This article hit the wire yesterday from Reuters:
"The U.S. Treasury on Monday set long-awaited guidance on a plan for mortgage companies to speed "short sales" of homes and other loan modification alternatives to stem a rising tide of foreclosures." More: http://news.yahoo.com/s/nm/20091130/bs_nm/us_treasury_shortsales.
Of course simplifying the short sale process should be good news, and I am hopeful. Having struggled with the existing process a number of times this year, I remain skeptical.
The new guidelines call for a 10-day lender response to a short sale offer. However, I don't believe that the long response times in the past were an indication of lenders just "dragging their feet." The problem has largely been understaffed and "over-guidelined" loss mitigation departments. Suddenly asking for response in 25% to 30% of typical response times doesn't add the staff or eliminate the bureaucracy that have made short sales painful in the past.
In addition, artificially capping net proceeds for 2nd lien holders may be attractive from an oversight standpoint, but it doesn't do anything to resolve the real financial pressures for those lenders who intentionally took subordinated positions. A very large part of the "problem" loans over the past several years were 80-10-10 or 80-15-5 packages in which the 2nd lender accepted higher risk in the expectation of higher return. Just because Treasury now asks them nicely to accept $3,000 maximum proceeds, should that be immediately acceptable to their investors?
Maybe it's just been a long day, so please excuse my cynicism. I really hope this is progress, but I'll wait to see some "real world" proof.