you are able to refinance or modify your loan, great. However, most people -especially if they've fallen behind on their payments and are upside down- won't qualify.
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Who says the Governator doesn't get one right once in a while. I don't care so much if the lender says no, just so long as they give me an answer and stop stalling.
Wow, that would be nice! (or will be at least in CA). On our ongoing short sale we were just told the negotiator had 15 days to move (or reject etc.) the file. The lender is CW (or BofA).
Silvia, that is good news if the lender can actually give an answer in 21 days, it will help to move a lot of depressed properties, it will also benefit home sellers after most of the short sales are sold.
I agree with you on this.. why can't they all go this way???
Brian, that's right. Just let us know.
Rita, wow, that's fast. Most buyers can live with 15 days wait.
Rita, with a little more efficiency, 21 days should still be plenty of time to review a file and make a decision.
Judi, who knows? I hope CA is setting an example that other states will follow quickly.
Silvia, California is setting a great example for other states to follow. Thanks for this info.
Rebecca, California seems to be the trendsetter once again!
Thank goodness one state is finally starting to address this. I know all the banks are short staffed but waiting months for an answer is unaccpetable.
This is a good law; nothing worse than being ignored for months, it's not good for anyone...
I would not mind if it happened here in Illinois! We could use a few closings on our pending shorts!
Diane
Hi Jane, it can't come soon enough!
Marilyn, it sure isn't.
Diane, yes, our ratio here of closed short sales to closed foreclosures is 1:3, wouldn't it be great if that was reversed?