Professional Home Staging and Photography Blog: Mortgage lenders about to face 45-day short sale approval deadline

Mortgage lenders about to face 45-day short sale approval deadline

Silverstone Ranch, Las Vegas, NVThe current real estate meltdown has been a true testing ground for anyone involved in its devastating turbulence. Homeowners have watched helplessly as their property values have headed south with little resistance. Home loan providers have worked under pressure for years to stay afloat in choppy waters full of creepy icebergs and many other deadly maritime hazards. Real estate agents are fighting to secure deals in a marketplace shrunk to a flat pie on life support from a full-blown strawberry cheesecake. The support industries are in it as deep as anyone else.

Something intriguing that could be rather meaningful for many in housing is in the works right now. Namely, the U.S. House just introduced a bipartisan - yes bipartisan, for change - bill that would require mortgage providers to come up with an answer to short sale requests within 45 days. It's common knowledge that mortgage banks usually take their sweet old time in reaching a decision on them. Sometimes they can't even make up their minds at all, ever, no "yes" or "no" at all, just deafening silence or bureaucratic runarounds until participants just give up, throw up their arms in disgust.

Underwater - the mortgage balance is higher than the property's value - homeowners would be big beneficiaries here. They would be informed in 45 days whether a short sale will work or not and then make plans for their next move regardless of the answer. Now they often don't know anything for months and many finally just decide to walk away from the mortgage. Failed short sales are one of the main reasons to climbing walk-away numbers.

First-time home buyers as well as other purchasers would get a much faster response to their offers, helping them with their strategies. The attitude of scores of real estate agents would change for the better toward the frequently ridiculously lengthy and complicated short sale process. Actually, even the mortgage lenders themselves would come out ahead in this, as they would be forced to make a decision and move on.

The bill does have merit aplenty, and should be passed. Who says Washington can't introduce useful housing legislation? Since the private mortgage sector was unable to satisfactorily act on this, the oft-maligned government stepped up to the plate with a well-designed bill that would yield nice dividends for the entire housing industry. 




Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 12 commentsEsko Kiuru • September 27 2010 03:14PM


It will be interesting to see what happens.  I wonder how they could enforce it.  It brings up some questions:

  • What if there are multiple loans?
  • What if they decide to foreclose before the end of 45 days?
  • What are the penalties?
  • What if the buyer walks?
Posted by Bob Willis, Orange County & L.A. County Real Estate Agent (Berkshire Hathaway HomeServices California Properties) almost 10 years ago

Esko this is good news.  I had read something about this already and was waiting to see if they finally did something positive in Washington :)

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) almost 10 years ago

It would be a start!  These transactions are so complicated and when I explain the complexity to a buyer they generally don't want to wait for an unknown outcome and possibly miss another opportunity.

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) almost 10 years ago

It would be a beautiful thing to truly get approval in 45 days; but I can't imagine that it would actually happen.

Posted by Kathy Torline, Colorado Springs Real Estate Blog 719-287-1049 (ERA Herman Group Real Estate) almost 10 years ago

This would be so helpful!  Great post!

Posted by June Stark, Las Vegas Condos & Luxury Homes Expert (Elite Realty-Luxury Homes & Condos On & Off the Strip) almost 10 years ago


Let's wait and see if the bill passes and perhaps then we find out answers to your good questions.

Posted by Esko Kiuru almost 10 years ago


Hopefully the bill passes soon. The real estate market, everybody I'd say, would really benefit from it.

Posted by Esko Kiuru almost 10 years ago


Can't blame the buyers for being skittish here.

Posted by Esko Kiuru almost 10 years ago


A lot of fingers are crossed for the bill to pass pronto.

Posted by Esko Kiuru almost 10 years ago


Right. Washington seems to be delivering at least on this one.

Posted by Esko Kiuru almost 10 years ago

Hi Esko,

Well written post.

Of course, by now we know it is only voluntary, and most banks are not participating.

But every institution seems to be getting more experience and learning how to navigate a little quicker!


Posted by Phil Leng, Phil Leng - Retired (Retired) almost 10 years ago


It's a shame. We have tried plenty of voluntary stuff and it usually doesn't work.

Posted by Esko Kiuru over 9 years ago