With the current housing crisis, many homeowners are struggling to pay their mortgages and keep on top of their monthly payments. Banks are there to help these people, but are going through unnecessary delays which are not of much help to people that are in a bad situation. A good friend of mine was unable to keep on top of all of her bills and ended up getting herself into some serious trouble. When she went to the bank for help, she came home feeling quite relieved that they could help her out. Unfortunately it has been weeks now and she is still waiting to hear from them! In the meantime she is getting herself more and more into debt. Something that should have been easy has become a long-winded process that is of no help to anyone; not even the lenders.
According to Duane Gates, a short sale specialist from the House Buyers Network, lenders are taking a lot longer to approve a short sale. When a short sale takes place, a struggling homeowner may ask the lender to take an amount a little less than what they are owed on their house mortgage and give them a pardon on the rest. My friend for example had a mortgage balance of about $100,000 and managed to find a buyer who was willing to pay $95,000 for her house. So, it is $5000 less, but in the long run it would solve my friend’s problems if the lender would accept this amount and close down her loan. That way she would not need to struggle all the time trying to come up with the monthly payment to the mortgage lender.
In an ideal world, this would have been a very quick and simple procedure. The buyer is happy with the bargain, my friend is happy to make a quick sale and the mortgage lender gets his money back. Everyone wins. The short sale procedure is beneficial to everyone. My friend avoids horrible foreclosure procedures and the lenders recoup most of their costs and do not have to go through the hassle of throwing people out and trying to sell the place again. Clayton Holdings, a provider of loan analytics, say that lenders typically lose 19% of a mortgage value in a short sale, but can lose up to 40% on loans that go into foreclosure. Quite beneficial with a quick sale, if you ask me!
Buyers, who are really struggling and want to make a short sale, cannot afford to keep waiting for a bank to make a decision. They need a quick decision so that they can move up and ahead of their debts. Getting a short sale approved is difficult with all of the foreclosure prevention efforts that are currently in place. The majority of mortgages are pooled and secure, making it difficult to get approval of mortgage changes. Something needs to be done to make quick sales an easier option for struggling homeowners who are trying their hardest to keep on top of the collapsing real estate market.
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