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Short Sale Done ABSOLUTELY Wrong

Well, after fighting and hanging on for over 9 months, it (Citibank) finally pulled the plug on a short sale listing I was involved in. This post is not a rant, rather a story to share with buyers and sellers that sometimes, no one wins when the property goes into foreclosure. Worse still, after having multiple offers as well as a very good solid offer waiting for 9 months.

Now that it's behind me, I'm going to take this opportunity to spill out the guts of this transaction. Very sad and most of all, I feel horrible for having a very disappointing client.

I represent the Buyer. We went into contract after the property was on the market for 6 months. When we submitted the offer, the listing agent advised us that her client has stopped making mortgage payments on the house that very month. This was February 2009. Okay, nothing alarming - in my opinion.

The owner of the property was deceased and her mother was the executor of the estate. The mother lives in Illinois while the property was located in Allen, TX. Just the perfect house for my client.

This was a regular sale when we went into contract. We inspected the home and my client worked on getting his loan. There were some property condition issues that came up that had to be a part of the loan approval process. This went on for almost 2 months. Something in my gut feeling told me to stop and wait for the seller's side to sign off on the repairs.

That was when we found out that the loan amount on the property now is more than the sales price. Very quickly, we found ourselves that we were in a "short sale" situation, but not by much.

Before you know it, 1 month has elapsed and the property was slapped on Forced insurance and attorney fees on Citibank's side because they were planning to take the property into foreclosure. This is probably our 3rd month into the transaction. It is mid-April by then.

The Seller's attorney demanded for payoff information - to which he has constantly been getting the run-around. No one at Citibank seems to have a clue who is the Asset Manager or who has authority over this property.

Every month then on, the property would be posted for foreclosure, but every month, the buyer and seller re-signed the amendment to show Citibank that there is a willing, ready and able buyer for this property - who has first not shorted in payoff by too much.

June, July, August, September and October passed. Every month, the same thing. The listing agent, bless her heart, worked so hard on this transaction because we are talking almost every other day. We are like sisters now.

I received a phone call from the Seller's attorney. He said, "Loreena, I'm sorry. The property was sold in foreclosure just this past Tuesday. I'm so sorry. I know how much your client wants this house. We fought so long and so hard but it still didn't work out".

You know, everyone in the transaction was doing the right thing especially for my buyer who patiently waited for 9 months. We knew that the Seller could just turn the keys in, wash her hands and walk away since it was her deceased daughter's estate. The mother made many months of mortgage payments until she decided

she couldn't do it anymore. She kept utilities on and did everything a proud mother would.

I had to be the deliverer of the bad news. I hate that. But my client is taking this news well. We know it happened for a reason.

I don't want to begin my posts on Short Sale in a negative tone. But it's been on my heart that I want to share it. I didn't like the fact that it didn't have to be this way for both the Buyer and Seller. My buyer waited 9 months for the property. The seller wanted to clear her daughter's estate with a good name even though there was no equity. Everyone was doing the right thing except - you guessed it. Citibank!

I believe big banks like Citibanks can be huge and very inefficient. And here we are wasting our tax dollars to fund stupidity and inefficiency that didn't need to happen. I'm sorry. I'm going to say it one time.

This is bull crap #$&*$$^&*TRR^*((**
BOO Citibank!

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Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

Super-serving Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area communities and other surrounding areas.

Posted by Loreena Yeo - Broker|Realtor(R) of www.Frisco-TX-Homes.com (214) 783-2210 on 11/05/2009 05:41 PM

Comments (148)

Short Sale Gone Bad in the Home Buying Channel

short sales and foreclosures

Originally posted at: faithfully frisco tx homes for sale: Short Sale Done ABSOLUTELY Wrong

This post has been included in Texas Information Collin County, TX Information Frisco, TX Information
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148 Comments on Short Sale Done ABSOLUTELY Wrong

NOV

We hate to hear of such mismanagement of an asset. The longer these matters fester, the less confidence I have that banks have the ability to do anything but hold our money.

They don't lend much any more.

What do they do besides collect high interest credit card fees and interest?

Oh, and pay dividends from TARP money.

Short sales are full of drama and totally lack logic. The bigger the bank, the more complicated and frustrating the journey. Your buyer deserves the home of his dreams for being so patient.

BOO Citibank is right. And you can throw Bank of America and their adopted stepchild Countrywide right off a cliff alongside them.

That's a really sad story.

Loreena, I feel sorry for your client and all the other buyers who are put though this. It gives them a bad taste about trying to buy a house and mostly for the process they are subjected to.

Tell Citibank to scratch their butts with a broken bottle.

Feel better?

I felt the pain from everyone you mentioned including yourself. I thought it was great to post this. It needed to be said! :)

Hi Loreena -- I feel bad for your buyer. Could you imagine if banks actually got the laws changed and were able to get into real estate? Shudder!

I think there should be a national database that tracks (both property specific and aggregated at various higher levels) the net difference (probably universally a net loss) between the short sale net proceeds when an offer is agreed to by the seller versus the investors/lenders net proceeds if foreclosure occurs.

I think these statistics would create a public outrage and perhaps could be a catalyst to force the banks to stop playing an active participant in the demise of communities that are struggling.

Sorry to hear this Loreena. Really surprised to hear it got foreclosed on. Banks do not want to take these properties back. Any reason why it didn't go through?

