With nearly 25 percent of Ohio homeowners underwater on their mortgages, legislators are looking for effective ways to improve the housing market by addressing “short sale” home sales. Short sales are real estate transactions that must be approved by the bank because the seller owes more on their mortgage than the proposed sale price.
This week, Senator Sherrod Brown (D-OH) was in Columbus promoting a bill he introduced last month - S 2120 The Prompt Notification of Short Sale Act.
The goal of the bill is to improve the process for buyers considering a “short-sale” home. Presently, it can take many months to get any kind of response from banks or other loan servicers to short sale offers. Brown’s legislation requires a written response of an acceptance, rejection, counter offer, or the need for an extension of time within 75 days of a request from a homeowner—thereby providing both buyers and sellers of short sale properties with predictability during a real estate transaction.
A companion bill in the House (HR 1498: Prompt Decision for Qualification of Short Sale Act of 2011) was introduced 4/12/2011 and currently has 36 co-sponsors. This bill amends the Truth in Lending Act to consider approved a mortgagor's written request to a mortgage loan servicer for a short sale of a dwelling or residential real property if the mortgagor has not received, within 45 days after the servicer's receipt of the request, a written notification of whether the request has been approved, specified changes are required, or additional information is required.
During a press conference on 4/4/12, Brown was joined by Byron Carle, a Columbus homeowner whose home has been on the market for nearly two years. Mr. Carle has received multiple offers on his home but because of the long wait for approval from the bank, two deals have fallen through. Mr. Carle received a third offer and is currently awaiting a response from the bank.
Brown, Carle, Dave Bible (Mr. Carle’s agent) and Columbus Board of REALTORS® Secretary Kathy Shiflet outlined how Brown’s bill would improve the process for both sellers and buyers involved in “short sale” transactions and bolster the housing market and our economic recovery.
“For most buyers, short sales are anything but. The seemingly endless waiting game associated with short sales represents a dangerous drag on our housing market,” Brown said. “If we’re going to recover from the housing crisis, we need to make it easier for qualified candidates to purchase homes. This commonsense legislation helps prospective home buyers and distressed homeowners alike, while helping to rebuild our neighborhoods and to foster long-term economic growth.”
“Too often during the short sale process, there is a lengthy break in communication between the loan servicer and the buyer of the short sale property. This breakdown deprives buyers notice of whether or not their offer has been accepted, rejected or countered—and that means that homes aren’t being sold, even when there is a demand,” Brown continued. “This lapse in communication makes it harder for families to move to Columbus and help us build our community, and potential buyers are left waiting or even walking away in frustration. This bill is aimed at improving communication between banks and homebuyers—and keeping homes in our neighborhoods occupied. Our economic recovery depends on our housing recovery.”