Why are banks not held accountable for delaying short sales?

The debate on short sales is legendary!  Those agents who do short sales offer a long list of reasons they take time including 2nd lienholder approvals and inaccurate BPOs. The complaints have continued to mount while some feel the process has improved in the last year.  There are those who feel that patience is the key to getting them done but the reality is that buyers often walk away and everybody loses, including sellers who end up in foreclosure.  It's an ugly cycle where so many people are pointing fingers at everyone else.

In the debates on the role of the banks, I have never heard anyone say anything about holding the banks accountable.  There is often discussion of holding the banks to faster turnaround times and requiring responses.  There is legislation being discussed that would require acceptance or denial of offers in 10 days and approvals from all lienholders in 45 days.  However, in none of these discussions has anyone said - "Let's hold the banks to those times."

The reality is that banks routinely "lose" paperwork.  All deadlines mean nothing if they can claim they don't have what they need to approve the sale.  As often as they lose paperwork, I have to believe that the majority of that is either a stall tactic or incompetence (possibly both).  Either way, the banks are in control because ultimately anything having to do with the actual sale falls to them.

• There is no incentive for a bank to approve a short sale as they realize an actual loss on the property
• The banking industy has made it clear that their first priority is to their investors, not clients
  

With those two factors impacting any real behavior change on the part of the banks, it seems to me that they need some sort of penalty for being late or taking so long.  Just as with taxpayers who don't pay on time, we fine the banks for not moving.  Here's a thought and I would really like to hear your feedback:

• Banks have 3 days to respond to an offer.  On day 4, they're fined $1000 a day for not responding.
• Banks have 7 days to get approval from 2nd lienholders (automatic no is not acceptable).  On day 8, they're fined $1000 a day for not responding.
• Banks have 45 days to close any short sale or be fined $1000 a day for any delay they cause.

It seems to me that fines would quickly mount and the banks would be forced to move quickly.  To discourage automatic "no" responses to ensure compliance, I'd add to the law a provision that the lender has to counter or accept ANY offer within 20% of the asking price. 

Would that solve the problem or make it worse?

Bryan Robertson, Broker Associate   Realtor, Developer, e-Pro   Mobile: (650) 799-9951   Email: bryan@serenogroup.com   Website: http://www.bryanrobertsonhomes.com   Blog:  http://BryanRobertsonHomes.Blogspot.com  DRE# 01191946   Google Me