October 12, 2011
Congresswoman Susan Davis Introduces Bill to Help Homeowners Avoid Foreclosure
Washington – As homeowners in San Diego and across the nation continue to tangle with banks, Congresswoman Susan Davis (D-San Diego) introduced legislation to give people another tool to avoid foreclosure and the subsequent damage to the their credit rating. The Short Sale Transparency Act will require Fannie Mae and Freddie Mac to disclose the minimum asking price they are willing to accept for a short sale if the first offer is rejected.
“People deserve a real chance to avoid foreclosure. It is unfair to expect someone to complete a short sale instead of abandoning their home to foreclosure, if the banks don’t meet them half way,” said Davis. “So many homeowners are willing, even eager, to work with banks to get out from under the mortgage and protect their credit rating. But far too often, they find themselves in a guessing game as to what dollar amount will complete the sale.”
For many Americans a short sale, the sale of a home below its value, is a last chance to avoid foreclosure. However, when the asking price is unknown, short sales become less viable because homeowners are essentially shooting in the dark when submitting bids to a bank. As a result, loan servicers can repeatedly deny short sale offers without giving homeowners guidance on the price the bank is asking. Ultimately, this back and forth ends in foreclosure.
On the other hand, if an offer is, for example, $2,000 short and the homeowner knows this, they could find a way to make up the difference in order to complete the short sale.
Disclosure is essential to ensuring fair transactions between investors and borrowers. Fairness to consumers is critical to boosting the economy and ending the cycle of foreclosures.