Banks drag feet on short sales, survey finds
Los Angeles Times
Associated Press
Banks are dragging their feet when considering so-called short sales, an increasingly prevalent type of real estate transaction in which lenders allow homes to be sold for less than what is owed on them, according to a survey of California real estate agents.
...Richard Green, who directs the USC Lusk Center for Real Estate, said the market would benefit from avoiding foreclosures, which can lead to homes languishing on the market, by encouraging more short sales.
"Forcing banks to clear the market through short sales would almost certainly get us through this faster than we're getting through it," he said.
Green said he suspected banks were slow to approve short sales because the transactions force them to immediately report the difference between the sale price and what they're owed as a loss, rather than carrying the loan balance as a purported asset. He said some banks may also fear inadvertently letting property go for less than it's worth...