BB - I suspect that it was poor management on Citibank's part. Citibank's attorneys couldnt really pinpoint an asset manager for which this property was assigned to. This was the first problem I saw.

I think it drifted from a regular sale into a short sale. Hence, we had the problem at our hand.

But you would imagine that since April when the property was "shorted", surely in 6 months, they could rectify the problem. But NO!

This is very silly. And if you asked me, I think this was only a couple thousand dollar short before they hired the attorney, before they put Forced insurance on it, before Citibank screwed themselves.

When we had the executed contract, the Seller still had a small sum to donate to charity. Surely, this shouldnt have happened.

Short sales are time consuming, thats for sure. When I worked on the servicing side with Countrywide, it could take us 1 1/2 - 3 months to close a deal. I hear these stories all the time about it taking longer than 6 months, but I just didnt have that with my team. Maybe we got lucky or maybe it just took a long time before we actually would receive the package from the agent. In any case, its a shame to see a home go to foreclosure when there was an interested party.

The other thing that is surprising is that we would always focus on the homes with a sale date first. That was out biggest priority. So, did Citibank just not want to postpone the sale any longer? Its a shame.

This is one of the "real" reasons why the First Time Home Buyer's Tax Credit is being extended. Here in Northern Virgina, many new home buyer's are giving up because of big bank foot dragging.

First the banks got people into homes they couldn't afford, then when the going got tough, they cried to congress for help.

And in some kind of wall street "epiphany", they foreclose on one group of people so they can lose their shirts to investors. All the while penalizing people that are being responsible and admit they are in over their heads.

On top of that, now they don't even trust one another to settle loans, and frequently violate The Real Estate Settlement and Procedures Act or RESPA, by requiring new home buyer's to use their lender, title insurance, and settlement company that they have a financial interest in.

It is not only not right, it is illegal, yet the banks since being bailed out, think they are untouchable.

As for me, in the future I will not only not shy away from taking on more "short sale" listings, but will actually relish the fight with the banks, as they have shown a complete and absolute contempt for anything that remotely resembles fairness and common sense.

Loreena, Thank you for sharing that. How very sad. A grieving mother, patient buyer and two diligent agents, this should have had a happy ending.

Linda Metallo, Re/max Impact, Lockport, Il. (Chicago)

John - We could never get anyone at Citibank to speak to. That was a huge problem!

I just picked up my first short sale listing. I hope that it does not turn out this way! I just can not believe your buyer stayed around that long! Keep at it!

Loreena - I'm so sorry this happened to all of the "good" parties involved, your buyer, you, the mother, who tried so hard to make things right and the listing agent from what you wrote. I do believe, however, that short sale is still the best answer but this one really fell through the crack. I sure wish you will continue showing buyers short sale listing despite your experience.

Tim - When you know Short Sale going in, I think it will be okay. The thing is that this wasnt suppose to be this way (short sale).

Petra - No... This experience wont damper my spirit with short sales. In a normal circumstance, a real short sale experience, everyone benefits. This one is stupidity.

That actually sounds pretty typical for the short sale units. Not sure why lenders have not figured this out yet. I know there are a TON to work on... but get more staff. There are enough in the market that they can afford a few more warm bodies to help out.

The lender is clueless. They will lose thousands more on the REO market.

Boo Citibank and Boo Bank of America also! I am waiting with a buyer with BofA and hope it doesn't turn out the same way yours did!

Philip - That's totally okay. We'll bail them out anyways.

Loreena...

I has confidence in Citi until I had my own little "episode." I feel for you my friend.

Hi Loreena. I work with short sales in Tampa Bay so know how it can be. I am very disappointed when this happens to me. It's terrible. ~ Lana

Loreena: The truth is that I do not understand how this happened. Last year I got over 300 approval letters for short sales, and I have never had a property go to foreclosure with a good, solid offer on the table. I'm sure your buyers are very unhappy. But, maybe they could pick it up as a bank-owned for a little bit less money?

Since the TARP money was given. The short sale management by the bank has gotten worse and worse.

Loreena: Usually we found that banks want to negotiate with us. . .unless the investor wants to go on and foreclose the property. There are many variables in a short sale and you seem to have found all the negatives in this short sale. . Citi Bank does not look good right now. . for that very reason.

It is probably too late, but the TARP money should have been conditioned on setting up an efficient short sale procedure.

Loreena - I can feel your frustration and disappointment. This is an extremely sad story for all parties involved. Boo is right!

What a terrible story. To spend so long in this transaction! I am glad your buyer is taking it well, you are both wise to know that everything happens for a reason....Hope your buyer does not give up! Unfortunately, this story is told too many times.....

Oh Loreena that is just so sad :(

What a mess. Begs the question. Did they buyer love the house or love the idea of getting a "deal". If they loved the house it is a big loss, if it was a deal you should have ran away long ago.

Good luck

Tony

Kuddos to your client for hanging in there for so long! I have been working on a lot of short sales right now and the buyers don't even want to wait for 2 months! Granted they wanted that tax credit and figured they better start looking for something else now..but hey they did extend it!

Anyway..I have had a couple that worked out in as little as 2 months, but of course have a couple that are mortgaged through the "big" guys and I really don't see it going anywhere at this point..I have an attorney working on it with me with the hopes of her getting further than I could, so we will see!

