Due to current economic conditions, the number of short sale properties on the market is rising. The increasing number of short sales on the market presents challenges for REALTORS®. Below you'll find more information on: short sales and their challenges, the government's efforts to address these challenges, and tools to help you navigate the short sale process. 

To check on the status of a particular short sale you should contact the lender. For a Freddie Mac loan, email shortsales@FreddieMac.com.

Latest news

Freddie Mac Amends Short Sale Affidavit Policy (Nov. 21, 2011)
BofA's Equator Requires Current License Information (Oct. 18, 2011)
Treasury Department Holds Short Sale Outreach Event for Real Estate Professionals (Oct. 12, 2011)
Reducing High REO Inventories (Sept. 15, 2011)
Are Your Short Sale Clients Colluding? (Aug. 29, 2011)
Freddie Mac Alerts Real Estate Professionals on Fighting Short Sale Fraud (Aug. 22, 2011)
Treasury Department Updates HAFA Policies (Aug. 9, 2011)
FTC Announces MARS Enforcement Forbearance (July 15, 2011)
Bank of America Announces Short Sale Changes (July 12, 2011)

Home Affordable Foreclosure Alternatives Program (HAFA)

To help homeowners who are unable to keep their homes under the Home Affordable Modification Program, the HAFA program may make a short sale or a deed-in-lieu of foreclosure a viable option to help them avoid foreclosure. The HAFA Program, which took effect April 5, 2010, provides servicer, seller and junior lien holder incentives for these transactions and is designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure.

NAR has created a document that outlines escalation options when involved in a HAFA transaction. For questions and contact information, Read more >

REALTORS® continue to raise issues with NAR about shorts sales and the HAFA process. NAR has created an online mailbox for REALTORS® to share their experiences and provide specific examples of the problems they are facing with lenders. These e-mails will be collected and used by NAR in its ongoing discussions with lenders and the Treasury Department.

Please note, this mailbox is for data collection purposes only and not all submissions will receive a response. Send an e-mail detailing your experiences to HAFA@realtors.org.

HAFA Forms Updated

The HAFA forms and guidelines (Supplemental Directive 09-09) have been updated as of May 18, 2011.
Read more about HAFA>

Short Sales Commissions Policies

HAFA Commissions Policies (PDF 319K) (Sept. 10)
Freddie Mac Short Sales Commission Policy (PDF 128K)  (Oct. 27)
Fannie Mae Short Sales Commissions Policy and Appeals Process (PDF 299K) (Oct. 27)

What is a short sale?

A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.

Why is the number of short sales rising?

Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses.

A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

What challenges have short sales presented for REALTORS®?

The rapid increase in the number of short sales, and the short sales process itself present a number of challenges for REALTORS®. Major challenges include:

1. Limited experience
   Many REALTORS® are new to the short sales process; a difficulty which is compounded by many lenders' lack of sufficient and experienced staff to process short sales. Even if the REALTORS® are experienced, most servicers are under-staffed and still not adequately trained, making negotiating a short sale particularly difficult.
   
2. Absence of a uniform process and application
   Until HAFA guidelines were established, both short-sales documents and processes were lender-specific, making it very difficult and time-consuming for REALTORS® to become knowledgeable and efficient in facilitating these transactions.
   
3. Multiple lenders
   When more than one lender is involved, the negotiations are much more difficult. Second lien holders often hold up the transaction to exert the largest possible payment, in exchange for releasing their lien, even though in foreclosure they will get nothing.

As a result of these challenges our members have reported difficulties with: unresponsive lenders; lost documents that require multiple submissions, inaccurate or unrealistic home value assessments, and long processing delays, which cause buyers to walk away.

What is being done to address or eliminate these challenges?

HAFA is designed to address many of the challenges presented by short sales. For more information see NAR's Home Affordable Foreclosure Alternatives Program