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We attended two high-level meetings with bankers recently and thought a few of the salient points were worth sharing. First both lenders (Bank of America and Wells Fargo) used the same estimated figure of seven million homeowners in the U.S. being late on their mortgage payments by 90 days or more. To put this number into perspective, there were approximately 800,000 short sales or foreclosures concluded for all of 2010 and there will be an estimated 1 million in 2011. So, this begs the question: What is going to become of all these properties?

Both of these institutions continue to gear-up for what they are terming the “new normal.” Obviously, the new normal is selling a property for less than what is owed. It was reiterated that lenders would strongly prefer to keep homeowners in their homes and work out a favorable arrangement by which they can do so. If all efforts fail to reach a compromise, then a short sale is the preferred method over a foreclosure. This benefits everyone, but requires the borrower’s cooperation.

Regarding short sales, both lenders are working diligently to implement improvements to their systems, processes and understanding of the issues. An interesting statistic they shared has to do with agents who submit short sales. Their assessment is that inexperienced short sale agents only get short sales approved 16% of the time. We know from personal experience how important it is to submit and complete and comprehensive package. As a result, our success rate is above 90%. It was hinted that large institutions may be going to a model of by which they recommend agents they know to be more experienced at managing the short sale process, thereby saving everyone time and money.

We will continue to keep an eye on how this progresses and will also continue to share statistics that are more local to South Orange County.