I'm currently negotiating a short sale with Bank of America. It's a joke. I also need to point out I've been involved in 10 successful short sales, so I know how these things work. Unfortunately, how each bank handles short sales is exactly why people are choosing to walk away from their homes and accept foreclosure - because it's less of a headache than talking to some $8.00/hour bank employee who could care less about your financial hardships.
This is good article explaining how banks are killing real estate values by not being able to work out short sales in lieu of foreclosing on the home. Here are some key points of the article.
[Short sales are] also a better option for banks: According to one analysis, short sales resulted in loan losses of only 19 percent, compared with an average loss of 40 percent on homes sold after foreclosure.
According to research firm Campbell Communications, only 23 percent of short sale transactions are actually completed. "Three out of four potential short sale transactions fail, principally because the mortgage servicer takes too long to respond to the offer," said Tom Popik, author of a February survey of real estate agents. "When these same properties are later sold it further depresses real estate prices."
Having spoken with these banks on behalf of my clients over the years I can tell you they are in no hurry to help anyone out of a tough spot. If your home is about to go into foreclosure and there is an offer on the table, they will not move faster to make the short sale happen.
Example, instead of the bank accepting $300,000 for a short sale, they take too long negotiating the offer and the home goes into foreclosure. The home sits vacant without utilities (or appliances) for months and deteriorates quickly. The home goes on the market as a foreclosure 3 to 6 months later and sells for $250,000 or less, which doesn't include the tens of thousands of dollars in attorney and processing fees paid by the bank. Smart financial decision on the bank's part, right?
And these "smart" bank folks are who we, US taxpayers, bailed out? *Scratches head*