Four out of 10 California Realtors say the last short sale they handled didn’t close, and most are frustrated at how long it takes lenders to respond to offers and other inquiries.
The California Association of Realtors says a survey of 2,150 members highlights the lack of standardization among lenders, long approval timelines, and a reluctance on the part of lenders to approve short sales.
Asked in December whether their most recent short-sale transaction closed, 57 percent of California Realtors said it did, and 43 percent said it did not.
Once Realtors had submitted a short-sale agreement to lenders, 63 percent said it took more than 60 days to get a written response approving or disapproving the sale. Only 4 percent said they received a response in less than 14 days.
Nearly half (44 percent) said it took more than five business days to get a response to other types of inquiries about a short-sale property, with only 14 percent saying lenders responded within one day.
Some 64 percent of Realtors surveyed reported that they were "not satisfied" or "not at all satisfied" with how long it took to hear back from lenders. About one in five (22 percent) said they were "satisfied" or "extremely satisfied" with the timeliness of lenders’ responses.
The survey was delivered to 20,000 Realtors, and 94 percent of those who filled it out said they handled a short-sale listing or participated in a short sale in 2010.
The Obama administration has relaxed some requirements for short-sale incentives that the Treasury Department provides to borrowers and lenders through the Home Affordable Foreclosure Alternatives program (HAFA), and said it would hold lenders to stricter timelines for approving or rejecting transactions.
CAR President Beth Peerce wrote the Treasury Department and the heads of Fannie Mae and Freddie Mac in December, saying HAFA short-sale approvals "are not only few and far between, but also generally unworkable."
When the Nevada Association of Realtors in August surveyed homeowners who’d been in foreclosure, 61 percent said they’d never heard of the HAFA program. While 10 percent of those surveyed said they’d used HAFA, only 2 percent said it did any good.
Loan servicers working for Fannie Mae and Freddie Mac signed off on 107,953 short sales in 2010, nearly double the 55,447 approved in 2009.
But the robo-signing controversy may have helped put a dent in the pace of short sales in the final three months of the year. Fannie and Freddie’s loan servicers signed off on 25,734 short sales during the fourth quarter of 2010, down nearly 13 percent from the previous quarter.