Home : Blogs : Endre Barath,Jr. 310.486.1002 : Marina Del Rey Real Estate

A Tragic Journey from a Short Sale to Foreclosure.

I was involved in a Tragic Journey from a Short Sale to Foreclosure. I represented the buyer and another agent represented the seller. The seller had an Attorney, who had a successful track record of negotiating short sales.

The history: We have written at least eight or ten FHA Offers, without getting any accepted. We lost out to Conventional Loan buyers, Cash Buyers and buyers who had large down payments. Finally May 2009 we received the "good news"...." Congratulations your offer was accepted". Then the journey began.

We continued searching, writing offers with no results. The communications between agents, principals were way too many to mention here. They all started with "any news?" and all ended with "just be patient".

Fast forward to Friday the Thirteenth, August 2010. Another one of those questions from the buyer. The Seller's Agent broke the news "... I was about to call you..."

How did this happen? The Sellers accepted the offer, the paperwork submitted at least four to five times during a period of nine months. Then a Short Sale Negotiator assigned from the Lender, attorney back and forth communication and the Result: the lender wanted $20,000.00 from the seller. The lender would not accept $10,000.00 from seller and $10,000.00 from buyer. They wanted it all from the seller.

May 2010 Foreclosure postponed, June 2010 Foreclosure postponed again. End of July the sellers go away for a few days. They return home, the locks have been changed, their belonging rummaged thru....

Who is the winner here? No one wins; all are tragically in the short end of this transaction. The sellers have no home, they have their credit ruined. The buyers waited a year and a half, now are totally devastated and will rent until the wounds will heal.

The lenders have to spend money for upkeep, security, electricity, water, taxes, insurance, vandalism etc. The cost around $2000.00 per month and ironically it takes about three to four months to sell a home. Once in Escrow another month to two months before the buyer receives the keys and the financial loss to the bank: approximately $10,000.00.

The agents worked for free for about a year and a half. Tell me what you think of this turn of events on an unhappy story. Do we need to overhaul how decisions are made? What do we need to prevent this from happening again?

If you are a consumer who is considering buying or selling a home, investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Culver City, Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 (USA) or email me at homes@endrebarath.com or visit one of my websites at http://www.endrebarath.com Your Pet Friendly Realtor. I contribute a portion of My commission to Local Animal Rescue Organizations.

Posted by Endre Barath,Jr. 310.486.1002 on 08/15/2010 05:32 PM

Comments (120)

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120 Comments on A Tragic Journey from a Short Sale to Foreclosure.

AUG

2010

Endre - While the timeframe is unusual, the results are not all that uncommon. The other thing that our statistics show, is that not only will the selling bank have additional costs to market, but the sales price is usually 10-18% lower than the short sales price they rejected. Who wins? There still seems to be a missing piece of this puzzle - and I think it has to do with money .... now, would that be unusual?

Great question, how did something of this nature happen? The sellers were ambushed as well, when they returned home and found that they did not have access to their home. How sad.

Sad story - sad ending. I had one such tough one where seller pulled the rug on the lender for fringe benefit. Who do we blame?

Good Luck with the buyers - tell them, this is unusual, but may be, a better home is waiting for them.

- Praful Thakkar

www.iPraful.com

It appears both common sense and compassion were missing in the decision making process...

Jason

Just makes me wonder how you can work for so long, for free? It's just heartbreaking to see so much effort get flushed right down the toilet.

Endre- It is utterly disgusting how the servicers are hurting not only the sellers, agents and buyers with their inability, ignorance and most likely purposeful inaction on short sales- they are also hurting the note owners and the investors, the shareholders all to hold out for that one lousy 1/2 percent payment to service the loan. We are in the thick of it. But we have found that when agents themselves do the negotiating like Nestor and I do- we get 100% of our short sales closed. The only ones that get messed up are the attorney deals and short sale company deals. Katerina

Endre, you are looking for common sense from the lending industry. If they had some, there wouldn't be so many foreclosures and short sales right now. Sure a lot of people would not have purchased homes, but most of those people probably shouldn't have bought in the first place, hence the foreclosures and short sales.

Hopefully the process gets better soon. Bank of America is supposed to be rolling out a new short sale approval program. If they are successful with it then I would expect other lenders to follow suit. Of course, just based on sheer numbers, there is always going to be instances like the one you experienced.

That is sad story, Endre. I had a similar situation during a short sale where the lender wanted the seller to put up an additional $10,000 of their own funds… AND wanted the buyer to also put in another $25,000 in funds. The buyers and sellers did not agree to the lender’s terms and the home went into foreclosure.

My sympahties to the buyers and sellers, Endre. What a loss.

