Are banks purposely rejecting short sales in favor of less profitable foreclosures? Maybe so, but why? Some say it may be for reasons such as avoiding fraud or favorable accounting rules allowing banks to foreclose on a home without having to write down a loss until that home is sold as opposed marking the loss on short sales upon approval. However, if this is the case and the bank knows they have no intention of approving a short sale, why do they not only allow but encourage the seller to go through months of the process?
Each month that a seller is delinquent further contributes to the decline of that seller’s credit. Banks require homeowners to be delinquent and they must be rejected for a modification prior to entering the short sale process. Then, banks take many months to process short sales, propose extremely high counter offers or frequently claim to lose documents that have already been submitted. The customer service workers often say they are poorly trained and can rarely answer any inquiries regarding short sale status. Upon receiving denial letters banks will not provide precise reasons or numbers. Sellers and buyers are left wondering how and why the home foreclosed.
Does any of this sound familiar to you? Are you a buyer or seller who has been through a similar scenario? If so, make your voice heard. The attached New York Times article is looking for your short sale stories.