Yes..your client does deserve the house of their dreams!

Yep, some of these short sales are rotten situations. But when the attorney said it was "sold in foreclosure" did a buyer buy it or did the bank take it back? I had a short sale earlier this year that the bank foreclosed on (took back) and my clients bought it as an REO....saved about $30k over their short sale offer.

Yours was a particularly challenging one-- but no short sales are ever an easy situation -- all the best.

big banks are so stupid and deserving of every loss they are suffering right now. No more bailouts

is there really a right way to do a short sale. I have never had 2 alike, even from the same bank. you just keep pluggin and hopefully get it done.

What trying circumstances for everyone. Sorry the ending was not what would have made the seller, prospective buyer and agents happy. I've waited months too, and too many times the banks blow the deal with their mismanagement.

Not having the identity of an asset manager was critical and Citibank blundered along with their attorneys. I am glad your spirits are not hampered on the negligence on the banks part and their representatives.

Now, have you seen that Fannie Mae is pushing for the homeowner to rent their home instead of foreclosing because they (Fannie) are loosing their "butts"? Management company will dictate the market rent. Should be alot easier if they just flipped the outstanding fees on the backend and did a loan modification, but hey, that makes too much sense and they want to drain us dry.

Dave - I meant that the bank took it back via foreclosure. With this being Citibank, there is no telling how long that could be, although this has been an option my client was considering.

Tony - With that being said, my client LOVED that house and was willing to go without the tax credit as an option. We discussed that.

Barb - I heard about this, experiencing it first hand with one of my seller client who went into renting after the sale. You're right. This is a business like never before.

I hope you find an even more perfect house for your client to make this all worthwhile. We've all learned a lot about real estate in these trying times, but I am looking forward to moving past the short sales and REOs. Don't you love dealing with a local bank where you can actually go in and talk to someone, face to face...what a concept!

Nime months is a long time to wait for a property. The people at Shiti Bank should be ashamed of themselves. I feel bad for your buyer.

Loreena,

I hope you and the listing agent get to work together again on a transaction that DOES go through!! :) It is a frustrating process...but you are SO right. It happened for a reason. Your client was meant to live somewhere else. WOW!! 9 months is a LONG time to wait. You have a very understanding client, and he has a great agent working for him! I'm sure it will work out in the end. THanks for sharing your story.

It seems to me most banks right now are behaving badly!

I feel for you, the listing agent and you client. But like you said, this happened for a reason and you and your client will soon know what it is!

I hope you day tomorrow will go better.

Loreena ~ if Citibank bought it back on the Court house steps, chances are, the home will probably be re-listed with an REO agent. You can wait until that happens, or you can submit an offer (for less) directly to the REO Dept. at the bank and still represent your client. All is not a loss!

I forgot to log into my account before I posted the above message :) Good luck!

Aren't we glad that NAR, who represents us, has kept banks out of real estate? Imagine if they actually were in real estate what a mess it could be.

As much as we complain about the banks, why don't we all insist that our association lobby to have a system mandated? All of us hold a license that requires we uphold a code of ethics and best practices. Chartered banks are above local laws, as per the supreme court, and can act in their own best interest without regard for the client. At this point I doubt that banks would want to be further involved than they are because they can't even figure out a way to process short sales and save themselves from ruin. Where is NAR in all this?

Loreena, did the Seller's agent go to the top of Citi to find out why there hadn't been an asset manager assigned? Or, as Fernando said, it may have been an investor that wanted to take it to foreclosure. Banks' loyalty are to their investors and sometimes when the investor is a mortgage backed security, they would rather foreclose than risk a lawsuit. Your house may have been such a situation. Otherwise, this makes no sense....but that's becoming more common these days. Hope you find the perfect house for your buyer.

Just one more reason why I think short sales should be illegal. Banks should re-work loans or foreclose and sell the home.

My Mantra is how I love real Estate because no matter how long you have been in the business, it is always different every day. Unfortunate to say the least about your outcome, but it is just another notch in your belt. Not all educational experiences come with a nice acronym. Yet the most important things for a Realtor do not have a Designation attached to it.

Ugh! I read the first line CitiBank and visions of my dealings with them. I spend 6 months working on this case only to have the seller loose all confidence in me, pulled the listing then someone else closing it in 3 months.(it's not closed yet...so we shall see.)

A class of 3rd graders would come up with better and more mathematically correct solutions than these big giant BOZOS!!!!

HOW HEARTBREAKING! I definitely feel for you, your buyers, the sellers and the seller's agent in this transaction. I do appreciate the positive spin you try to put on the dreaded short sale, but I strongly believe your exclamations were well-utilized in this post! Happy short selling to you in the future!

Scratch their butts with a broken bottle -- LOL! That's freakin' hilarious! (Although it does sound painful)

Wow, that is a really tough case. Banks can be so frustrating sometimes, but that is definitely one of the worst cases I've ever heard of. Keep plugging away!

Loreena- I don't think the banks are motivated to do short sales because they dont get bailout money like they do with the modifications! IMHO

When I list a short sale (if I list a short sale) I charge a listing fee of $400.00 that is refundable if the home sells they get it back.

