Is it enough to really encourage the banks to be more cooperative in a short sale environment?  Probably not.  Will it encourage more homeowners to attempt to short sell their house versus a foreclosure – maybe. 

In a Carlsbad short sale, the homeowner normally can not afford to keep making the payments.  Maybe they have contacted the lender and asked for a modification and the lender couldn’t help them.   So, rather than walking away from the property and letting it go to foreclosure, they attempt to sell the property for less than is owed on it.  They normally live in the property (payment free) until the sale is completed.

This is beneficial to the lenders because vacant foreclosures are often ransacked – by angry property owners, or vandals, bringing down the price of the home even further.  It is beneficial to the homeowner because it reports more positively on their credit report. 

For More Information on Carlsbad Short Sales vs. Carlsbad Foreclosures…

When their situations were really tough, most banks preferred short sales because they were their best opportunity to get the most money back. But with an improving economy, and because the losses on many of these properties have already been written off the books, banks are increasingly reluctant to negotiate a short sale.

Today, banks demand 9.5 weeks to respond to a short-sale request, compared to 4.5 weeks a year ago, according to research firm Campbell Communications. Their reluctance is frequently stymieing sales and frustrating real estate practitioners.

Source: Based on article from Business Week – Christopher Palmeri