Banks drag feet on short sales, survey finds
The CALIFORNIA ASSOCIATION OF REALTOR® (C.A.R.) published its findings of a survey this week, which show that tedious lender requirements and poor communication hamper short sales.
MAKING SENSE OF THE STORY

• Fewer than three of five short sales close in California, illustrating the complexity and difficulty of navigating lenders’ and servicers’ short sale procedures, according to C.A.R.’s survey, which gauged REALTORS®’ experience in working with short sale transactions – transactions in which the lender or lenders agree to accept less than the mortgage amount owed by the current homeowner.
• Although not every homeowner or mortgage is eligible for a short sale, those who are able to finalize a short sale avoid a foreclosure on their credit record and can move on with their lives.
• Banks are taking much longer to respond to short sale offers than those specified in government guidelines for banks. Nearly two-thirds of survey respondents said banks took longer than 60 days to respond to short sale offers. Often, this results in buyers walking away from the transaction.
• “Increasing the number of successful short sale transactions is one important way we can help California families avoid foreclosure and move our economy closer to recovery,” said C.A.R. President Beth L. Peerce.
• C.A.R. is asking government agencies, such as the U.S. Dept. of the Treasury, to force banks to complete all short sales following HAFA guidelines and to comply with the program’s time frames.

We here at NextGEN are not at all surprised by these findings. We toil daily, fighting the banks in our desire to help as many California families as possible.
We are currently dealing with a particular onerous company, PHH Mortgage which in this case is acting as a servicing agent for PNC. We have diligently and in good faith been trying to work out a solution for the sellers, a lovely family with two young children. The seller temporarily lost his job for a brief period of time. When he was unable to reinstate the loan, he tried for a modification or loan workout. He was denied in spite of his ability to once again afford his mortgage payment. Worse than that, he was cheated out of $18,000 dollars by one of the many spurious loan modification companies that have sprung up overnight, jackals feeding on the carcasses battered homeowners, adding insult to injury.
Now PHH Servicing, holder of the second mortgage wants to foreclose on this family and throw them out of their home. We've had a ready buyer in place since the middle of January. The buyer and his wife have offered a more than fair, market value offer to the 1st and 2nd lien holders of the mortgage. The first lien holder has been able to intelligently come to an agreement.
The second lien holder PHH Servicing will not negotiate in a fair fashion is demanding a $60,000 payment for a lien-only release and will seek a deficiency judgment. We've been told that it's not negotiable and that they don't care if the senior lien holder forecloses.
This is madness. If the senior lien holder forecloses, the second will receive nothing at all. Where are the shareholders in all of this? Why aren’t they as outraged as we are that an amicable, sensible solution cannot be reached with so many lenders? What about the enormous losses on their books, the huge costs to the banks to foreclose on a home, the costs of marketing while these homes languish on the market?
And so it goes, as another good family who hit a rough patch in the road gets forced out of their home while another honest family is denied homeownership, even when they are qualified borrowers willing to pay retail price for home. These types of decisions by servicing firms such as PHH Servicing just don’t make sense and will further hinder the US economy to a recovery within our volatile housing market.