In a panel session at the Mortgage Bankers Association’s National Conference & Expo, three industry professionals voiced their opinion on whether or not short sales will be a driving force behind the housing recovery.
“We’re seeing quite a bit of activity increasing in the short sale industry this year and I believe it will continue into 2014,” said Wingspan Portfolio Advisors CEO Steven Horne.
Over the past year, short sales have increased considerably and are rapidly establishing themselves as a tool of choice for both Realtors and servicers. “Last year we set a new record for short sales, we passed the 1 million mark for the first time in history,” added Rick Sharga, executive vice president of Carrington Mortgage.
In fact, 4.6 million total properties sold last year, meaning over a quarter were short sales, according to Sharga. “Every short sale moved is essentially one less REO,” noted Sharga.
So what is the force behind this increase in short sales?
“It’s a lot easier for servicers to get short sales done,” said John Vella, chief operations officer at Equator.
With technological updates and process changes, industry professionals are able to process short sales much easier. Vella noted, timelines have come down 20% over the year in starting to completing a short sale because everyone is more educated.
With a process that was seen as cumbersome for years, technology is key in speeding up the process of a short sale, making it more appealing to buyers, agents and all other constituents involved.
“The technology is really making great leaps forward,” noted Horne. As technology advances, you see the improvement of the agents and process; more timely short sales getting done, added Vella.
However, despite its strong growth, challenges still loom with short sales.
“Second-liens are clearly still an impediment,” Sharga stated. Oddly enough, the buyer is often an impediment, added Sharga, who says there’s often a waiting period while the buyer scrambles to gather their paperwork.
Horne added that one of the biggest issues in the past was complexity, although a lot has been done to simplify the process. For a number of reasons, Realtor willingness is still a factor, although diminishing quickly, according to Horne.
However, Vella reminded the crowd that as the REO inventory has shrunk, the agents that wanted to specifically be an REO agent are now more willing to be a short sale agent as well. There are a lot of good certification programs out there now to inform agents about the short sale process, Vella added.
Sharga continued, stressing that not much has been done thus far to educated potential short sale buyers. “I don’t think there’s a concerted effort to educate consumers about the process; there have probably been some half-hearted efforts to borrowers who’ve found themselves in distress,” said Sharga.
This education seems to be crucial as short sales don’t seem to be going away anytime soon. With an emergence of large-scale funds that are turning homes into rental properties, more short sales seem inevitable, Horne noted.
I think 2013 and 2014 are going to be all about the short sale, Horne added.
“I think we’re going to set a new record for short sales in 2013,” concluded Sharga.