We had the opportunity to pick the brain of Shane Sutton, short-sale real estate attorney extraordinaire, regarding the current state of the short sale market. Oh, the things we learned. For one, we now understand what a unique time in history this is: “banks are now doing deals to help people get out of their toxic debt, with their credit being repaired in a very short period of time,” Shane noted. “Sellers who are underwater should be encouraged to sell now; it’s better that they get out today than wait ten years and hundreds of thousands of dollars later to walk away,” he continued.
Indeed, the extending-the-pretending bank chapter may be coming to an end, such that banks are now bolstering their short sale departments to process them much more quickly, particularly for larger loans. Reviews that used to take months can now often take weeks. In addition, whereas foreclosure judgments stick around for 20 years, with credit soured for 7 years, credit can often be restored within 2 years of a short sale, enabling sellers to move forward with their lives.
“In New York, more people are underwater than many know or care to discuss; New Yorkers are very proud people,” Shane mentioned. He’s seeing a plethora of owners who purchased in Tribeca and the Highline area over the last two years, many of whom are underwater after having borrowed at 80%+. “You have the opportunity today to write off the balance of your debt load,” he said. “Owners should take advantage now, while banks are working to get rid of their non-performing loans at attractive terms to sellers.” Stay tuned for an upcoming post on The Apple, Peeled for a more detailed look at the short sale process.