A survey that gauges REALTORS®' experience working with lenders in their most recent short sale transaction shows mixed results, with lenders making some improvements in closing short sale transactions, but still room for lenders to make improvements in their communications and processes.
The latest California Association of REALTORS® Lender Satisfaction Survey, first started in 2010, finds lenders have made some progress in their short sale processes since last summer. While 64 percent of California REALTORS® said they still experienced difficulty in closing short sales, this was down from 77 percent in August 2011 and 70 percent in 2010. The percentage of REALTORS® who reported short sales as "extremely difficult," dropped from 56 percent in 2011 to 34 percent in 2012.
C.A.R.'s Lender Performance Index (LPI), which measures REALTORS®' lender satisfaction levels, rose to 23 in 2012, up from 17 in 2011 and 16 in 2010. The increase in the LPI is positive, but the index is still far below the median of 50, indicating more needs to be done to improve the short sale process.
Communication issues continue to be the biggest stumbling block to the process. Major hurdles include lenders' slow response time to a short sale package, cited by 67 percent of REALTORS® in 2012, up slightly from 66 percent last year; poor communication with lender representatives, cited by 55 percent of REALTORS®, unchanged from 2011; and repeated requests for documentation, cited by 50 percent of REALTORS®, down from 51 percent a year ago. Eight percent of REALTORS® reported the lender foreclosed on the home before the short sale transaction could be completed, down from 15 percent in 2011. Overall satisfaction in working with lenders in short sales improved, with 59 percent expressing dissatisfaction, down from 75 percent in 2011.
REALTORS® have suggested that a more standardized process may be the best way to facilitate the sale of homes that qualify. "The Federal Housing Finance Agency's decision to align Fannie Mae and Freddie Mac short sale guidelines will allow lenders and servicers to quickly and more easily qualify eligible borrowers for a short sale," said Richard Miller, who is chief banking officer of Ratecomb and serves as affiliate chair of the Silicon Valley Association of REALTORS® (SILVAR). "We are seeing progress as all parties involved strive to maintain better communication and are proactive with solutions."
According to SILVAR president Suzanne Yost, "Whether a struggling homeowner chooses the path of foreclosure or a short sale, the experience is both financially and emotionally difficult. We hope lenders will continue to make improvements so the process is both easier and quicker for homeowners."
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.
For further information, please email or call the SILVAR office at (408) 200-0100.