According to "Realtor" magazine online........
While obstacles to short sales remain, real estate practitioners say the process is becoming more efficient. Rather than waiting six months or more to push through a deal, agents say banks are more willing to negotiate prices up front.
"My gut feeling is that short sales seem to be the preferred avenue for distressed property now," says Cindi Hagley of San Ramon, Calif.-based Windermere Welcome Home. "It's cheaper for [banks] to do a short sale than go all the way to foreclosure."
The short-sale process has become more manageable now that banks are willing to pre-approve prices, reach out to underwater borrowers who have listed their homes for sale, implement Web-based systems that manage the short sale process, and add staff dedicated to short sales.
Additionally, the U.S. Treasury is set to implement a streamlined short sales framework and offer incentive payments of $1,500 to home owners and $1,000 to both loan servicers and second-lien holders.
Borrowers also prefer short sales because Fannie Mae requires them to wait only two years to own another home or even less than that if they were not delinquent. By contrast, those who lost their homes to foreclosure have to wait five years.
Source: San Francisco Chronicle, Carolyn Said (10/21/09)
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Douglas Fischer, R.A., REALTOR, ePro, C.D.P.E.
RE/MAX Honolulu
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Douglas is an experienced and respected Honolulu, Hawaii Realtor Associate, in partnership with his Japanese speaking partner, Christopher Sumida, who specialize in residential Real Estate and the sale of Condos in the greater Honolulu area including the neighborhoods of: Waikiki, Diamond Head, Ala Moana, Kakaako, Kapiolani, Makiki, Chinatown and Downtown Honolulu.
you would think that it is cheaper for banks to do short sales at least on paper but some banks have shared loss provisions with the FDIC and they actually prefer foreclosure since they actually make money B of A is the biggest one
I have always suspected that, but was unaware of the shared loss provision with the FDIC. That doesn't really make sense in the big picture, does it? When I do the math on paper, many. many times, the short sale is the cheaper way for the bank to go. But, as I see it now, the bank will ruin the credit of the homeowner by choosing foreclosure over a short sale, so it can gain financially because of a loss provision with the FDIC? What a system?