Bad news continues to surface as quality solutions for homeowners continue to remain anonymous or hidden. FDIC shutters two more regional banks; The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed late Friday. The IndyMac fallout continues to create havoc among depositors and investors. Wachovia lays of 10,000 employees and the FDIC places them on the top of their "close doors" watch list.  Foreclosure filings up 120%; 220,000 homes were lost to bank repossessions in the second quarter of 2008. A total of 739,714 more foreclosure filings were recorded during that three-month period. Because foreclosure filings are growing so quickly, RealtyTrac will have to reevaluate its foreclosure forecast of an estimated 2 million for the year. Less then midway through the year, we're already at 1.4 million foreclosures, so there're going to be significantly raising this projection. Could we hit over 3 million??!!

Every year 600,000 families with 1.35 million children experience homelessness in the United States, making up about 50 percent of the homeless population (3.2 Million) over the course of the year. (Source: National Alliance to End Homelessness).  Foreclosure has NOT been a major factor in homelessness when this study was done. Average household = 3.5 people. That's 11 Million people losing the home they live in!

What does all this bad news mean to a homeowner looking to resolve the negative equity, foreclosure, or resetting ARM mortgage issues with their home? Well, without a viable solution presenting itself shortly, it may mean you will become part of a national statistic and epidemic.

One option is short selling your home. But in this down market it has become questionable at best. Like a juggler, a short sale agent needs to keep so many items in the air in order to complete the transaction and save you from foreclosure. The tasks are overwhelming and the success rate is starting to drop like a brick off a bridge. A short sale agent/expert needs to be aware and juggle the following;

1.)    The Buyer - keeping them onboard is one of the hardest balls to keep in the air. Dream home purchases become nightmares during the short sale process.

2.)    The Buyer's Agent - Pushing for answers in order to secure the home for their buyer, and quite frankly get paid! ("I knew I should not have shown my qualified buyer that short sale house!" - a very common phrase heard throughout real estate offices.)

3.)    The Lender - An uncontrollable, unrealistic and unaware force that makes the decision as they want, when they want. No consideration for any party in the transaction other than their investors. This system is so broken even the best of the best find it difficult to navigate these illogical waters.

4.)    The Seller - Unforeseen liens, judgments and other issues that always seem to make the deal so much harder.  Self sabotage is starting to surface now as sellers begin to become frustrated after months of waiting, and call the lenders to negotiate themselves. (And by the way- they have the right to do it!)

5.)    Lien Holders - An entity that has claim to the home such as a second mortgage, judgment holder, or Unites States of America via a tax lien.

6.)    The Market - Through the process of the short sale, other homes come on the market that match yours in price and forces the buyer to reconsider their purchase. You have no control over this at all.

7.)    Mortgage Granters - Short sales take so long, at anytime the buyer's mortgage company could remove a program, change a program, or simply change guidelines that now place the buyer in "NON-APPROVAL" status. Deal Dead!

With everything listed above, there is no doubt you need to find an agent that has a complete understanding of doing a short sale and holding the deal together. This, at the very least, gives you half a chance to get the deal to the table. But I can assure you there is no guarantee.

Over the past years, I've seen things go from bad to worse. A canned response from most lenders when a short sale package has been presented is "please call back in 45 days to confirm receipt." Forty five days to confirm you've simply received it??!! That's crazy! The entire short sale process has now escalated to four months or better to complete. If lenders claim these time frame issues are based on sheer volume, and if RealtyTrac was wrong on their projections by more than fifty percent, does that mean current short sale time lines my increase by fifty percent as well?  I'm not sure our national economy can afford to let this happen.

Keeping the deal together is an almost impossible now. If we add fifty percent to that time we could be looking at a six month average. This is when, in my opinion, short sales will end. I may have an investor or two that would be willing to hold on for half a year (at a low offer price), but there is no way we will hold traditional home buyer to a six month window.

With a system that is obviously broken or flawed at best, and a process that requires an immense amount of resources and money to facilitate, why is no one doing anything about it?

Recently I've noticed a large number of counter offers from lenders. Some counters higher than full market value. Does this indicator show us that lenders have in fact made up their minds on the short sale market? Not to do them, or are they hurting for the money. I think it's the money. As indicated, 220,000 homes became bank owned last quarter according to RealtyTrac. This number, for those of you not following the REO market, is absolutely staggering.  I can't help to wonder how many had short sale contracts on them.  How many homeowners tried to avoid the blemish of foreclosure through a short sale but were unsuccessful? And more importantly, which of the items I listed above being juggled dropped to make it fall apart? My bet is number one (the buyer walked because of the wait time) in most cases.

I recently, and accidently attended a foreclosure law seminar. Silly me thinking it was for Realtors. I didn't find out until I was there, it was for lawyers only! I was never asked if I was a lawyer, so I stayed. The entire seminar was on how to represent your client (the lender) through the foreclosure process and how to "decrease" the time it takes to foreclose. Keeping in mind that New Jersey is a judicial state, and is averaging over eight months for the process. In the end, I was educated on how to speed up the process for a lender to foreclose. However, that information, by default, gave me a complete insight on how to sabotage the process and slow it back down...legally! Great information when I am representing my seller in foreclosure!  Maybe I should write a book!  Hahahaha! Although under full disclosure, I would never give "legal" advice to my clients.

Knowing that we could see a major (50%) increase in the time it takes to produce a short sale, it will place many sellers in jeopardy of losing the home before a short sale can even be complete. Contacting a lawyer to delay (sabotage) the process may be their only option. But why bother? Even if they do, they buyer will never stay around long enough to close the deal anyway.  If you can, having a lawyer when it comes to anything real estate or foreclosure related is always a good idea, and they can help.

We as agents work daily to make one persons housing nightmare end and another persons housing dream come true. We do it without really thinking what we've done. We do it because it's our job, our business and how we put bread on our table. Never realizing the power we have achieved to make a transaction like a short sale take place.

The National Association of Realtors (NAR) is one of the largest organizations in the world, and I believe, together with the lenders has the power to facilitate a change to this foreclosure and short sale abomination.  Realtors are in fact lender advocates, not their enemy.  Working together we can assist one another to minimize the damages of the housing mess and work towards a common solution. It's fairly obvious that as of today, we are not working as a team, but against one another.  The hard facts and statistics show this to be true.

Even I, as a short sale trainer, teach from experience only, not fact. To date, not a single lender has provided factual instruction, training, or faster facilitation programs. Why is this? We submit our "best guess" package only to find out 45 days later that items are missing. In most cases, items were not missing, it's just something new you now require from the seller. Why was this new requirement never published?  I propose instead of spending millions daily to facilitate and manage the incomplete or incorrect short sale package we work together to make every package complete.

This broad stroke idea is one of many that could be facilitated and save you millions. Why is it a tug a war between us? Short sale properties should require the holding lender approve the mortgage for the new buyer (like you do in your REO program). Simple items like this can not only save, and make you millions, but place the unfortunate American family losing their home in a position to buy again more quickly (without a foreclosure on their credit).  

So many things can be done that are not. So many fights take place between negotiator and agent (or lawyer), when things can obviously be so much easier. Nothing in me believes your intention is to take the property back. The oldest proverb in the real estate business "the bank does not want it back" must still hold true.  So let's bring this back to a reality! We as Realtors ask you to take a giant step backwards and realize there is an answer. The answer is there, but sometimes you really can't see the forest for the trees! Listening to us is a better option than closing your doors!

Frank Wible
REMAX ALL Pros
National Short Sale Agent and Homeowner Advocate.
www.ShortSaleNJ.com