Perhaps I should not say this but comment #9 made my skin crawl. On topic but tacky, tacky, tacky... the guideline against promoting yourself in the comments of another members post is broken over and over by people selling things, services on ActiveRain but seldom with such little tact.

It's like a doctor visiting the funeral to gloat to the mourners that he could have saved the deceased and handing out business cards to promote his business.

tacky, tacky, tacky....

Unfortunately, we hear/read about this all the time. Pretty unnerving times we live in.

I'm with Maureen here... everyone loses... And banks think they can get respect simply by marketing a warm a fuzzy message. I fear we're headed for really weird times, and I'm the eternal optimist! Then again, they're spending our money and when they get into trouble Uncle Sam gives them more of our money. I would venture to guess that the same (regulations) guidelines somehow don't affect banks the same way they do us. Gee, that would be cool if we had it that way. Tacky indeed... Yet then again, maybe I could be the CEO and get dismissed for 30 million or so and go away to a quiet retirement. I'll think about that and have one of my people get back to you. :0)

Many in our market that continue to take a listing only to add in the comments "Possible Short Sale". What does this mean? Simply the agent gets some marketing traction for the listing but unless the seller has done the "pre qualification" hard work necessary, the agent is fooling everyone, including the MLS membership.

Sorry to be cynical on this one! I am a postitive person by nature. "Short sale" seems to be a hoax because no one at the bank seems to care!

Stories like this bother me because it stinks being at the mercy of bank and servicer short sale departments that are not organized or run well. It should have been easy for Endre (or Endre's broker) and the listing agent to negotiate directly with the lender. Failing that, it should have been fairly easy to speak with that person's supervisor. Of course, it wasn't at all easy or they would have done it.

While I'm not thrilled with Mr. Benita's comments (#9) either, at least he speaks to the big question here: What ACTION can an agent take who finds him- or herself in this situation?

It looks like (1) one can try to be better prepared, including asking better questions of one's client; (2) one can educate one's client as to the ups and downs of buying/selling "short"; (3) one can involve an experienced negotiator, realizing there are limitations; (4) when things fall apart, one can say, "Oh, well" and/or complain to the regulators.

I guess Mr. Benita's advice is directed toward listing agents. However, we agents generally do not choose to be in these situations. We don't get to pick the lender/listing agent/negotiator with whom we end up dealing. Our buyer clients decide on the house they want, and it's our job to help them secure it. On the listing side, of the three short-sale listings my team is carrying at the moment, two were not that way when originally listed. (The lender of the third listing recommended us to the homeowners.) We "luck" into this stuff. All too often, we find luck is in short supply. --Peter Gibaud

Endre, this just doesn't have to happen. Not approving this short sale just cost the bank's investor tens of thousands of dollars. It will sell for less than the offer you had on the table, plus carrying costs, attorney's fees and more. How does this benefit anyone except the servicer for a few months?

If only banks would expedite the process, there would be more win-win scenarios!

Heartbreaking.

We have done 3 short sales, and all have been like giving birth, but more painful !!! I am not sure when I will want to work on another one.

That is a very sad story. I bet you were dealing with Bof A? I also bet the attorney didn't stay on top of things as he should. Just a guess. Either way, very sad for your buyers and the sellers!

Endre as I see it, it's all about control. Short Sales are about controlling behavior. If you want what I have, you'll have to jump through hoops and put everything that you have to invest on the line including time and money. End of story and it's a shame and a disgrace that this NEVER needs to happen. Short Sales by this measure should be illegal. There is never a reason for a short sale or foreclosure sale not to close once the seller accepts and the banks approve.

Endre--This is so typical, it is scary. I was involved in a short sale last week where a Lender was willing to foreclose on the property after an approved short sale, because the closing was delayed one day.

The system needs to be revamped, and soon.

So sorry to hear. For you, buyer and seller. It's very frustrating and heart breaking. I have not done many short sales and after every one, I always say I'm not doing another. But it's all about trying to help people in tough situations. You did everything you could. Good will come to you from somewhere else.

I'm sorry but attorneys that say that they can do better than we can on short sales are just talk. Who has more interest in getting a short sale done and settled? Who will work harder to get it done?

Again, sorry to hear and be ready for that easy deal around the corner. None of them are easy but you know what I mean.

This is a tragic and unnecessary journey. It does not benefit any of the parties.

Nobody ever said banks were smart. That's why they had such bad lending guidelines before

That's so unfortunate. Sometimes, I honestly feel like these banks are doing this on purpose.

I'm not shocked... The larger the organization, the more stupid rules rule their day.

Bureaucratic Ineptitude. How sad, everybody loses.

