Live Free for at least 6 Months before allowing a Short Sale?
Disclosure: Although names are not being named this article is a direct result of a current pending transaction with a major bank and is not a work of fiction.
Common sense has gone out the window in the banking industry. While most industries would love the following scenario only in banking is this seen as a negative.
A performing asset in this case, a mortgage loan, stays current despite the homeowners unemployment, use of savings to continue paying payment, securing a new job paying less, starting a side business to supplement the lower paying job with less medical coverage and finally realizing that the stress and lack of medical care was seriously impairing the homeowner's health, they decided to sell the home. They had tried previously but were not successful.
After 45 days on the market a solid offer came in and a short sale package was submitted a few days later. The bank knew the loan was current from the very beginning and yet made no mention that it would be an issue. Approximately a month and half into the short sale process the attorney is informed by the assigned negotiator that the file was closed due to the "loan being current!"
After telling the Realtor the bad news, the Realtor took decisive action and with leverage was able to get the file reopened and supposedly reviewed again. Despite the negotiator indicating that she had put in her recommendation for a short sale, since it was apparent that there was an actual hardship, the file was rejected by the investor because no hardship existed, there would be too much overage after the short sale and the loan had not defaulted.
So, let me repeat this again....you want the homeowner to default, live rent free in the home until it gets seriously behind not just a "technical" default so that you can have a non-performing loan then do a short sale??? You are kidding me, right?
I mean you are the number guys...you crunch numbers for a living and by my estimation if you take the current offer you will be ahead of the game since you will not have to pay additional legal fees to file the acceleration paperwork, send out summons, hire foreclosure attorney, keep paying the servicer, pay back property taxes, etc.
Oh, and hopefully get a new offer several months down the line as prices continue to drop in my area and more short sales are on the market compared to the 6 already in this subdivision.
Wow...no wonder my numbers don't add up - I use common sense and you use???
For the last 5 years I have been negotiating short sales and thought I had seen it all. I was floored by this and have requested an escalation. I have to shake my head in disgust at the banking industry and those that work for it.
The lack of transparency in the short sale process from the banks side is getting better with systems like Equator but with other banks their process seems to involve delays, deceit and blackmail. Realtors and attorneys representing sellers abide by whatever rules the servicer put up and in the background they play games, while they delay and continue to rack up servicing fees.
There is no way for those that represent the homeowners to know if a package is really presented to the investor we have to take the word of a negotiator that most of the time hides behind email (if we are lucky), policy (that they only disclose when they feel like but can't show in "black or white" because they are "proprietary") and layers of hoops that makes us feel like we belong in the circus.
We allow them to cut our commissions despite the fact that we are the ones that bring in the buyers to get them to get rid of a non-performing asset albeit at a loss but better than getting much less as an REO. We allow them to hold the homeowner's hostage by agreeing to their pound of flesh in the form of promissory notes and up front cash contributions.
Doing business is always a gamble and when their gamble was paying off they did everything they could to get more business. Now that the tide has turned and their high rolling crap game has come to an end they have resorted to the loan shark tactics...what is next? Cutting us at the knees (reduced commission), asking for our 1st born child (promissory notes - paying for something you don't own), holding us hostage (short sale process)!
Is the moral of this story to homeowners not to make their mortgage payments when they have a life issue such as loss of job, divorce, medical, reduction in income? Remember this is America and eventually those that are treated unfairly will take action...it's just a matter of how and when.