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Bank Delay on Short Sale

So what would you do when your client's bank does not get the loan docs prepared by the short sale expiration date? The loss mitigator is already a little ticked off but the delay should not be longer than 2-3 days after the expected closing date but Bank of America has lagged on getting their work done to complete the file. Any suggestions?

Posted by Matt Malouf on 04/02/2009 12:51 PM

Comments (5)

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5 Comments on Bank Delay on Short Sale

APR

You are lucky if you only have two to three days. Nationally, only 20% of short contracts go through. Even the best operators will only have an 80%-90% closing ratio. Short sales are a shot in the dark, and clients must be counseled accordingly. We have a disclosure that buyers sign informing them of the pitfalls in the short sale process to circumvent future communication issues.

Steve, great idea on the disclosure... there is definitely a "cost" for the savings these people realize on a short sale. The cost may not be cash, but the price of frustration and waiting is steep. I didn't realize, though, that the success rate for closings was so miserable. The best advertising for a well priced property any more is "Not a Short Sale or Foreclosure" ~ I tell my buyers to jump on them.

Matt... I wish I had some help. I am still baffled by how unwilling the banks are to get this process refined so that we can actually help with their impending loss. Amazing!

GOOD LUCK!!

I do like the disclosure form idea...

And many buyers are opting to wait and see what the Foreclosure price will be when the bank rejects the short sale offer, and why not?

APR

MATT--When the lenders give you the approval they have all their numbers set up to a certain date. The Mitigator is probably upset because all these numbers might have to be refigured or they need to get an approval to extend the approval date. Next time you should try to get extra time on the approval letter to give you some leeway. I would try to get a week if you think it will only be a couple of days.

STEVE--With the right education Short Sales are anything but a shot in the dark. If you understand the and prepare for the the ultimate goal of getting an approval then you can work to make your Short Sale Package as bulletproof as you can. The problem most encounter is that they argue and try to convince the Loss Mitigator of the numbers. Agents need to concentrate on putting the best package together they can and use that to convince the Underwriter or Investor who is the ultimate decision maker.

GRETCHIN--We, as agents, need to refine our skills also. There needs to be more education. The problem is that there are so many useless courses going around, most of which aren't regulated to make sure they're teaching the proper techniques.

MARILYN--Foreclosure have their own challenges. Many agents don't maintain the properties and they deteriorate quickly. Be careful and make sure the inspections are done properly and diligently.

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APR

As an escrow officer with a title company, I have had good success with closing short sales. I am fortunate enough to work with a Realtor and his Short Sale Processor that have experience. The most important thing to ending up successfully is starting out with a COMPLETE package submitted to the Loss Mitigator and a buyer who is flexible. I have not had the experience of the buyer's lender not being ready for closing. Probably because the closing date on most of the contracts was 2 - 3 months out.

Always extend dates out further than you think it should take. ALWAYS! If it's sooner, great! Always put together the most complete package BEFORE sending it off to the banks. ALWAYS! These are the 2 most important rules to get a short sale to close before the expiration date and the buyer walking away.

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