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Realtors Frustrated by Banks' Lack of Interest In Short SalesPre-foreclosure sales help both troubled homeowner and the buyer |
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By Mark Huffman May 2, 2008
Also known as pre-foreclosure, a short sale is when the mortgage holder agrees to accept less than the balance on the loan in order to move the property. Realtors say it allows the homeowner to walk away without having a foreclosure drag down their credit rating and the lender ends up losing less money than if the property went to foreclosure and sat on the market for months or years. It might sound like a reasonable compromise, but so far the response from banks has been lukewarm. A survey of 3,000 real estate agents shows that one third of all pre-foreclosure sales never make it to closing, mainly because lenders appear to be unenthusiastic. In a posting to ConsumerAffairs.com, a Northern California Realtor expressed her frustration. "I've had several short sales that have failed and gone onto foreclosure due to lack of response from bank," Tinarsha, of Mountain House, California, said. "I currently have a home that has been listed since November 27, 2007 and received a (short sale) contract for purchase February 25, 2008, when I sent it to Countrywide for approval. As of April 30, Countrywide has yet to respond." 'Unresponsive'Tinarsha says the service has been "unresponsive," and that Countrywide customer service personnel have refused to let her communicate directly with the negotiator assigned to the proposal. Meanwhile, she fears the deal is slipping away. "It's frustrating for sellers, buyers and agents," she said. "As an agent we try to educate homeowners in default to not walk away from their home and to try and resolve the issue as best as they can. But, the banks' behavior tends to lean towards the fact that the bank prefers to foreclose. What rights do the sellers have, if any?" The survey, conducted by Campbell Communications, suggests Tinarsha's experience is not unique. Agents interviewed for the survey said it takes mortgage servicers an average of 4 and a half weeks to provide answers on short sales contracts. The survey authors say foot-dragging on short sales from banks appear to reflect a reluctance to accept upfront losses. As a result, potential buyers are walking away. "With rapidly declining prices, combined with 100 percent or greater financing, many of the sellers are so far in the hole that the mortgage companies are hesitant to accept what the market will bear, and end up forcing these would-be sellers into foreclosure," the survey said. But real estate professionals say a foreclosure is a nightmare for all concerned. The homeowner is evicted with a cloud over their credit, neighboring real estate values plummet, and the banks lose even more money. Report Your Experience
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