March 16, 2009, Charlotte, NC – On April 5th, new rules from the U.S. Treasury Department governing residential real estate short sales are set to take effect. The new rules, part of the Home Affordable Foreclosure Alternatives Program, will apply to the sale of homes that have declined in value below the mortgage balance. In a short sale, the lender agrees to accept a payoff that is less than the mortgage amount owed, thereby allowing the homeowner to sell the home and avoid foreclosure.

The new rules are intended to make the complex and often-delayed short sale process simpler and faster. Kerry Stecher, ABR, SFR, CSP, Broker-In-Charge of Henderson Properties, which is already handling many short-sales transactions in the Charlotte short-sales market, says that the new rules are “desperately needed to provide both the real estate and mortgage industries with standardization and uniformity.”

Some of the rules’ provisions are:
• At closing, lenders will receive up to $1,000 to partially compensate them for their losses and homeowners will receive up to $1,500 to offset expenses related to relocation.
• Lenders must use standardized paperwork and forms and respond to a short-sale purchase offer within 10 days.
• Realtors will establish the fair market value of a home and the bank must approve the sale price before the home is put on the market. Sellers will be allowed at least 120 days to try to sell the property and the bank can’t foreclose during that period.
• Lenders may not negotiate reductions in real estate agents’ sales commissions after they receive a short-sale contract, a scenario that has dissuaded many Realtors from entering this market.
• Banks must offer the short-sale program to borrowers who do not qualify for a loan modification under the Home Affordable Mortgage Program (HAMP).

“The short-sales process has been extremely complex and time consuming, partially because there hasn’t been any standardization of rules, procedures, timelines or documentation requirements,” said Stecher. “These rules will save time, money and stress for all parties — sellers, buyers, lenders, Realtors and attorneys — through the standardization of process and forms. In addition, the monetary incentives for lenders and sellers are important because they help offset some of the economic losses both parties incur. Many sellers are destitute by the time they get to this point and don’t have any money to rent a moving van or put a security deposit down on an apartment, and the $1,500 will help them find stable housing after the sale.”

Stecher says that the rules, while helpful, could be improved. “There are a couple of issues with the rules that could prove troublesome in some situations. First of all, they don’t apply to homeowners who have Fannie Mae or Freddie loans, which is an enormous number of people. There are indications that these programs may be preparing similar guidelines but, for now, people with these loans are left out. Second, the sellers must have already tried to get a loan modification through HAMP and been denied, which extends the time in which the homeowner is getting further behind in payments. And, finally, the financial incentives are much needed, but they may not be enough in situations where the seller is tremendously upside down with the value of their home versus the loan amount.”

Kerry Stecher is available for interviews to discuss the issues of short sales, the housing crisis and residential real estate in the Charlotte market. Along with the majority of the Henderson Properties Real Estate Sales Team, she has achieved the National Association of Realtors’ “Short Sales, Foreclosures and Real-Estate Owned Transactions” certification, which qualifies her to handle these complex transactions.

If you would like to set up an interview with Kerry, she can be contacted by phone at: Office: 704-544-0253 or Cell:  704-287-5384, or by e-mail at: KStecher@hendersonproperties.com.

Henderson Properties is a full-service real estate company founded in 1990 in Charlotte, N.C. Its services include community association management, rental property management, leasing, maintenance and home sales. Over the years Henderson Properties has continued to grow while maintaining its commitment to the firm’s original vision — to make a difference in the real estate industry by providing quality, professional real estate services to owners and investors throughout the greater Charlotte area. For more information, contact Henderson Properties at 704-535-1122 or www.HendersonProperties.com.