That's so unfortunate. Sometimes, I honestly feel like these banks are doing this on purpose.

Endre - Wait that entire time for a good outcome and they slam it in the face of all parties. It is unfortuanate.

I am in a short sale since April and the buyer is casting me as the bad guy because it is not going through yet. And he calls me ahead of updating him so I look like I am not doing my job. There is an attorney involved too. I educated this buyer that anything can happen and every single short sale is different than the next.

I think it is some huge game the banks are playing and it is They just don't care because they have already written the loans off... Hopefully someday it will change!

The sellers and buyers I've dealt with always seem to think that someone is dropping the ball on this - they can't believe that an experienced real estate agent or negotiator can't get through to the seller. But alas, your story proves once again that the lenders are the ones screwing up the solotions that are right in front of their noses.

OMG Cody, I so agree with you. When I talk and educate my clients somewhere in the conversation is "the banks are writing off the bottom anyway, the banks get richer and richer".

I think many of the lenders need a reality check... I don't know what the answer is, but many of the lenders just don't get it!

HI Endre -- So many combinations of events that it's unfortunate beyond words when this happens.

AUG

2010

Endre,

I don't understand the system down there, I would think banks would want deals to go together. Am I missing something?

Let me Guess.... Ban of America or Chase (as in "Chase us around"). We see barely any logic in what happens in short sales. Sometimes the banks just make silly decisions that cost the Investors and the homeowners money.

Ohhhh that stipulation that the bank wants cash contribution at closing but it must come from the seller only, even if other parties are willing to chip in.

The lender is willing to give up the short sale and go another 6+ months of foreclosure costs and losses and risk of damage and vandalism in a declining market.

I'm open to understanding this if someone is able to explain the economics and the logic.

The problem with short sales is that the left hand of the bank doesn't know what the right is doing. The short sale team may be working hard to get the sale approved, all the while, another department is moving forward with foreclosure proceedings. Twice, I have arrived at a vacant short sale to show my buyers and the locks have been changed (without notifying the listing agent).

The lender is not allowed to just go in and change locks on a home before making sure it's vacant. If it's vacant they may change the locks to secure their asset. But, who knows what could result on short sales these days.

Unfortunately you have described teh worst of it. . that is the worst possible scenarion for any shor sale.

I had that happen to me already early on. . but I'm happy to report some short sales are closing in 45 days with no problems.

Lately, I've seen the difference in lenders and I still hold the faith that we will overcome.

I'm with Katerine, we negotiate our own short sales and allowing a third party that has is juggling 100's of other short sales makes me uncomfortable. . I need control and I need to have my thumb on the pulse.

Ugh...I have had this happen too. Of course I only go the listing, referred by my accountant "after" the sherriffs sale. So I just had 6 months to sell. But, I had a good offer, bank drug their heels, and the redemption period ended.

Then listed for my list price, another off, the same buyer wrote on it once it was an REO and the bank took less.

I grieved for days.

Common sense goes out the window !!!!!!!!!!!!!!!!!!!!! Two lives forced to head a different direction.

Is a shame that all that time was lost ! Why not mention who the lender was to see if others have had similar experiences ?

I see guesses as to who the lender was -- actually, I was guessing it was Wells Fargo because they seem to be the ones to postpone for only 30 days at a time and then foreclose in the middle of negotiations -- but who the lender was is not as important as the assumption that the lender did not want to do the short sale. Every so often I run across one of these situations. No matter what you offer, no matter how you structure the deal to give the bank exactly what the bank demands, they find a way to reject the deal -- it's as though they don't want to do it. The logical reason not to do it is because they are paid more to foreclose, which I believe is the case with some of these banks.

I wonder on some of these transactions if the lender gets some money from the PMI company or FHA insurance.

Sounds like another day at the office here in South Florida...

Endre, this is a sad story all around. Everyone associated with the transaction lost. It appears that the bank didn't want this deal to close. If the seller had $10,000, they would have been making their payments.

Even the pros get tossed around in these violent Real Estate seas.........from time to time...

Good FYI post.....thank you

I like your little numbers analysis at the end ($10,000). We have to wonder if the people working for the banks consider these things? The way things pan out sometimes we wonder if they have any clue.

Some of the banks have loan guarantees from the Fed, structured in such a way that they get a substantially larger reimbursement if they foreclose than if they participate in a short sale. Follow the money.

This goes to show that if common sense and common decency were more "common" in this process it would not be so heartbreaking. This is devastating to all parties involved.

I have one right now that has been dragging on for months. One buyer made a market-price offer, but the bank did not respond and that buyer walked. It is a nightmare working with banks when you don't know their hidden agendas.

