Are Lenders Finally Getting It?
May 31, 2012
It has been over four years since the real estate market boom ended and folks who purchased homes in the boom found that they now had mortgages that were greater than the decreased market value of their homes.
The short sale process (which had occurred in the recession of the 1990s) began again. The government also developed programs such as HAFA which were designed to expedite the sale of underwater properties.
Under this program the underwater homeowner could get an approval prior to marketing the property and supposedly then the "short sale" could be closed in a timely fashion. Unfortunately, it has been difficult to measure the success of HAFA as lenders/investors still seemed unwilling to process short sales quickly.
Those of us in the trenches can still cite the four to six month time frame to get a short sale approved.
However, the lenders seem to be realizing that getting rid of a non producing asset via a short sale may actually cut their losses. Last week several banks announced that they would now speed up the approval process and prospective buyers who make offers on a short sale property could expect an answer, approval or disapproval or even a counter offer, within 30 days. Some lenders said 20 days and I believe that I read that Bank of America actually said that they would act on offers within 10 days. This would be wonderful!
Buyers would know where they were in buying a property, sellers could move on. Perhaps even other underwater homeowners would decide to put their properties up for sale and foreclosures would go down.
It has been a mystery as to why lenders have taken so long to respond to offers on short sales. We certainly hope that all these news releases about speeding up the process reflect lenders who have established a process that will work. The fact that there have been a record number of short sale closings in the past month is a sign that these news releases do reflect what lenders are actually doing.
It has been over four years since the real estate market boom ended and folks who purchased homes in the boom found that they now had mortgages that were greater than the decreased market value of their homes.
The short sale process (which had occurred in the recession of the 1990s) began again. The government also developed programs such as HAFA which were designed to expedite the sale of underwater properties.
Under this program the underwater homeowner could get an approval prior to marketing the property and supposedly then the "short sale" could be closed in a timely fashion. Unfortunately, it has been difficult to measure the success of HAFA as lenders/investors still seemed unwilling to process short sales quickly.
Those of us in the trenches can still cite the four to six month time frame to get a short sale approved.
However, the lenders seem to be realizing that getting rid of a non producing asset via a short sale may actually cut their losses. Last week several banks announced that they would now speed up the approval process and prospective buyers who make offers on a short sale property could expect an answer, approval or disapproval or even a counter offer, within 30 days. Some lenders said 20 days and I believe that I read that Bank of America actually said that they would act on offers within 10 days. This would be wonderful!
Buyers would know where they were in buying a property, sellers could move on. Perhaps even other underwater homeowners would decide to put their properties up for sale and foreclosures would go down.
It has been a mystery as to why lenders have taken so long to respond to offers on short sales. We certainly hope that all these news releases about speeding up the process reflect lenders who have established a process that will work. The fact that there have been a record number of short sale closings in the past month is a sign that these news releases do reflect what lenders are actually doing.
posted by shirley harry at 8:16 AM
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