Short Sales in Housing Market Show Signs of Improvement

Strategic Insights -

Real estate agents in North San Diego and Southwest Riverside counties report a significant reduction in the time it takes to complete short sales, a process that has long been plagued by delays and frustration for buyers and sellers. The improvement is attributed to lenders, mortgage servicers, and real estate agents getting organized, with some loan servicers automating short sales and new conflict resolution programs helping to break up logjams. While the process is still cumbersome and filled with potential time-sucking snafus, agents say the time to get a short sale done has contracted to one to four months in many cases.

Key Takeaways:

  • The time to complete short sales has reduced from 9 months to 1-4 months in many cases, according to local real estate agents.
  • Lenders, mortgage servicers, and real estate agents are getting organized, with some loan servicers automating short sales and new conflict resolution programs helping to break up logjams.
  • Bank of America, the nation's largest manager of mortgages, has made significant improvements in processing short sales, with its Equator computer system allowing real estate agents and loan servicers to upload and track documents.
  • Real estate agents prefer to rely on their own contacts at banks rather than official channels when they need quick action.
  • The Home Affordable Foreclosure Alternatives Program, a federal program intended to create incentives for short sales, has failed to solve sale problems due to lenders' refusal to participate.

Statistics:

  • 4,488 short sales were completed nationwide through the Home Affordable Foreclosure Alternatives Program between April 2009 and February.
  • The Daza family got a short sale approved in 4 months to buy their house in Murrieta.
  • Real estate agents report that some lenders are still disorganized and slow, with one agent still working on a short sale that was in its 13th month at the time of the story.

Sources:

  • Eric Wolff, "Short sales gum up the housing market, but changes are afoot", North County Times, 2011
  • Diane Conaway, an Escondido real estate agent
  • Sidney Kutchuk, a Temecula real estate agent
  • Marcel Bryar, vice president of the credit division at Fannie Mae
  • Eric Wolff, staff writer, North County Times, 760-303-1927
  • McClatchy-Tribune Information Services (MCT)
  • North County Times, Escondido, Calif.