Indeed a sad story, but not surprising. The part that makes me wince is the $20,000 and how it could have been split between the principals. I just can't believe it. I think your story deserves to be put into a letter to the bank executives and to their shareholders to show how things are being managed.

I had one within 2 days of close of escrow, the deal all worked out, when it went into foreclosure because the bank 'forgot' to press the button to postpone the foreclosure by another 30 days to allow COE, and that even thought I called them 5 times.

Tim Bradley #51, hit the nail on the head. The way paperwork is structured at the banks, they are covered more with a foreclosure by the government. No monetary incentive to do a short sale. A foreclosure is a "toxic asset" and a short sale, since it has not taken place, is mere speculation.

Also keep in mind that the banks personnel that are doing such a really poor job now are the very same (fill in your choice of adjective here) folks who wrote the bad loans in the past. You think that NOW they will do a better job than before? Think again.

That is so unfortunate! I recently went to a short sale seminar put on by a nationwide bank (I'm not going to name them, because I don't want to give them any free marketing), and they filled us all in on the decision making process for short sales. It really filled in a lot of the holes in my understanding about how short sales are handled on the bank's side of the fence.

Tim #51 has part of the answer. Also, they have to go back to the master agreement. There are cases in the master agreement where the investor has said 'no short sale'. It's too bad that it isn't known sooner, but they do have their process to follow. By the time it gets to that point though, serious time has elapsed. And for investors it IS about the numbers. Which way are they better off - taking a lesser amount now, or writing off a larger debt come tax time?

Endre, maybe I'm misreading your post, but it sounded as if your buyer continued to write offers after they'd been accepted on this short sale? Our attorneys advise against this. Since the seller still owns the property and has signed the purchase agreement, our buyer is in a legally binding contract. Just curious about the situation.

Hi. You may still have a chance to reverse this foreclosure. We just had one just like this and Bank of America reversed it and allowed the short sale to go through. Has the listing agent tried to contact the bank?

Unfortunate, but so familiar.

This is very sad and like Katrina I believe its in the best interest of all involved if the listing agent does thier own negotiations. Attorney's don't have as much to lose as the real estate agents. Few attorney's actually do the negotiations - it's their staff. When the staff gets busy something is bound to be dropped, someone's file will not get the additional call.

Short sales are not so much about negotiations but about justifying your offer and informing the lender why the number they have (which they got from a BPO agent who is hoping to get the REO if the short sale does not make it) is wrong. Giving them a clear idea of the current market, how the numbers are going down, how the pendings will affect the current offer on the table and how their costs for going into foreclosure are going to net them a much lower price 12-24 months after they reject the offer.

I work with an attorney in case some trickier issues come along and so far I am doing much better than when I gave the attorney's the whole file. My commission is at stake and so is the buyer's agent. I work hard for my seller, the buyer and both agents. Normally we have more skin in the game than the attorney's although they are getting greeder on what they are charging when I am doing the work. I can play hard ball just as easily as an attorney by escalating a file.

Remember negotiators are overworked and like must paper shufflers just following a set of guidelines. They don't understand real estate unless they are former realtors. They follow rules and we need to understand their mindset to get to our objective. An accepted offer.

Short sales are not for the faint of heart. The turn around times are getting shorter at least in my experience in the last few months.

May your next one be much smoother.

In order for the real estate market to recover these banking institutions need their policies changed. We cannot recover if situations like these occur. Nor can it recover if the difficulties for borrowers who are qualified for loans cannot obtain financing because lenders are imposing unrealistic lending guidelines. It's a vicious cycle that somehow must get resolved immediately.

Unfortuately, this is happening way too often. Several comments mentioned that things seem to be improving! What bank has improved? I'm not saying you are wrong, I'm saying that I haven't seen any improvement. With some banks, it only has gotten worse. Just remember, SOME DAY, the shoe will be on the other foot, and the lenders will be begging US. Take notes today and pull those notes out in 2-4 years.

What a sad situation for all involved. It was probably a bank we bailed out so they can now make millions off consumers.

I don't know who the short selling bank was but my guess is they would make more money from foreclosing than short selling. They may have a sweetheart deal from the govt. where govt. pays them for their losses in a foreclosure but not a short sale.

I don't know the details about this case ... but to be fair, banks are getting tough on those strategic defaulters. Banks don't normally demand pays from sellers unless they know the seller has the capacity.

Sellers, trying to walk off easy? Think again!!!

Tragic. Having worked part-time for a non-profit in the mortgage/default department on behalf of the homeowner, i can't tell you how many times the banks passed a client's file from one department to another with no notification to any party.

