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The latest California Association of REALTORS® Lender Satisfaction Survey report says lenders have made some progress in their short sale processes from a year ago. Sixty-four percent of California REALTORS® said they still experienced difficulty in closing short sales, down from 77 percent in August 2011 and 70 percent in 2010. The percentage of REALTORS® who reported short sales as “extremely difficult,” dropped from 56 percent in 2011 to 34 percent in 2012.
C.A.R.’s Lender Performance Index (LPI), which measures REALTORS®’ lender satisfaction levels, rose to 23 in 2012, up from 17 in 2011 and 16 in 2010. The increase in the LPI is positive, but the index is still below the median of 50.
According to the C.A.R. report, communication issues continue to be the biggest stumbling block to the process:
* Lenders’ slow response time to a short sale package, cited by 67 percent of REALTORS® in 2012, up slightly from 66 percent last year;
* Poor communication with lender representatives, cited by 55 percent of REALTORS®, unchanged from 2011;
* Repeated requests for documentation, cited by 50 percent of REALTORS®, down from 51 percent a year ago.
* Eight percent of REALTORS® reported the lender foreclosed on the home before the short sale transaction could be completed, down from 15 percent in 2011.
However, overall satisfaction in working with lenders in short sales improved, with 59 percent expressing dissatisfaction, down from 75 percent in 2011.
REALTORS® believe a more standardized process may be the best way to facilitate the sale of homes that qualify. “The Federal Housing Finance Agency’s decision to align Fannie Mae and Freddie Mac short sale guidelines will allow lenders and servicers to quickly and more easily qualify eligible borrowers for a short sale,” says Richard Miller, who is chief banking officer of Ratecomb and serves as affiliate chair of the Silicon Valley Association of REALTORS® (SILVAR). “We are seeing progress as all parties involved strive to maintain better communication and are proactive with solutions.”
SILVAR President Suzanne Yost adds, “Whether a struggling homeowner chooses the path of foreclosure or a short sale, the experience is both financially and emotionally difficult. We hope lenders will continue to make improvements so the process is both easier and quicker for homeowners.”
In another move to protect struggling California homeowners, the California Association of REALTORS® (C.A.R.) is sponsoring a bill so homeowners who face losing their home and have negotiated a short sale in good faith with their lender or servicer are not forced to go through foreclosure.
Assembly Bill 1745 (Torres, D-Pomona) prevents lenders or servicers that have agreed to a “short sale” from foreclosing on a home. For any number of reasons (e.g., sickness, job loss, etc.), a homeowner may be unable to continue making his or her monthly mortgage payment. Rather than go through a lengthy and stressful foreclosure process, the homeowner will attempt to negotiate a “short” sale with the lender in which the lender agrees to accept less than the amount owed by the homeowner.
Foreclosures and short sales are usually handled by two different departments within banks. Unfortunately, these two departments often do not communicate with each other, which can frequently result in a homeowner being foreclosed upon, despite having previously negotiated a short sale with the same bank.
AB 1745 will likely result in banks implementing a dual tracking system to prevent foreclosing upon homeowners with whom they have already negotiated a short sale. The measure is scheduled for hearing on Monday, April 30 by the Assembly Banking and Finance Committee.
Senator Debbie Stabenow (D-MI) has introduced S. 2144, a bill that would make the mortgage debt forgiveness rules permanent. The rules that currently provide relief for homeowners on short sales, foreclosures or loan modifications expire December 31, 2012. This relief is essential to affected homeowners so they will not have to pay tax on the forgiven debt.
A companion bill in the House will be introduced soon. See additional information here.
Both Freddie Mac and Fannie Mae are temporarily suspending all scheduled evictions involving foreclosed occupied single-family 1- to 4- unit residences with owned mortgages beginning December 19, 2011 through January 2, 2012.
The suspension will apply only to eviction lockouts related to Freddie Ma and Fannie Mae owned REO properties and will not affect other pre- or post-foreclosure processes. During this period, legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be permitted to remain in the home.
Silicon Valley Association of REALTORS® says ... 