In the letter, CAR President Beth L. Peerce stated, "As public attention continues to be focused on the real estate industry in hopes of signs of a housing recovery, we trust you'll agree that change in your short-sale process is critical."
"We believe banks, investors, homeowners, and real estate professionals all have a common interest in conducting these transactions expeditiously and efficiently. The housing market recovery is in everyone's best interests, and your urgent focus on these issues will help achieve that end," Peerce continued in her letter.
In the letters to JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo, CAR made the following recommendations:
* Provide realistic time frames and then meet those time frames.
* Provide a comprehensive list of information needed upfront.
* Provide approval requirements upfront that, if satisfied, would assure the borrower of a short-sale approval.
* Disclose whether a loan you service is owned by you or if others own it. If others own it, provide time frames for approval. Be clear on who has final authority.
* Pre-approve the short sale and price upon request, prior to the property being listed
* Review and respond with an approved offer to a borrower's short-sale request within 30 days of receipt of the request. If rejected, be explicit on why and how it can be corrected.
* Do not "restart" files from square one if something is missing. Allow the correction and continue, without bumping it to the back of the line.
* Have a person available who can inform the borrower about the file's status and shortcomings, and who can assist in problem-solving.
* Increase the speed of processing files. Often, a single home goes through the process numerous times, resulting in months elapsing and buyers losing interest. The pre-approvals and cumulative files discussed above will dramatically assist this effort.
* Increase the amount junior lien holders receive. This is a common reason why short sales fail.
* When the property is cleared for sale, be explicit that there will be no recourse on the notes as required by SB 458, which now is in effect.
"We are convinced that by correcting these items, your system will run more smoothly and, in the end, save everyone money and resources, as well as assist in the housing market recovery. By addressing these concerns now, there will be great savings in the long run for you, and for current and future homeowners," Peerce concluded.