VENTURA, CA – With homeowners losing their residences at record levels, real estate agents are working feverishly to bring sellers and buyers together to avoid foreclosures, but new attitudes and policies of some lenders are inadvertently aggravating the situation, according to an official of Ventura County’s largest independent real estate company.
Bob Harrision, West Ventura County regional manager for Troop Real Estate, Inc., said that two of the best options to avoiding foreclosure, and a path the federal government is encouraging among lenders and borrowers, are the so-called “workout”, or the “short sale”
“The workout allows homeowners to stay in their homes until the market turns. The “short sale” calls for the seller to instruct the Realtor to put their house on the market at the best price and sell it in the shortest possible time to potentially avoid a further decline in value.
“The challenge here is that the loan balance is typically greater than the house’s market value. But if the lender accepts this scenario, the seller is usually relieved of their mortgage,” said Harrison.
Harrison said the workout and the short sale are the preferable options, because foreclosure looms as the next option.
“What’s happening now is that everyone, led by real estate agents, is trying to alleviate the situation without a full government bail-out and avoid more foreclosures. The problems, however, are that some short sale lenders are creating an unusual time delay response to buyers’ offers, which then fall out from buyers losing motivation and observing further declines in the home pricing. Some responses have exceeded three months if at all.
“As hard working full-time professional agents face financial challenges of their own, some lenders are arbitrarily reducing traditional real estate commissions on many short sales. The result is that they are creating more incentive for foreclosures to occur. Lenders created the problem with questionable sub-prime loans; now they’re taking a pound of flesh from the people who are trying to help navigate the situation for consumers,” Harrison said.

Once the lender owns the property through the foreclosure process, Harrison continued, they have offered all the extra incentives any motivated seller would, including aggressive pricing and concessions. The irony, he added, is that lenders are usually taking less money on a foreclosure because of the down housing market than they would if they accepted a short sale.
“The entire issue has to do with timely approvals of short sales and reasonable incentives for real estate agents who are providing well-qualified buyers,” Harrison said.