Short Sale Standards May Answer Present Difficulties

Anyone who has had experience with short sales, whether agent, buyer or seller, knows that the system is broken. In Maryland, the statistics show that only 1 in about 30 short sales actually make it to settlement. (Those stats were from the summer, it might have gotten better since then). The problems with the short sale transaction are many-fold. Often buyers don't hear from the lender for weeks or even months, and tire of waiting, so they rescind their offers and move on. Sometimes lenders aren't realistic in what they will consider a reasonable price. Mostly, lenders are simply overwhelmed and don't have the systems in place to deal with the volume of distressed properties they have.

According to a recent article in Realtor Magazine, Congress has the problem on their radar screen, NAR Vice President Ron Phipps testified about the problem before the U.S. House Financial Services Committee this fall.

Fannie Mae and Freddie Mac conservator James Lockhart was present at the NAR Convention in Orlando last weekend, and assured attendees that Freddie and Fannie are implimenting changes to help. They are ramping up their staff and making structural changes to better deal with the volume of problems. Freddie is allowing lenders to modify their subprime loans into 40-year, lower interest-rate mortgages. Borrowers are able to roll up to 6 months' missed payments into an unsecured second loan.

The Federal Housing Finance Agency will announce a streamlined short-sale policy that will probably go a long way in helping to focus lenders' attention on the problem, and also provide guidelines to facilitate a smoother process.

NAR has made the problem part of the four-point legislative plan that it wants Congress to take up before the end of the year. Whether they will or not is in question. No promises were made, other than "soon". Many of us hope soon means soon.

               The Highland Real Estate Group 
                                   Chris & Karen Highland
                      Frederick County MD Real Estate Agents
                    Specializing in Frederick County Real Estate 
                                          301-831-9947
                                  Real Estate Teams, LLC
                                     isell4u2@msn.com 
                                    Pictures of Frederick