Summit County outpaces the state for the percentage of homeowners who are underwater with their mortgages.
A total of 28 percent of Summit County mortgage holders owed more than their homes were worth at the end of last year, according to data U.S. Sen. Sherrod Brown released Wednesday.
About 25 percent of mortgage holders statewide are upside-down in their mortgages, he said.
Brown, D-Avon Lake, released the figures, compiled by real estate website Zillow.com, to promote his proposed bill that he says would help such mortgage holders by requiring lenders to respond in a timely manner to an offer on a short sale.
Short sales occur when a lender allows the property to be sold for less than what is owed on the mortgage.
The bipartisan legislation, titled the Prompt Notification of Short Sale Act, would set a 60-day time limit for lenders to accept, reject or counter a short-sale offer, or state the need for an extension. Sen. Lisa Murkowski, R-Alaska, is co-sponsoring the bill.
The lack of movement on short sales has contributed to the number of vacant properties in communities, Brown said.
“Empty homes litter the landscape of our state in far, far too many neighborhoods,” he said.
“We can’t afford to wait any longer,” said Brown, who introduced a similar bill last year. “This is a major component to stabilize the housing market.”
The percentage of underwater mortgages in Summit County has decreased since the second quarter of 2011, when it was 34.7 percent, according to Zillow. Brown and the website did not provide raw numbers, only percentages.
Clinton County in southwest Ohio has the worst rate at 40 percent. The best rate is 2.9 percent in Athens County.
Brown and area Realtors say the closing process in a short sale can last months, leading to potential buyers walking away and sellers being at greater risk of foreclosure.
Brown was joined in a telephone call-in by a Lake County homeowner whose home has been on the market for nearly two years. She blames delays in the short-sale process for the loss of potential buyers.
The short-sale process is burdened by “numerous requests for the same documents. It’s not short in any manner unfortunately,” said the homeowner, Kathy Hlad, whose house is set to be sold at a sheriff’s sale Monday.
Darlene Loughborough, a real estate broker with Twin Oaks Realty Inc. in Akron, cheered Brown’s proposed bill.
“The period of time in which [lenders] respond is ridiculous,” she said. “It’s not exclusive to one bank.”
She said she has three short sales she has been working on for months — “two of them over a year, and one of them since last July.”
Loughborough said she can’t pinpoint what to blame for the delays.
“I don’t know whether [lenders] are short in personnel, whether they require too much documentation. I’m not sure what the real problem is,” she said.
Real estate agent Cece Fox, who deals in bank-owned properties for Twin Oaks, said she’s not sure legislation would help.
“If Sherrod wants to legislate it, all power to him, but I don’t think it’ll work,” she said. “You’ve got too many entities involved.”
She also said there aren’t enough people in the banking industry, in part because of cutbacks, to handle all the myriad transactions, including short sales.
The Mortgage Bankers Association did not respond for a comment.