You may never see a response from the Bank. See a recent article that I published below, and note particular attention to recent legal counsel on the matter and why Lending institutions are keeping the property as an assett rather than claiming a loss on the transfer:
The Scoop on Short Sales:
â€œShort Salesâ€ are real estate listings that are trying to be sold for less money than what is owed on the property. The current owner has a loan (or loans) on the property that exceeds the listing or sale price.
On the surface, the property seems like a really good valueâ€¦ almost too good to be true. The enticement of the possibility of purchasing a property for less than market value certainly seems very appealing. It is natural to get excited about getting a great deal when purchasing real estate.
So whatâ€™s the downside? Unfortunately the downside is that Short Sales rarely mature to an actual sale. When you understand the dynamics of what has to happen, it becomes easier to understand why Short Sales hardly ever work out. Essentially, when an offer is submitted to a lender for Short Sale approval, the lender is put in the position of determining if they are willing to take less than what they are owed (a LOSS) to release the mortgage lien from the Short Sale property. Because the lenders often have an appraisal in the file that is higher than the offer price (because an appraisal was needed in order to fund the loan(s) to begin with), they are typically very reluctant to take less than what they are owed. The decision is further complicated when there is more than one loan on the property (i.e. a first mortgage plus a second mortgage, or home equity line of credit). Negotiating Short Sale acceptance on two loans is extremely difficult, if not virtually impossible.
Another dynamic that plays into the Short Sale dilemma is an interesting bit of information that an attorney recently provided at a conference I attended. Amidst all of the lending turmoil going on in the market right now, lenders have to be very careful to keep their assets in line with their debts. It is important to know that when a lender transfers interest or releases their loan, they are accountable immediately for the gain or LOSS. This means that if they agree to accept a Short Sale, they have to account for the LOSS on their books at the time of closing. Losses are not a good thing for lenders in this marketâ€¦ in fact, losses are precisely the reason why so many lenders are closing their doors and going out of business. According to the attorney presenting at the conference, it benefits the lenders to let the property go to foreclosure, and take the property back as an ASSETT, vs. having to report the property as a loss on their books. In theory, it is better for the lender to sit on the property, hoping that the market will get a little better so they can recover their loss, or at least break even on their loan, thereby not resulting in accountability for a loss.
The most frustrating component of a Short Sale, is that the majority of the time, the lender will not even respond to Short Sale offers! Instead, many offers continue to accumulate on the Short Sale property, of which each Buyer hopes to result in a great deal for the Buyer, and which the Lender hopes will be close to, or above the amount they are owed. There is new legislation that was passed in January 2008, and further revised in April 2008 (Oregon), that provides that Agents must disclose Short Sale â€œlanguageâ€ in such listings. Unfortunately there are many agents that donâ€™t follow the rules too closely. If you would like to read more about the summaries, you can see more at http://www.Vandervest.com/shortsalesummaries.pdf.
I am happy to further discuss how a Short Sale transaction may or may not work for you. It is a complex phenomenon new to the industry, and never before seen by most homeowners or RealtorsÂ®.
Real Estate Broker / REALTOR
RE/MAX Equity Group, Inc.
9790 SW Nimbus Avenue
Beaverton, OR 97008
888-864-6789 Ext. 4973