Saturday, January 16, 2010

Obama Putting the "Short" Back in to Short Sale

For any buyer, seller, real estate agent, or lender who has been involved in a short sale, knows there is nothing short about the a short sale. 

A short sale by defiinition is when a seller owes a loan amount higher than what home is being sold for.   It can take 3-4 months or longer to complete a short sale transaction, and many buyers end up not waiting until the end. 

Obama admistration has made strides to put pressure on banks who owe federal goverment TARP money to implement these new guidelines, such as, Bank of America and JP Morgan Chase for example.  These banks will need to respond to an offer within 10 days, which is much shorter than a typical 60 day wait that we commonly see.  Under these new requirements, lenders will be required to pay $1500 in sellers moving expenses.  Lenders and investors will also receive financial incentives.   Freddie Mac and Fannie Mae will not have to implement the new guidelines.  There will be financial penalities if these lenders do not comply and these guidelines are to be implemented by April.

While this is the right step in getting lender's short sale industry standardized, due to the high volume and disorganization these lenders have, it seems will be a very difficult task to implement, although very, very much needed.  Short sales account for 20% of the homes for sale in Orlando area.