Lenders have made some improvement in
the eyes of California real estate agents in their handling of short sales, but
the process remains problematic according to the California Association of
Realtors® (C.A.R.) The industry group just released results of its third annual
survey on short sales and found 64 percent of its members have had difficulty
closing these sales with 34 percent describing the difficulty as "extreme." A short sale is one where the lender agrees
to release its lien in return for a payoff less than the actual balance of the
mortgage.
When C.A.R. first conducted the survey
in 2010, 70 percent of respondents said they had experienced difficulty with
their most recent short sale transaction.
That number rose to 77 percent in 2011 with 56 percent ranking the
difficulty as extreme. Nineteen percent described their most recent transaction as
easy or extremely easy, up from eleven percent last year
Lender response time to the short
sale package and communication with the lender, the two problems most often cited
by Realtors, each ticked up slightly to 67 percent and 55 percent
respectively. Problems with appraisals and
dual track issues where the lender foreclosed in the midst of the short sale
negotiations were named as areas showing the greatest relative improvement.
"While it's encouraging that lenders and
servicers are making headway in improving their short sale processes, they still
have more work to do to ensure that not only Realtors, but also home sellers
and buyers have a better experience when dealing with short sales," said C.A.R.
President LeFrancis Arnold.
Overall satisfaction in working with
lenders in short sales improved over the past year, with 59 percent expressing
dissatisfaction, down from 75 percent in 2011. Additionally, more than
six in ten Realtors said they would not refer buyers to the lender for future
home purchases, down from 78 percent in 2011.
"A recent change announced by the
Federal Housing Finance Agency (FHFA) to align Fannie Mae and Freddie Mac short
sale guidelines will allow lenders and servicers to quickly and more easily
qualify borrowers for a short sale, further improving the process," said
Arnold. "C.A.R. has long advocated for a standardized short sale process,
and agreeing to a more standardized process may be the best way for banks,
servicers, REALTORS®, and homeowners to facilitate the sale of homes
that qualify."
C.A.R. also includes a new Lender
Performance Index (LPI) which measures Realtor satisfaction with lenders. The LPI has risen steadily over its three
year history, but C.A.R. notes it is far below the median of 50, "indicating
there is still room for lenders to make improvements in their communications
and processes." The trade group says it
considers any index value above 75 as high and below 24 as low.
