Does The New Bill to Speed Up Short Sales Show Promise?
The foreclosure rate is expected to get worse in 2011 before it gets any better, but while a new bill, meant to improve the short sale process, is being reviewed by Congress, new hope is on the horizon. The bill, “Prompt Decision for Qualification of Short Sale Act of 2011″, was presented earlier this month by U.S. Reps. Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.). Its intent is to speed up the amount of time it takes for lenders to respond to a short sale request; a deadline of 45 days. The National Association of Realtors is strongly backing the new bill. NAR President Ron Phipps states, “The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure”.
A short sale, as an alternative to foreclosure, can benefit distressed homeowners and lenders alike. The distressed homeowner can avoid foreclosure with a short sale, and they typically cost less for the lender, too. However, the problem with the current process is that lenders often make several delays in their approval process. In many cases, potential buyers don’t hear anything from the lender for months, they then lose patience, and the property goes into foreclosure. So while a short sale can be a great option for all of the parties involved, if it is not approved in a timely manner, much financial and emotional stress can result.
Despite the good intent of this new bill, Bob Hunt, a columnist at Realty Times and a former NAR director, argues that it may not be an effective solution to the current problems. The details of the bill state that the 45 day period will not officially begin until the servicer has received the following: a written request from the borrower, a copy of an executed contract between the property owner and a prospective buyer, and “all information required by the servicer”. Hunt notes, “in [...] our marketplace the #1 culprit responsible for the excessive time taken for short sales is that the servicer continually requests information that has already been submitted”. Although, Hunt predicts that the bill offers too many loopholes to potential offenders, only time will truly tell.
From an optimistic standpoint, let’s hope that Congress will swiftly pass the purposed bill, and improvements to the short sale process will soon follow.
Courtesy of NAR and Realty Times
Whether you’re a buyer, a seller, or one of the millions currently trying to avoid foreclosure, Angel Lynn Realty is your trusted source for buying a home and your understanding expert in the short sale process.
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