Short sale help on the way for "underwater homes" in D.C.
By York Van Nixon III 
Despite relative improvements in real estate markets in our city, many homeowners still find they owe more on their properties than some are worth ("underwater"). For those who don't qualify for loan modification, staying current on their loan obligation in this present economic environment forces some owners to forego other responsibilities to stave off foreclosure. Besides a strategic default (putting the keys in the mailbox and walking away), asking your lender to approve a short sale (reduce loan amount to match current market value) may be a viable alternative. But, like loan modification, which can sometimes take more than six months, having your mortgage reduced low enough to attract a buyer in a market fraught with foreclosures can take just as long. Fortunately, help may come from Capitol Hill to address this logjam in real estate markets in the District of Columbia and the rest of the country.
The Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida), was referred to the House Committee on Financial Services for consideration. This bipartisan bill will require all lenders to respond to a request for a short sale within 45 days.
Representative Tom Rooney's statement reflects frustration from buyers and sellers:
"I have heard from many short sellers in Florida whose potential homebuyers 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."
The "shadow inventory" of homeowners failing loan modification is putting additional pressure on already distressed markets. Even though Washington, D.C. is often thought to be less affected than other cities, recent statistics are proving otherwise. For example, Petworth in uppermost northwest has about 115 single-homes on the market. Within that number are about 30 short sales and REO (bank-owned) properties. Although the rate is high in this subdivision, foreclosures also abound west of Rock Creek Park in Georgetown, Wesley Heights, Palisades Park, and other affluent neighborhoods in our city.
Considering other legislation currently in both Houses, seeing this bill come to the floor for a vote before midterm election is highly unlikely. In the meantime, more homeowners lacking equity in their homes may rent moving vans and start over in rental properties and begin the process of repairing their credit.
Source: Washington Examiner
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