Short sales represent a way out for distressed homeowners who want to avoid putting their properties on repo homes listings. In short sales, homeowners will sell the house at less than the total amount of mortgage they owed.
This foreclosure prevention method requires the complete cooperation of lenders who will agree to accept the sale price as settlement of homeowners’ debt. Short sales represent a good option for almost 20 percent homeowners to avoid putting their properties on repo homes listings.
However, real estate experts said that the process of completing a short sale transaction has become complicated. This resulted for hundreds of pending short sales deals to fail as potential homebuyers grew tired of negotiating and then waiting for lenders to complete an approval process.
RealtyTrac vice president Rick Sharga noted that short sales require lot of paperwork, adding that majority of lenders are overwhelmed by the process.
The need to do some changes to improve the short sales process to live up to expectations that it could help homeowners protect their properties from repo homes listings, has prompted the Bank of America to revamp the way it handles short-sale requests.
A typical short sale request takes about 45 to 60 days to process at banks, according to real estate executive David Sunlin. Under the revised plan of the Bank of America, the response time for a single short sale application will take a week or less.
Sunlin explained that banks usually do not want to lose money. However, he added that homeowners’ demand for short sale as a way to help them avoid putting their properties on repo homes listings is rising.
He said the use of short sales to avoid foreclosures was not fully explored until today and this resulted to the double increase in short sale deals in 2009 compared to figures in 2008.
The Bank of America’s plan will allow it to reach out to distressed homeowners and start working with them the moment they decide to put their properties on short sale.
The current process of assessing requests for short sales starts when delinquent homeowners approached the banks with a proposal to sell their distressed properties for less than their outstanding debt to avoid repo homes listings.
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