Mortgage servicers will be kept to strict short sale timelines agreed to under the state Attorneys General foreclosure settlement this week.
As part of a settlement the five largest mortgage servicers are adopting new requirements for short sales, which is expected to speed-up what has been known as a lengthy process.
Here are some of the new requirements for servicers under the settlement:
- Servicers must provide borrowers with a decision within 30 days after receiving a short sale package request.
- Servicers will be required to notify a borrower, also within 30 days, if any necessary documents are missing to process the short sale request.
- Servicers must notify a borrower immediately if a deficiency payment is needed to approve the short sale. They also must provide an estimated amount for the deficiency payment needed for the short sale.
- Servicers are also required to form an internal group to review all short sale requests.
- Banks will be considered in violation of the settlement requirements if they take longer than 30 days on more than 10 percent of the short sale requests. Violations can carry fines of up to $1 million and $5 million for repeat offenses.
“If a real estate broker can get a checklist from the bank detailing what documentation is needed, everything can be provided up front, and the bank will be required to give a thumbs-up or a thumbs-down within 30 days,” short sale specialist Chris Hanson with the Hanson Law Firm told HousingWire. “That’s not a bad deal.”
The only thing is that if a bank wants to jerk people around (many of them do), they can still take as long as they’d like. All they have to do is respond within 30 days that they need a bank statement. Then 30 later, say they need a new pay stub, then 30 days later, say they are missing form xyz. This is exactly what they are doing today, they just have to do it every 30 days now. They have no interest in rushing and this law does not change that.
What it should say is this:
--- Here is a list of every document that you must turn in to a lender (a checklist).
--- Homeowner has 30 days to send in docs.
--- Then the lender must respond within 30 days WHAT they have received.
--- Homeowner has 30 days to provide any missing docs. If not, deal is done.
--- Once all docs are received, bank has 30 days to make a decision.
--- The process can take no more than 90 days MAXIMUM.
Doesn’t seem too hard to me. Banks wouldn't like it, but too bad.
So for home buyers from Antioch and Gurnee to Arlington Heights and Lake Zurich to the North Shore (Highland Park, Deerfield etc.), to down to Downers Grove, Lombard and Naperville, and to downtown Chicago and nearby areas (Bucktown, Wicker Park etc.) - the short sale process will be the same old same old...