Senator Lisa Murkowski has introduced an important bill with a diverse, bipartisan group of Senate colleagues designed to help potential homebuyers get out of "limbo' when considering a short sale property. Murkowski was joined by five Senators from both sides of the aisle in an effort to fix the lengthy closing process associated with short-sales -- where banks are called on to approve offers on properties where sellers owe more on their mortgage than the selling price.
"For far too long, underwater homeowners across the country have seen legitimate offers pass them by, time and time again," said Murkowski. "Banks have no real incentive to respond in a timely manner; this legislation requires they at least answer back.
S.361, the Prompt Notification of Short Sale Act would help buyers considering purchasing a "short-sale" home by providing a clear understanding and schedule of when they must hear back from the mortgage holder. Presently, it can take many months for any kind of response to short sale offers -- if a response is given at all. The legislation imposes a specific timeline for response:
After 3 business days: Acknowledge receipt of prospective buyer's paperwork.
After 5 business days: Notify of any missing paperwork.
After 30 business days: Provide a response to prospective buyer on the offer.
S. 361 creates a penalty to the servicer for failure to comply -- whether in a civil action for an individual to seek a $1,000 monetary award plus any reasonable attorneys' fees, or a higher amount in the case of an established pattern or practice of such failures.
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Senator Murkowski's diverse band of colleagues joining her in this fight are Senators Sherrod Brown (D-OH), Michael Enzi (R-WY), Robert Menendez (D-NJ), Jack Reed (D- RI), and Jeff Merkley (D-OR). Her co-sponsors explained the importance of this legislation:
Michael Enzi (R-WY): "When families have already made the difficult decision to sell their home at a loss, they shouldn't be left waiting for months for the mortgage servicer to tell them whether or not it is possible to do so," said Enzi. "Regardless of the servicer's decision, individuals and families have the right to know where their offer stands. In this tough economy, not being able to plan for the future can mean the difference between a home sale and a foreclosure, and our constituents deserve better than that."
Sherrod Brown (D-OH): "Ohio families are tired of being stuck in limbo," Brown said. "If we're going to fully recover from the housing crisis, we need to make it easier for qualified candidates to purchase homes. This commonsense legislation helps prospective home buyers and distressed homeowners alike--rebuilding our neighborhoods and jump starting economic growth."
Jeff Merkley (D-OR): "I have heard from Oregon homeowners and realtors that the current short sale process is all too often lengthy, confusing and inefficient," said Senator Merkley. "This bill is a common sense way to address a problem that is stressful for families and bad for our housing markets."
Robert Menendez (D-NJ): "This legislation will expedite the painfully slow and tedious process of short sales which is gumming up the housing market and slowing our overall housing recovery," said Senator Menendez. "It is absolutely vital that we require mortgage servicers to review and respond to short sale requests in a more timely manner so underwater homeowners can see much-needed relief and move on."