Housing experts say homeowners can wait as long as nine months to get approval to sell their home as a short sale, and efforts are underway to push lenders to give a prompt answer.
HouseLogic says homebuyers may find themselves in the position of having to send multiple requests to their lender to ask for approval for them to sell their house for less than they owe while a potential buyer waits in the wings. HouseLogic, a service offered by the National Association of Realtors, provides information on homeownership, such as taxes and insurance.
“The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure,” Moe Veissi, president of the Realtors association, said in a statement.
Short sales accounted for about 10 percent of March sales, or 196 of the nearly 1,900 transactions in the Baltimore region, according to RealEstate Business Intelligence. That is up 33 percent from this time last year, the statistics show.
Fannie Mae and Freddie Mac have new rules set to take effect in June that require their mortgage servicers to respond within 30 days to short-sale offers. If the servicer needs more time to make a final decision, it can take another 30 days, but it must send weekly updates.
Fannie and Freddie, which own or guarantee a majority of mortgages in the country, was directed by the Federal Housing Finance Agency to help facilitate short sales. Short sales are a tool to “prevent foreclosure, keep homes occupied and help maintain stable communities,” said Edward J. DeMarco, acting director of the agency.
For those loans that aren’t guaranteed by Fannie or Freddie, legislation is pending in Congress. According to HouseLogic, the Prompt Notification of Short Sale Act was introduced a couple of months ago by a bi-partisan group of senators.
The legislation requires lenders to respond to short sale requests within two and a half months or face a $1,000 fine, HouseLogic reports.
As @RealEstateWonk reported in April, banks are doing more to facilitate short sales.
Salisbury-based real estate agent Brandon Brittingham said a bank recently offered one of his clients $25,000 for moving costs as part of a short sale. Lenders have generally concluded that a short sale is a better alternative to foreclosures, he said.
"It's something we as real estate agents could have told them four years ago, but they didn't want to listen then," Brittingham said in the article.