Posted on Friday, March 18, 2011
Ninety-four percent of Realtors surveyed by the California Association of Realtors (C.A.R.) participated in a short sale transaction during 2010, demonstrating the growing presence of short sale listings in today’s distressed real estate environment.
Despite increased market interest in the short sale as an alternative to foreclosure, C.A.R.‘s study found that fewer than three out of five actually close in California. The trade group says this glaring fact illustrates “the complexity and difficulty of navigating lenders’ and servicers’ short sale procedures.”
Beth L. Peerce, president of C.A.R., called the ‘three-in-five’ success rate “disappointing.” She said, “Many underwater homeowners who have been hit by the recent economic crisis can no longer afford to stay in their home and just need to sell their home as expeditiously as possible are
unable to largely because of the complex and cumbersome short sale process.”
While 10 percent of the California Realtors surveyed said closing their most recent short sale transaction was “easy” or “extremely easy,” nearly three-fourths (70 percent) said it was “difficult” or “extremely difficult.”
According to C.A.R., the most frequent problems Realtors cited in working with lenders and servicers on a short sale included unresponsiveness, onerous procedures, and long processing delays.
“The lack of standardization, long approval process, and lack of lender approvals are hampering what should be a 45-day short sale process,” Peerce said. “Instead we’re hearing the typical response time for lenders is at least 60 days, and in many instances, their response time exceeds six months.”
More than half (63 percent) of Realtors said that lenders took more than 60 days to return a written response of the approval or disapproval of the short sale agreement submitted. Only 4 percent said they received a written response in less than 14 days.
“The survey results show that the short sale system is clearly flawed and must be standardized and streamlined to reduce the inventory of foreclosures,” Peerce said. “Increasing the number of successful short sale transactions is one important way we can help California families avoid foreclosure and move our economy closer to recovery.”
By: Carrie Bay DS News