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Can Short Sales Really Be Automated Like Cookie Cutters- One Size Fits All?

Can Short Sales Really Be Automated Like Cookie Cutters and become like one size fits all? I don't think so. Real estate agents along with NAR made their voices heard to the powers that be in Congress and in the banking institutions. Of course, it is a pain to not have guidelines and to be negotiating short sales in wild, wild west fashion but on the other hand the cream rises to the top so the agents with the talent of negotiating skills and the gift of listening and communication skills rise above the rest and have come to have very successful short sale businesses, they close their short sales and save many homeowners from foreclosure.

Be careful what you scream for, be careful what you wish for- it may just come back to bite you.

Let's look at what is really behind the automation so widely being sought after by agents and the NAR these days in regards to short sales:

California based Equator who changed their name from REOTRANS- has created and is implementing the very first short sale automation process for a large lender. The company will not come out and say in public who the lender is who they made this process for to begin with but anyone doing any number of short sales can see the obvious connection with Bank of America telling us that they are automating their short sale process and also with us already being given files to place into this automated system.

The company called Equator says the key to a successful short sale are:

accessibility,
responsiveness,
communication,
fulfillment

Equator says that by large lenders using their new automated system that the homeowner will have 24/7 access to their file and will be able to directly upload required documentation. They will also be given real time updates electronically.

They claim their system will comply with all governmental regulations and compliance, quick fulfillment times, faster turnaround times and will automate the decision making process.

Now that all sounds great and dandy but whenever you take out the human factor of emotions, making exceptions and taking the negotiations to another level you are not going to get the same approval ratios.

One size does not fit all. I am seeing the writing on the wall. You have several problems with this system even before they implement it.

First, you have to get all the processors and negotiators trained on the system. We are getting files already in this system but the customer service people at BofA and the negotiators are not even trained yet in using the same system. So chalk that one up to the learning curve.

More importantly when everyone starts to depend on an automated system there is less room for the human decision making process like for exceptions to the rule. We can not even count the number of times that a file did not 'fit' the system but we got the short sale approved anyways. When people depend on an automated system they tend to answer, " that is the way it is," or "sorry, the system says they are not approved," etc.

While real estate agents are screaming to streamline the short sale process homeowners may be pushed into foreclosure rather than doing short sale work outs just because some system says they are not approved for a short sale.

So at the end of the day the result may be faster approval times but a higher rate of rejections.

Can Short Sales Really Be Automated Like Cookie Cutters- One Size Fits All? by Coach Katerina Gasset is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License

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Posted by Nestor & Katerina Gasset Realtors® Wellington Florida Luxury Homes on 11/04/2009 10:42 AM

Comments (19)

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Originally posted at: South Florida Real Estate and...: Can Short Sales Really Be Automated Like Cookie Cutters- One Size Fits All?

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19 Comments on Can Short Sales Really Be Automated Like Cookie Cutters- One Size Fits All?

NOV

I understand the need of automation. But there must be a human element there to make the connection. This is a people business with real human circumstances. Please dont put our life situations into a mold.

I am seeing a human element from the lenders. I was about to post about it but will share part with you. One of the things that I am asking the lenders to do is a "forensic review" of the file. This entails a deeper research on the files that really need attention.

I stopped several homes from being sold at Sheriff and Trustee Sales in the last couple of months. All using the forensic review except for one.

I placed the call to the bank and asked for "mercy" as the file wasn't your typical mortgage fraud, I paid too much, I"m tired of the property with the negative equity. It was a genuine article where serious health issues evolved. I submitted a 1-1/2 page letter of hardship and documented it with doctor's letters. Her numbers were high and her income was low. She received another call from the attorney that they were going to foreclose again. I prepared her for the worst but was about to call "BofA" to ask for compassion.

Compassion came yesterday afternoon in a Federal Express Envelope and her payments were sliced by $700. Whether it is a short sale, loan modification (which I do not get paid for btw) can be an act of compassion.

I am finding it has to do with your research, what you send the banks, your knowledge and your communication skills that makes the bank listen to you.

Barb- exactly my point, much of what you just described will go away if they soley depend on automated systems. We just closed one the other day with Chase, not a hardship, our seller is a millionaire and the investor who owned the note wanted him to come to closing with 75K but he refused. He owed over 1M on the property. It was a big loss because we just sold it for 410K. We had an awesome negotiator who we know that we work with on 99% of our Chase files. He gets paid commission also so it is in his best interest to get short sales done. We worked together on options for this file for over 9 months with one offer after the other until we finally figured out a way together to get the investor to accept the short sale.

ALl our hardship cases except one have been approved since 1995. But most have had to have the human compassion on the side of the lender to make it work. Katerina

Katerina - I can clearly see your point here and appreciate your opinion on automation. There is no benefit at all for the sellers, other than the availability to upload their own files. In the end the negotiation process must continue be handled by a negotiator and the real estate agent representing the seller. I just hope that it will not lead to owners handling their own short sale process and getting screwed by the lender. Or am I looking too deep into the automation process?

