Home : Blogs : Patty DaSilva, CDPE©- Certified Short Sale Expert- e-PRO®- Ft Lauderdale : Patty Da Silva's Blog

But why so many obstacles?

oday of my favorite buyer’s agent asked me the above question… “But why so many obstacles?”

For the most part, I have been very lucky with the buyer agents who I have worked with in my short sales listings. We though it out and make things happen; we work together, towards the goal: CLOSING!

But that is only a part of the success. Working with the lenders is a huge challenge - in every way… from lost documents, to banks who do not allow for emails, to loss mitigators who have not cleared out their voicemail boxes in two months, MI companies who are ruthless, 2nd mortgages who are insured,

A closed short sale is a phenomenon to be celebrated!

Living and breathing short sales 24 hours a day, 7 days a week for as long as I can remember now, I could write for hours to answer her question.

But I wanted to keep it short (for her sake) so here are 4 main points

1. Banks DO NOT CARE. The incentive of $1000 or $1500 to approve a workout is too small to make them do anything but make them laugh. It doesn’t actually speed up the process and they get bailed out regardless of what they do.

2. The Government that bails out the banks has ABSOLUTELY NO POWER OR INFLUENCE on the way the banks process short sales or mods and can’t actually make the banks do anything.

3. Bank staff is overwhelmed, undertrained and underpaid – they also DO NOT CARE. They get paid, the same, regardless of what they do. There is no “end” client and no one knows who to complaint to. The bad employees are shield from “bad reviews” unlike other businesses. The ones that do get paid a bonus, the bonus isn’t big enough to make a real difference.

4. The investors who own these loans are “penny smart and dollar stupid” and make ridiculously retarded decisions.

So, this mess is left for people like you (Yes, you, who are reading this!) to deal with and figure out the best that we can, without having any chance to change the VERY broken system.
Even though we are the ones working on the issues everyday and actually have solutions….

I would love to hear your opinion and experiences.

Help lots of people and have a great day!

Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS
BROKER - Owner REALTOR® - Green Realty Properties

Visit www.pattydasilva.com for SouthEast Florida's best properties.

Posted by Patty DaSilva, CDPE©- Certified Short Sale Expert- e-PRO®- Ft Lauderdale on 07/25/2009 04:59 PM

Comments (43)

Short Sales, Foreclosures, Bank Owned in the ActiveRain Channel

short sales, short sales expert, problem with short sales

This post has been included in Florida Information Broward County, FL Information
Post is included in group: Short Sale REALTORS®
Post is included in group: Realtors®
Post is included in group: REALTOR LIFE
Post is included in group: Diary of a Realtor
Post is included in group: All Things Florida

43 Comments on But why so many obstacles?

JUL

I heard that Banks get paid some moenty for successful Loan Mitigation, but do they get paid for short sales?

We cannot say it often enough. Banks don't care. Banks don't know how to sell real estate. Bank mitigation clerks get paid no matter what.

Banks do not care.

Banks don't care, they have hired inexperienced unqualified staff and they can't keep up with the never ending stream of problems.

There's not enough well-qualified staff to handle the volume of short sales and loan mods. We see the results of this every day.

Ahhh....Patience is the name of the Game these days. I just had to send another email to a client reminding him..."patience". All approvals were in finally..."Let's go to closing! Yea!". But NO...title company needs an updated estoppel letter from HOA! Another week + $150 to get it in one week rather than 30 days! PATIENCE...PATIENCE...PATIENCE!!! Isn't this fun?!!

If you think about it, it is really you, the buyer and the buyer's agent against the seller's lender. The seller just doesn't want a foreclosure and doesn't want to owe anything. That's why I believe that you have to negotiate on the buyer's behalf. If you can get the property lower than what they are offering, then go for it. If they didn't ask for closing cost, put it in. If they didn't ask the seller to pay for the moon, then have it changed. The only thing that will save your short sale, especially with all the new changes in the last 2 months, is the ability to purchase them with built in equity. Anything else, you are just wasting time and energy while your seller goes into foreclosure.

"Overwhelmed, undertrained and underpaid" pretty much sums it up, and I don't see the situation improving anytime soon. My advice is to follow their system to the letter (even though we may not agree with it) and document every interaction with the bank thoroughly.

