An interesting article in today’s WSJ regarding
short-sales. Right now in our Bay
Area market, the short-sale success rate is at an all-time low and from my most
recent short-sale experience I feel the acceptance/approval process has gotten
much worse (read: slow) than just a year ago.
The article mentions a new “incentive” program to
encourage borrowers AND lenders to make the short-sale work (hopefully more
quickly). The Feds will give a
borrower $1,500 and give the mortgage servicing company $1,000 to complete the
short-sale. Nice. Best of all, these guidelines specify
that the borrow must be “fully released” from the debt liability -- basically
the lender cannot chase the borrower for the bad-debt.
Maybe it’s just a phenomena of the Bay Area, but most of
the short-sales I’ve seen are not happening from “poor” people where $1,500
makes a difference. In most cases,
I see flat-screen TVs and newer cars in the driveway no doubt bought through
their equity line.
I’ll be curious to see what effect this new guideline has
on the short-sale numbers. My gut
tells me it will have a minimal effect.
The process is the problem, not the incentive, but we’ll see.
-Mark
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