And now we have new Short-Sale rules

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