From my experience banks don't care and unless the hired different people and paid them a substantial incentive to clear their inventory this will go on and on until the market clears itself...very unfortunate..

Yep, the loss mitigators get paid no matter what. Been trying for weeks now to get a loss mitigator to rush along a cash offer that would net them close to 90% of the pay off. Not going to happen. They're backed up 6 months. By the time they will look at our offer, the buyer will have purchased another home, the loss mitigator will have collected 6 more paychecks and the bank is going to lose money. Who cares?

I know it is a system that our buyers are wanting some logical explanation of x,y,z and guess what - there is no logic whatsoever! I want to come up with a form that buyers sign at the get-go that says they have the patience of a saint, they agree to what until dooomsday, and in no way will they take their frustrations out on their realtor. Think this will fly?

Patty- Banks do not care but either does the government and to say that the government can not force the banks to do something is simply not the case. The government now owns most of the banks and tells them what to do and when and how. Fannie mae who owns along with Freddie more than 60 % of the notes ( the private investors you are talking about are pretty much a minority here) just pulled ALL The delegation power of ordering BPOs from the servicers. What part of Big Brother do we not understand?

The Government does NOT want short sale work outs. The politicians are in bed with the FED and the BANKS. The government wants to keep the people in their homes by buying up their notes, getting rid of the second mortgages, have the tax payers pay all the back payments to get people out of foreclosure and then the Government will become their landlord, their partner in this mess. So why would they ever really want a short sale to go through?

Nevertheless, we get our short sales closed, every one of them and that is what we do. We have gone all the way up to presidents of banks before. We are privy to some very private discussions about this issue. And I can tell you that even though I do not like banks, I like government even less right now. Katerina

Darrin- that is not true for ALL loss mitigators. There are a lot of servicers and loss mitigators that work on commission also. They do not get paid unless the short sale closes. Katerina

Amiri- That can come back to bite you. The lenders look at the amount of deficiency. To say that the only thing the seller cares about is not having a foreclosure is not usually correct. They also care about being 1099ed on investment shorts, they care about the fact that Florida is a deficiency state and that they may not get a total release, they care about it when the second is going to charge the loan off, and then sell that loan to collection agency who is going to hound them for 5 years. So the listing agent needs to get the highest offer to get the least amount of deficiency. The lenders score the notes. The more of a loss, the tougher the effect. Of course, this means that as listing agents we have to negotiate, negotiate, negotiate...

Nestor & Katerina - 1. Waive the right to deficiency if applicable. See if bankruptcy is right for the seller as even in a foreclosure, they can go after the seller and the end result might be the same. 2. A good CPA will write off the tax hit on an investment property as a business loss. 3. Highest offer will kill the short sale, especially now a days with the request of more money from the 2nd lien holders and the request for promissory notes on first loans. 4. The only time loss is calculated from original loan amount, is when MI or insurance is involved. Other than that, it makes no difference as the net on the HUD oppossed to their BPO will determine whether or not the short sale gets approved. 5. Nothing comes back to bite me as I explain and disclose everything to my clients, the buyers get a great deal, agents get 3% and seller gets some money (legally) and avoids a foreclosure.

That is a very true statement -- banks do not care. There is no motivation to make them care.

"penny smart and dollar stupid" - I couldn't have said that better myself. Last year I listed 4 properties that were short sales. Two closed and two did not. The two that did not were not unsuccessful in getting offers - they had plenty of interest and offers! In the end, after foreclosure, the bank accepted an offer on one that was $60,000 below my first and immediate offer on the property. The other accepted an offer of about $50,000 below the last offer on the property, still in place when the deal went to foreclosure - both the first and the second mortgages were held by the same lender in that case. Remind me again - why did we bail out the banks?

The banks don't care about anything or anybody but them so I don't think my clients or I should worry about them either.

Countrywide is the worst example of inefficiency and absolutely no care whatsoever for how much money their investors will lose. . .$$$$$$$$$

As short sale is more sensible solution than a foreclosure all day long yet. . .they really do not care

Jon - Yes, there is a monetary "incentive" for the lenders (usually servicers) to work out a short sale as well a modifications.

Lenn - The banks do not care and the compensation of the employees need to chance so they will care!

