I know, short sales are named that because they are a transaction in which a lender accepts an offer on a house that is “short,”or not the full amount owed. But when it comes to closing a short sale, there ain’t NOTHIN’ short about ‘em. At least not when lenders take a year or more to approve them.
Here’s the scenario I’ve encountered over and over. We Realtors submit a complete short sale package to the lender, with all the forms, documents and paperwork the bank requires. For the next several months, the bank sits on the application, often requesting updated information such as proof of income, employment status and portfolio values. And we wait. And we wait.
Finally the lender responds after doing a BPO. They want 30% more than the contract value of the house which was the value of the home six or nine months ago. The deal falls through as the buyers, who have been waiting forever, walk away. The house goes back on the market and the cycle starts all over again.
Our lenders are going to have to take some deep breaths and face the fact that, yes, they caused this mess with their “no income, no asset” loans, robo-signings and unregulated lending policies, and are going to have to show some losses on the books to fix it. The way it is now, they’re holding up the entire U.S. economy from going forward. New housing drives a large part of our economic fortunes, but contractors can’t build new homes because there are so many existing properties for sale, with thousands more in “shadow inventory” waiting to come on the market.
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