A new Senate bill aims to speed up the short-sale process by requiring mortgage lenders or servicers to respond within a mandated timeline or face potential fines.
The bill, introduced late last week by Sen. Lisa Murkowski, R-Alaska, gives the servicer 75 days to reply to a homeowner's written request, which must include a copy of a contract with a prospective buyer.
The servicer would have to answer with an approval, denial or request to extend the response period up to 21 days. The companies could also approve the short sale subject to certain changes.
Homeowners would receive $1,000 each time the lender or servicer fails to respond, along with other "appropriate relief," according to the requirements of the bill.
"What we have here is a failure to communicate," Murkowski said in a statement. "Why don't we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is 'yes,' 'no' or 'maybe?'"
Moe Veissi, president of the National Association of Realtors, said real estate agents support "any effort to improve the process for approving short sales."
The bill, co-sponsored by Sens. Scott Brown, R-Mass., and Sherrod Brown, D-Ohio, was referred to the Senate Banking Committee. Legislators introduced at least six bills related to short sales in 2011. None made it beyond the committee level.
One introduced by Rep. Thomas Rooney, R-Fla., would automatically approve a short sale, unless a lender or servicer responds within a 45-day window. The bill, H.R. 1498, holds limited bipartisian support in the House.