The federal government and state attorney’s offices have been hard at work investigating the activities of five of the largest banks/mortgage servicers in the country (Ally/GMAC, Bank of America, Citi, JPMorgan Chase and Wells Fargo). After a long negotiation with these banks and mortgage servicers a settlement was reached. The end result – the banks have agreed to pay $25 billion in relief to distressed homeowners and to state and federal government.
This is all a result of the “robo-signing” scandal where loan servicers were signing foreclosure documents without actually knowing if the documents were accurate and without a notary present. Yes, that’s against the law!
What does this mean for you as a homeowner in Orlando Florida trying to sell a home? As part of the settlement, lenders will now be forced to follow strict timeframes. The new requirements for lenders reviewing a short sale are outlined below:
- Mortgage servicers must give a decision to a borrower within 30 days of receiving a completed short sale request package.
- If a servicer takes more than 30 days on more than 10% of the requests submitted, the servicer will be considered in “potential violation.”
- The settlement also requires the servicer to notify a borrower within 30 days if any documents are missing from the submitted short sale package.
- Servicers are also required to notify a borrower if there is a deficiency payment needed before the short sale is approved, including an estimated amount.
- And if more than 5% of all short sales approved in a given quarter did not include this disclosure, the bank will be in violation.
- The servicers’ internal audit groups are required to review all short sale requests within the first two months of the quarter.
It will take a while to see how these new rules affect our short sale process; but all in all it looks like a good start to taking short sales from indefinite to “short” or 30-60 days for approval.
If you are thinking of short selling your home in Orlando, complete the form below for a free consultation on how we sell homes now!