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Realtors Say Short Sales Getting Faster Thanks in Part to Federal Short Sale Program

June 3, 2011

Our Riverside County foreclosure defense attorneys work every day with clients who are looking for alternatives to a foreclosure, with its financial losses and major credit hit. One alternative is a short sale -- selling the property for less than you owe -- but these can be difficult to finish because banks tend to drag their feet before approving or rejecting short sales. So we were interested to read a June 1 article from the Contra Costa Times suggesting that short sales have started to speed up. According to the article, observers of the real estate market say the difference is not extreme, and short sale buyers still shouldn't expect approval to happen quickly. But for those who are able to wait, real estate agents said they see short sales finishing faster now than they did a year ago.

A real estate agent who handled a recent short sale in Walnut Creek told the newspaper that short sales are taking less time in early 2011 than they took in 2010. However, the agent said buyers should still expect to wait 120 days or more; a California Association of Realtors survey found that fewer than three in five short sales closed at all. The agents attributed the slight speed-up in part to the Home Affordable Foreclosure Alternatives Program, a sister of the much-maligned federal loan modification program, which requires a response from the bank within 45 days. While most short sales don't go through HAFA, realtors said, the program has forced larger lenders to streamline their processes. They also suggested that banks may have realized that short sales are more cost-effective than foreclosures.

As Pomona foreclosure defense lawyers, we hope that's true. One major issue we've grappled with throughout the housing crisis is loan servicers' refusal to grant loan modifications. By rights, lenders should be eager to modify loans in a way that allows them to continue collecting payments on inflated bubble-era loans. However, loan servicers don't own the loans -- they just administer them for the owners -- so they stand to lose no money in foreclosures, but make a lot of money from foreclosure-related fees. This news makes us cautiously optimistic that the same senseless, anti-consumer incentives are not at work in the short sale world. If true, it's also good news that the 45-day deadline handed down under HAFA is being applied more widely.

At Howard Law PC, we represent clients who are looking for alternatives to foreclosure, even when their loan servicers and lenders don't seem interested in helping. Unfortunately, in our experience as Garden Grove foreclosure defense attorneys, that describes many loan servicers. Because paying lip service to loan modifications is good publicity, servicers continue to draw out the process without providing an answer, often "dual tracking" with a foreclosure action so they can take the home without delay. We help clients fight back, often through lawsuits that bring their cases before an impartial judge. We frequently sue lenders for violating HAMP rules by denying loan modifications for no good reason.

If you're facing default or foreclosure and you believe you can still fight it, Howard Law may be able to help. For a free, confidential evaluation of your case, send us a message online or call toll-free at 1-800-872-5925 today.