Due to current economic conditions, the
number of short sale properties on the market is rising.
The increasing number of short sales on the market
presents challenges for REALTORS®. Below you'll find more
information on: short sales and their challenges, the
government's efforts to address these challenges, and
tools to help you navigate the short sale process.
What is a short sale?
A short sale is a transaction in which the lender, or
lenders, agree to accept less than the mortgage amount owed
by the current homeowner. In some cases, the difference is
forgiven by the lender, and in others the homeowner must
make arrangements with the lender to settle the remainder of
the debt.
Why is the number
of short sales rising?
Due to the recent economic crisis, including rising
unemployment, and drops in home prices in communities across
the nation, the number of short sales is increasing. Since a
short sale generally costs the lender less than a
foreclosure, it can be a viable way for a lender to minimize
its losses.
A short sale can also be the best option for a homeowners
who are ?upside down? on mortgages because a short sale may
not hurt their credit history as much as a foreclosure. As a
result, homeowners may qualify for another mortgage sooner
once they get back on their feet financially.
What challenges
have short sales presented for REALTORS®?
The rapid increase in the number of short sales, and the
short sales process itself present a number of challenges
for REALTORS®. Major challenges include:
- Limited experience
Many REALTORS® are new to the short sales process; a
difficulty which is compounded by many lenders' lack of
sufficient and experienced staff to process short sales.
Even if the REALTORS® are experienced, most servicers
are under-staffed and still not adequately trained,
making negotiating a short sale particularly difficult.
- Absence of a uniform process and application
Currently, both short-sales documents and
processes are lender-specific, making it very difficult
and time-consuming for REALTORS® to become
knowledgeable and efficient in facilitating these
transactions.
- Multiple lenders
When more than one lender is involved, the
negotiations are much more difficult. Second lien
holders often hold up the transaction to exert the
largest possible payment, in exchange for releasing
their lien, even though in foreclosure they will get
nothing.
As a result of these challenges our members have reported
difficulties with: unresponsive lenders; lost documents that
require multiple submissions, inaccurate or unrealistic home
value assessments, and long processing delays, which cause
buyers to walk away.
What is being
done to address or eliminate these challenges?
On
May 14, 2009, the Obama Administration announced its
upcoming Foreclosure Alternatives Program. Among other
things, the new program: Establishes financial incentives
for servicers, sellers, and second lien holders to encourage
the completion of short-sale transactions.
·
Requires
that a timeline, of no fewer than 90 days, be set to allow a
homeowner to sell a home, without threat
of foreclosure action.
·
Requires
the short sale agreement to specify reasonable and customary
real estate commissions and costs to be deducted from the
sales prices. (The servicer must agree not to negotiate a
lower commission after receiving an offer.)
·
Will
provide standardized documents, including short-sale
agreements and offer acceptance letters.
To
learn more about Saab Real Estate Short Sale and the
Professionals that run it, please call
one of our specialist
Few companies have the experience and the organization
to assist home owners in their Short Sale Options like
Our Short Sale Team!
Find
out how much your closing costs could be.
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