Relief may be on the way for homeowners who are underwater with their mortgage - owe more on the loan than the current value of the house - with legislation that would impose a deadline on lenders to respond to short-sale requests. The bill is supported by the National Association of Realtors.
The legislation, H.R. 6133, "Prompt Decision for Qualification of Short Sale Act of 2010," was offered this month in Congress by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). The bill would require lenders to respond to consumer short sale requests within 45 days.
"The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth," said the national Realtor group's president Vicki Cox Golder. "While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times."
Jeff Bell, president of the Silicon Valley Association of Realtors, said speeding up the process of approving or disapproving a short sale will help all parties in a transaction and step up market activity.
"The bill addresses the timing of the decision, not the lenders' criteria for approving or disapproving the request," Bell said. "Timing is very important in a real estate transaction. Many of our members have expressed frustration about the difficulty of obtaining approval from mortgage lenders for short sales. Due to these long waiting periods, many consumers have missed out on other opportunities. We are also seeing a number of potential buyers walking away from short sale properties because of these delays."
"As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation's economy," said Golder.
The number of potential short sale properties is rising across the country. According to NAR data, in the second quarter of 2010, Nevada, California, Florida and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent and 24 percent, respectively.
"Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives," Golder said.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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