In a supplemental revision issued by the Treasury Department, HAFA participants now have new options (and new requirements) when dealing with short sales. The biggest of these changes allows 1st lien holder some more flexibility by eliminating the 6% cap on payments to 2nd lien holders, but the cap remains at 6%, meaning that the change will only potentially impact homes under $100K in value.
Among other changes:
- Vendor Fees (currently which can be charged to the Seller or the listing broker as a deduction from commission) are now not allowed to be deducted from commission OR charged back to the seller.
- Prior to a foreclosure, lenders are instructed to first offer a possible short sale and if not that, then a deed in lieu.
- As part of pursuing a short sale in good faith, a servicer has 30 days to send the borrower a short-sale agreement, which clarifies what list price or acceptable sale proceeds would be.
- Once an executed contract is in place on a short sale, the loan servicer has 30 days to respond.
These changes are effective Feb 1st according to the supplemental document linked above, but lenders are free to adopt these guidelines earlier if they would like.