Once the file was transferred, items would be lost or time would've lapsed and the whole process had to be started over again. The home would eventually foreclosure.

I know your post concerns short sales but the mortgage companies are not only inept with short sales but with loan modifications. I saw so many home owners jump through every hoop placed before them as well as myself, only to be denied a permanent loan mod. Many of the reps couldn't give a definitive reason for the denial.

I saw many loan mods approved that by my estimations should've been denied. ie; home owners who were hiding income, had paid off all their debts with their mortgage payments or kept high car payments instead of trying to sell their cars to retain their home.

There seems to be no rhyme or reason to the banks' methods. It is sheer madness and chaos and something needs to be done. Passing the buck from one department to another until all parties lose is the banks' path of least resistance. We all end up paying in the end.

Once the file was transferred, items would be lost or time would've lapsed and the whole process had to be started over again. The home would eventually foreclosure.

I get very disgusted when I hear stories like this. What will it take for lenders to wake up and get their act together?!?!? Stories like this are why I have a difficult time getting first time homebuyers to look at short sales. They have usually been told to stay away from them bu friends - and sometimes even their mortgage lender!

I get very disgusted when I hear stories like this. What will it take for lenders to wake up and get their act together?!?!? Stories like this are why I have a difficult time getting first time homebuyers to look at short sales. They have usually been told to stay away from them by friends - and sometimes even their mortgage lender!

This is very disappointing and sad for both buyers and sellers. I have heard this similar story and almost every time it involves Bank of America.

So sad. Sounds like everyone lost out due to heartless/impersonal bank procedures. I wish the bank executives are forced to go through a short sale scenario such as mentioned here. But no such justice exists.

The way the short sale game is played, the banks may not be losing as much as we think. The investors may be losing more, but not the banks. They are in an almost win-win situation. Remember who got most of the bailout money? So where do they really lose in this mess?

During the short-sale negotiations, we must keep in mind that while most of our talking will be with the bank's's short-sale negotiator, we cannot forget the bank's foreclosure department and must check with them about foreclosure dates, and/or let them what we are negotiating with the short-sale department. Remember, in these banks, the right hand doesn't know what the left one is doing!!

I'm still in the middle with BOA on 3 deals. 6 months or more. They are insist that sellers put in more money - even when they are bankrupt. The most frustrating is the one where BOA holds the 1st and a HELOC. The HELOC is holding everything up. My buyer's offer went in a year after they lost another better offer on the same property.

Another one has a 2nd with Citi. Seems that when the bank employee takes a 2 week vacation no one else can handle the file.

Common sense is non existent with many banks. Everyone loses in the end.

Sad story. Things definitely need to change with the banks.

MY question is what do we do? How can we change this? I think that there should be some invetigative reporter that should be put out there to dig up all the skeletons. We need to have a huge public out cry to change this. What about our NAR? Are they putting pressure on congress to correct this?

I'm as frustrated as all of you guys out here.

It is frustrating when decisions are made which do not appear to be logical in any sense. There is money to be made in losing money for these banks and investors. Meanwhile, our real estate markets suffer.

Be encouraged that you aren't alone in this. This scenario plays out quite often. Despite what a class may teach, sometimes it is completely out of our control. I feel for you because I know what it is like to work for free and have a deal fail at the same time. I'm sure we all do. I hope your clients will move on and let it go. There are more fish in the sea.

That is just awful...and such a case of cutting off your nose to spite your face! I just don't understand some of these banks...I have a case in point right next door to me. Last year they turned down the shortsale offers being made, it was foreclosed on a few months ago and now it sits empty has been on the market more than two months, they've lowered the price twice and are now below what the short sale offers were for last year...the bank is taking a BATH on this one...I just don't understand how they come to the decisions they do...

In the end no one wins. It's frustrating and sad that there isn't more done to get things done in a timely manner.

Unfortunately with short sales sometimes you can do everything the way you should and it still ends badly. I have had two short sales (where I represented the buyers) where the home was sold prior to our being able to get our approval. In both cases the listing agents and attorneys involved were diligent in their efforts to get the trustee sale postponed.

It is frustrating for everyone involved. I was able to scramble on both and get my client's offer in to the REO agent. Luckily in both cases my buyers ended up with the homes. But, wow, it was a wild ride.

Most of these deals involve Mortgage Insurance as well as the bank. In those cases, you may be getting agreement from one but not from both.

