Faster Short Sales Needed For Housing Recovery

Realtors urge Congress to press banks on `short sales’

By William Gibson May 13, 2011 02:05 PM

The Florida Realtors urged members of Congress on Friday to pressure banks and other lenders to quickly accept “short sales” of homes to help prevent the spread of foreclosures.

They said short sales – in which properties are sold for less than what is owed to lenders – would speed up real estate transactions and get Florida’s economy moving again.


Patricia Fitzgerald
The realtors pushed for a federal pilot project in Florida to establish a statewide electronic marketplace of properties, listing pre-approved short-sale prices.

The realtors also promoted a bill sponsored by Congressman Tom Rooney, a Republican from Tequesta, which would force lenders to accept or reject proposed short sales within 45 days. If lenders do not respond, the short-sale request would be considered approved.

Their briefing came with a dire housing forecast.

“Half of the mortgages in Florida are `underwater:’ the value of the property is less than what the mortgages are,” Patricia Fitzgerald, president of the realtors group, told the Florida congressional delegation. “Sales are up, but median prices are down, especially in South Florida.”

“Simply put, Florida needs a better way to sell more homes faster,” she said.

Several Florida members at the briefing said they would consider sending a letter to the Treasury Department and Federal Housing Finance Agency urging creation of the electronic marketplace.

The realtors said lenders have been slow to react because they are overwhelmed by the demand for short sales and are not set up to work with homeowners to complete these transactions.

But Louis Spagnuolo, vice president of mortgage banking at WCS Lending of Boca Raton, said many lenders have been reluctant to complete short sales because that would mean taking a loss.

“They are still hoping that if they hold on long enough, property values will increase and they can make more money on them,” Spagnuolo said. “But by holding this shadow inventory off the market, it just prolongs the inevitable.”

He said an electronic marketplace with pre-approved short-sale prices “would make the market much more fluid and functional.”

Categories: Florida housing (2)