Fannie Mae to encourage short sales?
Both Phoenix and Orlando have been particularly hard hit by foreclosures. Home prices fell in the Phoenix region 33% last year through October, according to Standard & Poor's/Case-Shiller home-price index, the worst decline in the country. Some 29% of the state's borrowers had negative equity in August, and an additional 6% of borrowers were approaching negative equity, according to a report by First American CoreLogic, a data provider.
Most recent Case-Shiller home value data
While short sales seemed like a great solution for sellers whose homes were worth less than their mortgages, agents often found that the banks would not respond to offers in a timely fashion, so the net effect was that many of the potential buyers felt frustrated and eventually pulled their offers.
From my own experience, I made an offer around last Christmas on a short sale, and the bank didn't get back to me for over a month. So the two offers that were made were both pulled by the time they made a decision, and obviously the housing market has gotten worse since then.
Hopefully if Fannie Mae is clear that it will accept X dollars for a particular house, at least that sets a "reserve" price, just like with an eBay auction. If a bidding war emerges to bump up the price, that's fine. The alternative is homes that say "Short Sale!" but might as well say "Danger: Avoid hassle!"
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Brett Widness is an editor with AOL's real estate channel. Find homes for sale, foreclosures, home values, home finance and apartments at AOL Real Estate.