July 23 (Source: Merced Sun-Star) – The San Joaquin Valley housing market has little chance of recovering as long as lenders continue to put up barriers blocking the short sales of homes. The experts who know the process best are real estate agents, and they went public Thursday, complaining about lenders and loan servicers.“Lenders are out of touch with the realities of the market and the consequences to struggling homeowners, and the result is unnecessary foreclosures that only make California’s economic problems worse, hindering a desperately needed recovery,” said Don Faught, treasurer of the California Association of Realtors.
Selling homes in this economic environment is difficult enough without lenders adding to the problem by creating artificial roadblocks.
Short sales involve homeowners with a demonstrated hardship, such as losing a job. Instead of going into foreclosure, they negotiate an agreement to sell their houses for less than the balance owed on their mortgage. It helps their neighbors because there’s one less boarded-up home on the block.
During a Fresno news conference, the group released results of a statewide survey in which most real estate agents say that closing short-sale transactions was “difficult” or “extremely difficult.” The main obstacles cited by the Realtors were lenders’ slow response to a short-sale package, repeated requests for documentation and poor communication with lender representatives.
The lenders’ inability to process short sales has caused gridlock in the real estate market and affected the Valley’s overall economic recovery. The Realtors association said that by “accelerating the pace of short sales and reducing the inventory of bank-owned homes on the market, short sales can play an important role in our state’s economic rebound.”
The Realtors association offered some suggestions to improve the process: Appoint a single point of contact for each short-sale transaction; when lenders accept a written short-sale offer, they should halt foreclosure proceedings; when a property in escrow mistakenly proceeds to foreclosure, despite the existence of an accepted offer from a qualified buyer, reverse the transaction; and work with the association to educate Realtors about steps being taken to improve the process.
With short sales accounting for 20 percent of all transactions, even in a flawed system, it’s crucial to solve the problems. By reducing the number of foreclosures and getting solid buyers into distressed homes, everyone should benefit.
Editorials are the opinion of the Merced Sun-Star editorial board. Members of the editorial board include Publisher Eric Johnston, Executive Editor Mike Tharp, Online Editor Brandon Bowers and Guest Editor Irene de la Cruz.
Source: Merced Sun-Star
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A service of YellowBrix, Inc. Publication date: 2011-07-23
