New short sale timelines and standards for mortgage lenders
These new rules will benefit both sellers and buyers. It was just announced that the strict short sale timelines that mortgage servicers will be held to under the terms of the state Attorneys General foreclosure settlement that was filed in federal court this week (March 12), and that we previously communicated to you in February. As reported on HousingWire.com, the new requirements for short sales include the following standards for the nations' five largest mortgage servicers (Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo):
- · Mortgage servicers are required to give a decision to a borrower within 30 days of receiving a completed short sale request package.
- · The servicers internal groups must review all short sale requests in the first two months of the quarter, according to Exhibit E in the settlement filed this week.
- · And if a servicer takes longer than 30 days on more than 10% of the requests, the firm is considered in "potential violation."
- · The settlement also requires a servicer to notify a borrower within 30 days if any documents are missing from the request package.
- · Servicers will also be required to notify a borrower if there is a deficiency payment needed before the short sale is approved, including an approximate amount.
- · If more than 5% of all short sales approved in a given quarter did not include this disclosure, the bank would be in violation.