There's one BIG change that would make the recovery faster, smoother and more vigorous. All short sales should be at preapproved prices. They shouldn't be allowed to go into the multiple listing service until the banks have agreed to the price, terms and conditions -- including and especially how deficiencies and seller contributions will be handled.
Why? Because we have too many willing and able buyers who get their hopes up and then are trapped in a short-sale contract, with slim chances of successfully owning the house. Unless the buyer is in contract on multiple houses, they're out of the market waiting for something that probably won't happen.
Having multiple contracts hurts the sellers, as these buyers are going to drop out as soon as one of their "deals" comes together. Massive time and energy is being spent by real estate agents, with little chance of success.
The strategic default problem would be reduced if the sellers knew that they'd be foreclosed on quickly. They're taking advantage of the prospect of making out better by doing a short sale. They're the most likely to have the banks requesting funds from the seller, or refusal to waive deficiency judgment -- terms that the seller will probably turn down, anyway. more...