Banks Vow Smoother Short Sale Process

Sharon and I are always on the look out for all the latest news and articles regarding today's real estate market. Short sales are on the rise here in the Sacramento real estate market, and we believe they are here to stay for a while before our market rebounds.

Just last week, I checked the statistics in three popular zip codes. 95758, 95834, and 95835. (Laguna, and Natomas neighborhoods) There were 650 homes for sale and 500 of them were short sales! Only 86 homes were Bank REO's. WOW. Stay tuned, Sacramento!

We found this very interesting article, and wanted to pass it along to you. One of the most frustrating problems with Short Sales, is the waiting period. With the pressure from the federal level, we are hoping to see a more smoother process.

If you would like more information on short sales and or know anyone who needs assistance, please pass them our information.

Lenders, including Bank of America and Wells Fargo, say they are making it easier for delinquent borrowers to avoid foreclosure by selling their homes for less than they owe on them.

Their efforts dovetail with a strategy unveiled last week by the Obama administration to promote such short sales.

Demand for short sales has burgeoned because falling home prices have made it impossible for many homeowners to get high enough prices to repay their lenders if they run into financial trouble, such as a job loss.

A short sale has an advantage over foreclosure for the homeowner because it is less embarrassing and does less damage to his or her credit. And for the lender, it is less costly than having to repossess, market and maintain a vacant property.

Also, keeping a house occupied can help preserve a neighborhood.

However, because of the complexity of such transactions -- including the need for approval of a sales price by lenders, investors and mortgage insurers -- the sales often fall apart. Real estate agents complain that by the time they get an answer from the bank on an offer, the potential buyer has lost interest.

At Bank of America, the nation's largest mortgage servicer, more than 60 percent of approved short sales do not close, which is why the bank wants to streamline the process, said BofA Senior Vice President David Sunlin by telephone Thursday.

Sunlin, who manages short sales for the bank, said the bank's first goal still is to negotiate a mortgage modification that will let a borrower keep his home. But he said during those negotiations the bank can simultaneously obtain the documentation needed to qualify the borrower for a short sale if the modification doesn't work.

In the past, Sunlin said, the bank did not begin the lengthy process of qualifying a borrower for a short sale until it had received a purchase offer.

To expedite short sales, Bank of America has enlarged and updated staff training and set up a phone line dedicated to short sales that borrowers and their agents can use.

Also, Sunlin said, in 60 to 90 days the bank will roll out a Web program it will use to find and track the short sales of houses with mortgages that it services. He said the Web portal also will accept qualifying documentation from clients wishing to do short sales.

Sunlin said it typically takes 45 to 60 days for the bank to tell a client if a short sale offer can be accepted, and up to 90 days if an investor must approve it. The goal, he said, is to shorten the wait to a week.

"By doing this, we should see more private sales instead of more sales of bank-owned (houses)," he said.

Sunlin said short sales will also benefit from an amendment to President Barack Obama's Making Home Affordable program announced last week that will standardize short sale application and acceptance forms. It also provides monetary incentives to servicers and helps cover relocation expense for homeowners.

David Knight, senior vice president at Wells Fargo Home Mortgage, said in an interview that his bank has been working many months to reduce delays in the short sale process. He said the bank is working closely with borrowers' agents to increase the likelihood that the listing prices on a short sale will be accepted.

The lending and real estate industries have been on a crash course to learn about short sales since the housing market bust, Knight said. "The big challenge is none of us really understood the process," he said.

By LESLIE BERKMAN
The Press-Enterprise

Thursday, May 21st 2009