After setting up the Home Affordable Foreclosure Alternatives program by the Govt., short sales were expected to go up. The Treasury Department had set a new standard in 2010 for foreclosures. But, last year they were lower than expected. HAFA only generated about 700.
The Chief Operating Officer, John Vella at Technology Provider Equator, explained in an edition that one in five borrowers were defaulting on their payments. Statistics showed that 2011 would bring better opportunities for short sales with an estimated 1.5 million foreclosures scheduled for 2011. Taking in account the volume of foreclosures and pending REO inventories, servicers will be driven to do more short sales. Moreover, investors want to undertake lower loss severity which comes with a short sale by 20% to 30% better execution instead of a REO sale. The short sale process has been improved with evolving real estate agent capabilities and technological innovations, making servicers more skillful in converting failed loan modifications into short sales. Servicers and their staff adapting these proven sales technologies effectively may see around 25% increase in short sales in 2011 compared to last year since this will help build a better relationship between the lender, agent and borrower.
In regards to lenders’ preference of short sale guidelines, Vella said that HAFA’s guidelines set in April 2010 didn’t guarantee effectiveness but moreover laid down guidelines in this very complicated field to maximize consistency. He said that lenders would redirect loans to their internal programs if HAFA wasn’t working out for them in some specific cases. This could be done smoothly without impacting compliance, timelines and borrower satisfaction with the proper technology.
A combination of factors makes the execution of a short sale difficult. It may take long periods of time to establish and react to offers for parties especially when a second loan or mortgage insurance is involved.
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Pearl Ahlquist
7921 Kingswood Dr. A6
Citrus Heights CA 95610
http:www.loanrecourse.com
McKayland Realty
916-708-3851
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