Bank of America recently issued a new Short Sale Agent Update that revises certain short sale requirements for short sales involving non-government-sponsored enterprise loans in which the homeowner is eligible for HAFA.

Key enhancements include:

• The Short Sale Agreement is being converted to a Short Sale Notice which will no longer require the borrower to sign and return the agreement.
• The Request for Approval of Short Sale and Alternative Request for Approval of Short Sale are being eliminated. The Acknowledgement of Request for Short Sale is being introduced in palace of the Request for Approval of Short Sale, but will no longer require borrower’s signature and return.
• The time frame for servicers to make a decision on a borrower’s request for HAFA has generally been shortened to 30 calendar days of receiving all documents and external approvals required.
• Treasury will now require both the seller and purchaser in a HAFA short sale transaction to sign a new HAFA Affidavit document prior to closing. This certifies that the sale represents an arms-length transaction and that no money is being given or received that is not reflected on the HUD-1 Settlement Statement.
• The prohibition against resale of a property for 90 calendar days following a HAFA short sale closing is being updated to prohibit any resale within 30 calendar days and prohibit a resale for more than 120 percent of the HAFA short sale price between 31 and 90 calendar days of the HAFA short sale closing.

Los Angeles Times – Roughly 20,000 borrowers escaped their “negative equity” positions during the final three months of last year, CoreLogic reported.

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With REO sales making up roughly 11 percent of total sales, it’s important for REALTORS® to know the short-sale market well, said Equator Vice President of Certification Ashley Bean, when leading a panel discussion at the REOMAC 2013 Summit & Expo in Dallas.

In 2011, the average time it took to complete a short sale was only 108 days, according to Bean. That is a far cry from the 148-day average that came the following year. Now, in 2013, we’ve pushed the time back down slightly, with the average somewhere between 120 and 130 days, the Equator VP said.

Abel Fregoso, vice president and national field short sale manager for Wells Fargo, told the crowd that there is a significant divide between the eastern and the western regions of the country.

The West is in full recovery mode, while the East is still struggling to rebound. But Fregoso warned it may take longer than most people think.

Fregoso explained that in the ‘90s, the last housing downturn, the amount of 30-day delinquencies maxed out at 3.3 percent. It wasn’t until 13 years later, in 2005, that those numbers leveled out to 1.5 percent.

However, in the third quarter of 2013, that number crept back up to 11.3 percent and still remains above 10 percent in 2013.

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The U.S. Dept. of the Treasury is offering a short sale training event for California REALTORS® on Tuesday, April 16, 2013, 9 a.m. – 11 a.m. at the Los Angeles Convention Center.

The event will be an “on-site” workshop and will include representatives from Treasury, Citi, Ocwen, Wells Fargo, Bank of America, Fannie Mae, and Freddie Mac to discuss identifying program options, getting offers approved quicker, navigating the process more smoothly, and getting help with difficult cases.  Attendees also can participate in a Q&A session with the representatives.

Register for the workshop here.  REALTORS® who are unable to attend this training in person also may participate via a live webinar.

For more information, contact Eric Hagen at (202) 622-1168 or Eric.Hagen@Treasury.gov.

According to C.A.R.’s Pending Home Sales Index, the combined share of all distressed property sales in California dropped to 32.9 percent in February, down from 35.6 percent in January and down from 53.3 percent in February 2012. Of the distressed properties, the share of short sales was 19.9 percent in February, down from 21.5 percent in January and down from 24.8 percent a year ago.

In January, Congress extended the Mortgage Forgiveness Debt Relief Act, which will for one more year exempt the taxation of mortgage debt that is forgiven when homeowners and their mortgage lenders negotiate a short sale or loan modification (including any principal reduction).

However, the California exemption expired at the end of 2012, so forgiven mortgage debt is considered taxable state income for now.  A C.A.R.-sponsored bill, SB 30 (Calderon, D-Montebello), passed out of the Senate Governance & Finance Committee this week by a 6-to-0 vote.

C.A.R. applauds the committee for approving SB 30 with no dissenting votes, and hopes the Legislature will send this measure to Gov. Brown for his signature into law as soon as possible.  Homeowners who are considering a short sale are uncertain how to proceed because California hasn’t extended the debt forgiveness protections.

Bank of America now requires the listing agent to always be identified as an authorized representative on the Third-Party Authorization Form, even when another real estate professional is assigned in Equator and working the file on their behalf.

The updated Third-Party Authorization Form instruction guide can be viewed here.

As a reminder, non-Bank of America third-party authorization forms will not be accepted and forms may be updated periodically, so it is important to always download a new copy from the Agent Resource Center to ensure the form is the most-recent version.

A report by RealtyTrac found that sales of foreclosed homes accounted for 11 percent of all sales in 2012, down from 13 percent in 2011. Meanwhile, short sales rose 5 percent year-over-year, accounting for 32 percent of all home deals.

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On Feb. 11, Bank of America issued a Short Sale Agent Update stating that the listing status of properties on the MLS should be “current and active” until a short sale approval letter has been issued.

C.A.R. Legal reviewed the Update and alerted Bank of America that keeping listing status as “active” after an offer has been accepted by the seller and forwarded to the lender is not only a violation of MLS rules, but would convey a false representation of the property’s actual status. Instead, the status should read “back up,” “contingent,” “pending” or another field along that line.

Bank of America recognized this error and issued a correction on Feb. 14 stating that it understands that listing status classifications may differ by locale and are subject to local or regional MLS requirements. Additionally, the Feb. 14 Alert says that brokers should follow MLS requirements at all times, and statuses such as “back up,” “contingent,” or “pending” may be acceptable.

Ensuring that the listing remains on the MLS until an approval letter is issued will help real estate agents show that the property was marketed on the open market.

Specific documents are required for Limited Liability Company and Corporation buyers of short sales. If the required documents are not provided, the short sale process can experience significant processing delays.

If the buyer is an LLC, the following documentation must be provided:

• Fully executed Articles of Incorporation/Organization and Operation Agreement (contains Members Agreement which lists Officers and their ownership interest in the company)
• Proof of funds in the LLC’s name
• Proof of the buyer’s connection to the LLC

If the buyer is a Corporation, the following documentation must be provided:

• Copy of Articles of Incorporation
• List of Shareholders and Officers
• Proof of funds in the Corporation’s name
• Proof of buyer’s connection to the Corporation