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 the latest Lender Satisfaction Survey conducted by the California Association of Realtors (CAR).
Seventy-seven percent of respondents reported closing short sale transactions as “difficult” or “extremely difficult,” up from 70 percent in December, according to the survey. The survey, a follow-up to a survey conducted in December 2010, gauges Realtors' experiences working with lenders in their most recent transaction. The majority of those surveyed dealt with short sale transactions.
The survey was conducted in June 2011 to gauge Realtors' experience in working with lenders or servicers during their most recent transaction, the majority of which were short sales. Most of the Realtors surveyed dealt with Bank of America, Wells Fargo, and JP Morgan Chase in their most recent transaction. The latest survey findings show that the situation has not materially improved in the six months since CAR first surveyed its members.
“Despite promises by lenders to improve their short-sale processes, clearly, they are not doing enough,” said CAR 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 continued to cite communication issues as the most frequent obstacles in working with lenders and servicers during the short sale process. These communication issues include lenders’ slow response time to a short sale package (cited by 66 percent of Realtors), poor communication with lender representatives (cited by 55 percent of Realtors), and repeated requests for documentation (cited by 51 percent of Realtors). More than 15 percent of Realtors indicated that the lender foreclosed on the home before the short-sale transaction could be completed.
Sixty-seven percent of Realtors said it took more than 60 days for lenders or servicers to return a written response on the approval or disapproval of the short sale agreement submitted. Additionally, 43 percent of Realtors said it took the lender more than five days to return any form of communication. Less than 20 percent said lenders responded “within one business day” or less.
Overall satisfaction with the lenders Realtors worked with in their most recent short sale transaction remained extremely poor, with 75 percent saying they were “not satisfied” or “not at all satisfied,” up from 67 percent in December. Moreover, nearly eight in 10 Realtors (78 percent) said they were “not likely” or “not at all likely” to refer buyers to the lender for future home purchases.
“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,” said Peerce.