Mike Schneider, ABR, CDPE, SFR

SOMETIMES, The tragic roots are conceived at the "BPO" level....It's imperative, the BPO agents are comparing apples to apples. Ive seen, the BPO compared to the wrong comparisons. If it goes un-noticed the difference in correct Market Value could be the very reason why the lender is not accepting "valid offers" and are looking for higher / better pricing from erroneous BPO. Makes sense to me. Thats enough to kill the deal and everyone gets hurt ! Better we are present at BPO and prepared with our own "comps" to avoid such tragedies. thank you for sharing excellant thoughts!

Do you not have a "foreclosure process" there? Do they get posted and then have some time as they do in Nevada? We have time upon the sale, up to 90 days to move. They don't just one day walk in and the locks are changed.

Ah, the war stories out there. We should all get together and write a book. Actually, I think it's already half completed at this point.

Ed Tseng (#66) suggests that the reason banks are demanding money from sellers is because they have reason to believe the seller has the money. And I'm sure there are ways to make such a determination. However, I also believe there is alot more going on than meets the eye.

In a SS that I'm working on right now where the seller supports 2 others on very limited income, the bank countered 12% over contract price. When the seller and buyer declined stating that they would stand by the current offer, and showing the bank that sales value had in fact dropped in the market since buyer's offer was submitted, the bank simply turned around and countered even higher for a total of 17% over offer price. AND THEN CLOSED THE FILE. Does the word "capricious" come to mind?

Are the banks/investors as tired of these SS files as the rest of us? Are they in search of taking over the real estate business as we know it? Are their pockets so deep, they don't care about the damage done to homeowers or buyers? Maybe they've hired the wrong people to work on these files and need to provide better training and certainly better direction.

Short sales are a unique animal that wasn't really a real estate tool until just a few years ago. No one really has been properly trained at the banking level nor is there sufficient regulation to give anyone the guidelines to get the deals done. For example, unlike a contract that has a beginning and end, everyone is at the whim of a lender when the lender's approval becomes a contingency to the contract. Without some form of structure, either new legislation or banking rules, the lenders have no incentive to get the deals done one way or the other.

Yes, we need someone out there to shed light on this situation. Any good investigative/financial reporters up for the job?

Another blood sucking government supported bank making sure no one gets a break.

endre, we are missing a piece or two of this puzzle. the foreclosure process in california is so above board that it is near impossible for the sale to occur without someone knowing. i did not say short sale, i said foreclosure process. they are handled by two different departments. we see it all time that they don't corres[pond between themselves. i have noticed that the most common response of sellers in default is to ignore the letters...if they did and the home went to sale then they have only themselves to blame.

i am nearing the end of a short sale now and the trustees sale is scheduled for 31 august. the Notice of Trustees Sale was mailed certified to all known addresses of the defaulting borrower and i am looking at a pile of NINE letters. four are certified.

presuming that the deal points were not ridiculous, i have a $50 says someone on the sellers side dropped the ball. i see this all the time, a less than diligent short sale 'negotiator' gets too many files going, takes a hundred calls a day, and one of the files slips through the cracks. this is the problem that a buyer has in a short...no control.

This probably plays out 10 times a day across America unfortunately. I have had 4 or 5 of these my self so far this year..I wont take any short sale listings anymore because I really believe you cant sell 90% of them because the banks won't work with you and Its my name that gets ruined

This story is being told over and over again! Why are the banks being so uncooperative? Or, a better question, when is the GOVERNMENT going to make the banks perform.... AS DIRECTED???!!!

It is unfortunate that this happened to you, but you cannot put all the blame on the lender. They have a process and as agents that are representing them, and the attorneys as well, it is OUR job to find out the course of that process. My money is on the sellers not doing what required of them or the attorney having too many files and this one slipped through the cracks. We need to be fiercely proactive in getting short sales to the closing table and you need to be the one that is control. No more blame game with the lender, the short sale negotiators or the attorneys that are supposed to protect our clients. As Katrina and Nestor say in their comment #6, they are in control and they have a 100% success rate in getting it to closing.

We have successfully closed around 35 short sales in the past 2 years. Most days it feels like voluntarily hitting yourself over the head with a hammer! I just had a deal that lasted 22 MONTHS, yes, MONTHS close last Friday!!

To me there is a great deal of satisfaction helping people in bad situations save some of there dignity and financial future. Don't get me wrong, I'll be very glad when these days are over. But facing our market in Mid-Florida and adjusting my business strategy to how things actually are has kept me going through the tough times! (So far anyway)

The banks and their systems are incredibly incompetent. I think it is safe to say there HAS to be a reason for their stupidity. IMO- If you follow the money, you will probably find the problem.

SALLY- I agree, a good investigative reporter could make their entire career by exposing the disaster (and the continuation of this disaster) created by our government and financial institutions. IS THERE ANYONE OUT THERE???

