For a financially struggling homeowner, the decision to pursue a short sale does not come easily. Homeowners who make that choice generally do so after months of searching and pleading for an alternative that would have kept them in the home.
Even when it goes smoothly, the short-sale process is painful for sellers. When it’s bumpy and slow, the pain is far worse. Far too many short sales have been plagued by false starts, confusion, delays and disappointments.
Short-sellers’ many encounters with insult upon injury stem from a combination of problems, including sellers’ lack of experience with the process and lenders’ initial reluctance to adopt on a mass scale what they had long considered an obscure means of resolving bad mortgage debts.
A Scottsdale resident, said one of the Larger Banks finally approved her short-sale application after 10 months of frustration and uncertainty. But the pain didn’t stop there. The sale finally went, but the bank reported the short sale as a foreclosure on the person’s credit reports, which is not easy to fix.
Big mortgage lenders such as Bank of America and Wells Fargo are still smoothing out the wrinkles in their respective solutions to making short sales faster and more reliable. But they are now taking short sales very seriously and have made many improvements, one bank representative said.
Just as the average homeowner never imagined losing a home to financial hardship, the average mortgage lender never dreamed the bank would have to set up an assembly line to churn out short-sale approvals.
Many banks after an overload of complaints has devised a new system.
Bank of America has implemented an automated system – the first of its kind – for tracking the progress of short sales and has reduced the average number of days it takes for a short-sale to be approved, from 90 days to just over 50 days.
The bank approved 18,000 short-sale applications in April, says a Bank representative.
Unfortunately, it received more than 50,000 short-sale applications that month.
“Our system was never designed to handle this kind of volume,” said Rick Sharga, senior vice president and chief economist at RealtyTrac, based in Irvine, Calif., which collects and analyzes nationwide data on short-sales and foreclosures. “Short sales were never intended to be a mass-market product.”
So what can we do now? InvestorCompsOnline is dedicated to teaching real-estate professionals how to be more effective at negotiating short sales, how to create their business plan so that they can financially maintain their investments, and how to pick markets to wisely invest in.
I believe education is a major part to repairing the problem.