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Are we finally seeing progress on streamlining the Short Sale Process with banks/lenders?

By Kathryn Bovard

Several recent news articles and resources are pointing to some positive steps towards streamlining the short sale process in an effort to expedite what has been a lengthy and exasperating process for all parties involved.  Numerous sources are reporting that Bank of America has invested in and launched, Equator, an electronic platform, formally known as REOTRANS.

By adopting Equator, the lender is now accessible 24/7 via a borrower portal, the company says. Borrowers (and real estate agents) can provide information and offers electronically and receive real-time status updates through the portal. The system also automates decisions, handles approvals, provides fulfillment and assures full compliance with government programs, according to Equator CEO Chris Saitta.  Sources: MortgageOrb, San Francisco Chronicle

Here is an excerpt form the SF Chronicle article, October 21, 2009.  Read the full story: Fewer Short Sales are Coming Up Short

But now real estate professionals and banks say the logjam is starting to ease, with decisions coming more quickly, more short sales trading hands, and the prospect of a new Treasury plan that will further lubricate the process.

Several developments are helping to expedite the sales:

Pre-approval. Some banks are proactively deciding what amount they will accept for a short sale house. Sometimes they reveal the amount; sometimes they don’t, but either way it expedites the process. Homes with this arrangement are listed as “Lender pre-approved short sale.”

“It’s an internal reserve price that lets us know the floor we’ll accept on a short sale,” said Dave Sunlin, senior vice president for foreclosures and real estate at Bank of America, which doesn’t reveal the price for competitive reasons.

At Wells Fargo, Ben Windust, senior vice president of default operations, said the bank is testing various short-sale approaches, including pre-approved sale amounts that it does reveal. That pilot is only for homes that Wells owns in its portfolio; homes owned by investors require more complex decision-making.

Proactive discussion with homeowners. Windust said another Wells pilot is to monitor real estate listings. “If we see we have a (Wells Fargo) borrower who listed property, if it’s underwater, we might proactively reach out to them to work with us now on a short sale.”

Similarly, JPMorgan Chase spokesman Gary Kishner said, “We are working on a more proactive approach to short sales by obtaining a listing of our delinquent borrowers who have their property listed for sale and then reaching out to help them sell the property.”

Wells, Chase and other banks said it benefits homeowners to let their banks know early on that they want to pursue a short sale so the home’s value, paperwork stream and other factors can be determined.

Treasury plan. In May the Treasury Department said it would offer a streamlined framework for short sales and incentive payments of $1,500 to homeowners, $1,000 to loan servicers and $1,000 to second-lien holders. That plan is supposed to be implemented very soon.

“As we understand it, it allows lenders to work with borrowers to mutually agree on how to market the property, set the price for it, gives us a fixed amount of time to sell the property and if not, converts it into a deed in lieu of foreclosure,” said BofA’s Sunlin.

Technology and staffing. BofA said it recently adopted a Web platform called Equator (formerly REOTrans) for managing short sales, as well as bulking up its short-sale staff.

But despite the progress, many short sales are still exasperating.

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