Rep. McNerney bill attempts to accelerate short sales

Short sales, increasingly common in Northern San Joaquin Valley real estate transactions, could become fast sales under legislation introduced by Rep. Jerry McNerney, D-Pleasanton.

"Great idea. Anything that would expedite short sales would be wonderful," said Lela Nelson, a longtime Stockton resident and owner of a real estate company.

A short sale happens when a bank or other lender agrees to allow a homeowner to sell a property for less than what is owed on the mortgage. The lender takes a loss on the difference.

McNerney introduced the Fast Help for Homeowners Act this month in what he called "a necessary step to addressing the housing crisis."

His bill would require a second mortgage lender of a federally insured mortgage to review and decide on a short-sale agreement within 45 days. If a decision is not made in that time, the short sale will be designated as "approved" the next day.

The California Association of Realtors reported this year that short sales — and other distressed property transactions — made up more than half of all sales in the state.

In a news release, McNerney said his legislation would help lenders and homeowners. He pointed out that short sales are less costly than going through foreclosure and less damaging to a homeowner's credit score.

"For most people, a short sale is not fraud," Stockton Realtor Marcia DeMott said. "People get tired of this process. It literally makes people sick. It is a horrible situation."

She said that four years ago, the short-sale difference might be $25,000. Today, $250,000 is more likely.

"A strong housing market is a crucial part of getting our economy back on track," McNerney said. "The housing crisis has affected homeowners, communities and small-business owners.

"Struggling homeowners have heard a lot of talk about addressing the issue and want to see real action."

McNerney's bill has received support from regional, state and national real estate and homeowner organizations. It has the backing of Republicans and Democrats from two of the nation's hardest-hit states in the foreclosure crisis — California and Florida.

"Short sale transactions are difficult as is," California Association of Realtors President LeFrancis Arnold said. "When subordinate lien holders refuse to respond to offers, additional unnecessary barriers to homeownership are created. (This) will eliminate this major hurdle."