Program to expedite short-sale process of homes

by Catherine Reagor - Jan. 14, 2009 12:00 AM
The Arizona Republic

Struggling Valley homeowners could get some relief through a new pilot program from Fannie Mae. The initiative won't help people keep their homes, but it could help them avoid foreclosure.

Mortgage giant Fannie Mae is testing a program to pre-approve short sales in Phoenix and Orlando, two of the areas hardest hit by foreclosures. The goal is to expedite the often difficult short-sale process by Fannie Mae agreeing on a sales price for a home on the brink of foreclosure and the loss it will take before a deal is even done.

Short sales allow homeowners, who can no longer afford their payments, to sell their house for less than they owe the lender to avoid foreclosure. The deal must be pre-approved by the lender, and usually the remaining debt owed on the home is forgiven.

Foreclosures in the Valley have soared during the past year even as many real-estate agents and homeowners tried to negotiate short sales. The problem has been that short sales take too long and often don't go through because an agreement over price can't be reached with lenders in time.

The Arizona Regional Multiple Listing Service is working with Fannie Mae to launch the expedited short-sale program.

Brett Barry, a Valley real-estate agent with Realty Executives, is concerned about Fannie Mae's reputation for overpricing homes. He said it will help to have a pre-approved price on houses in the program, but if the price is much higher than values in the area, it won't help the house sell before foreclosure.

Fannie Mae's short-sale program focuses on homes listed to sell for less then the mortgage balance and that are being serviced by Countrywide Financial.

This is one more move to mitigate foreclosures. In December, foreclosures and pre-foreclosures dipped, according to Information Market. But analysts are concerned that the drop is due to a foreclosure moratorium by Fannie Mae and Freddie Mac during the holidays and that many of the loans will go back into foreclosure. If the program is successful, it will be expanded to other parts of the country.

CityScape update

During these tough economic times, developments able to get financing and move forward are to be lauded.

Downtown Phoenix's $900 million CityScape project is one example. The development has been downsized because of the recession, but that's so much better than being put on hold. Construction is under way on CityScape's first skyscraper. The high-rise, across from US Airways Center, already has several tenants. Most recently the law firm Ballard Spahr Andrews & Ingersoll signed to move into the project.

Construction of the CityScape's condominiums is on hold for now. Some leaders are disappointed, but it seems like a wise business move considering the many other downtown condo projects competing for buyers now.

If you know of any sizeable developments that construction has recently started on, please send me information.