I really wonder what the banks are up to. It definitely seems that they don't want to move their properties. Furthermore my wife, Jacquie Cliff ( a real estate agent here in Lynnwood ) was told by a Bank of America rep that they are trying to close down the small mortgage brokers. I would assume their policy of requiring buyers to use them for the purchase loan is part of that.

The real question is how long it will be before someone sues a bank for RESPA or some other violation. Seems like they are playing very dirty pool.

Loreena,

I could not agree with you more on this issue. It is very sad for buyers and the seller too. I have one short sale listing and another one in a week. This last one I missed the deal by 2 days after the buyer waited for a month. The buyer went to an open on a Sunday I had a locked counter from the bank on Tuesday and they took the home they saw in the open. This was the 4thbuyer on the home in 5 months all of them lost on too long of a wait . it was the last one that was the killer because the counter offer would have worked with this couple.

I think the whole thing is big front by the banks and income for their employees. Yeah I am angry about it. They need to have controls and penalties put in place to stop the feet dragging.

NOV

Loreena,

This is such an unfortunate result for all parties, even for the bank who will also lose money. Sometimes, it just doesn't make sense.

Loreena,

Thank you for sharing. I'm wondering what you said before "Boo!?" LOL!

"BOO Citibank is right. And you can throw Bank of America and their adopted stepchild Countrywide right off a cliff alongside them." LOVE this comment!

I was the buyer's agent for my son and daughter-in-law on a short sale that ended up in foreclosure. I watched like a hawk every day for 2 months until it hit the market as an REO. We then POUNCED on it, offered more than full price and they got them home of their dreams for less than they would have paid for the short sale.

Everyone always talks about how the Banks don't want these properties back. The only problem is that the big banks continue to act as if they want every single one of them back! They are so large and the inefficiency is stunning, at times. The Foreclosure Dept typically has no communications withe the Negotiator handling the short sale. The negotiator takes forever to get assigned and then often the file gets assigned again due to the high turnover in some of these banks.

If things are going to continue, then I really am hoping for a push for a standard procedure across the board for short sales. There is no reason why a ready, willing and able buyer should not be able to purchase a home in over 9 months from a distressed seller.

I hope your Buyer finds the home of their DREAMS!

Sorry this chapter did not end well but that doesn't mean story can't have a happy ending. Don't give up. Get back in there and find your client her dream home.

Loreena send this story to your senator and congressman. If we all start send these stories, we can press them to do something, at least stop wasting our tax dollars!

Same thing happened to me with a seller from Cenlar. This should not happen in our country. I have had 73 success stories and now this.

Why is it that those of us at the grass roots level, who are trying to honor our clients & find what dignity we can for sellers in a very tough situation, trying to maintain pride in our communities and avoid the stigma of foreclosures, are the ones who are deemed invisible, irrelevant and annoyances by the banks?

You could of bought this house at the foreclosure steps with private money. Then, your clients could of done a rate and term refinance into conventional loan program. I do this quite often here in Phoenix buyers. It takes a network to make this transaction happen. Thanks for the post.

Citi was quick to take our tax dollars to survive, but their policies are to crush their customers at every turn. Their credit card policies are just as bad. Their rates are street corner loan shark rates and their fees are outrageous. Here is my personal BOO to Citibank. Next time let them fail!

Thanks for sharing the information. Wish you good luck with your next sale.

I wonder what the answer is. Dave Liniger suggested that we as RE/MAX agents get the CPDE (I think I have the letters right) designation, but then I read in a chat on Linked-in that most banks don't recognize the designation. And we can get all of the education we need or want, but if the banks don't educate the people they have handling these things, what good does it do.

I was holing off posting about a similar short sale. All cash, buyer agreed to pay $15,000 more to the existing 2nd and met the terms for the existing 1st. The first, Guaranty Bank sold to Compass Bankin the middle. Buyer re-agreed to their terms. 3 months later, Compass Bank turned down the short sale because the buyer made too much money in 2008. They only had his financials for 8 months.

Short sales are becoming less and less logical as TARP money has made its way into the banks' coffers. I feel for you and your clients on this one.

THIS IS JUST WRONG. I USED TO WORK AT THE LARGEST BANK IN THE U.S. BY DEPOSITS AND THE SAME CRAP IS GOING ON OVER THERE.

CAN YOU IMAGINE FINDING OUT THAT A MANAGER PAID $4000 FOR ONE TICKET TO A CONCERT.

THAT IS RIGHT $4000 FOR ONE TICKET to a well know artist from N.J.

WWW.ZEITGEISTMOVIE.COM

But a Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever.

John Adams

ALL THE BEST LOREENA;

MAY YOU HAVE A BLESSED 2010.

Have not worked on one short sale that went right....even the one where my buyer paid full list price and wired the cash to the title company...the lender...some unheard of bank...still took 30 days to close even when we paid their price AND wired the funds to thier title company

Just for the record: I have had a number of problems with short sales and all three or four times it has been with Citibank.

Unfortunate circumstances and I feel really bad for the buyer. Thanks for sharing.

Loreena, Citi is clueless. The negotiator I am working with doesn't even know how to check a fax. We have faxed paper work numerous times with a receipt that it went throug.....straight to her desk. She has never gotten it!!!!!!!!! She is probably out of paper or the fax machine is off or just plan dumb. Then they want new paper work because our old paper work is now outdated. Well imagine that!