You are correct on that as we do need some clear cut guidelines and rules, it is so unfortunate for the buyers, I have a short sale that has been going on for over 4 months and I thought that was really bad.

When the short-sale doesn't go through because the bank took unreasonable time, did not accept good offers, made additional money demands from the seller, then the bank closes the file (or the buyer, tired of waiting, walks away), the property ends up foreclosed, the house auctioned for "peanuts", the seller gets a 1099 or a deficiency judgment...I wonder if the seller can turn around and sue the bank for their lack of cooperation to assist the seller in the short-sale, and consequently, causing further financial damage to the seller.

I am dealing with a similar situation right now.

I just suffered a similar experience with a short sale where Suntrust was the primary and BOA was the secondary. I truly believe that greed entered the equation in this one. The buyer owed a balance of $8000 on the second. The primary allowed the "normal" 10% for the second. They balked and wanted $3000 instead of the $800. We negotiated back and forth and the buyer agreed to paying $500 down at closing and taking a prom note for the remaining $1700 plus the $800 BOA would get on the deal. We overcame the shortage, but neither Suntrust nor Bank of America would send an approval. So after a year of negotiating, the house went to foreclosure. I was so angry at both banks and so disappointed for my seller who had his hopes raised so many times only to be forced into foreclosure. If you're going to do short sales you need to develop a thick skin.

I am convinced that somehow these HORRIBLE banks are getting money from the government (from us really) when they foreclose or why would they be losing money left and right? Hopefully we'll figure this out before much longer as these stories are horrible.

Hello Endre:

I feel your pain and empathize with your buyer. I have done short sales as a buyer agent, but avoid them if at all possible. Just too many stories like this to make it worth it. Good luck.

More often than not there is no logic to the process which makes it almost impossible to explain to clients.

This is the exact rerason why you need a qualified short sale negotiator. Most people do not have moxie to be hard nosed and they do not have the inside connections inside the bank

the rerason we are successful is we do have the connections

Banks will push you around if they know you do not know the ropes.

If we can not get resuts in 45 days we drop the deal and the banks know that is our policy so they do not push us around

Art Martin foreclosure solutions

Endre: These stories always leave me feeling so bad for all sides in these transactions.

I agree and feel thatb hese lenders may now be getting money back On their losses through a Foreclosure and not a short sale!! I just closed a short sale after 2.5 years... Suntrust is the worse of the worse...Amazing maze that they put me through..All I can say is that short sales require consistency and patience as well as knowledge of what to say and do when Dealing with them! Good Luck Everyone!!

That is just no good. I have 27 short sales on the chopping block this month; as of today, all are still short sales. Who knows what tomorrow will hold?

AUG

2010

The consensus of opinion here really speaks volumes as to the banks superficial attempt to make sellers and their agents believe they will sell for less than what is owed. What about all the money they've already collected as interest on these loans, that doesn't count does it? I feel the larger the bank involved the less likely sellers and agents can really get anywhere with closing a transaction. God forbid the property in question needs a tremendous amount of work, these banks don't even consider that aspect when turning down offers on these loans . They seem to go by BPO's which don't accurately reflect the interior of a property.

Endre, you did everything right & it still ended all wrong. Watch the house for the buyers if they are still interested for the next 6 months or so. Connections (mentioned above) don't matter a hoot. That's just a nonsense promo for your company. The banks are just insane & that's it. You didn't mention numbers but if the numbers were OK & seemed logical, what's the reason then?

I have to agree with Lyn... Endre did everything right... it is not a post about failure by agents involved in the transaction to pull it off. I am enjoying the comment thread, there are some interesting insights.

"the rerason we are successful is we do have the connections"

Another attempt to drum up business at the funeral for a friend (to me the post is about the tragic end of a transaction, dashed hopes.) Art Martin who's got connections comments a lot on Broker Bryants posts about short sales. Endre must not allow non member comments? Art Martin had to join to post the plug in the comments here... ?

"This is the exact rerason why you need a qualified short sale negotiator"

Endre was the buyers agent but I guess the commenter does not get that... Or do buyers agents in short sales hire people with connections too? I thought that the short sale people worked on the sellers side?

The attorney who the LISTING agent did NOT have connections? Endre wrote "The seller had an Attorney, who had a successful track record of negotiating short sales."

Endre, so sorry that your story ended that way for the Buyers and the Sellers. I have been living almost the same scenario as the listing agent for a Bank of America short sale transaction since November of 2009. Just a day prior to "last and final" foreclosure date, I finally emailed the CEO of Bank of America brian.t.moynihan@bankofamerica.com and the foreclosure attorneys directly and told the whole story of how negligently/inefficiently/nonsensically my short sale was handled by his employees over a 9 month period. As a result, I was assigned a liason from the CEOs office, the foreclosure file was closed completely, and the short sale is being processed by a special escalation team short sale negotiator. I am hopeful, but it is not over yet.