Michael - The influx of work is not proportional to the amount of people available to work them... It is only going to get busier for the lenders as more and more loan are delinquent. I hope they hire and TRAIN new staff adequately.. We can always hope!

Christine - Lack of staff and lack of training in the staff that is available does shows, everyday.

Ross - PATIENCE - I used to think I had none. I was wrong! I think I might even receive an honorary degree in PATIENCE! Just being on hold with GMAC for over ONE HOUR AND 20 Minutes PER CALL proves that I have learned patience. The HOA and Condo Associations are also trying, indeed, to break the record on incompetency and red tape.

Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS

Visit http://www.pattydasilva.com for SouthEast Florida's best properties.

Patty,

Your spot on with this one, Bank staff is overwhelmed, undertrained and underpaid - they also DO NOT CARE...

Sorry to say, that's the state of the condition, yet true.

Amiri- Bankruptcy is sometimes the best option for some of our sellers. We then have the trustee order the sale and we get the paperwork to the short sale lender. Then our clients are off free and clear.

Yes, in foreclosures, the lenders will go after the deficiencies and in short sales, they might go after the deficiencies but we could never guarantee that this will be the end result without the waiver of deficiency being waived which some investors will do and others will not, depends on the investor and also on the amount of the deficiency. I just had this conversation with upper management at Chase today.

We went all the way to the board of directors at FDIC because their servicer said in Florida they do not waive the right to deficiency no matter what. Well, we went over the servicers head and after a few weeks of getting the runaround, we got the deficiency waived. Our seller in this case does not want to file bankruptcy and would rather do a deed in lieu than take the deficiency. We finally got that one solved.

I, as an agent just would never assume that all a seller cares about is not having a foreclosure as I understood your comment to say. Perhaps I read you comment wrong.

We had a seller who had a great CPA and Tax attorney and he still has his income brought into a higher tax bracket because of the 1099. Some are insolvent, others are not.

I am sorry to differ with you about the loss. I still disagree based on the scoring system that Chase uses and that Bank of America now just started using. Chase scores the losses and the score the file gets determines how much cash contribution will be required of the seller or not. Fannie Mae has just away all delegation powers on BPOs from servicers and using a pass or fail test on all their BPOs against what amount is owed to them. They care about their net. Katerina

JUL

I think the banks are just tooo overwhelmed to be on top of this. If they werer, they would hire additional staff to handle the situation. You might choose to use slightly more politically correct verbage than "ridiculously retarded."

Katerina is bringing some very interesting poitns of discussion to this post. Don't be afraid to keep pushing your way to the top to resolve the issue.

The manin problem is the rn around and it seems very few people know how to get to the solution or to the top management to resolve the problems. Good post! GREAT answers from Katerina

Interesting comments...some of them from people who do no negotiation and are only repeating what they have been told...There oughta be a law...if it won't appraise...you have to accept a reasonable offer...should be...smart banks accept that.....smaller local ones...not without a fight....

Soooo Many tall tales from agents...tsk, tsk.....the folks like you ....and like us who are in the trenches know what goes on....then there are those who like to hear themselves blog...

I haven't had that much experience with short sales. But some. With the exception of one woman, who was about 8 months pregnant (so she is entitled to some bad days), all the loss mitigators I have spoken with have tried to be very helpful. Sometimes it took a few days, some times a few months, but they were trying.

They probably think all real estate agents are idiots, just trying to get a big commission, and they are stuck in a desk, on a never ending phone call with us, asking what is up, where are we in the process. I have a friend that works in a cube and she says that none of the people in her "room" never talk to each other. At lunch they go into another room and watch soap operas for 30 minutes and never talk to each other their either!

Think how lucky we are to get out, meet people, solve some of their problems, have successes.... have failures... but at least we don't work in a bloody butcher shop.

Patty, some banks are giving incentives to loss mitagators based on how many they can get passed through. I would like to see a bit more uniformity to how the process runs, although i know those of us who deal with short sales understand that the loan or loans we deal with are very different. Our biggest problem right now is on some of the BPO Realtors who seem to live on those $45 opinions, and cause havoc when they estimate the property completely wrong. We had on house built in 2005 that the BPO came in at higher than 2009 houses were selling for in the same neighborhood, and the house had been abused by a renter. 7 months later it closed but not after having to challenge the opinion successfully but it was very time consuming.

