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Lender Short Sale Performance Improving, but Remains Problematic: CAR

by devteam October 19th, 2012 | Share

Lenders have made some improvement inrnthe eyes of California real estate agents in their handling of short sales, butrnthe process remains problematic according to the California Association ofrnRealtors® (C.A.R.) The industry group just released results of its third annualrnsurvey on short sales and found 64 percent of its members have had difficultyrnclosing these sales with 34 percent describing the difficulty as “extreme.”  A short sale is one where the lender agreesrnto release its lien in return for a payoff less than the actual balance of thernmortgage.</p

When C.A.R. first conducted the surveyrnin 2010, 70 percent of respondents said they had experienced difficulty withrntheir most recent short sale transaction. rnThat number rose to 77 percent in 2011 with 56 percent ranking therndifficulty as extreme.  Nineteen percent described their most recent transaction asrneasy or extremely easy, up from eleven percent last year</p

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Lender response time to the shortrnsale package and communication with the lender, the two problems most often citedrnby Realtors, each ticked up slightly to 67 percent and 55 percentrnrespectively.  Problems with appraisals andrndual track issues where the lender foreclosed in the midst of the short salernnegotiations were named as areas showing the greatest relative improvement.  </p

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 “While it’s encouraging that lenders andrnservicers are making headway in improving their short sale processes, they stillrnhave more work to do to ensure that not only Realtors, but also home sellersrnand buyers have a better experience when dealing with short sales,” said C.A.R.rnPresident LeFrancis Arnold.</p

Overall satisfaction in working withrnlenders in short sales improved over the past year, with 59 percent expressingrndissatisfaction, down from 75 percent in 2011.  Additionally, more thanrnsix in ten Realtors said they would not refer buyers to the lender for futurernhome purchases, down from 78 percent in 2011.</p

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“A recent change announced by thernFederal Housing Finance Agency (FHFA) to align Fannie Mae and Freddie Mac shortrnsale guidelines will allow lenders and servicers to quickly and more easilyrnqualify borrowers for a short sale, further improving the process,” saidrnArnold.  “C.A.R. has long advocated for a standardized short sale process,rnand agreeing to a more standardized process may be the best way for banks,rnservicers, REALTORS®, and homeowners to facilitate the sale of homesrnthat qualify.” </p

C.A.R. also includes a new LenderrnPerformance Index (LPI) which measures Realtor satisfaction with lenders.  The LPI has risen steadily over its threernyear history, but C.A.R. notes it is far below the median of 50, “indicatingrnthere is still room for lenders to make improvements in their communicationsrnand processes.”  The trade group says itrnconsiders any index value above 75 as high and below 24 as low.</p

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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