Should We Legislate The Short Sale Process?

Many underwater Washington homeowners understand that a short sale can save them from foreclosure; but the short sale process is often lengthy and aggravating.  The average short sale can take anywhere between four and nine months which causes some buyers to simply walk away.  But legislation proposed by three Senators would require that lenders respond to short sale proposals in 75 days or less.

On February 17, 2012 Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the Prompt Notification of Short Sale Act. If approved, the bill would require the following:

• Lenders respond to short sale proposals no later than 75 days after receiving a written request from the buyer.
• The lender’s response must specify acceptance, rejection, a counter offer, a need for extension, and an estimation for when a decision will be reached.
• The lender can only extend their response once and the extension cannot exceed 21 days.
• If the lender violates the proposed law, the buyer could be awarded $1000, plus “reasonable” attorney fees.

While this proposed legislation is a good start, 75 days is still a long time to expect a buyer to wait.  Forty-five or even sixty days would be reasonable.  Also, since the seller is the one who is most desperately in need of a short sale, the legislation should allow the seller to receive compensation if the lender violates the act.

Please feel free to leave any questions or comments! 🙂