In an attempt to reduce the number of foreclosures nationwide, the Federal Housing Finance Agency introduced new rules for the short sale process on Thursday, according to CNN Money.
In an attempt to reduce the number of foreclosures nationwide, the Federal Housing Finance Agency introduced new rules for the short sale process on Thursday, according to CNN Money. FHFA officials say the rules are designed to help speed up the process, which would in turn cut down on the number of properties going into foreclosure.
The new regulations implement a stricter timetable on short sales, with lenders now required to respond to requests within 30 days. In addition, they would be required to make a final decision on the sale within 60 days from the initial offer.
If review of the sale lasts longer than 30 days, lenders are required to provide weekly updates on the status of the sale to the borrower.
The general belief is that short sales most often fall through because the bank or other lending institution takes too long to review the sale. In many cases, says the National Association of Realtors, homes are foreclosed before the short sale can even close. California provides a perfect example; according to the California Association of Realtors, 60 percent of all short sales in the state failed to close last year.
Ultimately, CNN argues, short sales work out best for all parties in the long run: the lender is saved from continually paying property taxes and maintenance costs; the credit score of the seller(s) takes less damage; and the eventual buyer receives a home in better condition because people have been living there recently.
The new measures are scheduled to take effect on June 1.
To read the rest of the CNN story, click here.