The mortgage servicing industry in coming weeks will see details of an incentive program aimed to prevent foreclosures by encouraging servicers to pursue short sales and deeds-in-lieu of foreclosure.
US Treasury Department sources confirmed to HousingWire the Treasury expects to issue details on the short sale and deed-in-lieu program later this month.
The program is being finalized and will be announced as soon as possible, according to testimony Wednesday by Federal Housing Administration (FHA) commissioner David Stevens.
He said at a House Financial Services subcommittee hearing that the Making Home Affordable (MHA) Program is on track to provide modifications and refinancings to millions of homeowners, but noted other foreclosure alternatives exist.
“Because we know that the MHA program will not reach every at-risk homeowner or prevent all foreclosures, on May 14th the Administration announced the Foreclosure Alternatives program that will provide incentives for, and encourage, servicers and borrowers to pursue short sales and deeds-in-lieu (DIL) of foreclosure in cases where the borrower is generally eligible for a MHA modification but does not qualify or is unable to complete the process,” he said, according to prepared remarks.
He said the program will simplify the process of pursuing short sales and deeds-in-lieu, which will encourage more servicers and borrowers to participate in the program. The program will standardize the process, documentation and short performance timeframes.
“These options eliminate the need for potentially lengthy and expensive foreclosure proceedings, preserve the physical condition and value of the property by reducing the time a property is vacant, and allows the homeowners to transition with dignity to more affordable housing,” Stevens added.
Distressed sales — including short sales and foreclosures — accounted for nearly one-third of all house re-sales in recent months, leading to the National Association of Realtors to offer a short sales and foreclosure certification program to realtors.
At the same time, tech vendors and mortgage service providers are looking to fill the demand for short sale-related products and services. Equi-Trax Asset Solutions recently launched a new current listing search offering that searches a servicer’s portfolio to determine short sale and modification opportunities.