“I just got written approval for that short sale,” he said. “I close it in 30 days.”
While Dilka’s short-sale journey is extreme, short sales — when a lender accepts less than the amount owned on the mortgage — typically takes much longer than a conventional home sale.
Financially troubled homeowners prefer short sales to foreclosures, as a short sale impacts credit scores for a shorter term. Lenders typically can net more from a short sales than the complications of a foreclosure.
Hopefully, that changed Monday. A new federal regulation designed to streamline the sluggish process should help homeowners in financial trouble, lending institutions wanting to shed the toxic loans and buyers wanting to close escrow in a reasonable time.
With the new and improved short sale process:
- Homeowners receive $3,000 for relocation expenses when they complete a short sale or hand over the property deed to the lender.
- Lenders are required to set their minimum acceptable bid before the house is listed for sale. If the offer is at or above the minimum, the lender must accept it.
- Homebuyers making an offer should receive a reply in two weeks. This often took months.
Dilka said the new regulation would have greatly shortened his short-sale odyssey. He said the institution that held the mortgage would take three to four months to get back to his clients’ offers. By then, the potential buyers had moved on to other properties.
“I went through that process three times,” said Dilka.
Bankruptcies, mergers and general instability in the financial industry also caused short sales to drag on, said Beth Latta, a Century 21 M&M Realtor in Lodi. She said papers and documents could be lost in the transitions and disruptions.
“They lost my documents three times,” Latta said about her efforts to close on five triplexes. “It was over 1,250 pages of documents I had to fax. It took me 10 hours to fax. When they lost that 10 hours of faxing, I bawled on the phone.”
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