Why do short sales take so long?
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While short sales offer homebuyers discounted deals, they also create headaches for bargain shoppers.
Short sales often require several months to close. Why is that?
First, lenders - banks and mortgage companies - must review the request for a short sale and dig deep to verify that a homeowner truly can't pay the mortgage. If a lender agrees to a short sale, it also agrees to take a loss on the loan.
With massive increases in the number of national foreclosures and short sales, lenders across the United States fight just to keep up with the paperwork.
"The mortgage companies are overwhelmed," said Veronica McCants of RE/MAX Land and Homes in Victoria. "If the average person puts in a request for a short sale, they just go into a stack of thousands."
McCants said seven of her agents became certified to handle short sales, which helps homeowners avoid foreclosure.
Steve Hipes, chairman of South Texas for Prosperity Bank, said mortgages for Victoria County homes are often sold to companies outside the county.
Local banks, then, aren't swamped with short-sale requests, he suggests.
Sheryl and John Canter experienced the frustration recently of buying a home via short sale. While some buyers wait for five months or more, the Canters waited three months before they closed on the home.
"Short sale. I hate that word. It's a misnomer," John Canter said.
"You never know what phase you're in. It took weeks and weeks to get any little bit of information," Sheryl Canter said. "We didn't know where in the stack we were."
Luann O'Connor, a local real estate agent, said a lot of buyers opt out before they get long-awaited short sale answers from lenders.
Comments
And when "written off" won't the short seller than recieve a 1099 for the amount?
November 9, 2009 at 7:32 a.m.I would take a long time too, if I was going to take an unsecured debt from an already irresponsible party. The likely scenario is a loss for the mortgage company. In my business, I rather foreclose and take my chances at recovery in that process, than to voluntarily bite the bullet.
Is there really that much of this going on in Victoria and surrounding areas?
November 9, 2009 at 7:29 a.m.