Problems with Los Angeles Short Sales (and What banks can do to Fix them)
by Ben Nicolas
on Tuesday, February 19th, 2013 at 1:30pm.
Too many Games
Too much Fraud (by property owners, agents & investors)
In order to maximize the amount of money banks are receiving for their assets, their fiduciary duty to their shareholders and moral duty to the American taxpayers who have to bail them out when they get into financial trouble and are "too big to fail", banks need to introduce a higher element of transparency in the short sale transaction process.
Like many REO lenders have already started to do, all short sale offers should be submitted via a lender-direct website that goes directly to the loss mitigation department of the existing lien holders.
No more putting your house up for short sale to extend the amount of time you can live for free.
No more "Active Short Sales" that aren't really active.
No more listing agents choosing offers based on whichever buyer will allow them to "double end" the transaction.
No more sellers putting the house up for short sale so they or someone they know can buy it back at a steep discount (Short Sale Fraud)
No more Real Estate companies only selling the property to agents within their own office when the highest and best offer could possibly have been from an outside source.
In this already low inventory 2013 Los Angeles Real Estate Market do you have any idea how frusturating trying to buy a short sale can be for legitimate buyers and selling agents???!?...
I understand that the property owner still owns the property and therefore legally still has the right to choose who they sell it to. If I ran a loan servicing department I would very quickly and easily separate the property owners playing games from those with legitimate financial distress by giving anyone who applied for a short sale the following option:
We will allow you to sell your property for less than what you promised to pay back and not pursue you for a deficiency judgement if you allow us to select the buyer of the property through a transparent process.
If you honestly need to relieve yourself of the financial burden of an overencumbered mortgage it will be an easy choice. If you are playing fraudulent games to scam the system you'll back off quickly.
Does the economy benefit more by allowing a new person to buy a property where the current owner is not paying their mortgage or by allowing the person to "squat" in the house for 6-12-18-24+ months?
What is the greater good/macro economic advantage of letting someone
squat in their home without paying their mortgage for an extended
period of time?
Think of all the missing revenue dispersed throughout the economy from a normal RE sale
Real Estate Agents
Local Municipality Tax coffers (city/county transfer taxes)