Posted on Wednesday, October 13, 2010
The National Association of Realtors (NAR) is holding meetings with the nation’s four largest lenders to address growing concerns about their processes for short sales and selling REO homes.
The trade group’s leadership team has already met with representatives from Bank of America and Wells Fargo to discuss, as NAR put it, “the problems Realtors face every day when working to get deals to the closing table.” Meetings are scheduled later this year with Chase Home Mortgage and CitiMortgage.
According to NAR’s report detailing the content of the meetings, both BofA and Wells “sought to assure NAR that they understand the problems our members are facing and are working hard to address them.”
NAR says BofA’s primary goal is to provide a favorable customer experience, solutions for distressed homeowners, and profitable growth.
Wells Fargo briefed NAR on its originations approach, including the responsible lending principles that were adopted at the beginning of the crisis and resulted in three years of essentially no growth at the company. However, the bank says those principles have laid the groundwork for more growth now and fewer distressed mortgages to resolve.
A number of key principles for improving the working relationship between lenders and Realtors were addressed, including transparency into the process. NAR says from a Realtor’s perspective, too often lenders’ and servicers’ decisions are made in a “black box” and appear to be inconsistent.
The trade group is urging lenders – and the GSEs – to disclose more detail about their policies for underwriting loans, valuing property, selecting brokers for REO listings, and evaluating and approving a short sale in order to support Realtors’ efforts to close more deals.
As a result of the meetings that took place, NAR worked with Wells Fargo to post the bank’s Realtor Short Sale Guide online. Bank of America has launched a new site, which houses short sale education materials and webinars for real estate professionals.
NAR also addressed the issue of timely approvals with the lenders. According to the trade group, questionable delays often characterize the lenders’ loan approvals, with short sale agreements often taking months.
BofA and Wells both relayed to NAR that they have hired and are continuing to hire more staff, and are working to speed the process. NAR says at least one of the lenders has set up teams that work exclusively on purchase loans (as opposed to distressed short sales), so first-time homebuyers and other buyers can have their applications processed expeditiously.
According to NAR, the lenders are also working with mortgage investors (who own the mortgages and set the rules, including when to approve a short sale), to gain broader authority for the servicer to decide how to handle distressed properties.
With most short sales, the final approval still remains in the hands of the investor and other third parties, which can contribute significantly to lengthy delays, NAR explained. With broader authority, the trade group expects servicers to be able to establish more uniform, and more transparent, rules that will expedite decision-making.
NAR said in its report of the meetings, “The banks do not debate that there is a lot of room for improvement. NAR is not yet seeing improvement, and communicated that reality to the banks. We have resolved to work more closely together on solutions.”
According to NAR, these meetings mark a new phase of the relationship between Realtors and lenders, which will help to increase mutual success and support market recovery.
DS News Carrie Bay