So true, it seems sometimes like they are the ostrich with his head in the sand waiting for the danger to pass.

Wonderful comments, thank you to everyone. :)

Amiri - I have to agree with Catherine. Be very careful, if you are representing the buyer, of course you want the best deal for your customer, that is not different than it would be on a non-distressed sale... And if you represent the seller, you need to get the best and highest offer since it will have the best chance to be approved and have the least amount of deficiency or taxes, if applicable, the the customer.

John - I try to follow every lender's system.. I wish they did the same! LOL

Brian - More training and more pay to the employees would probably improve the system a whole lot.

Andrea - Thank you for sharing your story, and unfortunately, proving the same point.

You said, "a closed short sale is a phenomenon to be celebrated"! I take this time and do my own little happy dance when it's finally done, over, finished!! After all the hard work to complete these trans we actually need a top notch trip to some private island!

An - Write up that form and send it to me! I will make the buyers on my listing sign that! LOL

There is no logical explanation to give to buyers who are ready, willing and able to buyer and seller who are ready willing and just waiting on ABLE to sell who have to wait for a months on end, at times, and then get counter offers or stipulations that do not make sense and/or cannot be met!

Katherine - Indeed!!! The government is NOT helping, ON THE CONTRARY! I do, also, get all my short sales closed and that i how I know THE GOVERNMENT IS NOT HELPING!

Bob - No motivation to help, but it seems that there is motivation NOT to help...

Susan - Thank you for telling your story and proving that the banks make ridiculously idiotic decisions! Might not be politically correct to say that, but that does not mean it is not true!

Russ - Care about the banks -NO.. Worry about the banks - YES. Their decisions or lack of decisions can and do affect everyone involved in these transactions as well as whole neighborhoods.

The banks sure don't care ....nor do they hire extra people to take care of all the short sales and foreclosure. This is in part why it's such a long drawn out process. Then they want 'us" the Realtors to cut our commission.

Patricia Aulson

I agree--the banks don't care. I am a CDPE also, and dealing with these properties can be so frustrating. We see the human element and the emotions, but banks do not.

Fernando - Countrywide is the worse, there is not even a competition here. They are BY FAR the worse.

The system of moving the file around to 4 negotiators, often in different locations is obsurd. Every "phase" negotiator has a time limit to work on the file which they NEVER meet and NEVER have suffer any consequence. It isn't uncommon to have a file assigned to a negotiator (who has 30 business days to work on it) and then 25 days later, he/she REASSIGNS the file without EVER having done ANY work on the file... and the new person assigned, has 30 BUSINESS days to work on the file.. before you know it.. 4 months has gone by and NOTHING has been done.

They are getting much worse, in my experience, not better. Even getting BPOs ordered and done is taking SEVERAL calls and often 2+ months.

Countrywide brings a whole new meaning to "lenders do not care"!

Katerina and Patty - Maybe the logic of the short sale approval differs greatly in your state because it is a judicial foreclosure state. Assuming MI or insurance is not involved, my short sales are based on their BPO and not the loss of their original loan amounts. As long as their BPO and the purchase offer differs by 10% (for my market area), then my short sales get approved.

Katerina - It's ok to disagree! I encourage it and I actually like the fact that you present your case and share your experience. I just hope I don't run into this issue about them not accepting my short sale because of the original loan amount and the current purchase price. I do have a new Chase short sale where the loan amount is 490k and we are trying to short sale it for 160k (FMV 200k), so I will soon find out. Also, for the record, I agree with you regarding the seller and I stated "The seller just doesn't want a foreclosure and doesn't want to owe anything". I also agree with your stance on deficiency. In regards to the 1099 on investment property, my experience is that a business loss does not increase your personal tax bracket as it is an ordinary loss and not a gain. See IRC section 1231.

Patty - Thanks again for the Blog. If I am stepping on your toes, let me know and I will stop commenting. You are also right about Countrywide. The only reason why I like Countrywide is because we have inside connections and she helps us out greatly. It's very important to form relationships with any negotiator working out of the Simi Valley, CA office as they are in short sale escalations.

Patti...

Banks don't care! Banks don't care! Banks don't care! Did I mention Banks don't care? :)

TLW...ROAR!

