The real estate market continues to frustrate sellers, buyers and real estate brokers alike. Aside from the record number of foreclosures and declining home values, much is said about the problems plaguing the short sale process. Homeowners desperately wanting to avoid foreclosure continually lose buyers because lender approvals are slow to come to fruition. This blog will explain how some of the delays occur, and offer some tips on how to avoid them.
Unlike traditional home sales, short sales must go through an arduous consent process where the holder of the mortgage must agree to the price, along with other parties, such as investors, mortgage insurers and other equity holders. Coordinating communication between these parties may be difficult, and each may have different agendas or goals with their investment in the loan. Not all parties may be agreeable to a particular short sale price; thereby frustrating the process.
Further, mortgage servicers tend to benefit when the process slows to a crawl. While these servicers don't own the mortgage, they are responsible for communicating with the holder when the homeowner wants to negotiate a short sale. They collect additional fees when mortgage payments arrive late and they stand to make more money when the property forecloses. Despite this apparent conflict of interest, mortgage servicers may be the cause in the delay of short sales. In fact, the president of the California Realtors Association wrote an article in several newspapers blaming mortgage servicers for prolonging short sales in an effort to create more foreclosures. She seeks government intervention to enact changes.
In the meantime, distressed homeowners can follow these tips to help expedite their short sale:
- First, try to obtain an offer that reflects the best possible market value. By getting an optimal return for investors, it is easier for all parties to agree.
- Second, make sure to secure releases on secondary liens early in the process. Preventing substantial losses will help investors accept less than what they would have made on the loan.
- Lastly, having complete applications with all supporting documents and addenda will help mortgage holders process all the information necessary to accept a short sale offer.
If you have questions about your legal rights in the midst of a short sale, contact a Chicago consumer law attorney from Atlas Consumer Law