It’s pretty clear that banks are much better off financially with short sales as opposed to foreclosures. Then, why on earth are these crazy banks making them so complicated?
Typically, banks require reams of paperwork for homeowners who wish to do a short sale on their properties instead of heading directly into foreclosure. Primary among the tax returns, financial statements, bank statements, pay stubs, W2s, and such is the hardship letter, delineating reasons why the homeowner can no longer make the payments and so is requesting that the mortgage holder accept less than what is owed on the property and call it good.
Some banks have already recognized the futility, stupidity, hypocrisy, call it what you will, of this method and are no longer requiring mountains of paperwork and are, in effect, streamlining the whole process. Wachovia, now defunct, but operated by Wells Fargo Bank, announced quite some time ago that it would no longer require any paperwork other than the listing from the homeowner wishing to do a short sale along with a buyer’s offer. Most marvelous of all, Wachovia actually makes a decision and accepts or rejects the offer within 5 business days or tries to. Contrast this with Bank of America’s [aka Countrywide] 3 to 4 months.
Wachovia’s way makes sense, doesn’t it? It recognized that homeowners who are underwater to the tune of 50% or hundreds of thousands of dollars are not going to make the payments whether they are able to or not. They would need to be financial morons to stay in that situation. So, why force or punish the poor homeowner who is nevertheless giving up his home or his investment and require all this useless paperwork?
Let’s just face it. With about 24% of loans nationwide underwater, millions of homeowners, clogging up the system with all this useless and unnecessary pasperwork looks more like punishment for the homeowner than anything really needed to make the transaction happen. Listen up, big banks, let’s hear it for Wachovia!