At this point, just about everyone out there knows that the only thing "short" about a Short Sale is the payoff of the Seller's mortgage. And while it's true that the term was always meant to refer to the less than full payoff, the irony of "Short Sales" that take upwards of six months to complete has not been lost on anyone. Although, come to think of it, I haven't heard anyone laughing.
In response to mounting pressure from beleaguered homeowners who are just barely hanging on, a bipartisan bill is being sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida). The bill, Prompt Decision for Qualifications of Short Sale Act of 2010 (H.R.6133) seeks to alleviate the ongoing problem distressed seller's are experiencing as potential buyers walk away from their contract due to the inordinate amount of time many Servicers take to respond to a request for a Short Sale. The bill would require lenders to respond to short sale requests within 45 days.
The language of the bill (see excerpt below) is actually pretty strong at this point and is written to override any other provision of law or any contract between the servicer and the securitization vehicle. As the bill currently stands, the servicer is threatened with an automatic acceptance of any properly submitted short sale request if they fail to respond appropriately within 45 days.
"Except as provided in subsection (b) and notwithstanding any other provision of law or of any contract, including a contract between a servicer of a residential mortgage loan and a securitization vehicle or other investment vehicle, if the mortgagor under a residential mortgage loan submits to the servicer of the mortgage loan a written request for a short sale of the dwelling or residential real property that is subject to the mortgage, deed or trust, or other security interest that secures the mortgage loan, and all information required by the servicer in connection with such a request (including a copy of an executed contract between the owner of the dwelling or property and the prospective buyer that is subject to approval by the servicer), and the mortgagor does not receive from the servicer, before the expiration of the 45-day period beginning upon receipt by the servicer of such request and information, a written notification of whether such request has been approved, that such request has been approved subject to specified changes, or that additional information is required for such a determination, such request shall be considered to have been approved by the servicer."
It will be interesting to see if this bill survives, and in what form. Stay tuned....