The government has moved to increase the incentive for lenders to allow short sales on their defaulted loans. I welcome this, although there is nothing specified as to how they’ll hold banks accountable for streamlining the process, which is rife with red tape, bureaucracy and long waits. If they truly want to make short sales happen more frequently to help more distressed homeowners out, they would mandate a maximum of 6 weeks for a short sale approval.
The current system, which varies from lender to lender (negotiator to negotiator, really) is unsustainable. I did a successful, relatively fast short sale with Option One in 2007. The 2009 closing was a year-long nightmare that required heroism. Same lender. Go figure.
The administration has banned the insidious practice of lenders cutting the commission on short sale brokers, which I applaud. This is another good sign, and I hope they continue their efforts with a push to make the approval process shorter and simpler than the current disaster most transactions now are. There was a reference in the Inman News report that they want the lenders to give the sellers at least 90 days for the short sale, another positive sign.
Short sales in Westchester County are now part of our vernacular; moreover, the stakes are high. Often, the prices are the among the highest in the nation. A deficiency judgment in Rochester could be $10,000. In Westchester, it could be $200,000. People that make a good faith effort to do a short sale should not have their ordeal magnified by an inefficient system.
I am encouraged by this move.
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