So how come the attorney did not inform you about the auction? Your buyers could have bid at the auction if they really wanted the house?

Marcelo is right, we need to let our let our legislators know about the banks' egregious behavior. We all try to protect our buyers and sellers but you needn't apologize for your rant, YOU aren't the as*^%le !

Bill - Every month since July, the property has been posted for foreclosure. Each time, it would not happen and we just re-amend the Short Sale addendum. Nothing out of the ordinary, except that it did finally sell last Tuesday despite the fact that Citibank and their attorneys know that there is a working contract on it since late February.

Loreena - I could feel your pain...what a nightmare for you. I have closed many short sales now but none with Citibank. Often times the bank's response to the short sale just does not make sense. And you are right everyone loses, including the bank's shareholders, because in the end they will get less money off of this asset. Foreclosure costs banks money!

Aloha seems to me if you opened escrow and it was the same month the seller stopped payments there's the problem.... The seller could have paid one or two months more lost 2 or 3 thousand dollars and closed the deal. Yet they just dropped the payment, giving the death was involved. Even after death you can leave financial issues and can be foreclosed on. In my Opinion it's better to lose a little bit of money then a lot of money. If there was PMI then citi bank can and will receive a reimbursement, and also depends who originated the loan and who sold the loan and what they bought it for. People with hardship often use the four steps of recovery, the emotions of recovery are anger, denial, depression, acceptance and that's what we see in short sales everyday.

Hi Loreena, your buyer could not bid at the auction?

I am experiencing the exact same thing (estate short sale) with another lender. We were able to head off a foreclosure because the bank "lost" the file & the offer(s) for a while. Now, the bank is dragging their heels so much that we are now faced with the county immanently condemning & taking over the property because of its condition. The bank has done their final BPO, they have the preliminary HUD they asked for and now I've been told by the negotiator that we'll have to wait another 4 to 6 weeks for the final approval of the sliced & diced note holder.

All this drama with a cash buyer at over the bank's suggested listing price, a court-appointed personal rep -- no heirs & abosultely no money in the estate.

Is there such a word as ridiculosity?

As some others have said, B of A needs to be clumped in with the utterly useless banks regarding short sales. I have a short sale right now that we had a good offer on, (first time) buyer ended up pulling the offer because it was taking too long. Have a second offer now, and just received an approval for the first offer, a few weeks too late, and I can't get through to anyone to see if this approval is good for the second buyer or not. Frustrating to say the least. I'm still hopeful things can get done, but as you've mentioned, they don't always work out how we think they should...

Loreena,

I am sorry you and your clients had to go through this. I know your pain! Last year I had a short sale (Bank of America) listing and also a buyer for the property. We were set to close on Thursday when I got a call on Tuesday afternoon from the "new" owner who purchased the property that morning at auction. I can tell you it wasn't easy trying to explain that to both clients! The banks response was, TOO BAD?

Loreena, wow, what a sales cycle, and then it was pulled. You have MUCH more fortitude than me. Good luck on future deals in this category. This one had to be the worst.

This is not an isolated incident - most of us have had nightmares with short sales and the prima donna attitudes of the banks. Yet I am always amazed when I get calls from buyers who only want to look at short sales, as though that is where the best deals are. I tell them that they can get as good a deal and often better from a motivated and realistic seller.

Loreena: I am sorry that happened to all parties. I certainly hope that the matter was escalated to the top management within Citibank. I have heard stories like this before and once the account is escalated to an authority that can make a decision ... the right decision is made - the short sale approved - and the transaction closes.

Loreena, it's not over yet! There is a good chance that the home will reappear on the market as an REO in 3 to 4 months (I tracked one here in Atlanta that was relisted in only 45 days). Then you can make another run at the property and, most likely, get it for a much better price! Until the banks realize that putting a home through the foreclosure process then relisting it as an REO is costing them a great deal of money, we might as well help our buyers take advantage of their short-sightedness.

First of all, Realtors shouldn't badmouth other Realtors, and professionals don't diss other professionals. You had a negative experience with a lender. Too bad. This particular lender happens to be a Trust Administrator, as well as a Servicer. There is an inherent conflict of interest that is irreconcilable.

Who advised the mother to stop making payments? I certainly it wasn't a real estate agent.

What do you mean you couldn't locate the name of the asset manager? Who was signing the letters? What was the return address on the letters? It doesn't sound like Texas is a judicial foreclosure state, but weren't there attorneys involved anyway?

Before you extend the finger outward, point it inward, and reflect "what could I have done differently?" We all know that short sales and foreclosures are never a done deal until the lender signs off. Until then, no promises should be made to either client.

I think there is real value in using some of these professional short sale management firms that will take the offer and run with it until closing. It may be worth a few extra bucks.

What a sad story and shame on Citi Bank for allowing it to drag on. Something needs to be done, industry wide, about short sales. There has to be a better way. Hang in there girl. As you said, everything happens for a reason. :)

Loreena,

That is a sad one for sure....sounds like no one wins... :(

Loreena, its unfortunate.

I believe this was one of those properties that was packaged with a bunch other mortgages and sold to an investor. Some investors require that the bank purchases insurance before they will buy it. If this is the case, no matter what happens with the property the investor gets their money back. That's why it probably went into foreclosure and sold quickly. You should talk to someone in title about how that works. You can't tell which properties are insured as this is a crap shoot. They won't disclose that on title and obviously the asset manager won't tell you either.

