The U.S. Treasury Department last week unveiled a plan designed to streamline and encourage short sales, a move RE/MAX leaders have been advocating for some time.

Under provisions of the newly created "Foreclosure Alternatives Program," the process will soon include standardized documentation, cash incentives to lenders and moving allowances for homeowners.

RE/MAX International supports the government's action.

"We applaud the administration for creating the Foreclosure Alternatives Program, which promotes the short-sale process," says RE/MAX International Chairman and Co-Founder Dave Liniger (ABR, CRB). "We've been talking with key lenders and government officials for months about the short-sale issue and couldn't be more pleased that our hard work has finally paid off."

Here's a Treasury Department fact sheet about the plan, as well as a release from the National Association of Realtors.

Because RE/MAX International leadership recognized the viability of short sales as an important piece of the foreclosure puzzle, more than 5,000 Associates already have been trained through the Certified Distressed Property designation course, which covers the process in detail. The next airing on RSN is June 9-10.

"We've been preparing for, and pushing for, this type of action," says Mike Ryan, RE/MAX International Senior Vice President of Media Training. "We've felt for a long time that short sales provide a lifeline for homeowners who can't afford to stay in their homes, even with a loan modification. With a short sale, the sellers get out of a bad situation, the banks save on costs and the neighborhood avoids the many problems associated with vacant, foreclosed properties."

Ryan says it's more important than ever for Associates to learn how to handle short sales, which have traditionally been avoided by agents unwilling to navigate the long, frustrating and often unsuccessful terrain.

"It's understandable why many Associates have been reluctant to pursue this business. But with distressed properties accounting for half of U.S. sales and a whole new level of attention now being put on making short sales easier to complete, it really is time to let go of any reservations," Ryan says. "With the Treasury Department's involvement, we're going to see a lot more emphasis on short sales, through lenders, the media and the public. Our people need to be as educated as they can be about this segment of the market."

Two days after the Treasury announcement, The New York Times published a story, headlined "Lenders More Open to Short Sales," that included this passage:

"Mr. Mitchell of Lynx says short sales are often the best approach, even for homeowners considering a new loan to save the home. 'It's gotten to the point where people understand that sometimes you have to start over,' he said. 'A loan modification might help you in the short term, but sometimes what people need to do is get out completely.'"

The perception of short sales is clearly changing, Ryan says.

"It's up to us, and each individual Associate and brokerage, to be prepared," he says. "The foreclosure problem isn't going away anytime soon, and in fact will probably get worse before it gets better. But short sales provide a source of relief - and we want our agents to be able to close them better than anyone."

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Comments (5)
Thank you for your efforts. I am one of the agents who has and will continue to avoid short sales like the plague until there is some type of streamlined process in place to deal with such. Please keep us updated on progress of streamlining the short sale process.
– Bart Medlock, RE/MAX Advantage, New Albany, Ind.

Thank you for the article on short sales. I can say from experience that streamlining the process would certainly help. I found the numbers in the Treasury report pitiful, but reflective of the marketplace – meaning there are very few, if any, in this area that "qualify" for this program. Also, the people who are discussing the program with the troubled homeowner often do not know what they are talking about, and subsequent calls to the same department will yield different responses. I have been trying to find out if the tax liablity is still in place for the homeowner. It was supposed to be dropped twice last year, but I cannot seem to find if it is still in effect. This is the tax on the difference between the amount owed to the bank and the amount the home sells for at short sale. The homeowner is 1099'd at the end of the year as if this difference were income. If anyone can point me in the right direction, I think we all need to know whether or not our clients and customers are facing the possiblity of this tax if they sell at short sale.
– Peggie McKiernan, RE/MAX Realty of Milford, Milford, Pa.

Listing agents needed to be trained before being allowed to take short sale listings!  Many of the short sale problems are because the listing agent doesn’t have a clue about short sales.  They need to know what kind of loan is on the property and what a reasonable market value is before they can price the house.  If you don’t have a clue, don’t take a short sale.
– Wes Stansbury, RE/MAX Greater Atlanta, Roswell, Ga.

Short sales have been my lifeline since 2007, and it doesn't look like they are going away anytime soon so this is good news for Realtors. I'm delighted to see RE/MAX encouraging our elected officials to recognize the need for streamlining this process, and I've already experienced a marked difference with one lender who actually calls me back once a week to update the file! The reluctance of traditional agents to venture into this arena is warranted given the lack of knowledge of the lending industry, and I am hoping to learn more at the CDPE training this June. Agents need to remember who they are representing in the transaction and arm themselves with knowledge in the various tactics the banking industry uses. Just because the banks finally realized they need to improve their practices doesn't mean that they have lowered their requirements to get as much money as possible. This appears to be good PR on their behalf, but I would love to truly understand their side of the transaction so I can better represent my clients and protect myself.
– Beth Mergens, RE/MAX Gold, Folsom, Calif.

Banks need to decide prior to short sale homes being marketed whether or not they agree to a short sale, and if so for what price and terms. As long as the cart is before the horse, this process is misleading at best to the seller, the buyer and the general market. If the banks are serious about turning this around, they’ll get their docs in a logical row. Streamlining is a small patch for what is obviously a really large hole.
– Jeanine Lunsford, RE/MAX Gold, Fair Oaks, Calif.

Posted on 5/20/09