California is one of the states that has been most affected by the housing bust and foreclosure crisis. Over the past year, close to one half of home sales state-wide are sales of distressed properties. In some parts of California, the numbers are even worse: last month, in Madera County, 86% of home sales contracts accepted were for distressed-property sales.
A new move by members of the California Association of Realtors (CAR), as reported by DSNews today, may help to streamline short sales for homeowners across the country.
California, like Washington, is a state that implements non-judicial foreclosure. This means that lenders can pursue foreclosure without going through the courts. Foreclosure is initiated by mailing a defaulting borrower a notice of foreclosure.
CAR recognizes that short sales are important to clearing out the inventory of distressed properties, and that short sales will continue to be important in the coming years. But they are concerned that some of the requirements that lenders have in processing short sales may hold up future transactions. So CAR has sent letters to many of the major lenders, including JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo, with recommendations for streamlining the short sale process. These recommendations include:
- asking lenders to disclose whether or not they actually own the original loan
- asking lenders to disclose who has the finally authority to approve a short sale (e.g. the lender or the investor or some third party)
- requesting that lenders implement a standard process to pre-approve a request for a short sales before a property is listed for sale
- asking that lenders increase the amount that junior lenders may receive from a short sale, as second mortgages often hold up short sale approvals.
Although this request is coming from CAR in California, if the lenders approve CAR’s requests, this will help to further speed up the short sale process across the country. The number of short sales continues to grow nationwide. Short sales now account for 25% of residential property sales - up three times from two years ago.
If you are a homeowner, and would like to learn more about short selling your home, please go to: http://seattleshortsales.com/homeowners/
If you are a real estate agent, and would like to learn about our no-fee short sale service, please go to: http://seattleshortsales.com/agents/
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