If I were one of the big lenders today, I would be losing some serious sleep over how to reduce my backlog of nonperforming loans. With the newspapers and blogs full of stories of bogus documents being used to provide the legal basis for their foreclosures, and with several banks voluntarily suspending action across the country, it is just a matter of time before they all come to a stop.
But I’m not sure what’s next. It is clear that the lenders will now have to forensically audit thousands of nonperforming loans. And not just the ones in foreclosure. What about those headed toward foreclosure? And what about those already foreclosed? I suspect the class action lawyers are sharpening their knives, not to mention numerous state and federal regulatory authorities and perhaps a few federal prosecutors.
So what does this mean for Realtors, most of whom have seen their fortunes slide as the economy and the real estate market continue to languish? It is way too soon to make firm predictions, but it is clear that there may be a silver lining in these storm clouds. Why? Well, if I’m a lender with billions of dollars in non-performing loans, I know that I will not be able to use the foreclosure process until my loan documentation process is thoroughly examined. I certainly don’t want to take more properties back into my already bloated REO department by accepting deeds-in-lieu of foreclosure. The best way to dispose of the distressed property, and at the same time avoid the scrutiny of lawyers, courts, regulators, Attorneys General, and the public, may be to consent to a short sale short sale and move on. This is not to suggest that lenders will start consenting to “any and all” short sale offers. But assuming the offering price is within the realm of reason, I would say there is greater likelihood of them being accepted today than a few months ago.
So for those Realtors actively engaged in the short sale business – or those wanting to do so – this may be a good time to sharpen your skills and get in front of as many distressed property owners as possible. Short sales that may have seemed impossible a few months ago may be much more possible – and faster – today. Time will tell.