Patty, good thoughts on the mounting obstacles. The obstacles do seem to be increasing while the pay per hour is flat or declining. What is wrong with this picture? Banks? Banks don't care about getting people in and out of houses, and the perfect home for them. Where did we ever think they care?

Amiri- Great! Some folks get all bent out of shape when you disagree with them:)Yes, that was my error for not looking at your state law first or not asking you what state you are referring to. I am sorry about that. Normally I preface all my comments with: in the state of Florida. My contact at Chase told me that short sales are treated differently based on state regulations, statutes and deed or trust deed and deficiency or non deficiency. We are a deed state but also a deficiency state. Fannie Mae though is coming up with some crap that is going to get us all our undies tied in a wad! Let's just be ready to contact our congress men and women when their changes take place. Also Freddie is up to some crap too. Katerina

Patty- Thanks:)

JUL

Had to add a new comment for you today. If it wasn't bad enough at Chase, my least favorite bank to work a short sale with, it has gotten worse. They are implementing a new computer system which is causing the already hellish delays to get even longer.

In my local market, people either need to get out of the short sale game or get ready to gear up and go get them because the foreclosures are moving off of the market like hotcakes (thanks to buying incentives and down payment assistance given by governmental grant money) and buyers have to start moving towards looking at short sale purchases. I happen to love them! I advise my clients upfront about some of the obstacles that we're likely to encounter and then we hit it! I agree with the comments about Countrywide; however, I closed a short sale with them within 30 days!!!! Yes.....I did my happy dance!!!

Maybe the government could have taken some of the $182 billion to create incentives to expidite the short sale process. But it takes me back to when I was lending in a more rational environment compaired to the boom time when I actually had a loan manager tell me "we aren't going to do it [make the loan] because we are "X" bank and we don't have to".

JUL

Lynda – It is VERY sad and very true and that is what we have to deal with.

Katerina – I agree… the scoring systems and usage of BPOs is not helping!

Bob - Term might not be politically correct, that doesn’t mean it is not true. What the banks do is often VERY incorrect..

Allison – Run around, that is what the banks make us do.. They want us to get them things immediately (preferably SOONER) but then sit on the file for months while the documents, you ran around to obtain for them, expire.

Countrywide, GMAC (about half the time) and Bank of America take the lead.. by order of worst to bad.. Chase is getting worse, unfortunately.

Sally – I list, process and work every one of my short sales. No one else works on my files.

Lexie – You said it.. you just haven’t had enough short sales. LOL

Everyone has always been very nice, (Exception Russ from BoA – no need of a last name.. if you ever came across this person you know who I am talking about), I don’t know about very helpful.

Countrywide staff is probably the nicest.. that doesn’t mean they can actually help, in any way……

Joe – I think BPOs should be done by professionals who actually BUY AND SELL REAL ESTATE FOR A LIVING in the market they are trying to give “an opinion on”.

I ask EVERY BPO agent who calls on my files and only about 10 percent actually have ANY listings. The last one told me “ I am computer IT guy and do that full time, I do BPO just for the extra money”. Hence the problems were are facing with listings that are priced correctly and good offers that get denied/countered.

David – Their heads are in the sand because they are too scared to look up.. Things are much worse than anyone in the banking/servicing industry is ready to admit.

Visit http://www.pattydasilva.com for SouthEast Florida's best properties.

JUL

Banks don't care - but let's be honest...do sellers and buyers?

We had an appointment the other day where the sellers had a loss of job. They own a home outright in another area, and wanted to short sell the home they were living in, without having to sell the other home or make up the difference. Their argument - we worked hard and all these other people are getting to take advantage of what is going on...

They are great people, have been great clients for us, and we really do feel for them. But this is the mentality that the people we are representing have - so are they any different than the banks or investor who are loosing hundreds of thousands of dollars that they put up in good faith when current laws allow these homeowners to walk away with a credit hit for a couple of years?

I am not disagreeing with what everyone is posting - I think banks are screwing this up left and right. But I also think that individuals involved have taken the stance where they are not accountable for anything.

Jimmy

Jimmy,

I really appreciate your post above.

There are a lot of people trying to take advantage of the mess we are in, no doubt.

That is partially the reason why the people who really need and deserve the help, are not getting it.

Visit http://www.pattydasilva.com for SouthEast Florida's best properties.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?