Hi Katrina!
I agree that a non-human streamlining is going to have it's own frustrations. I think most of us would simply like to see short sales handled like any other real estate transaction. Obviously, the biggest key to this is timeliness. Just as with any conventional contract, there are timelines to be adhered to, short sale should be no different. Check out Wachovia's system...they have figured it out with a totally human factor. This would go a long way towards a better experience with short sales!

Petra- No, they won't be doing it on their own because the lenders really want the properties to be listed. I do see that if the czar of pay gets involved he may think we get paid too much and reduce our pay or cap it. :(

Katerina - I hear you on the Czar of Pay and it won't be good. No too many know he knowledge, skill, communication, let alone dedication that is involved in these files and then someone throwing a wrench ino the whole thing: we are paid too much. Some of these files, we could be paid more working a McDonald's with benefits! Until someone has walked in your shoes, they do not know or understand but only what is written in a report by an individual that has not walked in our shoes.

Great post!

Katherina - I was thinking in line of let seller handle their own short sale while the home is being listed. Well, the czar of pay is never a good thing when he is involved.

NOV

There's never a one size fits all solution, whether it's offered by the government or business!

Hello Katerina,

I agree that the glitch we are seeing now is that the processors and negotiators are still being trained. I was told yesterday by a BOA negotiator to still fax in my documentation and not depend on the new system completely. What does that tell you?

Paula - I agree the Wachovia system is working well.

Barb - You are so right! We have to document that there really is a hardship, make them see the person behind the need for a short sale. And lets never forget that short sales are paperwork and time intensive. I advocate the use of a assistant or outside negotiator unless you have an in house system.

You get the listing and the offer, then let a company like mine do the "oh so important" work of making sure YOUR short sale package is processed, assigned to a negotiator and approved in a timely manner. This won't happen without diligent follow up and timely responses to any communication from the lender.

However beware when you do use this kind of company. Do your homework before your entrust your business to an assistant. Make sure they are knowledgeable about short sales. If they are doing these everyday they should be on the front line with new information on how the packages are processed. This can be invaluable to you, the Realtor.

You should always get references, more than one. And really call them. You would be surprised how many times you are given a reference that isn't even someone they did a short sale for. Make sure they have been in business for at least a year. There are many new "short sale assistants" that come and go in 6 months or less. Also they need to have a comprehensive system for handling your short sale and a way for you to monitor your short sale WITHOUT you having to call them and ask for a progress report.

Another good post Katerina!

Katerina-

Florida is leading the way in developing the Short Sale scenario. You guys have a large head start on us here in Nashville.

However, we'll catch up ( to a degree), I think the short sale process is hear to stay. There are just too many peple under water and too many properties over valued?

What are your thoughts?

Thanks

Jim

NOV

Katerina, I can't imagine a purely automated system. I think a hybrid will be the final outcome. I don't believe a continued flood of foreclosures going over the top of the dam (so to speak) will be acceptable to government or the banking industry. JMHO

NOV

Hi Katerina,

Well presented post and a good education for many of who are not dealing with the same issues you are..it makes sense that the automation may improve approval times but will definitely lead to a higher rate of rejections.

NOV

How this all plays out will be interesting, but I hope that the consumer will not be the victim, again and again. How can an automated system have a heart? But do you really see a heart in the way it is working now?

Hi Katerina! As Jim said, thankfully, you guys have gotten this short sale process down to a science and are so generous in sharing your wealth of knowledge with those of us who are in states that were slow to start working in short sales. However, the short sales that I have been exposed to have all required a 'human factor' to get the job done. Case in point--one that I'm working right now with BOA: I was told to fax in the package, then told to upload it into the REOTrans system. I did so and kept noticing that the information was disappearing. After several very long phone calls to a BOA rep, I wound up putting the information into the system a total of three times before one finally was visable to them--why, I don't know, I could see it just fine! Anyway, last week, still under the 'generic negotiator,' we got results--two approvals and one decline! WHAT? This was the SAME file! Same documentation, same EVERYTHING! Of course, I was frantically trying to delete the decline and keep one of the approvals but, can now find no one who knows the system well enough to assist me.

It's been a crazy mess--just suffice it to say, I want them to keep some form of human factor in this--all hardships are not created equally and automation is not going to be able to evaluate this or the financials in a 'fair' manner. My opinion, they should have trained their staff on the system BEFORE rolling it out to the agents!

Hi Dawn!

Dawn is a great short sale negotiator if you need to hire one. We had Dawn work on a lot of files for us until we hired our daughter to do it in house. Dawn is diligent, honest and a hard worker.

There are some areas I wouldn't mind having standardized as far as forms among the banks but not

get carried away with automation taking the human element out.

HI everyone- We have been out of town and so I have not been able to get to all the comments and blogging is behind schedule! Thank you and I have read each and every comment. Katerina