Another reason why some short sales will never happen...
A SECURITIZATION PACKAGE? It makes sense, but I have not heard it mentioned until your Post came along!!! Few loans sit anywhere near where one thinks they are so this Package makes sense and protects the investor in Timbuktu from being "Shorted Out". I was wondering how the investor was involved in these shorting agreements between lender and seller. THANK YOU!
Assuming the listing agent is competent and submitted a complete package with a market-level qualified offer, the usual reasons for failed short sales include:
- incompetence of the loss mitigation department staff, under-staffing, fed-up and under-paid bank negotiators, high turnover of their staff...
- the loan has some sort of warranty or insurance that would prevent short sales...
- the second lender is demanding a large amount and is not cooperating...
- the lender has a track record of preferring foreclosure to short sales (Bank of America seems to be an obvious one)
- the disgusted buyer walks away after several months of waiting in vain, and you have to re-submit and start the process all over again knowing time is not on your side...
But here is one that a lot of agents are not aware of:
After origination, some loans are packaged in what is called a securitization process, where multiple loans are packaged in investment portfolios where investors paid for shares that have certain returns tied to risk (called tranches (which means slices in french)). These pools or portfolios often prohibit short sales, and it is almost impossible to find out whether your particular loan(s) were package like that after origination. So here you are beating your head against the loss mitigation wall thinking they are the lowest life form, when in reality the file is marked for foreclosure from the get go...
Another cruel curve ball...
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