Survey: Realtors Dislike Working with Lenders During Short Sale Process
Realtors are having trouble working with lenders during the short sale process, according to a California Association of Realtors survey.
In the June survey distributed to Realtors in California’s Central Valley to determine their satisfaction with lenders, more than half characterized a short sale transaction as either “difficult” or “extremely difficult to close.” Most of the Realtors that responded to the survey dealt with Bank of America, Wells Fargo and JPMorgan Chase.
“Despite assurances by lenders in recent months that they would improve their short sale processes, clearly, not enough is being done,” said Don Faught, treasurer of the California Association of Realtors. “Lenders are out of touch with the realities of the market and the consequences to struggling homeowners, and the result is unnecessary foreclosures that only make California’s economic problems worse, hindering a desperately needed recovery.”
Nearly three-fourths of the Realtors said it took more than 60 days for lenders or servicers to return a written response on the approval or disapproval of the short sale agreement.
Overall satisfaction with the lenders Realtors worked with to handle short sale transactions was poor, with 77% saying they were “not satisfied” or “not at all satisfied.”
Also, almost nine out of 10 Realtors (88%) in the survey said they were “not likely” or “not at all likely” to refer buyers to the lender they worked with to finance future home purchases.
The association said one example that highlights the troubles between a Realtor and lender is a homeowner who has been trying to execute a short sale of their home for two years. After two potential buyers chose not to acquire the property during contract, the lender told the seller to short sale, but asked for $2,000 as condition of the short sale approval and that the owner sign a promissory note for a new, unsecured loan of $8,000.
Additionally, the bank reappraised the home for 31% more than the initial appraisal conducted in the previous year. This homeowner now faces foreclosure because the bank is unwilling to consider another appraisal despite having a third buyer in contract to purchase the property.
“Banks say they want to help work things out on short sales, but to be honest, I don’t think they really care,” said an anonymous Realtor in a written statement.
The top three obstacles Realtors faced while working with lenders and servicers during the short sale process includes lenders’ slow response time to a short sale package, repeated requests for documentation and poor communication with lender representatives. Some Realtors even indicated that the lender foreclosed on the home before the short sale transaction could be completed.
“We all know that a recovery in the housing market is essential to a recovery in the general economy,” Faught said. “Lenders and servicers need to take steps now to improve the short sale process so that the housing market can begin improving.”