Banks Don't Get It (or do they?)
Experts agree that the inventory levels have to come down fot the housing market to start recovering. Short sales offer a win-win solution for buyers, sellers, lenders and agents, to speed up this recovery by selling inventory faster than by going the foreclosure/REO route.
While short sales have been on the rise, I believe that lenders are not really prepared (and willing?) to approve these transactions in a timely manner. Extensive delays of six weeks to six months are not uncommon, and banks may reject an offer 20% below appraisal, only to sell after foreclosing on the property for a higher discount.
I believe that the Obama recovery plan was well intentioned, but lacks accountability on the part of the banks. Why else would banks be so reluctant to quickly accept short sale offers which prove to be better business decisions for them? They took the billions in government money, padded their balance sheets and now they have no urgency to get on with the reduction of inventory. In the end, they will be suffering, because the longer the housing market takes to recover, the lower home prices will fall and the higher their losses from foreclosures will be. The silver lining: Housing has become a lot more affordable for fist-time home buyers!