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On April 12, 2011 a bill regarding short sales was introduced into the House of Representatives. H.R. 1498, “Prompt Decision for Qualification of Short Sale Act of 2011”, was submitted by Representatives Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.)
The proposed law sounds good. It would require lenders and servicing companies to approve or deny a short sale request within 45 days. It all sounds so wonderful, just like an Easter Bunny who brings you presents and candy and makes life wonderful for awhile.
The problem with the proposed law is this: Approval or denial within 45 days of WHAT? As it turns out, the 45-day clock does not start running until the servicer has received: (a) a written request from the borrower, (b) a copy of an executed contract between the property owner and a prospective buyer, and (c) all information required by the servicer. That item “c” is where you find out the Easter Bunny is just Dad, and he doesn’t even have a decent costume (unlike Christmas!)
Today, servicers keep claiming they don’t have requested information, or it wasn’t in the correct format, or borrowers need to send more and more and more and more…
While the marketing hype for the bill says the lender must approve or deny within 45 days, the actual law itself says (1) approve or (2) deny or (3) request additional information!
The only benefit I see in this law is, if the servicer accidentally misses its deadline by failing to ask for additional information every 45 days, the short sale will be legally considered approved, and can be enforced. Oh, wait, enforcement requires finding and hiring a lawyer and winning a lawsuit or a settlement, several years later. Am I the only one who sees that the Easter Bunny has no ears, and this bill has no teeth?