Earlier this year we discussed the fact that the California Association of Realtors® (CAR) was undertaking a major effort to bring about improvement in short sale processes. A December, 2010, Short Sale Lender Satisfaction Survey had confirmed what was already known on an anecdotal basis. The survey was conducted among CAR members. Among its findings: fewer than 3 in 5 short sale transactions closed successfully; more than half of those surveyed said that their last transaction took sixty days or more to receive a written approval or disapproval -- many took much longer; 70% of survey respondents said that their last short sale transaction was difficult or extremely difficult.

In December, CAR president Beth Peerce wrote on behalf of the 170,000 member organization to the Treasury Secretary, Acting Director of the Federal Housing Finance Agency, and the CEOs of both Fannie Mae and Freddie Mac. In addition to making recommendations about specific aspects of the so-far unsuccessful HAFA program, she also urged that "…Treasury should set forth the underwriting guidelines to which servicers and lenders must adhere. The government’s unwillingness to mandate action by lenders to stem the current housing crisis relegates HAFA to yet another well-intentioned voluntary program, which servicers, lenders, and investors are all too happy to ignore, and which C.A.R. fears will fail."

On March 10, CAR placed an open letter advertisement in California’s seven largest daily newspapers, calling on lenders and industry regulators to streamline and improve the short sale process. The full-page ad appeared in major papers throughout the state.

Later in March, CAR announced that it had partnered with Fannie Mae on an initiative designed to help Realtors® quickly resolve issues that might arise after a short sale offer is made on a Fannie Mae-backed loan. The Fannie Mae Short Sale Assistance Desk would "provide brokers and agents the ability to significantly shorten the time they have to wait for approval on Fannie Mae short sale transactions…"

In April, as a result of considerable legislative advocacy efforts by both CAR, NAR (National Association of Realtors®), and other Realtor® groups, H.R. 1498, "Prompt Decision for Qualification of Short Sale Act of 2011" was introduced into the House of Representatives by Congressmen Tom Rooney (R-Fla.) and Robert Andrews (D-N.J.) Its purpose was "to require the lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale."

So, how are all these efforts working out? To date, we have to say, not quite as well as we would have liked.

H.R. 1498, introduced April 12, was referred to the Subcommittee on Financial Institutions and Consumer Credit on May 2. There it sits, appropriately enough, moving forward with all the speed of a short sale request.

Moreover, a follow-up CAR survey – conducted in June – suggests that, if anything, things may be getting worse. In the recent survey, 77% (up from 70% in December) reported closing short sale transactions as "difficult" or "extremely difficult".

To quote from the CAR report, "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% 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.

To be sure, it may be a little early to say that institutional efforts begun in December haven’t worked. They well may need more time. But, certainly, the pushing and prodding and pleading have yet to show any results.

If that hasn’t worked, perhaps it would be relevant to focus the attention of lenders on the following survey finding: "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." [my emphasis]

Published: August 9, 2011

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Bob Hunt is a former director of the National Association of Realtors and is author of the recently published book, "Real Estate the Ethical Way." A graduate of Princeton with a master's degree from UCLA in philosophy, Hunt has served as a U.S. Marine, Realtor association president in South Orange County, and director of the California Association of Realtors, and is an award-winning Realtor. Contact Bob at .