Short sales are one of the more frustrating areas in today's real estate industry. Countless legitimate short sale offers are withdrawn because the banks just do not respond for months at a time. I have clients right now whose lease is expiring at the end of June. We submitted a short sale offer in March. I don't think we'll hear back from the bank, much less close the deal, before they're going to have to vacate their apartment.
A recent amendment to the Mortgage Foreclosure Act seeks to remedy this situation. The Act now requires the bank to respond to a written short sale offer within 90 days, if the property is the subject of a residential foreclosure case.
It is a relatively short section, so I have copied the entire text of the new statute below:
(a) For purposes of this Section, "short sale" means the sale of real estate that is subject to a mortgage for an amount that is less than the amount owed to the mortgagee on the outstanding mortgage note.
(b) In a foreclosure of residential real estate, if (i) the mortgagor presents to the mortgagee a bona fide written offer from a third party to purchase the property that is the subject of the foreclosure proceeding, (ii) the written offer to purchase is for an amount which constitutes a short sale of the property, and (iii) the mortgagor makes a written request to the mortgagee to approve the sale on the terms of the offer to purchase, the mortgagee must respond to the mortgagor within 90 days after receipt of the written offer and written request.
(c) The mortgagee shall determine whether to accept the mortgagor's short sale offer. Failure to accept the offer shall not impair or abrogate in any way the rights of the mortgagee or affect the status of the foreclosure proceedings. The 90-day period shall not operate as a stay of the proceedings.
(735 ILCS 5/15-1401.1)