Murkowski Fighting to Improve Alaska, National Housing Market
With Alaskans and Americans in Limbo, Bipartisan Group Joins Senator to Expedite Process
WASHINGTON, D.C. – 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.
Jody Mathis of Anchorage made an offer on a property where the owner was financially underwater and is “waiting and wondering” whether it was approved or not. Her nine-year old son keeps asking her “when can we move, mom? When can we move into our own house?” and Mathis is frustrated at not being able to answer him. Mathis is one of thousands of such prospective buyers across the country.
Anchorage Board of Realtors President Micheal Droege says he has a prospective buyer who has already waited over a month for a decision on an offer. “I’ve heard it’ll take another forty days to get a response,” says Droege. “You’re looking at 70, 80, 90 days – most buyers can’t wait that long because they have a family that needs a place to live.”
There may be some situations in which a Servicer will be unable to provide a decision within 30 days following receipt of a complete application (e.g., extended negotiations with the mortgage insurer). In such cases, the Servicer must notify the prospective buyer within 30 days that the application is still under review and each week thereafter provide them a status update indicating the reason(s) why a decision is pending.
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."