Tuesday, December 21st 2010 Lenders are opting to “delay and deny” in more and more short sale cases as the real estate market continues to be uncertain[1]. While many homeowners, real estate agents and housing advocates continue to argue that a short sale deal, which sells the home at a loss to the lender but removes the existing, delinquent homeowner from the property and places a paying homeowner in it, is in the best interest of most lenders, the banks themselves are not so sure and, in an increasing number of cases, are opting out of short sales to repossess and sell the home themselves. JPMorgan Chase, whose official stance on short sales is that “the company generally prefers short sales over foreclosures because they cost less and benefit the community,” has recently been citing its responsibility to investors to “get a fair price for the property,” pointing out that this may mean “seeking more than the short sale price – even if it puts the sale in jeopardy.”

Not surprisingly, this angers all sorts of people from homeowners to Hope Now advocates, who believe that “the short sale process is hampered by lenders’ concerns about fraud, difficulties in determining property values and the confusing lineup of players typically involved in a real estate deal.” One lawyer who represents sellers and lenders in short sales said simply, “The irrationality in which these applications can be dealt with is absurd.”

However, points out Frank McKenna, vice president of fraud strategy at CoreLogic, lenders are losing about $310 million each year in short sale fraud, with 1 in every 53 sales “plagued by problems” including flopping (short sale flipping), and a failure to get “the right valuation” on a property thanks to “shady investors.”

By: BEREL News Team