10:20am | It’s no surprise that Realtors, and homebuyers, aren’t happy with lenders. And a recent report by the California Association of Realtors confirms just how much angst there is between those groups, and that Realtors feel that lenders are keeping short-sale deals from closing quickly.
 
More Realtors characterized closing short-sale transactions as “difficult” or “extremely difficult” than late last year, indicating that lenders’ and servicers’ short-sale procedures have shown little improvement in the past six months, according to a Lender Satisfaction Survey released by the California Association of Realtors on Wednesday.
 
More than three-fourths of California Realtors reported closing short-sale transactions as “difficult” or “extremely difficult,” up from 70 percent in December, according to the C.A.R. survey.
 
The survey gauges Realtors’ experience working with lenders in their most recent transaction.  “The majority of those surveyed dealt with short-sale transactions – transactions in which a homeowner with a demonstrated hardship negotiates with the lender or lenders to accept less than the balance owed on the mortgage,” the report states.
 
“Despite promises by lenders to improve their short-sale processes, clearly, they are not doing enough,” said C.A.R. President Beth L. Peerce.  “Instead of helping struggling homeowners who need to sell and willing home buyers who want to buy, lenders have created man-made roadblocks that have caused real estate gridlock and hindered a desperately needed housing recovery.”
 
Realtors cited communication issues as the most frequent obstacles in working with lenders and servicers during the short-sale process. These issues include slow response time, poor communication and repeated requests for documentation.  More than 15 percent of Realtors indicated that the lender foreclosed on the home before the short-sale transaction could be completed.
 
“With short sales accounting for a fifth of all transactions in California, it’s crucial that lenders improve their short-sale process so that a meaningful recovery in the housing market and overall economy can occur,” Peerce added.
 
In an effort to educate consumers and its members about short sales, C.A.R. created a website (http://www.shortsalescalifornia.org/) earlier this spring to help clarify the process.
 
Ramon Crum, owner of Crum & Associates Residential Group in Long Beach, gave a detailed look at what he feels is causing the problem.
 
“The Equator system was the first short sale portal used by Bank of America and the former Countrywide mortgage. Realtors were promised that this new system would streamline the short sale process by having agents upload their short sale package directly to the lender,” he said. “The Equator system would automatically start the lender’s clock for when the BPO (broker price opinion) should be scheduled. The BPO is a mini appraisal that will give the lender physical pictures of the property and three sold and three active properties that are within a mile of the subject property. The BPO should be scheduled 15 days after the lender confirms that they have received a complete short sale package. This includes a hardship letter, authorization letter, last two years tax returns, last two months paystubs, and last two months bank statements. I also will ask my clients for their last mortgage(s) and HOA statements. The new Equator system also promised Realtors direct email and phone access to the managers making the final decision whether to approve or deny the short sale.”
 
Crum noted the major problems with the Equator and similar systems is that most short sales will have an average of three buyers come before escrow is entered into. “And the lenders want you to start the process over, meaning re-scheduling the BPO, etc.,” Crum said. “Wachovia has the best short sale process because they will have a BPO in less than seven days. When Well Fargo acquired Wachova, Wells Fargo realized that they needed to change their short sale process. Now Wells Fargo has started to use the Equator system and Bank of America will approve a new buyer within 15 days.”
 
His advice for buyers: Allow 48 hours for uploaded documents to enter the lenders system. I will have my assistant call the bank between two to three times a weeks to speed the process along. Also, sometime the emails from the Equator system will go straight to my spam box. So you have to log into the system each week to see if you are holding up the process because the lender is missing or need updated documents.”