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with FHFA and the other GSE to determine an amount to offer subordinate lien holders," Beaty said. "They have to accept what is offered or say 'no,' which alleviates protracted negotiations." Obviously, there are benefits for both buyers and sellers in short sales. Buyers are typically able to acquire the property for a sizeable discount, and unlike most REOs, a short sale property remains occupied up until the keys change hands so it is generally in good shape when the buyer takes possession. For sellers, upon agreeing to a short sale of their property, the GSEs offer up to $3,000 to help with moving expenses. This specific arrangement is exclusive to Freddie Mac and Fannie Mae, but there are other lenders and investors who provide similar relocation subsidies depending on the homeowner's specific circumstances or geographical location. In addition, Beaty points out that it will be easier for the homeowner to obtain a new loan in the future after participating in a short sale, as opposed to a completed foreclosure. "We release the deficiency on the loan and do not pursue the borrower for the amount of the deficiency," Beaty explained. "In addition, a borrower who has reestablished his credit after the short sale may be considered for a new loan in as short a time as 24 to 48 months compared to seven years required for a foreclosure." Attention to Details Beaty suggests borrowers stay in constant communication with all parties involved in a short sale transaction, including real estate agents, servicers, and foreclosure attorneys. Borrowers should also confirm that their property is being marketed to the largest audience through a multiple listing service (MLS) or similar system. "For those who live in rural areas, if MLS is not available, homeowners need to learn how their property is being marketed to ensure they are receiving the best offers," Beaty said. She also noted that sometimes borrowers may not have to sell short, depending on how fast values are appreciating in their local markets. In addition, she points out that to qualify for a short sale, a property must be listed with a selling agent and be in "active" status for at least five business days immediately preceding the day on which a purchase offer is accepted by the borrower and submitted to the servicer for approval. "This requirement helps to ensure that the property was made available to the public and not subject to any inside deals," Beaty explained. Sometimes during a short sale, loan servicing may be transferred to another company. Borrowers need to identify and contact their present loan servicer to learn if their loan will be transferred. If so, they need to obtain the name of the new servicer, its short sale contact person, and what stage of the transferal process the company is at currently. "You don't want the transaction to fall apart because you don't know who the servicer is," Beaty explained. To provide distressed homeowners with a more streamlined short sale option, the Federal Housing Administration (FHA) has aligned its Preforeclosure Sale (PFS) Program with the GSEs' requirements. HUD Secretary Shaun Donovan says the changes, which went into effect October 1, will give more families the opportunity to avoid foreclosure while reducing costs for FHA. In late September, it was announced that one short sale provision initially slated for the October implementation would be delayed—HUD's ban on dual agency listings for short sales. Intended as an anti-fraud measure, HUD conceded to arguments by the National Association of Realtors (NAR) and delayed its prohibition of dual agency listings "indefinitely," according to Gary Thomas, NAR president. HUD's decision allows "NAR to continue the dialogue with agency officials on a formal solution to the dual agency issue," the trade group said in a statement. IN NEVADA, SHORT SALES PREVAIL Foreclosure sales are nonexistent as short sale properties disappear in less than a week. In October 2011, short sales became the preferred method of selling distressed properties in Nevada because of a new law that stopped banks from foreclosing without documents in hand proving they had the right to foreclose. Short sales, however, circumvented this requirement, and so they became the preferred method of selling properties with delinquent loans, according to Mark Karten of the Karten Group, Las Vegas. As a result, Karten says during the past two years, no inventory of distressed properties has accumulated. "Anything with any kind of value is gone in three days to a week," he explained. "It's a different world from what it was years ago. You can't get REO listings from banks anymore, and any agent who grew an REO business and didn't switch to short sales is literally out of business." After witnessing the state's foreclosure process all but grind to a complete halt and its TIPS FROM FREDDIE MAC FOR SPEEDY SHORT SALES » Borrowers should contact » Contact subordinate lien » Homeowners need to » If not already known, their servicers immediately holders early on, as it is quickly learn the status find out who owns critical for negotiation and send in all their of their loans, whether the mortgage in case timing to determine the financial information so foreclosure proceedings certain issues need to second or junior lien that required approvals have begun, and whether be escalated. Servicers holder's name, contact info, the matter has been can be obtained quickly. should also have an payoff amount, etc. This The longer the delay in referred to a foreclosure escalation path in place in submitting documentation, enables first lien holders attorney. If so, this attorney case homeowners are not to begin negotiations and the longer the overall should be notified that a getting a timely decision or reduces processing time. process will take. short sale is in progress. if needs are not being met. 62

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