For some of these short sales, this may be the only way to save the homeowner from foreclosure and get the sale processed. I am writing this here and posting his email on your blog, not to toot my own horn, but only so more people might see it, than would see it on my blog which does not have a lot of readers. I think the CEOs of all the Banks should get more letters like this so he can see what is really going on in the day-to-day lives of agents like us, and the homeowners that pay their salaries. Maybe if their offices get jammed with more complaints, they will figure out a more reasonable and effectiveway to process short sales and fewer homes will be foreclosed upon. I also don't think we should have to work for free. ~ Aloha

AUG

2010

Endre, it sounds like no one won in this situation. Statistics show that it costs a bank around 18% to short sell a home compared to 34% to foreclose. I guess this type of thinking by financial institutions isn't going to change even after all that has happened.

In the Wild World of Short Sales new rules are made on a daily basis only to be contravened the next day by more new rules. We are all wandering in the wildereness when it comes to short sales. We try what we think will work until it does not work. But...then it worked before and it will work again...it just did not work that time.

There still exist many grey areas in short sales. By the time all of the rules are formalized, they will be a vanishing breed.

AUG

2010

This has happened to me to. Buyer was so disappointed, didn't understand it wasn't my fault.

AUG

2010

Endre,

That scares me... We so far did not have the problem with second refusing that the buyer pays for the Seller.

I am trying to understand the logic behind and I can't. It is about money, not punishment, so why would they object?

And what if the Buyer just gives the Seller $10,000 and he puts it on the table, is it fraud? Vengeance by the Lender is OK, and trying the transaction to close to mutual benefit of all the parties is a problem?

Tough

What a broken system we have. I believe that the banks will have about 80% of their "loss" covered by the Government.. Our financial system has to be changed. The people that works at the banks have sipped too much of the kool-aide. When does common sense kick in. How does the underwriter or person at the bank who made this call look at themselves in the mirror?

I went through something similar. I was representing the buyer. Bank of America had the property. First Bank of America said they didn't have all the papers, even though I had signed documents stating that they did. Then they said that they needed updated documents. Then the person who was working with us at Bank of America quit. That resulted in us having to do everything again. Finally we get a negotiator, but as soon as we did, he took off on a 30-day vacation. Finally, 11 months later, all the ducks decided to line up in a row. Except one. The day before we got final approvaly, my client had lost her job.

AUG

2010

Hi Endre,

I saw this post just after you wrote it and didn't comment but, KNEW it was going to be a feature! It's happening more and more these days and is just SO unnecessary. I've had this happen with two--actually, they just pulled the plug with an Offer BETTER than what either of them sold for AND after the costs of foreclosure were absorbed by the bank. Forget the win-win in these situations; what the investors don't realize in these situations is that EVERYONE loses. Lose-lose doesn't seem appealing to ANYone--why do they continue to practice business in this manner?

Endre,

Such a sad story. Banks are suppose to work with the sellers, but I haven't seen a change in the way they are handling short sales. My last was 2 years on the market, 10 offers, and the one they accepted was about 100k lower than the first! No expediting here in Massachusetts either. by the way, got a call from one of my short sale clients. We closed February 2010. The bank sent them a deficiency bill for $52,000 it was a second mortgage from the same bank, but just before the closing the loan was sold! I find this disheartening.

AUG

2010

Endre, sad story, great post. Something similar happened to one of my short sale listings as well. Makes you wonder, what are they thinking?

SEP

bet your blog is going to get hit by spam... #118 and a comment from "Veruca" on your James Hook & Co. post are two I see... that are precursors to spam. I don't understand the spam ... but I would bet money you will see some nonsense comments soon. Jobeth's and Veruca's comments are closer to not nonsense than what follows.

Maureen I was out all day last minute "real estate" & "kitty" emergency....anyway you were right I see AR has deleted #118 without me even asking. There were about 7 or 8 in other blog post of mine. Thank you for being on top.

SEP

I thought #122 would not happen if #118 and # 120 were removed almost 12 hours earlier.

Have you noticed the really long clothing spam comments on Members Only Posts?

Maureen, I was slammed with spam at least 25 or more on some of my posts and after the first round got a second round as well. I reported each one to AR have not heard back one way or another. I am sure they are working on it.

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Endre Barath,Jr. 310.486.1002

Beverly Hills, CA

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Beverly Hills,CA. Coldwell Banker

Address: Beverly Hills, CA, 90210

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