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A "short sale" is a distress sale in which the lender agree to take less than the amount owed on the home's mortgage, so it can avoid the costs of a foreclosure. The number of such deals has been rising in lock step with the surge in foreclosures the past year.
Orange, Seminole, Lake, Osceola and Volusia counties are among 11 counties in Central and Southwest Florida where about 300 homes have been preapproved by Fannie Mae for short sales. Orlando-area Realtors say they hope the program cuts the wait time on short-sale offers from months to weeks or even days -- and prompts other lenders to move faster as well.
"Right now, short sales can take months and months until you get an answer back, and sometimes the answer is, 'We're not interested.' This program will cut through that," said Marty Hunt, an Orlando-area Realtor and president of the Mid-Florida Regional Multiple Listing Service.
The regional MLS, owned and operated by 13 Realtor associations in 10 counties, including the Orlando Regional Realtor Association, will flag the preapproved short sales so member agents can market them for quick sale. The pilot program, which began in late December, also is under way in Phoenix.
Hunt said the relatively small number of preapproved short sales in the Orlando area won't do much to decrease the thousands of homes in some stage of foreclosure or already repossessed by banks. But if the pilot program works during the next few months, it would be extended and expanded, he said, and that would probably prompt other lenders to develop similar fast-track programs.
The pilot program crafted by Fannie Mae, formally known as the Federal National Mortgage Association, streamlines the process by getting all the research on a property and all the necessary clearances done in advance. In a typical short sale, an offer takes longer than a conventional sale to close because the offer must be cleared by multiple parties, and any negotiations on price can get lost in the blizzard of faxes and other paperwork.
Hunt said that if lenders decide upfront how much they are willing to accept, it would help move some of the record inventory now on the market, and that would help stabilize falling home values and boost consumer confidence.
"That's critical to turning this around," he said, noting that in some of the region's newer subdivisions an estimated 50 percent to 60 percent of the homes on the market are foreclosures or short sales. The Fannie Mae pilot program will also include some listings in Polk, Hillsborough, southern Pasco, Manatee, Sarasota and Charlotte counties.
Jerry W. Jackson can be reached at jwjackson@orlandosentinel.com or 407-420-5721.
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