I hate wasting time and emotional energy on a deal that will inevitably not close. I'm sorry you had that poor experience.

Everything I keep reading about short sales experiences and the common denominator is that there is a real lack of communication that the bank has going.

Loreena,

So sorry for your buyers. But try to be philosophical about it. This was not meant to be their house.

As for banks, I have heard of several who are bad about this. And they are shooting themselves in the foot. They end up selling it for a lot less than a realtor and their client are offering if they would just accept the &*)(..& offer. My broker said if it is a $100,00 house, by federal law they have to have $500,000 in reserve. You would thing they would be more motivated to sell these houses and get them off their books.

At least one thing came out positive ... you have a new sister now!!!

Keep a eye on the MLS and in contact with your buyer. the property will get listed and I bet your buyer gets it for less that what they were under contract for to start with.

I have saw banks do stupid things over and over. I had a client make a offer on a foreclosre, the offer was rejected then two weeks later they dropped the listing price below what our offer was. If that asset manager was working for me and it was my money we were trying to get back by selling the property they would be looking for a new job.

Thanks for sharing this with us Loreena!

Wish the whole short sale process could be cleaned up!

Start putting in calls to the CEO? Call the network trouble shooters to shed light on this? We as Realtors all know this is happening, but what can we do to really force it to the surface? Hmmm... I feel a new post coming on :)

#6 Jackie got it right.

Why do some newsletter featured posts never make to ActiveRain featured posts?
The newsletter seems to be completely different.

Why isn't there a link to the newsletter on AR?

This is interesting. I'm in California and here the person in charge of the short sale file at the bank is generally referred to as the Negotiator. Upfront I establish a timeline and when, even Citibank, exceeds their timeline on a particualr task, the escalate the file. This process has worked very successfully for me.

Better luck on the next one.

Loreena - Sorry to hear about your bad experience with Citibank...I've had a couple of my own, most recently with Chase (two separate sales). One sale finally closed, after an extended period of information-less waiting. The other foreclosed...and sold at auction for less than the sale price on our deal. I also had a deal go south a couple of years ago when short sales were just getting started around here (Long Island, NY). Since then I have been involved in a handful of short sales. What I've found is that the key is having an experienced attorney (or negotiator) and an experienced agent. And by experienced I mean in short sales. Otherwise the deal is virtually doomed from the start. Good luck on the next one and nice post...especially the ending!

Hi Loreena, Sad story - among too many sad stories ! I wonder if there is an accurate portrayal of this market to our elected officials !?!

Financial Freedom, which does reverse mortgages did much the same thing to us. We had a disaster of a property listed and had no less than 150 showings on it until we finally got a CASH offer for $10K more than the lender's appraisal. The lender would have only lost about 10K had they gotten their S### together in time to keep the buyer. The buyer, after months of waiting, got cold feet because the property he was selling was set to close and he refused to move twice. The Personal Rep of the estate was, by this time, totally drained of energy and personal funds to upkeep the property and let it go back to the bank. Now it will become a HUD REO. It will most likely sit vacant over the (Wisconsin) winter, deteriorate even more, and they will NEVER get the price they had in hand before. Now it will be the taxpayers with the bottomless pit of money who will lose - again.

If the government really wanted to help this situation they would initiate a standard short sale process with time deadlines for the banks to adhere to. They find it easy enough to pile rule after rule onto all other aspects of our business - why not short sales?

Sorry for you and your client. Your frustration is well validated. These banks are like fearless rogue monsters doing as they please! It is so frustrating how the gov't reaches in to our pockets (without asking or consent), takes our money and gives it to the big banks without stipulations (ie; demanding them to move x % of their failed assets/inventory in a timely manner.) The fallen market started with housing and it will heal with housing. These banks/investors are sitting on a ton of inventory and there are plenty of buyers out there just waiting.

I hope your buyers find the home of their dreams soon.

Weichert - Synergy: For one, most of them that know me on AR will know that I would one of the people who would look inwardly for an answer to see there is a better way. This is not a rant for what happened. It's a tragic to share that sometimes, a regular sale with a willing and able buyer, along with a seller can turn ugly and into an unexpected short sale.

Sure, the seller could have continued to make her deceased daughter's mortgage but not many people can financially withstand having to make 2 mortgage payments for a long time. She did that for over 8 months and finally decided that it could continue to be a money pit for her.

Note that the seller is trying to do the right thing by taking care of her daughter's estate. She could have very early on turn in those keys and be done.

I admire your dedication to your buyer. I know you will find the best possible home for them.

ouch...

we as agents really need to put our heads together as to how we can really get the word out on what these banks are doing to our clients and to the market.

There is no excuse!

Makes me want to give up on doing anymore short sales so I can keep my blood pressure and life somewhat normal....but no I am a dedicated agent and will try to get the sale done...

That is really tough. These days, transactions are becoming quite a lot of work and challenging to close. Thanks for sharing your story.

Shari

Hi Loreena,

I don't like short sales at all. IT's crazy how the bank works. I don't want any part of therm

Patricia

I love this: "Tell Citibank to scratch their butts with a broken bottle." (Thanks Jackie, I'm going to remember that one.)

