Short sales have been an important lifeline for many Tampa Bay homeowners unable to sell their homes at market prices. In fact, 30% of the single family homes for sale in New Tampa are short sales, while 46% of homes for sale in Wesley Chapel are short sales. Over half of the homes under contract in Hillsborough County are short sales. Many Tampa Bay homeowners have been willing to face uncertainties about time frames, deficiency judgments, and promissory notes in order to avoid foreclosure. For their part, banks have reluctantly and belatedly accepted short sales as a fact of life.
Economic calculations have historically made short sales a cheaper option for banks than foreclosure until recent government interventions. The FDIC has a program whereby your tax dollars will reimburse the banks after the first 20% of any future losses (FDIC Loss Sharing Agreements). These “losses” include all penalties and fees tacked on by lenders. As a result, delays in short sales and foreclosures can result in additional fees and higher FDIC reimbursements. The FDIC has entered into 53 loss share agreements with acquirers of failed banks. For single family mortgages, the FDIC reimburses the banks for: modifications, short sales, foreclosures, and charge-offs for some second liens. Many banks are beginning to view foreclosure as a more attractive option since government intervention has distorted market forces. While it is hard to fault business people for following the rules to earn a profit, the result of these government programs seems to be at cross purposes with the intended goals of helping the average homeowner.
Though the effort to re-capitalize banks may have been defensible, the effects of the stimulus are not working for many Tampa Bay homeowners. As Certified Disttressed Property Experts (CDPEs) who work to help homeowners avoid foreclosure everyday, we at Team Bohannon encourage you to be fully informed seek the advice of competent legal, tax and real estate professionals before contemplating a foreclosure or short sale. Here is a related Business Week story.
