CNBC just ran a small story about how Fannie Mae is testing short sales of homes.  They were reporting that this keeps lenders from having to take the home back and finds a new buyer for the home.  They reported that the average short sale results in losses of around 19% to the lender while an average foreclosure results in a loss of around 40%.

This is what we have been tellng our Jacksonville Short Sale buyers and Jacksonville Short Sale sellers.  Jacksonville Short sales are truly a win-win for every party involved, the buyer, seller and the lender.  So with this being the case, the question is why are some lenders still so slow to process and approve short sales?  Many lenders are doing much better at this.  The ones that aren't really need to streamline their process to allow for faster approval and closings since waiting for approval is what turns off many buyers currently.  Why not get the process down to under a month from start to finish?  Let buyers and sellers close with a timeframe that closely mimics a traditional or a foreclosure sale.  Rumors about the impossibility of short sales are rampant.  While short sales are not at all impossible...the actions and performance, or lack therof, of banks are why these rumors got started in the first place.

Banks need to sharpen it up.  Why aren't they being held accountable for increasing profits and reducing losses?  The fact is that if a home is sold in a short sale it never has to go on the banks books and the bank mitigated their loss.  It escapes me why the investors who sometimes hold these loans in pieces do not pressure the banks to move FAST on these things.

Why are the investors and stockholders standing by and allowing banks to sit on short sales, lose buyers who are willing to pay around fair market value, then foreclose on the house later...which adds significantly to the loss?  They then end up selling it later for lower than the short sale price multiplying losses! This is what is happening when banks don't approve good fair short sale deals.  You don't fix bad decisions with more bad decisions.  They need to be held accountable for knowingly making decisions that increase the losses to the bank.

Even if the buyer is patient, if you have an especially slow bank who sits on the file and does not accept it for 2-3 months, in a declining market, many times the market value of the home has fallen enough to make the deal ABOVE market forcing buyers to walk away rather than closing on a home that already has a built in loss of equity.

Worse is the second mortgage holder.  Sometimes this is a straight second mortgage, sometimes a HELOC.  In this market many of these loanholders will never see a penny if the home is foreclosed on.  Yet some of these banks either refuse to accept the short sale, demand a large payoff that is out of the realm of possibility in the deal (and the seller obviously doesn't have it or they would be making their payment), or insert crazy terms or conditions that wreck or threaten to wreck the deal.   This type of behavior by certain banks is what gives the short sale a bad reputation.

Jacksonville short sales are great deals!  While not all Jacksonville Short Sale transactions will be successful, most Jacksonville short sales will be successful when done correctly.  Following the correct procedure is a crucial component.  We can help whether you are a Jacksonville short sale buyer or are a Jacksonville homeowner who is upside down on your home but need to sell.