Short sale process better, not faster, according to short sale expert

Short sales have evolved over the last five years but there are still no guarantees, according to Realtor® Courtney Franklin, who also teaches a course on the short sale process.

Last year his real estate office saw a 15 to 20 percent increase in distressed homeowner clients. This year, they expect to see another 30 to 40 percent increase. “Not all result in short sales and this isn’t the focus of our business but we believe helping people now will lead to future referrals,” he said.

Franklin said one of the keys to short sales is understanding the process, knowing what to say to bankers and who to work with. “The process has gotten better, not necessarily faster. And banks are trying to streamline the process,” he said.

He stresses that he often works with consumers first to try to save their home by pointing them to counseling and available programs. “If they’re having trouble making payments, they have a small window of opportunity to protect their home through Homeowners’ Emergency Mortgage Assistance Program (HEMAP) and Emergency Homeowners’ Loan Program (EHLP). Consumers must act within the first three days of when the letter was sent and they have four weeks to get into a counseling agency to get the applications completed. Once the 33-day window is past, they aren’t eligible for the programs,” he noted.

Administered through the PA Housing Finance Agency (PHFA), HEMAP is a loan program designed to protect Pennsylvanians who, through no fault of their own, are financially unable to make their mortgage payments and are in danger of losing their homes to foreclosure. HEMAP funds loaned to prevent foreclosure are not a grant. These funds are a loan and must be repaid.

EHLP, a U.S. Housing and Urban Development program administered by PHFA, is designed for homeowners at least three months delinquent on their mortgage. If their delinquency is due to involuntary unemployment, under employment, or medical reasons, the homeowner could be eligible for an EHLP loan.

Franklin cautions agents in his classes that there’s a responsibility to clients when working with a potential short sale. “Offering a short sale to a client before they talk to a PHFA-approved counselor and receive competent legal advice is not doing right by the public, especially if the consumer wants to stay in the house. You’ can’t lose sight of who you’re trying to help,” he added.

If the homeowner isn’t eligible for the programs, Franklin said the short sale negotiation begins.

“Sellers need a lot of disclosure and from the buyer’s perspective, short sales aren’t for everyone either,” Franklin said. “If people need to be in a house at a specific time, a short sale may not be for you. It takes time for the sale to be approved and for it to go through and ultimately, the sale may not go through.”

“A short sale is not a ‘get out of jail free card,’” Franklin noted. “If the homeowners have the ability to pay their mortgage, the banks are holding people to that.”