That's exactly my feeling toward all of them - they were more than willing to take taxpayer funds to pay their top executives, fund expensive retreat meetings, etc. - while they fired (laid-off?) thousands of other employees.I know one woman who had worked for B of A for 31 years - and she was downsized.

Perhaps if they still had some of those seasoned employees to work on short sales, they'd get done. I have an idea their new, lower-wage employees, just don't have a clue. There are far too many stories about files being misplaced, no one knowing which person is handling which property, etc.

As much as government wants to control things now, it's too bad that when they gave our money to the big banks they didn't include some controls on how it could be spent. "We the people" sure got flim-flammed on that one!

I am in a short sale with Wells Fargo and am getting the same run around from them. Right when I thought we were close, our negotiator said that he had been transferred to another portfolio and we are still trying to find out who our new negotiator is after 4 months.

I feel for you and your clients too... I have done WAY more short sales than I ever wanted to in the past 18 months. There has been ONE and ONLY ONE bank that i have worked with on a short sale that has been outstanding.. and that is Wachovia. I got a short sale decision out of them in 8 days! Imagine if all the other banks could get it together to make decisions that streamlined... Certainly they could save themselves a lot of money too (bank owned properties usually sell for far less, and there is the cost of the foreclosure itself)... a win/ win situation.

Very disappointing outcome. I hope your buyer finds another home they love.

I find it ironic that Weichert (#91) opens up by demanding that Realtors not bad mouth each other,and then does exactly that two paragraphs later. I had a similar experience with him/her on my blog as well. Some of us should look inward before posting.

I had a similar incident with Citi. Family had lost their job in Houston, moved in with family back east, tried diligently to work things out. We had five or six good solid offers. Took the best. Inspections went well. Then, no answer. Two weeks after it foreclosed, a representative from Citi called to ask how the transaction was going. GEEZ. In this case it wasn't the mother's obligation to make the payments unless she was also on the loan. And yes, I think we ALL look inwardly to see if we could have done things differently. All of us, except, maybe, Citibank.

THIS IS MY RANT! Sorry Loreena! How much money did the taxpayers give Citi? And I wonder how many H1N1 flue shots the over bonused execs received. This short sale process (read most lender's inability to handle short sales) is criminal. Wait for the next shoe to drop with all the Truth In Lending violations! Look out Title Insurers!

I wish I could say that this action by Citibank was shocking...but based on my personal experience it is par for the course!

I had clients that stopped making payments 16 months ago on their home.They called Citibank and said we will sign it over to you and the amount owed is within about $5,000 of what the home is worth....The banks answer?? Not interested!!! You owe us X amount and we don't want the home back....

It took Citibank 15 months from the time the clients stopped paying until they took it back at Trustee's sale....15 months with ZERO payments or income on that loan....

I had a buyer that wanted it but the bank wasn't interested in that either!

What is the home now priced at almost a year and a half later?? $50k LESS that they could have taken it back for and sold it for a year and a half ago!!

The cost of the Foreclosure and the loss in value in the 16 months ordeal will result in an approx loss to the bank of $100k!!!

Glad I don't own any of that stock!

Regards,

Richard

Search the local Redding Ca MLS here now

I feel for you Loreena. I have taken classes on short sales, and hold the CDPE. But I HATE SHORT SALES.

I had a similar situation to yours and the buyer walked 6 months into the deal. 9 months later the house was sold for 50% of what my buyer had offered. That was Bank of America. They all s--k.

Who is in charge? Who is making smart decisions?

One of my agents is involved now in one, and the buyer is being patient 1st lender gets 100% no problem. 2nd lender refuses to sign off on deal because they are "short"--not by much. They don't seem to understand getting something is better than getting nothing. Madness.

Hang in there.

I believe it goes beyond honest inefficiencies. I do not believe the banks or the government really want to let the short sales go through. In the long run they want to push prices up and/or own the homes and make us all renters.

Lorenna,

Sorry for the difficult time. It is hard to tell how the lender will respond to a short sale-- some go easy-- others like yours difficult. It is hard to give hope to your buyer in these days.

At some point these banks have got to become reasonable......or is that me just being unreasonable?

Thanks for sharing your short sale story. What a situation!

CitiBank is a big bureaucracy and we know how bureaucracieswork. They are very good at circling the wagons and protect their own turf. Logic falls on deaf ears.

It blows me away that there is a willing and able BUYER and the bank chooses to foreclose?!!?!?!?

There must be some incentive or pay-off that fattens their bottom line to do so.

I can't see any other reason there is a benefit to foreclosing, when I BUYER is waiting in the wings to take over. Joy

NOV

From the desk of David Dee,

Loreena, short sales sometimes end up without a happy ending. I had a similar situation and I know how it feels. And guess who was the lender? It's a 4 letter word and starts with a C and ends with Bank.

Loreena,

I can't believe your buyer waited that long. They must have really loved the house. How sad that it turned out that way. I hope that your buyers do find the home of their dreams.

Possibly same bank, same story line. The Buyer after 7 months of waiting finally had to go find another house which we settled yesterday. This Bank after 7 months and many weeks and weeks of failed return calls and lost paperwork and complete mismanagement called the other day to see if settlement was still a go. Unbelievable.

