A Short Sale can drive you to the brink especially if it involves Countrywide now part of Bank of America. I have been working with my sellers for almost a year. During that time I presented more than 7 contracts to my clients. Just this past week, (knock on wood) I think we have a clear to close. But, I better not count my ‘chickens ...'
Some lenders will get a short sale approved immediately. Most take a little time. But the king ... the winner of taking the longest has to be Bank of America. My experience has to be unusual.
Here is a little background. My seller's loan was not held directly by B of A. Rather they had an investor - Wells Fargo. B of A was just the loan servicer. In a short sale the contract is first accepted by the sellers and then presented to all lien holders for their approval. This can involve a second mortgage company used to assist with the down payment. Other 2nd's could be any home equity loans, homeowner's association, and contractor liens and so on. I am sure you get the picture.
Back to my sale... Bank of America and its predecessor Countrywide use a very tedious process of reviewing a short sale. In the beginning before a property will be considered for short sale, the sellers have to stop paying their mortgage for 3 months.
This brings us to the short sale application which requires numerous documents such as tax records, bank ecords, and a hardship letter explaining the reason for the short sale and so on.
The property may have been listed for sale during this process but not necessarily so. Once an offer is obtained the real fun begins. As with a normal contract all parties execute the contract subject to the 3rd party interest(s) approval. In my scenario this was done 4 times. 3 of the 4 times the contract fell apart 80% due to the very slow and cumbersome B of A required procedures to be followed.
First the contract has to pass an electronic "desktop" appraisal of value. Assuming this is OK, the file passes to a negotiator. This person usually has over 1,000 cases on his desk Calling him is impossible. Email is your only hope and the following sample email address format usually works: (john.doe@bankofamerica.com) Getting a response is another issue.
Assuming all of the above steps have been followed, the original negotiator passes the file along to a ‘super-duper' negotiator who then does his own review as well as negotiating with the "investor' who have their own review procedure. This can be a real obstacle in the process because of the 100,000's or pending foreclosures in the market and the large amount of potential lost money. The junior lien holders are much easier to make a deal with and rarely act as deal breakers.
My own recent deal finally was approved by the investor and we are good to close. We were once before though on the same property. By the time the bank and the investor agreed which too 7 months the property values declined $20,000. The Buyers said no and their mortgage company said no. However, we submitted a new offer based on current values which were approved and once again we have a clear to close. In the meantime the bank lost $20, 0000 plus the payments and the taxes and the insurance. Crossing my fingers.
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