09/06/2025
Press Release Preview of Bank's Losses, Negligent and Inefficient Processing Short Sales and Loan Modification:
FOR IMMEDIATE RELEASE
Lack of Diligence Costs Mortgage Lenders Billions Annually as They Inefficiently Process Short Sales
Hollywood, FL — September 5, 2025 — Mortgage lenders’ persistent inefficiencies in handling short sales and other pre-foreclosure alternatives result in billions of dollars in losses annually, leaving FHA, VA, mortgage insurers, and taxpayers to bear the financial burden. Prolonged timelines, repetitive paperwork, and inconsistent procedures force Realtors, attorneys, title companies, and buyers to endure delays, often restarting from scratch when frustrated buyers cancel, even when a new contract is submitted, further delaying the process for months.
Key Points
• Edward Goldfarb (United Realty Group) and partner Deborah Franza-Cowart have secured over 900 short-sale and loan-modification approvals, citing persistent systemic problems in lender processing.
• Historically, short-sale turnaround times ranged from four to nine months, averaging six months by 2009; inconsistent lender requirements and long processor wait times remain core issues today.
• With approximately 140,000 homes in the short-sale pipeline, accumulated unpaid mortgages, HOA fees, insurance, and property taxes during lengthy processing periods generate multi-billion-dollar losses annually.
• Foreclosure costs to banks can reach up to $50,000 per property—substantially higher than the cost of completing a short sale—increasing the fiscal burden when short sales are not handled efficiently.
Background and Context
Edward Goldfarb and Deborah Franza-Cowart highlight regulatory and market shifts over the past two decades that have shaped today’s challenges. The repeal of the Glass-Steagall Act in 1999 (Gramm-Leach-Bliley Act) and the subsequent rise in risky lending practices contributed to the 2007 housing crash, a surge in distressed inventory, and years of elevated foreclosure activity. In response, the Distressed Property Institute created the Certified Distressed Property Expert (CDPE) designation, training thousands of real estate professionals to manage pre-foreclosure alternatives.
Despite years of opportunity to streamline processes, lenders maintain inconsistent and sometimes excessive documentation requirements, slowing file processing and undermining outcomes. Realtors routinely face long hold times, unclear instructions, frequent document expirations due to delays, and cases where buyers cancel out of frustration, forcing a repeat of lengthy processes even when contract terms remain unchanged.
Recent market shifts have added new strain. After a period of stability from 2014–2019, with modest annual home-price gains and historically low mortgage rates, mortgage rates spiked sharply in 2022, stalling markets and renewing pressure on homeowners and lenders alike.
Financial Impact and Consequences
• Extended short-sale processing increases carrying costs (mortgage arrears, taxes, insurance, HOA dues), compounding losses for lenders.
• Foreclosures, when they occur, often cost lenders significantly more than completing a short sale.
• While mortgage insurance (e.g., FHA loans or loans with small down payments) can offset some losses, the cumulative effect of inefficient processing remains substantial and largely unaddressed.
Closing Statement
“This is not simply a paperwork problem—it’s a systemic inefficiency that costs our industry and taxpayers dearly,” said Edward Goldfarb. “Streamlining bank processes, improving communication, and reducing repetitive documentation would protect homeowners, preserve property values, and reduce losses for lenders.”
Media Contact
Edward and Deborah have lost only one Short Sale to the foreclosure auction since 2007. Edward has written many articles on Short Sales, served on Distressed Property Panels, interview by NPR, USA Today and other newspapers.
Edward Goldfarb
Realtor, United Realty Group
Email: [email protected]
Phone: (954) 605-8427
Hollywood, Florida
