FreedomCM heard that Bank of America has stopped doing short sales in Nevada – is that a good idea?
The whole idea is a slippery slope – once lenders allow a few homeowners to sell short, doesn’t it create the classic moral hazard?
Today there are MORE PENDINGS THAN ACTIVE LISTINGS in San Diego County. Let’s look at how many are short sales in process (the calculating is a little tricky, but I think this is accurate…..well, as accurate as the Sandicor MLS can be):
|Det & Att||Total #||Shorts||Percent|
Sure, there are plenty of short sales that are pending, it’s because they take so long to process them. We just received approval this week on one that we started five months ago!
The number of short sales closing each month are on the rise:
You’ll hear people say it is cheaper for a lender to short sale, rather then foreclose, but I’m not so sure.
1. The agents are driving the list prices ultra-low to make a short sale attractive to buyers.
2. The staffing needed to underwrite the sellers’ financial packages aren’t needed when foreclosing.
3. The additional number of debtors who could make payments, but are gaming the system.
The short-sale specialists include a clause for lenders to sign that releases the homeowner from liability on recourse loans, and I guess the banks are signing them. The debtors are getting off virtually scott-free.
Lenders should stop allowing short sales, and foreclose on anybody who can’t, or doesn’t want to make their payments. It would ease up on staffing requirements, streamline the liquidation, and probably put more money in lenders pockets.