Help Coming On Short Sale Woes?

The US Department of the Treasury announced yesterday new details about its "Foreclosure Alternatives Program", which is part of the "Making Homes Affortable" program. Short Sales make up about one-third of the homes currently listed for sale in Orange County, and have been a source of frustration for lenders, sellers and buyers because of the lack of any standardized process for handling a short sale transaction. A typical Short Sale can take up to 3 months or more to complete once an offer has been made on the home, and this can often be a problem when the foreclosure is happening at the same time.

The purpose of the Foreclosure Alternatives Program is to streamline the Short Sale process by providing a standardized process flow, establishing minimum performance time frames and standard documentation, and offering incentives to both sellers and lenders to persue a Short Sale as an alternative to foreclosure. Other issues tackled by the program will include standards for establishing the value of the home to be sold, minimum time allowed to market the home for sale before a foreclosure can be completed, standards for fees and commissions, and more. There's more in the fact sheet here.

It's too early to tell whether this program will help provide needed standardization to a long and complex process. There is always a danger with government intervention that the program will have unintended consequences and do more harm than good, but most of the stated goals of the program would be a much needed improvement over the status quo.

(Cross posted at www.leslieeskildsen.com)