Based on a recent Residential and Foreclosure Sales Report by the RealtyTrac, residential property sales saw a 13% rise from last year. Although the median home sales for most of the states in the US have increased on an annualized basis, some prominent states such as California, Nevada and Arizona have reported a decrease in the overall residential property sales. California posted the highest dip which was about 15% less than last year and Arizona close behind with 13% decrease indicated a major slide in property sales.
The median sales price in the country for all residential properties whether distressed or non-distressed was 6% higher than last year but stayed more or less unchanged compared to the previous months. In the total residential property sales of $295,000 in the month of October, the median price of distressed residential property was at $110,000 which was about 41% lower than the median price of the non- distressed property.
The increase in the number of distressed properties that are generally bank owned or in foreclosure showed that the lenders were taking a hit as far as residential property loans were concerned. Banks generally make a good profit on property loans as long as the person who has taken the loan is able to pay back the installments. However, in case of a distressed property they sometimes end up selling the house at a price much lower than the original amount which causes them a substantial loss. The rising prices of residential properties and the complexity of finding good cash buyers for the public foreclosure auction is making short sales less favorable for lenders.
Inefficient mortgage loan processing methods that banks use can more or less be blamed for the increase in the number of distressed properties. Due to the lack of speedy and complete information that the banks need before processing a loan, a large number of them tend to fund the loan based on very little information about the customer. When banks contact the IRS directly to request a 4506-T, it generally takes anywhere from 30 to 60 days for them to receive it. Banks cannot always afford to wait for that long because they can lose a potential customer in the process.
What the banks need is a quick and reliable system that can help them get the information they need about the client to process the loan efficiently. There are a number of firms that specialize in providing banks, lenders, brokers and law firms’ quick access to a client’s financial information. They can speed up the process of submission and getting tax transcripts through forms such as 4506-T. Mortgage companies can benefit from the reliable services of this kind that a few external firms provide so that they can make the whole lending process safe and simple. After all both the borrower and the lender are equally responsible for the loan to be a success, isn’t it?