WASHINGTON (April 13, 2011) – A new bill to improve the process for approving short sales may soon bring relief to distressed home owners who are unable to keep their homes and hope to avoid foreclosure. The bill, introduced in the U.S. House this week, would impose a deadline of 45 days on lenders to respond to short sale requests.
“The current short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a home owner from foreclosure,” said NATIONAL ASSOCIATION OF REALTORS® President Ron Phipps.
The short-sale process has frustrated buyers because lenders are unable to decide whether to approve a short sale, he added. “After many months of delays, and with no response from lenders, potential buyers are losing patience and cancelling their contracts, often resulting in the property entering foreclosure. A short sale minimizes the negative impact on sellers and generally costs the lender less than a foreclosure,” said Phipps.
About 13% of recent home sales are short sales, according to NAR data. “Streamlining short sales transactions will reduce the amount of time it takes to sell the property, improve the likelihood that the transaction will close, and reduce the overall number of foreclosures. This benefits sellers, lenders, buyers, and the entire community,” Phipps concluded.