Loreena, I am so surprised that this was a recent occurance. It just exemplifies how out of touch Citibank is. I have many Short Sale listings that have upcoming foreclosure sale dates and last year we had to fight the sale, file motions to cancel, numerous calls to the bank and attorney at the 9th hour. In today's world, 100% of the sale dates are cancelled by the bank itself!!! It really is a sad story what you and your Buyer experienced. I feel your pain.

Loreena, we see this too. It has been very frustrating listening and watching other agents in the office deal with BIG banks to try to make a WIN/WIN situation. I feel your pain.

As an active real estate agent team that has an in-house Loss Mitigation team that works on team listings and assists other agents, I am exposed to more than a lot of other agents. I would also like to share a true story that took over 6 months but it's the last 3 weeks that are just CRAZY.. The seller has less than 6 months to live due to cancer. He wants to resolve the issue of getting his short sale sold and not burden his wife after he's passed. There are 3 loans: Wachovia 1st, Wells 2nd (that is 3 times the amount of the 1st) & Wachovia 3rd that was a HELOC. We had SS approval on the 1st & 2nd with a deadline to close of Oct 27th. In a 3 week period, our Loss Mit team made 24 phone calls, sent 10 urgent fax's, & got the voice mail of the supervisor 3 times (with no call back) to find out on the 27th that they were just ordering a BPO. Due to the HARD and relentless work from the loss mit team, we got an extension to close for 5 days. We were also able to get the BPO changed to a 24 hour turn around time drive- by BPO and we closed! As an agent, I know how to work my own short sales but do I have the time that it takes to follow- up on my follow-up on my follow-up with the lender... you get my point? It is upsetting that as an agent we feel that we have to let our clients down. It's not us. It's not that some agents do or do not out-source their loss mit negotiations. It's the Short Sale process (or lack of realistic process) that the lenders have. I am sure there are millions of these types of stories to share. I wish there was a place that all of them could be posted and shared with the offending lenders and maybe, just maybe, they would get the big picture. Hopefully, if I wish hard enough Santa will grant my wish for Christmas.

Loreena,

I just read all of the comments on this story, and so you have received most of the comments I would have made so I will not repeat them. Bottm line is, that whomever was working with the bank did not do their job properly. It could have gotten done.

I can't believe the buyer stuck around for 9 months. Allen has a lot of homes for sale, and I'm sure he's going to find something comparable.

Agree with all those who say keep your eyes on the MLS for a little while (hopefully less than a month to get listed as REO if it was in reasonable condition). You'll probable be able to purchase at full list price for less than your short sale offer.

Keep your chin up!

Keep your eye out for that REO and see if there can't be a 'Part 2' to this story.

NOV

The sad reality is that until they see a better financial incentive to do otherwise, they'll continue to do things that aren't in the interest of the buyers/sellers, but their bottom line. I guess we would all agree that they can't tell their true bottom line from the bottoms.

Wowsa ! You ended it right. This makes absolutely no sense at all. Am sorry this happened to you and your client. That was just a waste of 9 months and energy. You have a great attitude about it. Hopefully that buyer is still with you and you can get them another property ! Our experience has also been the bigger the bank, the more difficult the short sale process can be, although we had a couple short sale approvals as well with Citibank. Is crazy !

I can honestly say that I refuse to show a short sale if I see that it has been on the market more than 60 days and is priced below market. This lets me know that the bank is not going to respond to any offers. I had a client that made a $320,000 cash offer on a house that the bank did not accept during the short sale. The same client than went to the foreclosure auction and bought the exact same house for $280,000 cash at the auction. So the bank lost $40,000 and I lost $9000+ in commission. Short Sales 80% of the time are a WASTE OF TIME!

Jason, how do you refuse to show a short sale and represent your client. The last approval I got took more then 5 months, but they got approved. It just depends on how hard the negotiator works with the bank.

NOV

That is terrible Loreena. Some of these banks need to get a clue.

NOV

Can you find out who it was sold to. I'd find them and if your client really wants it find out what they paid and would they take a quick 10K profit? I have clients who buy at foreclosure auctions and at least half of them would sell for an immediate 10K profit.

Oh, girlfriend - BIG FAT DITTO!!!! I hate short sales for that very reason. Mine wasn't with Citibank, but same type of "service" and the deal fell through after the buyers held on for about 6 months.

Bad, bad situations.

NOV

I'm so sorry this didn't work out for your buyers. I have several short sales right now that I'm waiting on the MI company for approval. Sure makes this business hard.

NOV

Amen to the post that said there's no logic in the short sale process. I'm representing a buyer in an offer in a short-sale situation right now, and we've established a cut-off date in the offer. Thankfully, my client is keeping a good perspective on the whole thing - if it works out, great - he's got some instant equity...if it doesn't work out, oh well - God's got something better planned for him. Good luck to your buyer, Loreena - if they're looking in Allen, they're bound to find a great home - that's such a nice community! :)

NOV

I am sure you read the posts about a week ago about how the banks make more money if the properties foreclose? The seller "trying to do the right thing" doesnt make a difference when greed is involved. I am sorry for you and your buyer and the agent who worked so hard on the seller's behalf. I have one we've been waiting since May, 2009...and we are hoping to wrap it up, but until it's done, you don't know what's going to happen. SO I think positively and keep moving forward and hope my single mom client gets a home for herself and two children. Best to you and your buyer.

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