While every lender today speaks encouragingly of “wanting” to do more short sales vs foreclosures and deeds in lieu, nearly all are overwhelmed with the volume of requests they’re receiving. We are seeing processing times in some cases more similar to that which were experienced several years ago before short sales were the big trend as today.
In addition to long processing times, it’s still not uncommon for some lenders to claim to have not received paperwork when the agent has sent it in via fax, the only accepted method with some lenders. Rarely was the fax truly not received but rather it simply wasn’t processed correctly so the docs didn’t make it to the correct file. Admittedly, at times, it is likely possible that the agent didn’t include the borrowers loan number on all the docs so the processor simply didn’t make any effort to determine where the docs should go. However it happens, it is not uncommon for paperwork to be sent multiple times in order to get a bank moving on a review.
Due to the extended delays many lenders are creating, it is back to common place to have to sell a short sale property multiple times as buyers simply get tired of waiting and walk. Too often, this is due to unreasonable expectations of a buyer that hasn’t been properly counseled by their agent. When a buyer goes into contract on a property being sold as a short sale, they need to be aware that in many instances the wait time can be long. If a particular buyer needs to be able to close by a specific date that isn’t too distant in the future, a typical short sale may not be the best option for them to go into contract. Often times, a transaction can be completed within reasonable times but most experienced short sale agents can tell you that months in the trenches to get a deal approved isn’t uncommon.
Further complicating the issue with many lenders is a HAFA review. While the program was designed to help struggling homeowners complete a short sale in a reduced amount of time, nearly every lender takes an extended period of time to review a seller for acceptance to a HAFA short sale. In addition, many borrowers for multiple reasons are deemed unqualified and the HAFA program has been called a massive failure by many in the industry. The number of sellers approved to participate in the HAFA short sale program are grossly below expectations.
With the backlog of foreclosures in the pipeline as well as the still heavy delinquency rate on other homes, some of which will eventually go into foreclosure, the review delay may not end soon. Most lenders are miserably understaffed and remain unprepared to handle the volume of short sale requests.
