Why Do Short Sales Take So Long?
December 16, 2008
On Sunday, December 14, 2008, the Los Angeles Tmes Newsspaper had an article written by Lew Sichelman which gave some rationale for the lengthy process that is known in the real estate and lending worlds as a "short sale". If you go to www.latimes.com/business you may be able to read the article in its entirety.
Mr. Sichelman suggests that lenders are so swamped by underwater borrowers who need permission to sell their homes for less than the mortgage amount owed, that they (the lenders)
only take seriously the packages submitted that meet certain criteria.
Some of these criteria include: The borrower must be behind in the monthly payments;
The borrower must show hardship; payments being greater than the borrower's ability to pay; The borrower must submit a financial work sheet listing bank accounts, real estate owned and all other assets; (It is important to be totally honest with both the real estate agent and the lender; If possible, obtain a copy of the lender's short sale package and give them everything they want.
Each type of loan may have different criteria. Recognize that lenders seemingly have not yet established efficient processes and that they are sorting out the best way to proceed.
It would seem that all the affected parties, Borrowers, Lenders, Investors, etc. would recognize that it is in their best interest to get these properties sold. Waiting the 121+ days for a trustee's sale and then marketing the bank-owned properties can cost more money than being able to sell the property in the early days of a borrower's non-payment.
However, the reality is that short sales are taking even longer than foreclosures. What is wrong with this picture?
On Sunday, December 14, 2008, the Los Angeles Tmes Newsspaper had an article written by Lew Sichelman which gave some rationale for the lengthy process that is known in the real estate and lending worlds as a "short sale". If you go to www.latimes.com/business you may be able to read the article in its entirety.
Mr. Sichelman suggests that lenders are so swamped by underwater borrowers who need permission to sell their homes for less than the mortgage amount owed, that they (the lenders)
only take seriously the packages submitted that meet certain criteria.
Some of these criteria include: The borrower must be behind in the monthly payments;
The borrower must show hardship; payments being greater than the borrower's ability to pay; The borrower must submit a financial work sheet listing bank accounts, real estate owned and all other assets; (It is important to be totally honest with both the real estate agent and the lender; If possible, obtain a copy of the lender's short sale package and give them everything they want.
Each type of loan may have different criteria. Recognize that lenders seemingly have not yet established efficient processes and that they are sorting out the best way to proceed.
It would seem that all the affected parties, Borrowers, Lenders, Investors, etc. would recognize that it is in their best interest to get these properties sold. Waiting the 121+ days for a trustee's sale and then marketing the bank-owned properties can cost more money than being able to sell the property in the early days of a borrower's non-payment.
However, the reality is that short sales are taking even longer than foreclosures. What is wrong with this picture?
posted by shirley harry at 8:16 AM
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