This may be good news about the time is takes to get a short sale approved, if the new bill introduced in the U.S. House passes.
The legislation would impose a deadline on lenders to respond more quickly to short sale requests, requiring them to have an answer to the borrower within 45 days. The bill is called the Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), and it is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida). The bill has bi-partisan sponsorship and support.
This may help to force lenders to reduce the extended time it takes to get an approval on a short sale offer or proposal. That is, unless they lenders find ways to circumvent the intent of the law while following the letter, as they so often seem to do.
“I have heard from many short sellers in Florida whose potential home-buyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”
I have certainly had buyers with offers on short sales with that experience. Usually we hear back on the short sale about the time they close escrow on their new purchase!
The number of potential short sale properties is only increasing across the country. The National Association of Realtors (NAR), data shows that in the second quarter of 2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.
Here is a quote from NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, who says that NAR and its members across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.
“Potential home-buyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.
We as real estate professionals can only hope that this provides some relief for at least one of the many onging problems in our industry.