Will Banks Approve More Short Sales in Coral Gables and Miami?

posted on December 7th, 2009 filed under: Real Estate News

Some recent transactions and listings in the Coral Gables and Miami real estate markets have suggested that there might be shift underway in banks’ attitudes toward short sales.  (A short sale occurs when a bank approves a sale for less than the amount owed, thus realizing a loss.)  Many properties have been listed as short sales, and many have gone under contract, but many have also lingered in pending status without ever closing.  These would-be buyers of homes in Coral Gables and Miami have been in suspended animation for up to a year or more.  Among the reasons, reports Bloomberg:

Lenders . . . didn’t have procedures for employees to approve a financial loss for the company, said Alan White, assistant professor at Valparaiso University School of Law . . . .

. . . . “There are not good structures in place to incentivize losses.”

Bankers also have been slow to sign off on short sales because homeowner associations, mortgage insurers and second- lien holders may not agree to the terms of the deal, said Michael Frantantoni, vice president of single family research at the Mortgage Bankers Association.

The Bloomberg report says banks are becoming more ready, willing and able to approve losses.  That would be good news for buyers waiting to close on short sales here in the Miami and Coral Gables markets.

Unfortunately, the Bloomberg report relies more on anecdotal evidence than hard data to show that banks might be picking up the pace.  But it’s consistent with some of the anecdotal evidence here in Miami and the Gables.  Maybe there’s somthing to it.

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