Almost 830,000 homeowners in Florida owe more on their mortgages than their home is worth. The Treasury has a new regulation that requires banks to make decisions about short sales withing 10 days of receiving a fully executed contract.
This new rule can be good if there is only one lien on the property and if all the paperwork is available as soon as the contract comes in.
Many weeks ago, I submitted a contract on a duplex in North Miami Beach and did not hear from the bank, in any way, for three months. At the end of that time, I was told that the bank was sold and that the new bank, Bank of America, would have to start the review all over again. Needless to say, the buyers were fed up and backed out. This is a story I have heard time and again.
The new rule does not apply to FNMA or FREDDIE MAC. They are working on their own rules.
The banks have abused the short sale concept. They are really holding on to offers while they hope the market will turn around and they can get more later. The real outcome that happens is that more properties linger on the market, dragging prices down even further.
Short Sales exist to avoid foreclosures but they exist on paper, only. Buyers are so wary of short sales, that many refuse to look at the properties. Even when they are advertised as Approved, it doesn’t mean much. The bank doesn’t have to abide by this.
Many realtors don’t know how to accurately and correctly draw up a short sale. All this is very frustrating for the potential buyer.
Banks are waiting while the market is still falling and the prices that they refuse today will be even lower tomorrow.
We will watch and wait to see if this new rule has any teeth and if the banks follow the new guidelines.
For more information. Contact me.