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Posted by on Sep 17, 2010 in Short Sales | 17 comments | Print Print

Short-Sale Legislation

From reoi.com:

Real estate brokers who have long complained about the time it takes to complete a short sale now have two U.S. congressmen in their corner who are sponsoring a bill that would require lenders to respond to consumer short sale requests within 45 days.

Lenders have been pushing more short sales as the industry recognizes them as a viable alternative to foreclosure. Short sales in the U.S. have tripled since 2008, according to data analyzer CoreLogic.

At the government-sponsored enterprises (GSEs), short sale volume in the second quarter was up more than 150% from volume in 2Q09, according to the Federal Housing Finance Agency’s “Foreclosure Prevention & Refinance Report.”

The National Association of Realtors (NAR) is supporting the bill, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010.” It was filed Sept. 15 by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). The bill was referred to the House Committee on Financial Services on Wednesday.

REO Insider is currently running a survey asking readers about the longest time that it has taken to complete a short sale. So far, 81% of respondents have said it takes more than 91 days, with 44% of those saying it takes 91-180 days.

17 Comments

  1. May market clearing starts!

  2. Our legislators aren’t all that bright.

    The problem is that banks and servicers are simply responding to the incentives the system gives them. It’s better for servicers to keep serving (to keep getting revenue). It’s better for banks not to sell, because then the can carry the asset on their books at a wishing price rather than a market price.

    The real solution is to give banks an incentive to sell houses at market prices rather than to add yet more bureaucracy. If banks had a disincentive to carry overvalued assets on their books, they’d unload the overvalued assets. Duh.

    Of course, the politicians are sleeping with the bankers, so that’s not going to happen.

  3. Neat idea, but here’s how it will work in practice:

    Realtor: Ok, your 45 days are up, can I get an answer?
    Bank: We haven’t looked at it yet. Can you withdraw the request and resubmit to restart the clock to give us time?
    Realtor: Well, my buyer is anxious to get moving on a purchase, so I would really like you to comply with the law.
    Bank. Ok. The answer is no.

  4. Wish it was so, however, I do not believe it…if it ain’t broke…

    ps: RB Res nailed it on the proposed rules….micro-managing acceptance offers from DC, seriously???

  5. Nice link. The highlight below, which caused commenters to rally at the thought, though Kingside reminded, ‘we’ve heard this for three years’:

    Hello,

    If you are receiving this email, I currently am working on your short sale file or have worked on your file in the past few months. PLEASE READ THIS WHOLE EMAIL AND FORWARD TO ANY PARTIES WHO MAY BE WORKING ON A SHORT SALE FOR WELLS FARGO.

    Due to recent industry changes, we at Wells Fargo will no longer be granting any extensions for short sale close dates or postponing foreclosure/trustee sale dates. If you were issued an extension letter dated 9/14 or earlier, those extension letters will be honored, but no further extensions will be granted. Files must close by expiration date on the original approval letter or they will be removed. If your approval expires 9/15 or 9/16, you will have 48 hours to get me the final HUD for approval and close.

    Please let me know if you have any questions! Thank you!

    Timothy A. Williams

    Wells Fargo Home Mortgage Liquidation

  6. JtR (or anyone else),

    Do you have a fax number, email or mail address for Timothy Williams at Wells Fargo Home Mortgate Liquidation?

  7. “Please let me know if you have any questions! Thank you!”

    Don’t you just love people who use exclamation marks like candy! They are so sweet! LOL!

  8. “a bill that would require lenders to respond to consumer short sale requests within 45 days.”

    Translation: All offers are automatically declined on day 45. Please submit a new offer.

  9. In the first post, the Realtor starts off by saying this:

    “I’m currently working 36 short sales. Some are “listings”, some are “flip” deals.”

    Translation: Some of them are on the up and up (“listings”), and some of are me committing fraud against the bank by me giving them a low appraisal and then having my buyer turn around and sell it for more to another party after it closes (“flip” deals).

    What a scumbag.

  10. Funny thing is I got that Wells fargo email also. over the past year I have been averaging about 1 REO assignment a month from PAS(wells fargo). So far in Sept I have received 10 from them. My cap is 50 with them. This year I have been holding around 5 assets on any givin day from them . This is a great sign that the drip may turn more into a stream very very very soon.

  11. I can understand the attraction of buying “new”. The house is for sale and you can reach a deal and close the transaction in finite time. What’s the alternative? A lot of OPTs, a few REOs, and short sales.
    An “owner” of a short sale is not able to commit to any deal without the bank’s agreement and there’s no incentive for any of the parties on that side to move the deal along to closure. Until the deal closes, the bank gets to pretend their asset’s value has not fallen, the servicer continues to collect fees, and the “owner” lives rent-free! Why do I as a buyer want to waste my time hoping that one day they will want to close the transaction so that I can actually buy a short sale? Foreclose and get it over with!

  12. “Why do I as a buyer want to waste my time hoping that one day they will want to close the transaction so that I can actually buy a short sale?”

    Because most buyers think exactly the way you do, and if you have the flexibility and stomach to wait, you won’t have any competition if it is the right house.

  13. I have no problem with speeding up legitimate short sales, but what about speeding up foreclosures??

  14. Ultimately the rate of foreclosures and short sales depends on how much damage the banks’ balance sheets can afford. That is the rate limiting component, thus the “foreclosure roulette”.

  15. Funny thing is I got that Wells fargo email also. over the past year I have been averaging about 1 REO assignment a month from PAS(wells fargo). So far in Sept I have received 10 from them. My cap is 50 with them. This year I have been holding around 5 assets on any givin day from them . This is a great sign that the drip may turn more into a stream very very very soon.

    vegasandre | September 17th, 2010 at 1:57 pm
    —————-

    From your lips to God’s ears, vegasandre. Some of us have been waiting a long, long time for this charade to be over with.

  16. yes it finally seems we are getting some action. take a look at this article from palm beach co in FLA where there has also been a cough cough “moratorioum ” for awhile.

    http://weblogs.sun-sentinel.com/business/realestate/housekeys/blog/2010/09/foreclosures_accelerating_in_p.html

    The number of Palm Beach County foreclosure filings rose dramatically in August for the second consecutive month as officials keep moving a backlog of cases through the court system.

    The county had 6,035 filings last month, up 61 percent from July and 45 percent from August 2009, RealtyTrac Inc. said Thursday. Palm Beach County had the state’s third-highest foreclosure rate, with one in every 106 homes in some stage of foreclosure last month.

    hopefully you guys in the great Ponzi scheme known as coastal california real estate will be getting in on the action within next 6 months.

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