Reply #10: Banks miss an easy housing fix [View All]

NEW YORK (CNNMoney.com) -- Banks say they want to help troubled homeowners, but they are delaying deals that could save everyone - including the lenders themselves - a lot of time and money.

Lenders are taking much longer than necessary to approve short sales, according to Duane LeGate, of House Buyers Network, a short sale specialist.

In a short sale, a homeowner who cannot keep up with their loan asks the lender to take a dollar amount less than what is owed on a home's mortgage, and forgive the remainder of the unpaid debt.

So if a borrower has a mortgage balance of $100,000 and finds a seller who will pay $95,000 for the house, the lender agrees to accept that $95,000 and close out the loan.

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Ideally in a short sale, everyone wins. Borrowers avoid the ugly foreclosure process that destroys their credit, while lenders recoup more of their costs than they would by spending the time and money it takes to kick an owner out and resell the property.

http://money.cnn.com/2008/05/28/real_estate/short_sales_long_waits/index.htm?postversion=2008052806