Short Sales Less Frustrating, but Still Difficult
The short sale process, while still difficult, is becoming a little less frustrating, according to a Lender Satisfaction Survey conducted by the California Association of Realtors(C.A.R.).
The trade organization reported 64 percent of California Realtors expressed difficulty in closing short sales, an improvement from 77 percent in August 2011 and 70 percent in 2010.
However, the more significant improvement was the drop in Realtors who described the short sale process as “extremely difficult.” More than half (56 percent) of the Realtors surveyed in 2011 said the process was “extremely difficult” compared to about a third (34 percent) in 2012.
The survey is based on Realtors’ most recent short sale transaction.
“While it’s encouraging that lenders and servicers are making headway in improving their short sale processes, they still have more work to do to ensure that not only REALTORS®, but also home sellers and buyers have a better experience when dealing with short sales,” said C.A.R. President LeFrancis Arnold.
Overall satisfaction with lenders during the short sale process improved, with 28 percent expressing satisfaction in 2012, compared to 16 percent in 2011. A smaller share was also dissatisfied, with 59 percent expressing dissatisfaction, down from 75 percent in 2011.
In addition, more than six in ten Realtors said they would not refer buyers to the lender for future home purchases, down from 78 percent in 2011.
Among the main obstacles Realtors faced, a lender’s slow response time to a short sale package was the most cited, with 67 percent of Realtors marking it as an issue, according to the survey.
Poor communication with the lender representative was the second most cited obstacle, with 55 percent of Realtors selecting it as an issue. Half of the Realtors also said repeated requests for documentation hindered them as well.
Other obstacles included a buyer backing out or long negotiations (32 percent), problems with second lien holders (23 percent), and a lender foreclosing on a borrower before the transaction is completed (8 percent).
“A recent change announced by the Federal Housing Finance Agency (FHFA) to align Fannie Mae and Freddie Mac short sale guidelines will allow lenders and servicers to quickly and more easily qualify borrowers for a short sale, further improving the process,” said Arnold. “C.A.R. has long advocated for a standardized short sale process, and agreeing to a more standardized process may be the best way for banks, servicers, REALTORS®, and homeowners to facilitate the sale of homes that qualify.”
The survey also included a recently developed Lender Performance Index (LPI), which measures how satisfied a Realtor is with a lender.
With 50 as the median, the index stood at 23 in 2012, up from 17 in 2011 and 16 in 2010.