Good News for Short Sales – At Least We Hope
April 30, 2012
I am a licensed attorney with Bankruptcy experience and I’m also a licensed real estate broker so when the housing crash hit back in 2007 I was in a position to help a lot of people. I help a lot of people that don’t quite know what to do with their upside down mortgage. Some have maxed out their credit hoping this economy would turn around and now realize it still hasn’t happened. We all thought this would last maybe a year or two back in 2007 when I first started doing short sales. Most people in the business thought the downturn would be a year or two and then we would be back to normal. Well it’s still here and it only looks like it’s getting worse when it come to upside-down mortgages in large parts of California.
The biggest problem with short sales specifically is that the banks have done a VERY poor job of getting them through the process. I know that the banks weren’t in the business of handling large volumes of upside-down mortgages but they should be doing a better job than what has happened thus far.
Now something new and hopefully exciting is happening in the world of short sales. As some of you might know the Attorney Generals mediated a settlement with the 5 largest banks to help struggling homeowners. While most homeowners won’t actually receive any money (and I seriously doubt there will be many principle reductions) there is one thing really good that appears to be actually happening.
Bank of America along with Fannie and Freddie have instituted new procedures focused on helping homeowners complete short sales in order to avoid foreclosure. They have finally realized that a foreclosure is the worst option and should be the very last option. Most people who can’t afford their home want to minimize the damage moving forward and choose a short sale as the best option.
I help a lot of people and have been doing short sales for years now. I have done hundreds of them. The biggest problem I run into with short sales is that the banks take so long to process what should be fairly simple paperwork. This causes buyers to give up and move on. This causes the homeowner to get frustrated and give up as well.
The NEW process that is being implemented is intended to get an answer within 30 days of a full package being submitted. In my world this is an incredibly good goal. Fannie and Freddie are shooting for a 60 day period and believe me that is good as well.
The problem has been with the process that banks have been using… it has been a process that required them to finish one task before moving on to the next task. Well now they will be parallel tasking and working on multiple tasks at once. I have been screaming at the top of my lungs for this from day one. Well now, thanks to litigation and severe penalties, they appear to be getting the message.
Just recently my staff have been participating in training workshops put on by BofA regarding implementation of these new protocols. We are very excited about this and we hope and pray that the banks will finally make this process as graceful for homeowners as possible. Losing one’s home is one of life’s major distressful events. I have a box of tissue in my conference room because when everything has failed and a homeowner finally realizes that a short sale is the least damaging and only option left they usually have an emotional reaction. The fact that the banks were making the process even more distressing than it already was is kind of like rubbing salt into a wound.
Well now we should be able to make this process easier and I will go out on a limb and say that I think this will help our real estate market and economy as well. I do want to reserve the right to change that opinion should this all be much ado about nothing. I am optimistic now and I honestly can say I haven’t said those words in a very long time…
For those that can’t afford their mortgage payment and are substantially upside down – a short sale is the least damaging approach. For some a short sale and a Chapter 7 Bankruptcy is the best approach. For some a Chapter 13 might be the answer. It’s certainly is complicated and everyone’s situation is different. It takes me upwards of an hour with some people to fully analyze their situation and explain what options are available and I do this without charge.
My best advice is to be careful who you listen to and make sure you have current information because there is a lot of bad information out there.
If you have any questions or concerns about your own personal situation I would be happy to give you a FREE legal consultation. You can call me at 916.442.6400 or send me an email at email@example.com or go to my website www.upsidedownca.com.
California Attorney and
licensed Real Estate Broker