Bill sets 45-day deadline on lender short sale decisions

Homeowners aren’t the only ones who complain about the long short sale process. Real estate brokers and agents also get stressed about the amount of time a short sales normally take to complete the process. Many complaints over the last few years from homeowners and agents alike have encouraged two U.S. Congressmen to support a bill that would require lenders to respond to short sell requests within 45 days.
We here at LoanSafe.org have been observing and reporting about the short sale process since 2007. Since this time we have found the process generally takes about four to eight months to complete the transaction.
More and more lenders have been providing short sales as they are a more practical alternative to foreclosure. According to CoreLogic, U.S. real estate short sales have just about tripled since 2008.
At the government-sponsored enterprises (GSEs), applications for short sales have increased more than 150% in the second quarter of this year, compared to the amount in 2009, according to a report by the Federal Housing Finance Agency.

The bill was filed September 15 by U.S. representatives Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). This bill is H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010” and is strongly supported by the National Association of Realtors (NAR).
“The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth,” said NAR President Vicki Cox Golder in a news release. “While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times.”
According to NAR, in the second quarter of this year Nevada had 32% of all properties on the market said to be a short sale, with California 28%, Florida 27%, and Arizona 24%.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” she said. “Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price,” Golder said.
Obama and his administration have made attempts to promote short sales with the Home Affordable Foreclosure Alternative Program. The HAFA program gives cash incentives to first and second lien holders to allow short sales to move forward. However, this program has not been successful because it allows lenders to participate voluntarily, which has led to a great deal of them refusing to participate in this program.