Quicker Response to Short Sale Requests
Homeowners who are underwater with their mortgage may find that relief is on the way from a bill strongly supported by the National Association of Realtors® that would impose a deadline on lenders to make a quicker response to short sale requests.
The legislation, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010,” was Sept. 15 in Congress by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). The bill would require lenders to respond to consumer short sale requests within 45 days.
“The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth,” said NAR President Vicki Cox Golder. “While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times.”
Consumers seek to sell their real estate "short,” or for less than what is currently owed, due to a variety of reasons. These reasons can include loss of wages and the inability to pay; declining property value that makes their home no longer worth what the paid or what is owed; the need to move during a declining economy, plus others. Lender approval is needed for a short sale but the backlog of requests has meant very long decision times, which can hamper or ultimately defeat the purpose.
“As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” said Golder.
The number of potential short sale properties is rising across the country, in part due to the lack of a quicker response to short sale requests. According to NAR data, in the second quarter of 2010, Nevada, California, Florida and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent and 24 percent, respectively.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time. Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.
Watch this space for news of how the Congressional legislation for quicker response to short sale requests will be voted upon.
